Comments and Forex-analytics from FBS Brokerage Company

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Analysts: outlook for USD/CAD

Tuesday, May 1, 2012 - 14:00

 

According to the Royal Bank of Canada, the greenback may reach an eight-month low versus a Canadian dollar (C$0.9788) after dropping to a fresh low for this year. The pair has already slid below the C$0.9842 level (previous 2012 low).

 

RBC Capital Markets: The decline has resolved a multi-month trading range to the downside, exposing the August 31, 2011 low. This development confirms that bearish sentiment still remains prevalent for the dollar versus the loonie.

 

However, this week the USD/CAD bounced back to C$0.9890 area after the unexpected contraction of nation’s GDP.

 

TD Securities: Yesterday’s disappointing GDP figures might pause any intention by the BoC of rising the overnight rates. The market is consolidating ahead of another push higher towards C$0.9950.

 

Chart. Daily USD/CAD

 

Analysts: outlook for USD/CAD // FBS Markets Inc.

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U.S. Manufacturing PMI beats forecasts

Tuesday, May 1, 2012 - 14:15

 

The U.S. ISM Manufacturing PMI came out better than expected (54.8 vs. consensus-forecast 53.0 and 53.4 in March), pushing the greenback higher against its major counterparts. Positive PMI figures confirm the rebound of biggest economy in the world, lowering fears of the new policy easing required to stimulate the economy.

 

However, construction spending in March dell 0.1% vs. a 0.5% growth expected. Later today three FOMC members will deliver speeches; on Friday non-farm payroll figures will be next to offer investors the clues on the prospects of the U.S. economy.

 

Chart. H4 EUR/USD

 

U.S. Manufacturing PMI beats forecasts // FBS Markets Inc.

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Aspen Trading: recommendations on AUD/USD

Wednesday, May 2, 2012 - 08:00

 

The Australian dollar fell against the greenback after Reserve Bank of Australia unexpectedly cut its main cash rate by 50 bps to 3.75% yesterday.

 

Analysts at Aspen Trading Group are convinced that the downward pressure on the AUD/USD is set to continue. In their view, the Australia’s economy may require more rate cuts on the back of problems in the housing sector and low inflation figures. The U.S. dollar, on the contrary, is strong on yesterday’s positive Manufacturing PMI report (54.8 vs. consensus-forecast 53.0 and 53.4 in March) and seems to have bright prospects.

 

Strategists recommend entering the trade at $1.0330 with a stop at $1.0500 and a target of $1.0000.

 

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Commerzbank: outlook for USD/CHF

Wednesday, May 2, 2012 - 08:45

 

Analysts at Commerzbank expect the USD/CHF to drop to the 0.9000 area, ahead of 0.8948 (200-day MA). In their view, the downside pressure on the cross may be eliminated only if it breaks through the key resistance, lying at 0.9191.

 

 

 

“Slightly longer term, we view the price action this year as a consolidation, but it is possible that this will extend to 0.8834/the 55 week ma prior to the resumption of the bull move”, analysts say.

 

Swiss PMI, released today, came out below expectations, pointing at the industry contraction (46.9 in April vs. consensus forecast 51.6 and 51.1 in March).

 

On Tuesday 08:45 GMT USD/CHF is trading at 0.9124.

 

Commerzbank: outlook for USD/CHF // FBS Markets Inc.

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Revived debt woes weigh on the euro

Wednesday, May 2, 2012 - 18:00

 

On Wednesday, May 2, market sells the common currency after data showed euro zone manufacturing shrank and unemployment rose in Germany, adding to concern that the new wave of the debt crisis has come.

 

Europe’s Final Manufacturing PMI fell to a 34-month low of 45.9 in April from 47.7 in March (a reading below 50 indicates contraction).

 

The number of unemployed people in Germany grew by 19K in April to 2.87 million compared with 9K forecasted and a 13K contraction in March. Seasonally adjusted unemployment rate remained unchanged at 6.8%.

 

However, U.S. ADP Non-Farm Employment release also surprised the market on a downside: actual 119K of 175K forecasted. The real NFP figures, eagerly awaited by the market, will be released on Friday (consensus 176K vs. previous 120K).

