Comments and Forex-analytics from FBS Brokerage Company

[wynnasuju 10]

John Taylor is bearish on US dollar

Monday, February 6, 2012 - 12:45

 

John Taylor, the founder of FX Concepts, the world’s largest currency hedge fund, is bearish on US dollar after the Fed extended their pledge to keep interest rates close to 0 until late 2014 and signaled that it’s prepared for additional quantitative easing on January 25.

 

The specialist is more bearish on US currency than on the European one. “Everybody in the market is sure that whenever the dollar looks strong, Bernanke will come up with another idea to make it weak”, says Taylor. In his view, EUR/USD will end the year at the parity level.

 

The economist also expects the greenback to depreciate versus Japanese yen even if it is temporarily boosted by the bank of Japan’s dollar purchases. Taylor agrees that Japanese central bank is likely to intervene in 75 yen area, but thinks that traders will wait until USD/JPY is pushed up by the interventions and then start selling the pair again.

 

John Taylor is bearish on US dollar // FBS Markets Inc.

 

 

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[wynnasuju 10]

Greece: negotiations seem endless

Tuesday, February 7, 2012 - 06:45

 

The single currency is under pressure versus the greenback, unable to resume recovery from January minimum at

$1.2625. The pair EUR/USD has so far been consolidating in the $1.3035/1.3225 area. The bias is still bullish.

On the upside, if euro rises above $1.3233, it may get to $1.3375 (December 12, 2011, maximum). On the

downside, below support at $1.3075, the pair may drift to $1.2856/75 (December 29, 2011, minimum/January 2011

minimum).

 

Investors are worried that the Greece’s policymakers may fail to reach an agreement on terms for a second aid

package, which is a condition for the second bailout. Today Greek Prime Minister Lucas Papademos will resume

talks with the heads of 3 political parties in his interim coalition government. In addition, Papademos begins

today a second round of negotiations with the Troika – the European Commission, the ECB and the IMF.

 

Analysts at Westpac think that there will be a lot of problems and shocks before the Greek situation is

resolved, so they are bearish in euro. The single currency lost 4.5% during the last 3 months.

 

Chart. Daily EUR/USD

 

Greece: negotiations seem endless // FBS Markets Inc.

 

 

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[wynnasuju 10]

UBS on SNB’s policy options

Tuesday, February 7, 2012 - 07:45

 

There are 2 things to note about Swiss franc:

 

1) Hopes that that Swiss National Bank lifts up the floor for EUR/CHF from 1.2000 to 1.25/3000 in order to

fight deflation crushed on December 15, when the SNB left the peg unchanged.

2) The market started worrying about the sustainability of the peg after former central bank’s President

Hildebrand resigned.

 

Strategists at UBS claim that although the SNB interim president Tomas Jordan pledged to defend EUR/CHF

minimum, the central bank is under pressure due to a lot of stops placed below the threshold: if franc

strengthens, it may be very difficult for the SNB to act against the market.

 

However, the central bank will try to do its best as its credibility is at stake, thinks UBS. The specialists

think that the SNB will lift up the floor in the second half of 2012 to 1.3000. The bank recommends watching

Switzerland’s CPI figures due on Monday.

 

Chart. Daily EUR/CHF

 

UBS on SNB

 

 

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[wynnasuju 10]

Japan conducted stealth intervention in November

Tuesday, February 7, 2012 - 12:30

 

Japanese yen declined versus US dollar and the single currency as the government data showed that Japan

conducted stealth intervention in November in order to weaken the national currency. Stealth intervention is

carried out without any official announcement from the finance ministry.

 

Japan’s Ministry of Finance reported today that the nation sold 1.02 trillion yen ($13.6 billion) against the

dollar in markets on the first four days of November in addition to an 8.07 trillion-yen sale on October 31.

Finance Minister Jun Azumi said he won’t rule out any options to curb the currency’s appreciation.

 

Analysts at Bank of Tokyo-Mitsubishi UFJ claim that yen’s drop reflects the increasing risks that the Japanese

authorities may intervene again to make yen depreciate.

 

Specialists at Commerzbank think, however, that interventions won’t reverse major USD/JPY downtrend as their

effect seems to be short-lived.

 

Chart. Daily USD/JPY

 

Japan conducted stealth intervention in November // FBS Markets Inc.

