Comments and Forex-analytics from FBS Brokerage Company

FBS_Official · August 19, 2011

Commerzbank: USD/JPY will test the record minimum

The greenback keeps failing to jump above 77.00 yen. US currency remains in the dangerous closeness to the record minimum at 76.22 hit on March 16 that’s regarded at the key support level.

Technical analysts at Commerzbank believe that USD/JPY will retest this mark today. The specialists say that if the pair goes below there, it will drop to the psychological support at 75.00 and the support line of the downtrend from 2009 to 2011 at 74.23.

According to the bank, resistance for US dollar is found at 78.04 (August 1 maximum), 78.45 (July 13 minimum) and 79.16/69 (55-day MA, May and June minimums).

Japan urged G7 for more coordination

Japan called on Group of Seven nations to work together to counter market turmoil. It happened after equities fell in Asia hitting consumer and business confidence and worsening the global economic outlook that is already undermined by the debt problems of the developed nations. The main reason of fear is the risk that US economic recovery has stumbled.

The nation’s Finance Minister Yoshihiko Noda underlined that during the next few weeks G7 has to cooperate very closely. Noda reminded that on August 8 the group’s finance ministers and central bank governors pledged to do all that is needed to ensure financial stability and growth.

According to Bloomberg, Japanese Topix index fell today to 2-year minimum; China’s Shanghai Composite Index went down by 1.4%; Hong Kong’s Hang Seng index dropped by 2.4%; South Korea’s Kospi index lost about 6%.

The last time G7 nations acted together was in March when they performed joint intervention to calm down volatile yen moves after the nation’s March earthquake.

RBC: euro zone nations lack cooperation

Analysts at RBC Capital Markets note that the euro area faces serious political risks.

The specialists note that while European nations are supposed to show strong cooperation and coordination, the latest debates about the Greece’s second bailout indicate the opposite.

The matter is that Finland that was reluctant of supporting indebted peripheral countries forced Greece to agree to put up collateral in exchange for a bailout loan. This made other nations – Austria, Slovenia, Slovakia and the Netherlands – demand the same from Greece.

As a result, Greece will have to spend scarce money on collateral rather than on getting its house in order, while the process of July deal’s implementation stalled. There’s the risk now that other countries who do not receive collateral may not vote in favor of the loan bailout casting doubts on the survival of the currency bloc.

Morgan Stanley increased yen forecasts

Japanese currency is still very strong staying in the area of 76.40 yen per dollar.

Analysts at Morgan Stanley argue that by the end of the year yen will climb even higher and rise to the record maximum versus its US counterpart. In their view, the actions of the nation’s monetary authorities won’t manage to change yen’s uptrend.

The specialists revised down their forecasts for the pair USD/JPY from 81 to 74 yen and for and EUR/JPY from 110 to 101 yen. According to the bank, yen remains extremely overvalued relative in the longer term.

Citigroup reduced US GDP forecast

Analysts at Citigroup lowered US economic growth forecast from 1.7% to 1.6% in 2011 and from 2.7% to 2.15% in 2012. The estimates for the S&P 500 Index’s earnings per share were reduced from $98 to $97 this year and from $105 to $101 next year.

The analysts claim that the main reason to cut the outlook for American GDP growth rate was the potential inability of political parties to agree on reducing the budget deficit as well as the fiscal tightening. Citigroup warns that if there’s no agreement, both tax increases and spending cuts larger than expected would be automatically triggered, so that very sharp tightening steps would occur in 2013 and could be sensed in financial market expectations during 2012.

Yesterday there was a bunch of negative news in the United States: S&P 500 lost 4.5%, Philadelphia manufacturing PMI dropped to the minimal level since 2009, unemployment claims and consumer prices rose, while existing home sales decreased.

Citigroup, however, doesn’t speak about recession. According to the bank, the US is going through weak recovery that won’t be able to gain full force.

wynnasuju · August 21, 2011

Japan urged G7 for more coordination

2011-08-19 12:38

Japan called on Group of Seven nations to work together to counter market turmoil. It happened after equities fell in Asia hitting consumer and business confidence and worsening the global economic outlook that is already undermined by the debt problems of the developed nations. The main reason of fear is the risk that US economic recovery has stumbled.

The nation’s Finance Minister Yoshihiko Noda underlined that during the next few weeks G7 has to cooperate very closely. Noda reminded that on August 8 the group’s finance ministers and central bank governors pledged to do all that is needed to ensure financial stability and growth.