 

Many analysts expect Mario Draghi to give a hint at a further QE at the ECB Press Conference held tomorrow. The central bank will keep its benchmark interest rate at a record 1%, according to Bloomberg survey. Moreover, market expects Spain to sell 3- and 5-year notes tomorrow.

 

Westpac Banking Corp: Draghi may begin to hint that the outlook for the European economy is clearly beginning to deteriorate again. Within the next couple of months, the possibility of further rate cuts from the ECB is rising.

 

GFT Forex: We have very bad purchasing-manager indexes and the first sign that Germany is cracking. The gangrene has spread from the periphery to the core. If Draghi hints that there will be more easing to come, the euro may be vulnerable and fall to the $1.30 level.

 

EUR/USD dropped to $1.3120 (lowest since April 23) on Wednesday due to euro zone’s statistics, but then bounced back to $1.3156 on disappointing U.S. employment data.

 

Chart. Daily EUR/USD

 

Revived debt woes weigh on the euro // FBS Markets Inc.

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Kiwi falls on unemployment figures

Thursday, May 3, 2012 - 06:30

 

The New Zealand dollar weakened on Thursday after a report showed today the unemployment rate in the country unexpectedly rose.

 

The unemployment in the first quarter overcame the consensus forecast 6.3% and reached 6.7% after 6.4% in Q4. However, number of employed people increased by 0.4% compared with a 0.2% increase in the prior quarter. According to economists, the jobless rate surge was caused by a significant increase in number of people looking for a work.

 

UBS: Today’s unemployment report may contribute to lowering the RBNZ inflation outlook and may create scope to ease monetary policy.

 

The next RBNZ meeting is scheduled on June 14. On the previous meeting the bank tried to push the kiwi lower, giving hints on possible dovish actions.

 

NZD/USD dropped to $0.8062 (200-day MA) today, breaking the $0.8080 support (38.2% retracement from a Dec.2011-Jan.2012 growth). Strong support for the pair lies at $0.7965 (50% retracement) and at $0.7845 (61.8% retracement). 

 

Chart. Daily NZD/USD

 

Kiwi falls on unemployment figures // FBS Markets Inc.

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SocGen: trading ahead of ECB meeting

Thursday, May 3, 2012 - 07:00

 

Analysts at Societe Generale recommend going short on the euro against the dollar, entering the trade at $1.3250, targeting at $1.2900 and with a stop at $1.3400.

 

According to analysts, the common currency may edge up, but than drop to the lowest level since January. However, French and German elections and the ECB meeting may weigh on the cross.

 

Specialists do not expect anything special from the today’s ECB meeting, but the market is ready for surprises this week after the RBA unexpectedly cut the key interest rate on Tuesday. Europe definitely needs to do something to stimulate the economic growth, but it’s difficult to say when and what measures be used.

 

Chart. Daily EUR/USD

 

SocGen: trading ahead of ECB meeting // FBS Markets Inc.

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ECB: austerity vs. growth

Thursday, May 3, 2012 - 09:00

 

What fate awaits the common currency and the euro zone? In quest of the answers, markets expect the ECB meeting (Wednesday, 13:30 GMT) with impatience. Moreover, today Spain holds its first 3- and 5-year bond auction since S&P cut the countries credit rating BBB+ last week.

The ECB has added more than 1 trillion of cheap euros into the banking system and cut interest rates to a record low of 1.0% in December to stimulate growth. Some analysts believe that the ECB funding operations, launched in December and at the end of February, supported the indebted periphery countries and prevented a global credit crunch.

However, according to recent economic releases, including the PMI’s, eight euro zone countries are now in recession, while others are struggling to grow. The discontent with the austerity measures in the region grows, making the current European leaders extremely unpopular.

Market participants understand the euro zone’s economy requires a supporting stimulus, but analysts split over the terms and the instruments of the policy easing.

Danske Bank: Recent economic data is mixed, but not so weak that it will trigger a rate cut. The ECB remains in ‘wait and see’ mode as it assesses the impact of the two 3-year LTROs.