 

 

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[wynnasuju 10]

Jordan: SNB won’t allow franc to strengthen

Tuesday, February 7, 2012 - 13:15

 

ТThe Swiss National Bank’s interim president Tomas Jordan said today that the central bank will not tolerate a

breakdown of the CHF 1.20 threshold.

 

According to Jordan, the SNB is more than ever “committed to defending the cap” and can’t allow further

appreciation of the national currency as strong franc affects Switzerland’s economy. To do that the central

bank is ready to buy unlimited amounts of foreign currencies. The main risks come from further escalations of

the euro zone’s debt crisis.

 

The pair EUR/CHF is trading in the positive zone, right below the daily peak at 1.2087. Resistance for euro is

found at 1.2109 (January 25 maximum) and 1.2128 (January 13 maximum). Support for the pair lies at 1.2053

(200-day MA) and 1.2028 (February 1 minimum).

 

Chart. H1 EUR/CHF

 

Jordan: SNB won

 

 

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[wynnasuju 10]

Will the ECB lower rates?

Tuesday, February 7, 2012 - 13:45

 

The European Central Bank meets this Thursday. The majority of the economists expect the ECB to keep the

borrowing costs unchanged. Some specialists, however, think that the central bank may cut its benchmark rate

from the current level of 1%.

 

The arguments for the ECB’s staying on hold: better-than-expected key economic indicators released so far in

the euro zone, successful bond and T-bill auctions in Germany and peripheral nations, positive impact of ECB’s

LTRO which helped to increase liquidity.

 

The arguments for the ECB’s rate cut: austerity measures affecting the European economy and creating the

threat of the region’s recession, the expansion of the central bank’s balance sheet as a result of the LTROs,

unresolved negotiations in Greece.

 

Analysts at UBS think that the ECB will reduce interest rates. In their view, EUR/USD will stay under pressure

ending 2012 at $1.1500.

 

Chart. Daily EUR/USD

 

Will the ECB lower rates? // FBS Markets Inc.

 

 

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[wynnasuju 10]

Greek deal speculation encourages euro

Tuesday, February 7, 2012 - 14:45

 

The single currency surged versus the greenback setting new daily maximum at $1.3197 after Reuters reported

that “Greek government is drafting agreement on bailout deal to be put to political leaders for approval later

today” citing the words of the unnamed government official.

 

Analysts at BNP Paribas claimed that “the whole focus on austerity measures is that it’s the prerequisite for

the second bailout package. It would be a step closer to everything fitting in to place. The market has

reacted very positively.”

 

Resistance for EUR/USD if found at $1.3200 and $1.3225 (January 30 maximum).

 

Chart. H1 EUR/USD

 

Greek deal speculation encourages euro // FBS Markets Inc.

 

 

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[wynnasuju 10]

USD/JPY gained on Japanese data

Wednesday, February 8, 2012 - 07:00

 

The greenback advanced versus Japanese yen climbing above 77 yen on the news that Japan’s current-account

surplus dropped in 2011 to a 15-year minimum.

 

According to the nation’s Finance Ministry data, current-account surplus declined last year by 44% from the

previous year to 9.63 trillion yen ($125 billion), the minimal level since 1996. Japan's current account

surplus contracted for the tenth straight month in December to 303.5 billion yen (by 74.7% y/y) before

seasonal adjustment versus the forecast of 331.4 billion yen surplus.

 

Analysts at Credit Suisse claim that Japan’s current-account balance will turn out to be a deficit in January,

so yen will naturally weaken.

 

It seems that Japanese MOF is changing its intervention tactics in favor of stealth (unannounced)

interventions rather from the shock-and-awe tactics with large amounts of yens sold which it used before.

Yesterday the country’s MOF reported today that the nation sold 1.02 trillion yen ($13.6 billion) against the

dollar in markets on the first four days of November in addition to an 8.07 trillion-yen sale on October 31

and expressed intentions to fight the appreciation of the national currency.

 

Despite the advance of USD/JPY one has to be cautious because large players are likely getting ready to sell

on the rallies.

 

Chart. Daily USD/JPY

 

USD/JPY gained on Japanese data // FBS Markets Inc.