According to Bloomberg, Japanese Topix index fell today to 2-year minimum; China’s Shanghai Composite Index went down by 1.4%; Hong Kong’s Hang Seng index dropped by 2.4%; South Korea’s Kospi index lost about 6%.

The last time G7 nations acted together was in March when they performed joint intervention to calm down volatile yen moves after the nation’s March earthquake.

RBC: euro zone nations lack cooperation

2011-08-19 13:27

Analysts at RBC Capital Markets note that the euro area faces serious political risks.

The specialists note that while European nations are supposed to show strong cooperation and coordination, the latest debates about the Greece’s second bailout indicate the opposite.

The matter is that Finland that was reluctant of supporting indebted peripheral countries forced Greece to agree to put up collateral in exchange for a bailout loan. This made other nations – Austria, Slovenia, Slovakia and the Netherlands – demand the same from Greece.

As a result, Greece will have to spend scarce money on collateral rather than on getting its house in order, while the process of July deal’s implementation stalled. There’s the risk now that other countries who do not receive collateral may not vote in favor of the loan bailout casting doubts on the survival of the currency bloc.

Morgan Stanley increased yen forecasts

2011-08-19 14:19

Japanese currency is still very strong staying in the area of 76.40 yen per dollar.

Analysts at Morgan Stanley argue that by the end of the year yen will climb even higher and rise to the record maximum versus its US counterpart. In their view, the actions of the nation’s monetary authorities won’t manage to change yen’s uptrend.

The specialists revised down their forecasts for the pair USD/JPY from 81 to 74 yen and for and EUR/JPY from 110 to 101 yen. According to the bank, yen remains extremely overvalued relative in the longer term.

Citigroup reduced US GDP forecast

2011-08-19 14:53

Analysts at Citigroup lowered US economic growth forecast from 1.7% to 1.6% in 2011 and from 2.7% to 2.15% in 2012. The estimates for the S&P 500 Index’s earnings per share were reduced from $98 to $97 this year and from $105 to $101 next year.

The analysts claim that the main reason to cut the outlook for American GDP growth rate was the potential inability of political parties to agree on reducing the budget deficit as well as the fiscal tightening. Citigroup warns that if there’s no agreement, both tax increases and spending cuts larger than expected would be automatically triggered, so that very sharp tightening steps would occur in 2013 and could be sensed in financial market expectations during 2012.

Yesterday there was a bunch of negative news in the United States: S&P 500 lost 4.5%, Philadelphia manufacturing PMI dropped to the minimal level since 2009, unemployment claims and consumer prices rose, while existing home sales decreased.

Citigroup, however, doesn’t speak about recession. According to the bank, the US is going through weak recovery that won’t be able to gain full force.

wynnasuju · August 22, 2011

Ichimoku. Weekly forecast. GBP/USD

2011-08-22 13:55

Weekly GBP/USD

As it was expected, last week the pair GBP/USD consolidated above the Standard line (1) that is acting as a support.

All lines of the Indicator are horizontal (1, 2, 3 and 4).

The bullish Ichimoku Cloud (3, 4) though isn’t very wide, keep supporting pound.

1. weekly gbpusd

Daily GBP/USD

On the daily chart pound managed to overcome resistance provided by Tenkan-sen (1) and get out of the Ichimoku Cloud. The pair GBP/USD was rising during the first half of the week. Then on Thursday and Friday sterling’s rate went a bit down, though the new week began with the bulls pushing the prices higher.

The Turning line (1) and the Standard line (2) rose continuing to move parallel each other holding the “golden cross” in place.

At the moment all lines of the Indicator (1, 2, 3 and 4) are going sideways), Tenkan and Kijun are supporting the pair. The rising Ichimoku Cloud has widened up as its upper border – Senkou Span A went higher (3).

Sterling is going to consolidate or pulls back to the Turning line (1) and after that British currency is likely to resume growth.

2. daily gbpusd

Ichimoku. Weekly forecast. USD/JPY

2011-08-22 13:58

Weekly USD/JPY

Last week the pair USD/JPY remained in the area of the record minimums: on the one hand, the demand for Japanese currency as the safe haven remained high due to the continuing risk aversion and, on the other hand, the risk of further Bank of Japan’s interventions held US currency from falling.

The greenback doesn’t have any significant support, while resistance to it is provided by the horizontal Tenkan-sen (1) and Kijun-sen (2) as well as by the descending Ichimoku Cloud (3). The Turning line (1) and the Standard line (1) still keep the “dead cross” in place.

This week US currency may try to recover to Tenkan-sen (1).