There is a speculation that the ECB policymakers are planning to replace the “fiscal compact”, signed in March, by a so-called “growth compact”. However, according to analysts at Danske Bank, the renewed focus on growth does not necessarily mean the rate cut in June.

Societe Generale: It seems too early for another wave of easing, but that is where the risks are skewed. The outcome is continued downward pressure on EUR/USD. We still expect it to break below $1.30.

 

Photo: europe-today.ru

 

ECB: austerity vs. growth // FBS Markets Inc.

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Markets on the watch for NFP

Thursday, May 3, 2012 - 12:00

 

According to the recent ADP Employer Services report, the number of employed people grew by 119K workers in April (the smallest increase in the last seven months). The figures fell below the estimated 170K growth and 201K gain in March.

 

CMC Markets: The release suggested that the surprisingly weak March U.S. non-farm payrolls weren't a one-off stutter and that the U.S. recovery may be losing momentum.

 

Factory, manufacturing and construction sectors reduced the number of jobs in April; however, the reduction was slightly offset by the increase of services sector jobs.

 

On Friday (13:30 GMT) non-farm payrolls release is scheduled. Investors are scratching heads: whether or not the figures will come in line with forecasted 176K. In March employment changed by 120K jobs. Negative NFP report will definitely revive talks about the further monetary policy easing.

 

The ISM Manufacturing PMI came out better than expected on Tuesday (54.8 vs. consensus-forecast 53.0 and 53.4 in March). However, ADP report makes rapid economy rebound look challengeable: U.S. labor market is obviously far from recovery.

 

 

Markets on the watch for NFP // FBS Markets Inc.

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AUD/USD drops further on RBA statement

Friday, May 4, 2012 - 07:00

 

The Australian dollar keeps weakening against its major counterparts because of the investor’s bets on further rate cuts increased.

 

According to the RBA Monetary Policy Statement, released on Friday, the RBA sees average growth of 3% in 2012, down from a February estimate of 3.5%. Consumer prices will rise 2.5% in the year to December, from a previous prediction of 3%. Underlying inflation is predicted to be at 2.25% from a previous 2.7%, the central bank said.

 

U.S. non-farm payrolls data, eagerly awaited today (13:30 GMT), may influence on the cross strongly. Economists forecast the number of employed people to grow by 176K in April compared with 120K increase in March.

 

BMO Capital: If the NFP report comes stronger than expected (higher than 176K), go short on AUD/USD. Reserve Bank of Australia lowered the key interest rate this week and, given the problems of the Australia’s economy, may cut them further. On the contrary, positive NFP figures will make the Fed unlikely to loosen monetary policy.

 

AUD/USD declined 1.8% this week and is currently trading in the $1.0262 area. Resistance for the pair lies at 1.0300, 1.0395, 1.0420, 1.0450, 1.0475 (local maximum), while support – at 1.0245, 1.0225 (local minimum) and 1.0200.

 

Chart. Daily AUD/USD

 

AUD/USD drops further on RBA statement // FBS Markets Inc.

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ECB press conference: highlights

Friday, May 4, 2012 - 08:30

 

The European Central Bank’s meeting, held on Thursday, was one of the most expected events of the week for the currency market.

The ECB left the benchmark rate at a record 1% low. Some market marticipants, however, expected the rate cuts after ECB President Mario Draghi last week said the bank was changing the growth and inflation outlook.

According to Draghi, the economic activity stabilized at low levels in Q1 2012. The inflation in 2012 is likely to exceed the target 2% level due to commodities price and indirect taxes growth. Downside risks are still strong, but the ECB forecasts a slow economic rebound in 2012.

ECB President has partially dispelled investor’s hopes on a third round of the LTROs: according to him, the positive effect of the second LTRO yet to come. Mario Draghi said the operations supported the financial sector to avoid a credit crunch and strongly improved the funding conditions for the banks.

Commerzbank: There are significant downside risks to the ECB’s growth outlook. Draghi indirectly hinted at next month’s ECB meeting when the bank will publish its new projections. Since the ECB may lower its growth forecasts, the rate-cut discussion will stay with us.