 

 

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[wynnasuju 10]

The “art” of forecasting and Aussie’s prospects

Wednesday, February 8, 2012 - 07:45

 

24 out of 27 economists surveyed by Bloomberg News expected the Reserve bank of Australia to cut interest

rates. The media widely spread these expectations, so the cut was widely seen as a sure thing and the central

bank’s staying on hold was surprising for the market.

 

One has to understand that the analysts’ forecasts are no more than best guesses given available information.

The predictability of future in such complicated environment as the modern globalizing world is a tricky and

highly disputable thing. It’s necessary to remember about uncertainty. Don’t rush to comfort yourself with

estimates and figures. Surely you have to take the figures into account, but don’t be fooled by the data

stream.

 

Already much was said about the human nature of the forecasters: once an economist has made an assumption, he

or she is tempted to interpret all new data in the way which would justify his already existing forecast.

Yesterday’s situation is a good example: some of the market strategists were pessimistic about Australia’s

labor market as payrolls contracted; others ignored this piece of information focusing on steady unemployment

rate. That’s how 2 different points of view derive from the single data set.

 

The conclusion is simple enough: analyze all available data before drawing any forecasts and be flexible in

your forecasting.

 

Anyway, let’s back to Australia. Now that the RBA has avoided easing, it’s time to elaborate a trading

strategy which would suit the moment.

 

Analysts at BMO Capital are bullish on Aussie thinking that RBA’s staying on hold provides enough reason to

expect AUD/USD to keep growing. The specialists also think that China may reduce reserve requirements

encouraging risk appetite. In addition, the Fed plans to keep rates low until the end of 2014. As a result,

BMO expects Aussie to rise to $1.0925.

Chart. Daily AUD/USD

 

The

 

 

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[wynnasuju 10]

Euro’s in the positive zone, markets await Greece

Wednesday, February 8, 2012 - 09:15

 

The single currency is little changed to the upside versus the greenback on the speculation that Greek officials and creditors worked on the final draft of an agreement on budget and structural measures needed to free up a second aid package.

Bloomberg reports that Charles Dallara, managing director of the International Institute of Finance, Deutsche Bank AG Chairman Josef Ackermann and Jean Lemierre, a senior adviser to the chairman of BNP Paribas SA, had “constructive” talks with Greek

 

Premier Papademos and Finance Minister Evangelos Venizelos. A government spokeswoman said a meeting between Papademos and the leaders of the three parties supporting his government was postponed to tomorrow morning.

 

Analysts at Mizuho claim that “Greece is a big part of Europe’s debt crisis, so a step forward to its resolution is seen favorably in the near term, which is spurring the unwinding of short positions on the euro.” The specialists think that euro may rise to $1.34. Economists at Credit Agricole, however, warn about the possibility of “buy on rumors, sell on facts” outcome.

 

Specialists at Commerzbank think that the key resistance level for the pair EUR/USD lies at $1.3280. If euro manages to break above this point above this point, it will get chance to strengthen to $1.3436 and $1.3627 (50% and 61.8% Fibonacci retracement targets of the pair’s decline from October maximum to January minimum). Next resistance will be found at $1.3334 (100-day MA).

 

Chart. Daily EUR/USD

 

Euro

 

 

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[wynnasuju 10]

Morgan Stanley: sell GBP/USD

Wednesday, February 8, 2012 - 11:30

 

Analysts at Morgan Stanley recommend investors selling British pound versus the greenback. The specialists advise to place stops for GBP/USD at $1.61 and look for the pair’s decline to $1.5460.

 

According to the bank, sterling will be under pressure due to 2 factors: UK economic weakness and Bank of England’s quantitative easing – Morgan Stanley expects the BOE to announce tomorrow another 50 billion pounds of bond purchases.

 

Chart. Daily GBP/USD

 

Morgan Stanley: sell GBP/USD // FBS Markets Inc.

 

 

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[wynnasuju 10]

CFTC trader positioning data

Monday, February 13, 2012 - 09:15

 

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that:

 

• Euro shorts declined for the second consecutive weak. Net shorts account for around 141K contracts, down from the previous week’s total of 158K.

• British pound shorts increased from 26K contracts on January 31 to 33K contracts on February 7 after 2 weeks of improvement.

• Japanese yen net longs declined from 57K contracts reported on January 31 to 55K as the data on February 7 showed. Yen speculative positions are still just below their maximum in over a year which was reached on January 10 when contracts surpassed the August 2 level of 59K.

