FBS_Official

Analysts on Swiss KOF barometer According to the data released today, Swiss KOF barometer rose from upwardly revised February figure of 2.19 to 2.24 in March increasing for the third consecutive month. Analysts at Credit Suisse note that although the change in the indicator remained rather moderate in absolute terms, it shows that Switzerland’s economic activity remains strong. In their view, exports to the EU and growth of Swiss industry were the main drivers of the KOF index. Strategists at UniCredit sound quite optimistic as well. In their view, such dynamics of the barometer means that Swiss economy remains in full swing this year. The economists still think that Swiss GDP will add 2.5% in 2011 maintaining 2010 growth pace. Moody's specialists, however, claim that Swiss economic recovery will slow this year as weaker exports will have negative impact on the nation’s growth. According to them, Switzerland’s GDP growth pace will fall to 2.1% this year. The rating agency believes that situation in the euro zone, Switzerland’s key trading partner, will worsen this year due to severe fiscal tightening and the ongoing sovereign debt crisis. Moody's forecasts that the Swiss National Bank will leave its benchmark interest rate at the current 0.25% level until later this year.

Mizuho: EUR/JPY will rise to 126.00 yen in April Technical analysts at Mizuho Corporate Bank note that the all elements of the daily Ichimoku chart point at the long positions for the pair EUR/JPY. According to the bank, euro rose above the top of the “pennant” formation, while the 9-day MA went up almost vertically. The specialists expect the single currency to appreciate to 126.00 yen in April.

Barclays Capital: comments on USD/CHF US dollar reached today 2-week maximum versus Swiss franc at 0.9250 and then eased down to 0.9220. Technical analysts at Barclays Capital claim that that the advance of pair USD/CHF is limited by the Fibonacci retracement resistance and the old range minimums between 0.9200 and 0.9260. In their view, the greenback’s decline will extend to the 0.9105/0.9090 zone. The specialists note, however, that if US currency manages to overcome 0.9260, it will be able to rise to the early March maximums in the 0.9370 area.

German Deputy Finance Minister: comments on euro zone German Deputy Finance Minister Joerg Asmussen claimed that euro zone is ready to face any violent moves of the financial market caused by the region’s debt problems. The policymaker underlined that the European authorities strengthened Stability and Growth Pact, approved the Euro-plus pact for competitiveness and worked out the permanent crisis-resolution mechanism – the ESM. Standard & Poor’s cut today Portugal’s sovereign credit rating from BBB to BBB-. According to Asmussen, Portuguese government will decide for itself whether the country needs any financial help. The EU and the IMF will support Portugal if necessary but only if the nation pledges to conduct the required austerity measures. Portuguese 10-year bonds fell, pushing the yield above 8%t for the first time. Economists at Rabobank estimate that Portugal needs to raise 1.35 billion euro to fund itself to the end of April, including the April 15 redemption spike. G20 leaders will assemble in Nanjing (China) tomorrow for a one-day seminar on the international monetary system.

Commerzbank: EUR/JPY will rise to 120.00 yen per euro Technical analysts at Commerzbank note that the single currency broke through resistance at 115.69 yen completing the major base. In their view, the pair EUR/JPY will now move up to the 119.65/120.00 zone limited by the February 2010 minimum and the psychological resistance. The specialists believe that in the longer term euro will manage to climb to 126.00. According to the bank, the European currency will be able to make such advance as long as it stays above the key support in the 114.40/113.55 area limited by the 20-day MA and last week’s minimum.

Yen’s under pressure due to the rate differentials It’s very likely that the Bank of Japan will fall behind when the world’s major central banks begin normalizing monetary policy. Japanese yen fell today to 11-month minimum versus the European currency at 117 yen per euro. Analysts ANZ National Bank note that euro keeps getting support from the interest rates differentials. The ECB council member Jozef Makuch claimed yesterday that the possibility of the ECB rate hike next week seems to be high. Euro strengthened versus yen even despite Standard & Poor’s cut Portugal’s sovereign credit ratings from BBB to BBB- and Greece’s – from BB+ to BB- with negative outlooks. Strategists at UBS claim there can be 2 reasons for such dynamics: either investors were pricing in a lot of the bad news or this pushes Portugal closer to asking for aid that’s regarded as positive. US dollar managed to get above 83 yen level for the first time since Japan’s earthquake on March 11. Yen got under pressure due to the rising Treasury yields and the recent hawkish comments of the Fed’s members.