Berenberg: The pain threshold of the ECB for more policy action is high and has not been reached. Deteriorating survey data may be revisited at the next meeting, leaving the door for policy action at the June meeting open very slightly.

Nomura: The ECB will wait to see how its lending to banks will feed into the real economy. Economic conditions need to deteriorate significantly in the weeks ahead before the ECB will consider loosening monetary policy further at the June meeting.

 

Photo: Getty images

 

ECB press conference: highlights // FBS Markets Inc.

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Euro slides on political uncertainty

Monday, May 7, 2012 - 07:45

 

The common currency fell to a three-month low after France and Greece voted against pro-austerity politicians on Sunday.

 

As expected, Francois Hollande got 51.7% of the vote in the French presidential election held on Sunday against about 48.3% given for incumbent Nicolas Sarkozy. According to analysts, his victory may be interpreted more as an outcry against the austerity policy, pursued by Sarkozy, than the support of Hollande's own program.

 

Societe Generale: Mr. Hollande’s victory was largely expected, but it does act as a trigger to increase demand for the dollar.

 

Parliamentary elections in Greece increase bearish pressure on the euro: the debt crisis shaved the popularity of two main parties, attempting to eliminate budget deficit and to collaborate with EU. Centre-right New Democracy led with 19%, down from 33.5% in 2009. Left-wing coalition Syriza came surprisingly in second place with 16.7%, while centre-left PASOK stood in third place with 13.3%, down from 43.9% in the last elections.

 

UBS: If Greece chooses to resolve the crisis on its own, the EU may refuse credence and financial aid.

 

FX Prime: There are major concerns about the euro. What’s common to both Greek and French voting is that people aren’t feeling good about austerity measures, which are the crux to a resolution of Europe’s debt problems.

 

EUR/USD dropped to $1.2954 early Sunday, but then bounced back to $1.3010. However, the key $1.3000 support, the lower bound of a side channel (exists since January), was broken.

 

Analysts at Nomura Holdings expect the pair to consolidate in the $1.26-1.28 area within a few weeks.

 

Chart. Daily EUR/USD

 

Euro slides on political uncertainty // FBS Markets Inc.

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JP Morgan: trading EUR/JPY

Monday, May 7, 2012 - 09:00

 

Analysts at J.P. Morgan Asset Management recommend selling EUR/JPY at current levels, setting a stop at 106.00 and a target of 102.50.

 

According to specialists, the Hollande’s victory was already priced in, while Greece will weigh on the euro. They underline that the market is unstable: any comments from Hollande after the election or something later in the week may influence the pair.

 

Chart. Daily EUR/JPY

 

JP Morgan: trading EUR/JPY // FBS Markets Inc.

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Analysts: outlook for AUD/USD

Monday, May 7, 2012 - 10:30

 

The Australian dollar opened the week on a downside amid concern election results in France and Greece will deepen the euro zone’s crisis. However, throughout the day positive news from Australia improved the market sentiment.

 

FX Prime: There are major concerns about the euro. What’s common to both Greek and French voting is that people aren’t feeling good about austerity measures, which are the crux to a resolution of Europe’s debt problems.

 

Europe’s economic and political mayhem is may influence the economies, regarded as safe havens: policymakers may cut interest rates to weaken the currencies.

 

Societe Generale: In a weakening global environment, countries that can cut rates will do so and their currencies can fall. Europe is an economy with a currency that isn’t expensive, with not much scope or appetite for cuts.

 

Westpac Banking: We’ve got what may well prove to be the next wave of instability from Europe. There’s a clear voter rejection of austerity evident. We’d expect the Aussie and the kiwi to remain under pressure.

 

Australia’s retail sales grew by 0.9% in March after a revised 0.3% gain in February. Number of new building approvals increased by 7.4% after an 8.8% decline in February, pointing that the housing market improved in March.

 

Standard Chartered: The data was actually very strong, so it’s more like it’s putting a floor on the Aussie weakness that we’re seeing. It’s difficult to see the Aussie bouncing in this environment where risk sentiment is pretty weak.