• Swiss franc net shorts declined from 11K net short contracts on January 31 to 9.7K contracts on February 7. The shorts decrease for the third consecutive week.

• US dollar long positions were reduced from a total long position of $14.22 billion on January 31 to $10.63 billion on February 7.

 

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound.

 

CFTC trader positioning data // FBS Markets Inc.

[wynnasuju 10]

UBS: short-term outlook for USD/JPY

Monday, February 13, 2012 - 10:15

 

Analysts at UBS note that the greenback has posted its biggest weekly advance versus Japanese yen since the Bank of Japan’s record intervention at the end of October 2011.

 

USD/JPY rose from the 76.50 area on Monday to Friday’s peak at 77.80 yen. The pair went up due to the general strengthening of US dollar as well as on the speculation of potential intervention of Japan’s monetary authorities.

 

Never the less, the specialists claim that USD/JPY may find itself under pressure in the upcoming weeks. According to UBS, the outlook for the pair is mixed: on the one hand, the economists expect inflows into yen from semi-annual coupon payments of US T-bonds holders and some kind of repatriation due to the Japanese financial year-end; on the other, the Bank of Japan may further ease its monetary policy.

 

The bank thinks that USD/JPY isn’t likely to rise above 80 yen unless US Treasury yields can break significantly higher.

 

Chart. Daily USD/JPY

 

UBS: short-term outlook for USD/JPY // FBS Markets Inc.

[wynnasuju 10]

UK economic forecasts: update

Monday, February 13, 2012 - 11:15

 

The Confederation of British Industry (CBI) lowered its 2012 forecast for the UK economy from the 1.2% (November 2011 estimate) to 0.9%.

 

Although Britain’s GDP contracted by 0.2% in the final 3 months of last year, the specialists think that the nation will manage to avoid technical recession or, in other words, 2 consecutive quarters of negative growth.

 

According to the CBI, British growth will accelerate to 2.0% in 2013. The economists say that in the quarterly basis growth will remain fragile in the first two quarters of this year (0.2%, 0.2%), improving modestly in the second half of the year (0.6%, 0.5%), as inflationary pressures ease.

 

The latest forecasts show inflation falling back towards target levels (2.2%) in the fourth quarter of 2012 and then remaining close to the BOE’s 2.0% target throughout 2013. The growth will be driven by trade and business investment. Household consumption, however, will be under pressure from modest wage growth and continuing high unemployment.

 

Later this week in the UK

 

On Wednesday the Bank of England will publish its latest quarterly Inflation Report with update forecasts for growth and inflation. The BoE Governor Mervyn King will give press conference the same morning. As the Monetary Policy Committee (MPC) increased asset purchases by 50 billion pounds to 325 billion pounds on Thursday, the forecasts might continue showing lower inflation in the medium term.

 

On Tuesday the Office for national Statistics will release January inflation data. The CPI growth is expected to slow from 4.2% (y/y) to 3.6%. King will have to write a letter to the Chancellor, explaining why inflation is more than one percentage point above the 2% target.

 

Chart. Daily GBP/USD

 

UK economic forecasts: update // FBS Markets Inc.

[wynnasuju 10]

Watch Fed’s meeting minutes on Wednesday

Monday, February 13, 2012 - 12:00

 

To get insight about the Federal Reserve’s stance toward further quantitative easing one has to watch the Fed's January meeting minutes released on Wednesday.

 

The minutes will show how the opinions of the central bank’s officials are divided: some FOMC members may have seen the need for additional monetary easing.

 

This time the central bank for the first time will provide "qualitative" details on officials' views on the Fed's near-record $2.9 trillion balance sheet.

 

Last month the Fed revealed its intentions of keeping the rates near zero until the end of 2014 but gave no details on how it should handle its asset holdings.

 

The argument against QE3 is improved labor market situation (in January unemployment rate declined to 8.3%). However, some experts think that US economy won’t gain enough growth pace to satisfy the Fed.

 

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[wynnasuju 10]

Different comments on Greece and euro

Monday, February 13, 2012 - 12:15

 

UniCredit: if Greece leaves the euro area, it would be a disaster for Greek society, while for the rest of Europe it won’t matter much in the longer term. However, the majority underestimates the risks of Greek default to the global financial markets in general and other European nations in particular.