Sumitomo: comments on USD/JPY and EUR/USD Analysts at Sumitomo Trust & Banking claim that US dollar is likely to trade at the upside of the range between 82 and 83 yen. In their view, American currency will be supported by the speculation that the Fed soon quit its $600-billion quantitative easing program fueled by the comments of president of the Federal Reserve Bank of St. Louis James Bullard about the need to normilize the country’s monetary policy. The specialists note that the market’s sentiment has become more optimistic. As for the pair EUR/USD, Sumitomo expects it to fluctuate today between 1.4050 and 1.4150. The strategists underlined that euro finds itself under the influence of 2 contradictory factors: the expectations of the ECB rate hike and the concerns about indebted peripheral euro zone nations.

Standard Life Investments are bearish on EUR/USD Analysts at Standard Life Investments believe that the single currency is currently overvalued. In their view, the pair EUR/USD may drop to the undervalued levels before the sovereign debt crisis is resolved. The specialists note that although the marker is pricing in 100 basis points of the interest rates hike for euro in 12 months, they expect no more than 75 points increase in the ECB rates. According to Standard Life Investments, EUR/USD fair long term value for indebted countries like Greece, Portugal, and Ireland is found somewhere between $1.00 to $1.10 range and for the euro area as a whole – between $1.20 and $1.25. The strategists underline that the European authorities need weak euro to cope with the debt crisis, slow trend growth and the necessity of fiscal consolidation. As for the United States, the economic fundamentals, on the contrary, will be gradually improving, says Standard Life Investments. The analysts think that dollar’s decline won’t last long.

TD Securities: Aussie gains versus dollar and yen Australian dollar climbed today to 1.0332, the maximal level versus its US counterpart since 1983 when it began floating freely. The currency climbed to 85.68, the highest since May 5, 2010. Analysts at TD Securities believe that Aussie will rise to 88 yen by the end of June helped by Chinese growth and surging commodity prices. The pair AUD/JPY gained 6.8% since March 18. Related data releases (based on Bloomberg surveys): March 31: Australia’s retail sales (forecast +0.4%); March 31: Australia’s building permits (forecast +4%); March 31: US factory orders (forecast +0.5%); April 1: China’s PMI (forecast: 54 from 52.2 in February).

Outlook for Japan’s trade balance and current account In February Japan's trade balance returned to surplus after imports exceeded exports for the first time in 22 months in January. Japan's current account balance decreased by 47.6% compared with 2010 level in January 2011 to 461.90 billion yen (US$5.62 billion) as a higher import bill and seasonal declines in merchandise exports eroded Japan's surplus and contributed to its first trade deficit in two years. In December 2010, Japan's current account surplus rose by 30.5% to 1.1195 trillion yen. The extent to which Japan's current account will continue to widen will largely depend on external demand from its Asian trading partners, especially China, as well as the United States and Europe, but will be weighed down if commodity prices (especially oil) continue to show strength. Japanese Ministry of Finance claimed on March 8 that Japan's current account is expected to improve over the next month as seasonal factors which drove the decline in the trade balance diminish. Economists at UBS believe that Japan's export figures in March will be weakened due to the declines in production resulting from the March 11 earthquake. The specialists believe that the first quarter GDP growth will be very insignificant. Analysts at Mizuho claim that Japan's exports in March and April are likely to slow down, though Japan will continue with a trade surplus and exports are likely to return to a recovery path around May along with the nation's reconstruction, but they may slow down again around summer when power supplies are expected to be restricted.

From this moment, it will be posted daily.

SNB quarter report released The Swiss National Bank has released today its quarterly report. The central bank announced that the tensions in the Middle East led to the new strengthening of Swiss franc versus the European currency and US dollar. According to the central bank, franc’s appreciation has so far had only a moderate effect on the import price index. The Swiss franc prices of some import goods react with a time lag to the exchange rate’s moves, as the companies adjust them at irregular intervals. Switzerland’s monetary authorities also said strong national currency made the country’s exports lose considerable momentum. The SNB expects that Swiss GDP will gain about 2% in 2011.

Barclays Capital: Australian dollar may rise to 1.09 Analysts at Barclays Capital note that Australian dollar is under bullish pressure versus its US counterpart as long as it holds above 1.01. In the near term the pair AUD/USD is likely to fluctuate near the post-float maximums in the 1.0260 area. If Aussie decisively breaks up through these levels, it will get chance to climb to 1.0650 and 1.09 in the medium term.

Commerzbank: EUR/GBP eroded long term resistance The single currency bounced yesterday versus British pound breaking above the key resistance in the 0.8758 area. Technical analysts at Commerzbank note that euro has severed the long-term downtrend, introducing scope to 0.8935/45. The specialists say that as long as the pair EUR/GBP is trading above the mentioned trend it has potential to advance to the 0.8935/45 area representing the 50% retracement of the decline from 2009 and the October 2010 maximum. According to the bank, bullish pressure on euro will ease only below the short term uptrend at 0.8672 and the pair will be poised lower to 0.8605 then 0.8560.