3. weekly usdjpy

Daily USD/JPY

During the whole week US dollar was trading within the narrow range: neither bulls, nor bears were decisive enough to push the market in their side.

At the same time, the Turning line has gone sharply down (2). As a result, Tenkan-sen and Kijun-sen remained within the strong “dead cross” formation. The descending Ichimoku Cloud has widened as Senkou Span A has plunged, while Senkou Span B went down mildly.

At the same time, the pair has at last found some support opening above Tenkan. So, this week the bulls may be more active, though any advance of the pair is likely to be limited. It’s necessary to watch with great attention US economic news this week.

4. daily usdjpy

Ichimoku. Weekly forecast. USD/CHF

2011-08-22 14:00

Weekly USD/CHF

On the weekly chart US dollar is still holding above the Turning line (1) that is acting as a support.

At the same time, the downtrend is going on. The Ichimoku Cloud remains bearish. The majority of the lines of the chart are directed down (2, 3 and 4), while only Tenkan-sen has switched to the horizontal mode (1).

5. weekly usdchf

Daily USD/CHF

The Swiss National Bank didn’t manage to achieve the results it was counting on while easing policy and pumping more liquidity at Swiss franc’s market. Never the less, the situation at USD/CHF has slightly improved.

The prices, for example, are consolidating above the Standard line (2). In addition, the Turning line (1) has urged up (1) ready to cross Kijun-sen bottom-up (2). Resistance for the rate is provided only by rather narrow Ichimoku Cloud (3, 4).

The signal to by dollars will come if the lagging Chinkou Span indicated with green color breaks up the price chart and Kijun and Tenkan form the “golden cross”. At the same time, it’s necessary to note that the horizontal Standard line (2) and Senkou Span B point at the possibility of the rate’s consolidation.

6. daily usdchf

wynnasuju · August 22, 2011

BNP Paribas, BBH: EUR/USD will pull back down

2011-08-22 17:12

The single currency rose versus the greenback from the levels in the $1.4050 area to the $1.4400 zone.

However, currency strategists at BNP Paribas believe that EUR/USD will fail to rise above $1.45. In their view, the pair is struck between $1.41 and $1.45. The specialists note that euro will get under negative pressure in case of weak euro-zone data such as PMIs, ZEW and IFO that are released this week.

Analysts at Brown Brothers Harriman claim that as the deterioration of the global economic outlook and renewed fears about European banks strengthened investors’ risk aversion and made stock markets slump last week, the demand for riskier currencies such as euro will be low and the pair EUR/USD will fall to $1.4000.

Commerzbank: comments on USD/JPY

2011-08-22 17:33

On Friday the greenback renewed the record minimum against Japanese yen by falling to 75.94. However, the pair USD/JPY managed to jump above the previous lows in the 76.25/30 area and return to the former trading range, reports Commerzbank. The bank specialists expect American currency to stay there during the coming days. In their view, the bias will be slightly positive.

Commerzbank: comments on GBP/USD

2011-08-22 17:46

Technical analysts at Commerzbank note that the pair GBP/USD has climbed from the minimums in the 1.6110 area hit at the beginning of August to last week’s maximum at $1.6617. In their view, pound is now going to consolidate at the current levels during the next few days. On the upside, sterling’s attempts will be limited by the resistance at $1.6617.

wynnasuju · August 23, 2011

TD Securities, ANZ: outlook for NZD

2011-08-23 12:09

RBNZ

The Reserve Bank of New Zealand's quarterly survey shows that the CPI expectations for the year ahead were 2.94% compared with 3.12% in a similar survey held the previous quarter, while inflation expectations for the next 2 years decreased from 3.00% in the previous survey to 2.86%.

Strategists at TD Securities note that during the next 2 years inflation expectations are likely to stay higher than actual inflation. In their view, in September the RBNZ can reverse its emergency 50-basis-points rate cut made in March after a massive earthquake in the nation's second largest city. Then the central bank is expected to stay on hold for several months judging the impact of the overseas economic issues on the outlook for exports and commodity prices.

Impact of China’s PMI

Analysts at ANZ believe that New Zealand’s currency is supported by the positive preliminary HSBC China Manufacturing PMI data. Investors’ risk sentiment has slightly improved after the Asian stocks performed well.

The market players will look for the drivers mainly from the global risk picture. On Wednesday, however, one should watch important 2Q retail sales figures.

Technical analysis

NZD/USD broke above resistance at $0.8320.