 

The AUD/USD pair is currently trading in the 1.0180 area. Analysts at ANZ expect the Aussie to trade at $1.07 by December versus the greenback. According to Bloomberg forecast, the currency will end 2012 at $1.04.

 

Chart. Daily AUD/USD

 

Analysts: outlook for AUD/USD // FBS Markets Inc.

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GBP/USD: is the demand back?

Monday, May 7, 2012 - 12:30

 

Demand for sterling grows regardless of the increased risk aversion on the currency markets: GBP/USD strengthens on Monday after declining last week for five consecutive days.

 

The cross has already overcome its Friday’s closing price and reached $1.6172 level. However, only a strong break above $1.6200 resistance will reverse the bearish trend.

 

On Tuesday watch out for UK retail sales and housing prices data releases.

 

Chart. Daily GBP/USD

 

GBP/USD: is the demand back? // FBS Markets Inc.

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UBS: outlook for the US dollar

Monday, May 7, 2012 - 13:00

 

Last week the US Dollar Index increased from 78.60 on Monday to 79.60 on Friday. According to analysts at UBS, the greenback was supported by the worrisome data coming from Europe and by the low likeliness of new round of QE in US. Poor Friday’s NFP data was offset by an improvement in other key indicators (for example, unemployment declined).

 

Specialists at UBS continue to believe in the greenback as they do not expect the US economy to slow down sufficiently to allow the Fed’s doves to push for additional asset purchases.

 

Chart. US Dollar Index

 

Source: Bloomberg

 

UBS: outlook for the US dollar // FBS Markets Inc.

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CharmerCharts: trading GBP/USD

Tuesday, May 8, 2012 - 08:00

 

The sterling continued weakening against the greenback on Tuesday after yesterday's growth. Bank holiday in UK on Monday hindered the reaction of the pound on the results of French and Greek elections.

 

Analysts at CharmerCharts see the target dor the cable at 1.6110/085 levels. They believe the break below 1.6065 may cause another wave of selling pressure which should drive the price lower for 1.6005 to 1.5990.

 

Resistance for GBP/USD lies at 1.6180, 1.6200 and 1.6245. On the downside, supports might act at 1.6135 and 1.6115.

 

Chart. Daily GBP/USD

 

CharmerCharts: trading GBP/USD // FBS Markets Inc.

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BBH: outlook for AUD/USD

Tuesday, May 8, 2012 - 14:30

 

The Aussie weakens against the greenback on Tusday after weak trade data report.

 

Trade deficit in March reached 1.59B vs.1.38B deficit forecasted and 0.75B deficit in February. The Australian Government, however, remains forecasting a return to surplus by 2012/13, as promised last year.

 

According to analysts, tight fiscal policy and eased monetary policy will continue pushing the AUD/USD pair down. Strong resistance for the pair lies at 1.0220 level. In a longer-term analysts expect the pair to fall to 0.9860.

 

Chart. Daily AUD/USD

 

BBH: outlook for AUD/USD // FBS Markets Inc.

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Taylor: Greece will abandon euro in June

Wednesday, May 9, 2012 - 05:45

 

The resent changes on European political landscape made some analysts come up with more radical forecasts of euro’s future than they used to have before. For example, John Taylor, the head of the world’s largest currency hedge fund FX Concepts, now thinks that Greece may leave the euro area already in June.

 

The specialist warns that the nation’s government will soon have no more cash, while European institutions won’t be able to give it more money due to the emerging political split between France and Germany. Greece itself is in the situation of uncertainty: if the policymakers fail to form a governing coalition, there will be other Parliament elections in the middle of the next month.

 

“I think that people are feeling the implications of a Greek exit aren’t so bad. If Greece leaves the euro, Europeans will turn around and huddle together and say, ‘how do I help Portugal and Spain?” Taylor says.

 

 

Taylor: Greece will abandon euro in June // FBS Markets Inc.

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Deutsche Bank: outlook for USD/JPY

Wednesday, May 9, 2012 - 07:00

 

The yen strengthens against the greenback this week as the Japanese currency benefits from its “safe haven” status.

 

Analysts at Deutsche Bank, however, recently revised their forecast for USD/JPY to bullish after being bearish since 2008. They now expect the pair to rise to 82 yen by the end of 2012, compared with previous forecast 75 yen.