Wells Fargo: the outlook for major currencies Analysts at Wells Fargo claim that there are 2 opposing forces influencing the pair USD/JPY. On the one hand, there is the speculative upward pressure on yen due to the anticipation of the repatriation flows. On the other hand, Japanese officials have drawn the line in the sand to prevent further appreciation of the national currency. The specialists believe that this kind of mixed environment for yen is going to prevail for at least several months. The specialists, however, don’t think that Japanese currency will once more test the postwar maximums as it did on March 16 when it reached 76.31 yen. Wells Fargo says that 80 yen mark is certainly a psychological level below which the intervention risk is high. The economists are speaking not so much about the actions of other central banks, but about the efforts of both the Bank of Japan and the country’s Ministry of Finance. Judging from the degree of momentum at the market the pairs USD/JPY and EUR/JPY will be the primary crosses affected by potential intervention, though the Bank of England and the Bank of Canada have also sold yen. The strategists note that though the amount of the international participation probably isn’t very strong, it will send a strong message to investors indicating the high degree of the authorities’ commitment. The market has priced in about a 100 basis points interest rates hike over 12 month – quite significant pricing in – so it can be argued that there’s still some place for Euro to reflect the expectations. The problem is still in the European debt concerns. Wells Fargo believes that some of the euro zone’s indebted nations, especially Portugal, may soon need a bailout. As for Portugal, April is a very important month in terms of the debt’s refinancing. This could be the point where the forex market will come more in line with the fixed income market. It’s necessary to note that Portuguese bond market is still showing a significant amount of investors’ stress. It’s just the forex market that hasn’t paid much attention to the euro area’s debt problems so far. The specialists say that the greenback will be on the defensive due to the hawkish signals from the ECB and the Bank of England until the second round of the QE ends in June. Wells Fargo expects June to be an important threshold for the currency market. The transition from easing to neutral policy is going to be significant itself, even if the Fed doesn’t start hiking rates quickly.

HSBC: ECB and BoE may repeat Japan’s mistake European inflation broke above the ECB’s 2% threshold in December rising to 2.4% in February, while the British CPI growth accelerated last month to 4.4%, twice higher the 2% BoE target level. As a result, the European Central Bank announced about its readiness to raise interest rates and more and more members of the Bank of England’s MPC call for monetary tightening. Analysts at HSBC, however, claim that the central banks should take into account Japan’s unsuccessful experience in this field. In their view, the inflation threat may misguide the European monetary authorities and, as a result, the region’s economy may suffer like Japan did in the past quarter century. At the beginning of 1990s, the Bank of Japan increased its key rate in more than 2 times to 6% as the Gulf War pushed oil prices and inflation to 4.%. However, when inflation was soon eliminated the central bank has to cut back the rate to less than 2% by the end of 1993. According to HSBC, oil-price surge can create sometimes more deflationary than inflationary risks as it is squeezing spending power. The specialists warn that that’s what may be currently happening in Europe as crude oil approached maximum in more than 2 years above $100 a barrel. HSBC notes that among the longer term costs of the monetary policy mistake there are stagnation, deflation and economic underperformance. To receive evidence one must just look at Japan: the country has to keep rates at the record low, while its debt is twice the size of the nation’s economy.

CharmerCharts: sell EUR/USD on advance to 1.4200/20 Specialists at CharmerCharts, analytical firm providing technical analysis, note that the single currency jumped yesterday to the 1.4200 area versus US dollar. In the medium term, however, the analysts regard the outlook for euro as negative and advise investors to sell on the pair’s advance to 1.4200/20. According to the analysts, such trade should be stopped if EUR/USD manages to break above 1.4300. CharmerCharts says that support for the pair is found in the 1.4030/50 zone. Below these levels euro will be poised for a decline to 1.3860.

Dear Traders! I'm glad to present in this thread the analytics of FBS brokerage company. Europe: Portugal’s debt rating reduced, EU summit Standard & Poor’s lowered Portugal’s credit rating by two notches from A- to BBB with the negative forecast 2 days after Fitch Ratings cut Portuguese long-term debt rating from А+ to А-. Analysts at Credit Suisse claim that the country’s downgrade affected the market. In their view, investors don’t want to buy euro while they’re closely watching if there’s any progress at the EU summit. The specialists note that there are still many negative factors for the single currency. According to Bloomberg, two European officials with direct knowledge of the matter claimed that the bailout for Portugal may total 70 billion euro ($99 billion). The country hasn’t asked for financial help yet. On the first day of the summit yesterday the European leaders agreed on Germany’s proposal to spread contributions to the future permanent rescue fund – European Stability Mechanism – over 5 years. The initial amount of the fund will be equal to less than the expected earlier 40 billion euro of paid-in capital. The pair EUR/USD is trading in the 1.4160/70 area.