According to ANZ specialists, support for kiwi lies at $0.8220. If things go bearish and the pair falls below the psychological level of $0.80, it may drop to the 3-month minimum sliding during the next 2 weeks to its 200-day MA at $0.7868.

NAB: Aussie rose versus the greenback

2011-08-23 14:26

Australian dollar rose today versus its US counterpart from the day’s minimum at $1.0385 to the levels in the $1.0500 area.

There are 2 reasons for Aussie’s gains: firstly, the better-than-expected Chinese Manufacturing PMI data that brightened the market’s sentiment and, secondly, comments by the Reserve Bank of Australia's deputy governor, Ric Battellino.

The HSBC preliminary PMI went up from 49.3 in July to the 2-month maximum at 49.8 in August.

Analysts at Bank of Tokyo-Mitsubishi believe that the figures mean that investors don’t need to be too pessimistic about the growth pace in China.

Battellino claimed that inflation remains a big concern for the RBA. The official underlined that the strength of the national currency doesn't warrant intervention by the central bank and in the current situation the attempts to weaken Aussie’s rate would bring no results.

Economists at National Australia Bank think that such remarks mean that the central bank will stay on hold on the September 6 meeting, while the fixed-income market has been widely expecting about the possible rate cuts.

Jyske bank recommends buying USD/JPY

2011-08-23 15:10

Currency strategists at Jyske bank advise investors to buy the greenback versus Japanese yen stopping below 75.75 and targeting 79.50 as they think that the pair USD/JPY will move gradually up on the expectations of the Bank of Japan’s interventions.

Charmer Charts: comments on EUR/USD

2011-08-23 15:52

Technical analysts at Charmer Charts note that if the single currency manages to stay above $1.4330/55 versus the greenback, it will manage to rise to 1.4520.

The specialists warn, however, that if the pair EUR/USD slides below 1.4330, it will be poised down to 1.4285.

wynnasuju · August 25, 2011

BBH and UBS regard QE3 as unlikely

2011-08-25 11:06

Analysts at Brown Brothers Harriman believe that the although investors’ sentiment has worsened during the last several weeks, the markets will get disappointed as the Fed, in their view, won’t announce the third round of quantitative easing in the current circumstances. According to the specialists, the markets will remain in the risk-off mode and the demand for safe haven currencies will continue being high.

Strategists at UBS also don’t expect the QE3. The bank thinks that the Fed will try to reassure investors by outlining the central additional monetary policy tools against the nation’s economic weakness without committing to use them. As a result, that might disappoint dollar bears.

The Federal Reserve’s Chairman Ben Bernanke will speak tomorrow at 6:00 pm (GMT+4) in Jackson Hole, Wyoming.

Capital Economics: USD/JPY forecast

2011-08-25 12:23

Currency strategists at Capital Economics still think that he greenback will be able to rise to 85.00 versus Japanese yen by the end of 2011. Such forecast is based on the assumption that the Bank of Japan will continue easing its monetary policy and that Japan will become less attractive as a refuge.

The specialists underline that if the Federal Reserve doesn’t start new round of QE, while the BOJ continues expanding its asset purchase program that will be sufficient to drive yen down. In addition, investors may start worrying about the economic and fiscal position of Japan itself.

Yesterday Moody’s Investors Service reduced Japan’s credit rating by one step to Aa3 – not very surprising event taking into account the fact that Japanese monetary authorities have made no efforts to reduce the nation’s dent.

It’s necessary to note, however, that if the Swiss Central Bank will do more easing measures to weaken franc, demand for yen may rise, says Capital Economics. In this case the pair USD/JPY may drop to 70 yen and even lower.

Bernanke's won’t signal more QE

2011-08-25 14:09 |

The majority of experts think that the Federal Reserve’s chairman Ben Bernanke won’t announce the resumption of the quantitative easing program. The main arguments against more QE are increasing inflation and the fact that the US is currently in no recession.

It’s widely thought that Bernanke will talk about the options for further stimulus and clarify how much the Fed’s reduction in its outlook this month stems from long-term obstacles to growth.

The economists point out that it’s necessary to realize that the current situation is different from what was seen a year ago when QE2 was launched. The core CPI index that doesn’t include volatile food and energy prices added 1.8% during a year through July, while during the 12 months up to July 2010 it gained only 0.9%. The S&P 500 Index is still above 12% of the on the eve of Bernanke’s speech last year.

Bernanke will speak tomorrow at 6:00 pm (GMT+4) in Jackson Hole, Wyoming. His speech is entitled “Near- and Long-Term Prospects for the US Economy”.