 

Bank of Nova Scotia: as Greek parliament approved austerity measures the pressure on euro may ease in the short term.

 

Societe Generale: speculative positioning data shows that short euro positions are being reduced, but not enough to spark a substantial risk rally. EUR/USD will struggle to break last week's maximum at $1.3330.

 

Morgan Stanley: EUR/USD correlation with the market’s risk sentiment will break down this year. The single currency will remain under pressure with the ECB’s accommodative increase of euro’s supply, recessionary growth and political uncertainty. Sell euro at $1.3250, stopping at $1.3300 and targeting $1.2390.

 

Credit Agricole: so much good news is already reflected in the value of the single currency, so even if there is some form of debt deal and second bailout package for Greece EUR/USD’s advance will be limited.

 

Chart. Daily EUR/USD

 

Different comments on Greece and euro // FBS Markets Inc.

[wynnasuju 10]

JPMorgan: buy euro against franc

Monday, February 13, 2012 - 14:00

 

Analysts at JPMorgan recommend buying the single currency versus Swiss franc. In their view, the pair EUR/CHF will rise to 1.23 in the medium term.

 

The specialists point out that in Switzerland deflationary forces are mounting, while the economy is close to recession. The bank reminds investors of weak January manufacturing PMI (the indicator declined from 49.1 to 47.3) and high unemployment rate.

 

According to JPMorgan, the SNB will defend the 1.20 floor or possibly to raise it.

 

Chart. Daily EUR/CHF

 

JPMorgan: buy euro against franc // FBS Markets Inc.

[wynnasuju 10]

Moody’s downgraded European nations

Tuesday, February 14, 2012 - 08:00

 

The single currency declined versus the greenback for the third day. Euro fell after Moody’s Investors Service downgraded several European nations. US dollar, on the other hand, strengthened versus all of its major counterparts as the market’s risk sentiment deteriorated.

 

Moody’s cut Spain’s rating from A1 to A3, Italy’s – from A2 to A3 and Portugal’s one – from Ba2 to Ba3 with negative outlooks. The ratings of Slovakia, Slovenia and Malta were also lowered with negative outlooks. In addition, the agency said it may strip France, Austria and the UK of their top Aaa ratings. The rating of EFSF (European Financial Stability Facility) was retained with stable forecast.

 

According to the Moody’s economists, the downgrade was motivated by the uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis.

 

The euro zone’s finance ministers meet tomorrow to discuss a second 130 billion-euro ($171 billion) aid package for Greece which managed to reach parliamentary approval of austerity measures.

 

Analysts at Mizuho claim that “the ratings agencies behind the curve as the risks have actually been falling in Europe. There may be worries that countries cutting fiscal spending may drag on their economic growth, but the concerns aren't new and the downgrade should have minimal impact on market sentiment.”

 

Investors’ attention will be also focused on Italian bond auction today (bonds due in 2014, 2015 and 2017) and debt auctions of Spain, Belgium and Greece (bills) and the Netherlands (bonds maturing in 2017).

 

The pair EUR/USD fell from last week’s maximums above $1.3300 to the levels in the $1.3135 area.

 

Chart. Daily EUR/USD

 

Moody

[wynnasuju 10]

Bank of Japan increased asset purchases

Tuesday, February 14, 2012 - 10:00

 

Japanese yen declined against US dollar as the Bank of Japan increased its asset-purchase program by 10 trillion yen ($128 billion) to 65 trillion yen and set near-term inflation target at 1%. The move was generally unexpected. The BOJ left its benchmark rate at 0.1% (in line with forecasts).

 

According to the BOJ statement, the central bank’s goals are to “clarify its monetary policy stance and to further enhance monetary easing” to “overcome deflation and achieve sustainable growth with price stability.” Some experts, however, criticize the BOJ for yielding to political pressure. The increase in the asset-purchase facility will be used to fund purchases of more government bonds.

 

Japanese central bank decided to support national economy which contracted in the final quarter of 2011 by 2.3% (y/y), data released yesterday showed. The BOJ also signaled its resolve to take further action to beat deflation. Nationwide core CPI fell by 0.1% (y/y) in December, the third straight month of decline. Prices haven't risen by at least 1% for any year since 1997.