 

In their view, USD/JPY may strengthen in a short term, but the trend is descending.

 

Chart. Daily USD/JPY

 

Deutsche Bank: outlook for USD/JPY // FBS Markets Inc.

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Analysts: BoE may extend QE program

Wednesday, May 9, 2012 - 08:45

 

On Thursday, May 10, the Bank of England holds its monthly meeting. Some analysts expect the regulator to extend its asset purchase program tomorrow.

 

According to the BoE governor Mervyn King, the inflation in the U.K. is too high and the nation's economic recovery too slow. The annual rate of inflation, which was 3.5% in March, remains well above the BOE's 2% target. Mervyn King said last week that the current crisis is far from over.

 

Investec: In conditions of sticky inflation versus stuck economy the BoE may add another £25bn to its £325bn program of QE on its Thursday meeting. The committee will worry more about low growth than an inflation rate that is taking longer to come down than it predicted.

 

Capital Economics: The BoE may add £25bn to its asset purchase program in autumn.

 

Commerzbank: The BoE may adopt the wait-and-see approach: despite the fact that in a longer term the QE extension is possible, now we expect the bank to leave the room for maneuver in case if the markets require support.

 

Photo: Daniel Jones

 

Analysts: BoE may extend QE program // FBS Markets Inc.

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Scotia Capital: better to sell EUR vs. GBP

Wednesday, May 9, 2012 - 10:15

 

Analysts at Scotia Capital recommend selling the single currency versus British pound as an alternative for trading volatile EUR/USD which has been fluctuating this year in the $1.30/35 area, so that many traders burned their fingers. “EUR/GBP is still really euro, but the risk/reward is better than with EUR/USD.”

 

The specialists note that Europe’s future looks dim in both cases: either the currency union will continue with austerity measures and there will be a long period of slow growth in the region, or it won’t, so the crisis will dramatically escalate. According to Scotia Capital, EUR/GBP will slide to 0.77 by the end of 2012.

 

Scotia Capital: better to sell EUR vs. GBP // FBS Markets Inc.

[wynnasuju 10]

Euro may rise against… Aussie

Wednesday, May 9, 2012 - 13:00

 

Analysts at Commerzbank believe that the single currency may rise versus its Australian counterpart to 1.2906/1.3004 (200-day MA, 2010-2011 minimums, April 2012 maximum).

 

The specialists say that euro’s advance is likely to end there. However, if the resistance is breached, EUR/AUD may climb to 1.3111. The bank remains bullish on the pair in the short-term as long as it’s trading above 1.2646 (April 30 minimum).

 

According to the bank, if euro slips below 1.2646 and 1.2641 (55-day MA), it will slide to 1.2571 (April minimum), the level below which the pair’s prospects will become negative.

 

Chart. Daily EUR/AUD

 

Euro may rise against

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RBS: betting on USD/CHF advance

Thursday, May 10, 2012 - 06:45

 

The current turmoil in Europe makes analysts come up with more and more ideas of how to avoid exposure to risks associated with the single currency.

 

Strategists at Royal Bank of Scotland propose buying US dollar versus Swiss franc. In their view, the Swiss National Bank will continue to maintain EUR/CHF floor, so that franc won’t have chance to appreciate. At the same time, the bank is bullish on the greenback due to relatively positive economic reports released so far. RBS thinks USD/CHF may strengthen to 0.9950.

 

Chart. Daily USD/CHF

 

RBS: betting on USD/CHF advance // FBS Markets Inc.

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Key options expiring today

Thursday, May 10, 2012 - 08:00

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.3000, $1.3085, $1.3100, $1.3130 and $1.3150;

 

USD/JPY: 79.05,80,00 and 80.25, 81.00;

 

EUR/JPY: 106.35;

 

GBP/USD: $1.6060, $1.6300;

 

AUD/USD $1.0000, $1.0195, $1.0200;

 

AUD/JPY: 83.00.

 

Have a profitable trading day!

 

Image from deNull:

 

Key options expiring today // FBS Markets Inc.