Standard Chartered cut euro area's GDP growth forecast

2011-08-25 14:42 |

Analysts at Standard Chartered lowered euro zone’s economic growth forecast from 2% to 1.8% in 2011 and from 2.2% to 1.5% in 2012.

Among the reason of the downward revision of their projections the specialists named weak GDP growth in the region’s core economies and worsening European consumer and business sentiment. In their view, these factors have aggravated the situation that has already been quite complicated. The serious obstacles come from the fiscal and monetary tightening, weaker global growth and continued weak bank lending.

At the same time, the strategists note that the 2Q GDP numbers may be exaggerated to the downside, while the burden of higher commodity prices and Japan's supply-chain disruptions might no longer affect growth in the third quarter.

J.P.Morgan recommends avoiding loonie

2011-08-25 15:16

Currency strategists at J.P.Morgan claim that once one is bullish on oil, all he needs is to choose which currencies of oil-producing nations to trade.

The specialists warn that it’s necessary to be very cautious with Canadian dollar as its dynamics is strongly correlated with the moves of S&P 500 Index. So does Mexico's peso and Russian ruble.

As a result, the best choice for such traders is Norwegian krone.

UBS: forecast for USD/JPY

2011-08-25 15:42

Analysts at UBS claim that Japanese monetary authorities have to wait until the Federal Reserve’s intentions about the QE become clear before conducting any forex interventions.

In their view, if the Fed doesn’t signal additional QE, there’s no need to step in the currency market. Otherwise, it may be necessary to wait until US dollar drops lower where it would be easier to make a big push.

The specialists left their 1-month forecast for USD/JPY at 77 yen.

Feldstein on weak US dollar

2011-08-25 16:44

Martin Feldstein, well-known economics professor in Harvard University, thinks that weak dollar is a really positive factor for US economy as it’s encouraging the nation’s exports and increase domestic demand for the goods produced in America as the import prices rise.

Moreover, another positive moment is that the declining dollar isn’t increasing the national debt. In addition, the greenback’s slump didn’t propel the pace of CPI growth.

It’s necessary to note, however, that although Feldstein forecasts further declines in dollar’s rate, he says that he isn’t calling for the currency’s depreciation. The thing is that declining dollar affects personal incomes as the households to pay more for imported items.

The economist warns that the Fed is running out of monetary tools to stimulate the US economy. Feldstein says that another round of asset purchases accelerate dollar’s fall.

According to the data from Bloomberg, the greenback has lost 6.3% this year being the worst performer among the 10 major currencies. USD contracted by 49% since the record maximum in 1985. American exports have climbed 16% this year through June compared with a year ago. The nation’s annual economic growth slowed down from 3.9% at the beginning of 2010 to 1.3% in the second quarter of 2011.

Commerzbank: GBP/USD technical levels

2011-08-25 16:47

British pound didn’t manage to get yesterday above resistance in the $1.6539/47 area and pulled down below the 50% Fibonacci retracement level of the decline from April to July at $1.6370.

Technical analysts at Commerzbank believe that GBP/USD is poised down to July 21 maximum at $1.6330. If the pair breaks even lower than this level, it will drop to the channel support and the 50% Fibonacci retracement at $1.6264 and 55-day MA at $1.6224.

The specialists claim that if sterling closes today above the 3-month maximum at $1.6617 reached last week, it will once again get chance to climb to $1.6687/1.6745 (200-week MA and April maximum).

Wells Fargo: Friday release of US GDP

2011-08-25 17:29

US second quarter GDP is released for the second time on Friday at 4:30 pm (GMT+4). Consensus forecast is that the initial reading will be revised down from of 1.3% to 1.1%.

Analysts at Wells Fargo point out that since the last publication of the Q2 growth figures some new data has been released.

On the one hand, inventories and net exports were weaker than the government’s initial estimates, so their contribution to GDP will be revised down. On the other hand, the negative effect will likely be offset upward revision in the construction and consumer spending.

Roubini: comments on US labor market data

2011-08-25 17:54

According to the data released today, initial jobless claims in US rose to 417,000 during the week ended on August 20 from 412,000 a week ago, while the economists were looking forward to the decline to 403,000.

Nouriel Roubini, professor of economics at New York University famous for predicting 2008 global crisis, says that Non-Farm Payrolls may be in August zero or even negative, while in July the number of jobs in the United States rose by 117,000. The NFP data is releases on Friday, September 2, at 4:30 pm (GMT+4).