 

It’s also necessary to point out that as US Federal Reserve last month set an inflation target and extended its commitment to near zero rates. As a result, pressure on the BOJ strengthened encouraging it to make a move.

 

Analysts at Sumitomo Mitsui think that the impact on yen’s long-term uptrend will be limited. Specialists at Mitsubishi UFJ Morgan Stanley Securities claim that the BOJ still has further easing options left, such as increasing the amount of assets it buys and buying JGBs with longer maturities.

 

Economists at Credit Agricole think that the BOJ's decision will help to keep JGB yields low and make yen weaken in the short term. However, the specialists aren’t sure that the impact will be sustained. There needs to be probably more to be done, the buying of JGBs would need to be more intense, says Credit Agricole.

 

The pair USD/JPY rose above 78 yen mark. Resistance for the greenback lies at 78.29 yen (maximums of the late November and January 25). Above this level the upside momentum will increase.

 

Chart. Daily USD/JPY

 

Bank of Japan increased asset purchases // FBS Markets Inc.

[wynnasuju 10]

Analysts at UBS revised up euro forecast

Tuesday, February 14, 2012 - 10:30

 

Analysts at UBS raised 1-month forecast for euro from $1.2000 to $1.3000 and increased the 3-month projection from $1.1500 to $1.2500.

 

The specialists also lifted up their 3-month forecast of USD/JPY’s rate from 75.00 to 77.00.

 

According to UBS, short-term risks diminished: the situation in the euro zone’s banking sector will improve due to ECB’s Long-term liquidity operations (LTLO) operations, while the threat of a disorderly Greek default for now subsided.

 

Chart. Daily EUR/USD

 

Analysts at UBS revised up euro forecast // FBS Markets Inc.

 

 

 

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[wynnasuju 10]

China pledged to help the euro area

Wednesday, February 15, 2012 - 08:00

 

The single currency went up versus the greenback and reached 2-month maximums against Japanese yen as the People’s Bank of China announced that the nation will take part in resolving the euro zone’s debt crisis.

 

The PBOC Governor Zhou Xiaochuan said that China can provide help through the central bank, China Investment Corp., the nation’s sovereign wealth fund, and banks including the China Development Bank, Export-Import Bank and other institutions.

 

Analysts at Royal Bank of Canada claim that we’ll see some growth on the short covering, but the advance won’t be long.

 

On the upside, euro’s moves are limited ahead of the European finance minister’s teleconference on the second bailout for Greece (the meeting initially scheduled for today was put off to Monday, February 20). European authorities are waiting for written commitments of Greek parties on the implementation of the austerity program. According to Greece’s government, the necessary assurances will be provided today.

 

The pair EUR/USD rose from yesterday’s minimum at $1.3079 to the levels around $1.3180. There may be some further consolidation between 100- and 55-day MAs.

Chart. Daily EUR/USD

 

China pledged to help the euro area // FBS Markets Inc.

 

 

 

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[wynnasuju 10]

Commerzbank: EUR/CAD technical comments

Wednesday, February 15, 2012 - 11:00

 

Analysts at Commerzbank are bearish on the single currency versus Canadian dollar. The specialists note that EUR/CAD didn’t manage to overcome resistance provided by the 55-day MA at $1.3258 and is resuming decline.

 

According to the bank, support levels are situated at $1.3000 (psychological level), $1.2876 (2012 minimum), $1.2777 (2011 minimum), $1.2765 (the 1985-2012 uptrend line) and $1.2613. Resistance levels are situated at $1.3253 (January maximum), $1.3258 (55-day MA) and $1.3398 (September minimum).

 

Chart. Daily EUR/CAD

 

Commerzbank: EUR/CAD technical comments // FBS Markets Inc.

 

 

 

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[wynnasuju 10]

Analysts on USD/JPY prospects

Wednesday, February 15, 2012 - 12:15

 

Analysts at BNP Paribas believe that one shouldn’t hurry to turn bullish on USD/JPY. The specialists underline that though the Bank of Japan decided to keep expanding its balance sheet and set a 1% inflation target, it will not be guiding policy any differently. The economists remind that asset purchases didn’t manage to reverse yen’s uptrend either in the past 3 years or during the prior QE in 2002-2004. According to the bank, USD/JPY will trade in 73 yen area in first quarter, 71 in the second one and then decline to 70 in the final 3 months of the year.