Citigroup: world’s economic growth forecast reduced

2011-08-25 19:15

Analysts at Citigroup reduced its global economic growth forecast from 3.4% to 3.1% in 2011 and from 3.7% to 3.2% in 2012.

The specialists think that the growth of the developed nations will likely remain sluggish at least until the end of 2012, while the unemployment will keep rising. The situation is aggravated by the abrupt tightening in financial conditions and doubts over scope for monetary and fiscal stimulus needed to help the economies rebound. At the same time, the major economies aren’t, in their view, in the treat of recession.

The United States, the euro area, Japan, and the United Kingdom are expected to go through a long period of extremely low interest rates.

wynnasuju · August 27, 2011

The background of Bernanke’s speech

2011-08-26 14:01

All eyes today are on Ben Bernanke’s speech that will take place at 6:00 pm (GMT+4). The market is speculating whether the Federal Reserve’s Chairman signals the third round of quantitative easing or not.

Professor Lew Spellman, from the McCombs School of Business at the University of Texas at Austin takes a glance back examining how the Fed’s monetary policy has been changing since 2008. Spellman points out that the Federal Reserve’s approaches towards QE1 and QE2 were quite different: QE1 was a defensive step aimed to contain GDP collapse, while QE2, on the contrary, was an offensive measure.

It’s difficult to assess the results of QE2 and definitely say whether this program helped the recovery or not. The clear thing is, however, that the inflation expectations have increased – the main argument of those who don’t expect QE3.

At the same time, it’s also important to realize what the general approach of Bernanke is – as his colleagues say, the central banker is a man of action: he would rather err doing too much, rather than too little, when dealing with the consequences of financial crisis. Bernanke is also known for criticizing Japanese monetary authorities in 1999: in his view, the Bank of Japan didn’t do enough to fight deflation and encourage economic growth, while it should have kept interest rates low until inflation picked up and buy government bonds.

Commerzbank: EUR/USD prospects after Bernanke

2011-08-26 14:20

Analysts at Commerzbank note that investors are very nervous.

If the comments of the Fed’s Chairman sound uncertain, the pair EUR/USD will get under pressure.

However, the specialists believe that as Bernanke used weak economy to justify the previous QE steps, there’s little chance that he admit that the strategy of monetary stimulus was wrong.

So, it may happen that Bernanke’s views on economy aren’t as pessimistic as many are thinking. In such case the markets will likely calm down and EUR/USD will get some support.

Jyske Bank: EUR/USD will break the «wedge»

2011-08-26 15:06

Currency strategists at Jyske Bank note that from the beginning of the week EUR/USD remained in range between $1.4350 and $1.5000 ahead of Ben Bernanke’s Jackson Hole speech. However, the latest trend on yield spreads, equities and commodities shows that the pair has strong downward potential.

That’s why the specialists recommend selling the single currency stopping above $1.4580 and targeting $1.3855. In their view, euro is trading within the “symmetrical wedge” and will break this formation this week. The bank forecasts that if the Fed’s Chairman announces QE3, EUR/USD will break the model to the upside; otherwise there will be a downside breach.

Martin Weale on the prospects of further QE in Britain

2011-08-26 16:24

Martin Weale, the Bank of England’s Monetary Policy Committee member, doesn’t think that it’s necessary to expand the central bank’s emergency 200 billion pound ($326 billion) bond-purchase program now.

However, the official says that his opinion may change if UK economy significantly weakened and inflation falls below the 2% target level. According to Weale, more QE will be necessary if the nation’s banks become more reluctant to lend, though he doesn’t believe such outcome is very likely.

wynnasuju · August 29, 2011

Ichimoku. Weekly forecast. GBP/USD

2011-08-29 13:59

Weekly GBP/USD

On the weekly chart GBP/USD keeps consolidating above the Standard line (1) which is acting as a support.

All lines of the Indicator are horizontal (1, 2, 3 and 4). Tenkan-sen (1) and Kijun-sen (2) keep holding the “dead cross” in place (5), though the signal isn’t strong as it was formed above Kumo and only slightly holds the pair from getting higher.

The bullish Ichimoku Cloud (3, 4) keeps supporting pound though it has narrowed.

1. weekly gbpusd

Chart. Weekly GBP/USD

Daily GBP/USD

Last week the prices have made a corrective decline within the general move up.

On Wednesday and Thursday the pair went sharply down breaking firstly down through the Turning line (1) and then through the Standard line (2), though on Friday pound managed to push up from the support line and reverse upwards. The new week has begun with the bulls pushing the prices higher: sterling was already successfully brought back above Kijun-sen (2).

Tenkan-sen (1) and Kijun-sen (2) went horizontally holding the “golden cross in place”. The Preceding lines – Senkou Span A and B also move sideways.

The rising Ichimoku Cloud (3, 4) keeps pointing at an uptrend. The pair is likely to consolidate above Kijun (2).

2. daily gbpusd

Chart. Daily GBP/USD

Ichimoku. Weekly forecast. USD/JPY

2011-08-29 14:01

Weekly USD/JPY

On the weekly USD/JPY chart the situation didn’t change much. The prices remain in the area of the record minimums, in the narrow range between 76 and 77 yen: on the one hand, the demand for Japanese currency remained high due to the continuing risk aversion and, on the other hand, the risk of further Bank of Japan’s interventions held US currency from falling.

US dollar still lacks support, while resistance is provided by the horizontal Tenkan-sen (1) and Kijun-sen (2) as well as by the descending Ichimoku Cloud (3). The Turning line (1) and the Standard line (1) still keep the strong “dead cross” in place.

3. weekly usdjpy

Chart. Weekly USD/JPY

Daily USD/JPY

On Friday US dollar went above the Turning line (1) that has turned from support to resistance.

All lines of the indicator are horizontal (1, 2, 3 and 4) that means that the market may keep moving sideways.

Tenkan-sen (1) and Kijun-sen (2) remain in the “dead cross”. The descending Ichimoku Cloud (3, 4) keep holding US currency under pressure.

4. daily usdjpy

Chart. Daily USD/JPY

Ichimoku. Weekly forecast. USD/CHF

2011-08-29 14:05

Weekly USD/CHF

On the weekly chart the pair USD/CHF continues the advance that it has started at the beginning of August. The greenback is confidently above the Turning line (1) that’s acting as a support and approached the resistance provided by the Standard line (2).

At the same time, the general downtrend remains and the pair’s growth still may turn out to be merely a correction. The Ichimoku Cloud remains bearish, though the lines Senkou Span A (3) and B (4) stopped declining.

5. weekly usdchf

Chart. Weekly USD/CHF

Daily USD/CHF

On the daily chart USD/CHF has tested resistance line of the downtrend from February maximum. The next obstacle on the pair’s way will be the Ichimoku Cloud.

The descending Cloud itself (4) has narrowed almost to a point and Senkou Span A seems to get above Senkou Span B, though the distance between the 2 lines is almost zero.

The Turning line which went up (1) supports the greenback helping US currency to get higher. Tenkan-sen and Kijun-sen (2) have formed the “golden cross” (3), though the strength of the signal isn’t very strong as it happened below Kumo.

All in all, the bulls have chance to enter the Cloud. It’s necessary to watch the lagging Chinkou Span that has approached the price chart (5).

6. daily usdchf

Chart. Daily USD/CHF

The results of the central bankers’ meeting in Jackson Hole

2011-08-29 14:45

The main message of the central bankers’ meeting that took place in Jackson Hole, Wyoming, this weekend was that monetary policy can’t sustain the expansion of the global economy alone.

Federal Reserve Chairman Ben Bernanke called American authorities to improve the situation at the housing market and be careful not to harm the short-term economic growth.

Ewald Nowotny, the member of the European Central Bank’s Governing Council, said that the euro zone nations have to expand the bailout fund.

August was a rather difficult month for the Fed and the ECB as the central banks were forced to support the economy: the Fed pledged to keep the borrowing costs at the record minimum at least until the middle of 2013, while the ECB began buying Spanish and Italian bonds to ease the concerns about the debt crisis.

The IMF Managing Director Christine Lagarde, who took the post in July, warned that the world’s economy is entering dangerous phase. In her view, the risks are higher as the policy makers aren’t determined to take the necessary decisions.

The greenback weakened after Bernanke’s speech

2011-08-29 15:31

Here are the key points of the Federal Reserve’s Chairman Ben Bernanke’s Friday speech:

- The Fed has a range of tools that it may use to encourage the nation’s economy if needed (though Bernanke didn’t signal QE3).

- September FOMC meeting is stretched for 2 days and will take place on September 20-21 (Bernanke may try to take time and convince FOMC, primarily Fisher, Kocherlakota and Plosser, in the necessity of more monetary easing).

Analysts at Barclays Capital believe that the decision to lengthen the meeting will keep the market expecting more monetary stimulus.