 

Never the less, analysts at Barclays Capital note that the BOJ is trying to "catch up to its counterparts, and this adds to the downward pressure on yen already prevailing from Japan’s ongoing external balance deterioration and the risk of a sovereign downgrade toward fiscal year-end (March 31)”. With Japanese interest rates also “lower for longer” Japanese investors will look abroad for better returns stepping up monetary outflows from Japan. In addition, US dollar will be helped by American economic recovery. In their view, USD/JPY will rise to 79.00, 81.00 and 83.00 yen in 3, 6 and 12 months.

 

By the way, specialists at Societe Generale point out that the move of Japanese central bank doesn’t look that large compared with ECB’s actions: the BOJ will increase bond purchases by a further 10 trillion yen this year, which could increase the size of their balance sheet by 2% of GDP, while the ECB's December LTRO added nearly 5% GDP to the central bank's balance sheet (remember that there will be another 3-year LTRO February 29). The specialists say that though the fast that USD/JPY rose above 200-day MA is rather promising, the pair still has to overcome the critical 80 yen level.

 

Economists at CitiFX believe that yen’s depreciation will be short-lived. In their view, it will be difficult for USD/JPY to start sustainable rally until US Treasury yields as a whole start to press higher.

 

Chart. Daily USD/JPY

 

Analysts on USD/JPY prospects // FBS Markets Inc.

 

 

 

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[wynnasuju 10]

HSBC about the forex market prospects

Wednesday, February 15, 2012 - 14:15

 

While many experts expect the single currency to keep falling versus the greenback, analysts at HSBC think that EUR/USD will rise to $1.3700 by the end of the second quarter.

 

The specialists don’t think the market has arrived at any kind of final verdict on Greece. There is disappointment that there wasn’t anything firmer in terms of ring-fencing Greece, but progress has been made and there is political commitment on the outcome. In that environment, people should still buy the euro, claims the bank. In the short term, euro will push higher and some of the doubts will fade away.

 

HSBC also believe that the Swiss National Bank (SNB) will defend the floor for EUR/CHF which was set at 1.20 in September 2011 without raising it in the near future. As for USD/CHF, it will remain stable at around 0.90 over the next 3 months.

 

The specialists are bullish on emerging market currencies, even though many are dependent on global growth indicators, and are driven by unpredictable risk appetite.

 

 

HSBC about the forex market prospects // FBS Markets Inc.

 

 

 

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[wynnasuju 10]

Euro’s pressed by Greek uncertainty

Thursday, February 16, 2012 - 08:00

 

The single currency fell to 3-month minimum versus the greenback.

 

Tomorrow German’s Chancellor Angela Merkel meets Italian Prime Minister Mario Monti. The leaders will hold a joint press conference afterwards.

On Monday, February 20, euro zone’s finance ministers will gather to discuss a second bailout package for Greece. Initially the meeting was scheduled to take place yesterday, but then was postponed. Luxembourg Prime Minister Jean-Claude Junker assured the markets that “all the necessary decisions” on the issue will be taken at February 20 meeting.

 

The markets worried that a delay in Greek aid will increase borrowing costs for the region. The situation remains rather uncertain. According to Reuters, several EU sources said on Wednesday the euro zone is examining ways of holding back parts or even the entire bailout program until after Greek elections in April while still ensuring it avoids a disorderly default. The risk sentiment was also affected by Moody’s announcement that the ratings of several banks including UBS, Credit Suisse and Deutsche Bank are put on review to the downside.

 

In the current circumstances watch Spain’s and France’s debt auctions later today. France will offer 8.5 billion euro in 2-, 3- and 5-year bonds, while Spain plans to sell 4 billion euro in securities maturing in January and July 2015 and in October 2019.

 

Analysts at Nomura believe that by the end of the month EUR/USD will hit $1.2500. In their view, the market has lost confidence and investors won’t have much incentive to buy euro.

 

The pair fell today below 38.2% Fibonacci retracement of its rally this year at $1.3056 and 55-day MA at $1.3050. Support for euro is now found in the $1.2970 area (50% retracement of the same rally, daily Ichimoku charts' Kijun-sen line and also the Cloud’s bottom).

 

Chart. Daily EUR/USD

 

Euro

 

 

 

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