European and Asian stocks are up, the pair EUR/USD reached maximum at $1.4550, though strategists at UBS advise investors to be cautious because euro is facing the risks from German economic slowdown and concerns about euro zone's debt markets.

Chart. Daily EUR/USD

Noda will become Japan’s Prime Minister

2011-08-29 18:53

Japan’s finance minister Yoshihiko Noda was elected head of Democratic Party of Japan, the nation’s ruling party, and is on his way to take the prime minister’s seat. Tomorrow the DPJ is going to use its majority in the lower house to appoint him as premier to succeed Naoto Kan.

The main challenges for Noda will be to help the economy that contracted during the 3 quarters in a row and restore confidence in his party.

Noda’s expected to lift up the taxes in order to pay for reconstruction and shore up the welfare system – the policymaker has recently claimed that there should be no retreat from a pledge to double the sales tax to 10% by the middle of the decade. Analysts at Nomura Securities note that this might support Japanese bond market. Japanese authorities plan to spend 19 trillion yen ($248 billion) over the next 5 years to rebuild from the earthquake and tsunami.

Strategists at Barclays Capital think that Japan's currency interventions policy won’t change as the DPJ's regime will maintain. However, the specialists say that the situation will change if Noda manages to form coalition with the Liberal Democratic Party and the New Komeito – Kan failed to do that after March 11 earthquake.

On August 24 Moody’s Investors Service lowered Japan’s credit rating by one step to Aa3 due to the government’s lack of efforts about reducing the nation’s huge debt.

Chart. Daily USD/JPY

wynnasuju · August 30, 2011

Citigroup is bullish on USD/CHF and EUR/CHF

2011-08-30 12:49

Technical analysts at Citigroup believe that as the pair USD/CHF managed to close yesterday above the 55-day MA at 0.8089, it will be able to rise to the 200-day MA at 0.8921 climbing to the levels last seen in May.

The specialists also think that the pair EUR/CHF will reach 1.24 after on August 26 it closed above the 55-day MA at 1.1529.

Commerzbank: technical comments on EUR/CHF

2011-08-30 13:46

Technical analysts at Commerzbank note that the single currency has broken above 4-month downtrend resistance line at 1.1772 and tested the levels above the 32.8% Fibonacci retracement of the decline from 2010 to 2011.

In their view, this means that the pair EUR/CHF has potential for an advance to 1.2346/1.2400 (December 2010 and March 2011 minimums and June 2011 peak). The long-term target for euro is set at 1.2708 (55-week MA).

However, in the short run the bank expects the European currency to stall below the psychological resistance at 1.20. In their view, support for the pair is found at 1.1809 (June minimum) and 1.1557 (August 17 maximum).

ING: USD/JPY will trade in the 75/85 yen area for 6 months

2011-08-30 13:48

Currency strategists at ING Commercial Banking believe that Japan has so far elaborated a more interventionist approach concerning the appreciation of its national currency.

The specialists refer to the steps taken by Japanese authorities – the creation of a credit facility which encourages Japanese corporations to invest overseas and monitoring of open positions at the commercial banks.

According to ING, Japan is now more likely to intervene if USD/JPY approaches 75 yen. As US currency remains weak, the analysts expect the pair to trade during the next 6 months between 75 and 80 yen.

BMO Capital: trading on hurricanes

2011-08-30 14:27

The Atlantic hurricane season is traditionally lasting from June 1 to November 30, so even though Irene that kept US under a strain last week has passed, there may be other storms.

Currency strategists at BMO Capital note that it’s possible to gain on the hurricanes which are likely to go through the Gulf and disrupt oil production.

In their view, it’s necessary to catch the moment when the storm begins to build off Africa and start buying the currencies of oil-exporting countries like Canada and Norway.

Michael Spence: 50% possibility of global recession

2011-08-30 15:02

Nobel Prize winner Michael Spence sees the 50% chance of global economic recession.

In his view, the main risks come from Europe and the United States – the combined contraction of their GDPs will affect China’s exports and growth hitting other emerging economies.

Spence thinks that though after the 2008 crisis China managed to cushion the blow with a stimulus program, this time it wouldn’t be able to solve the problem that easily: with inflation that has reached 6.5% it would be insane for the nation’s authorities to encourage further credit growth.

Wells Fargo, Citigroup: US dollar-positive factors

2011-08-30 16:15

Bloomberg says that US dollar has added 1.2% in August versus a of the developed world’s nine most-traded exchange rates after losing 14% from this time last year through July.

Currency strategists at Wells Fargo advise investors to buy the greenback versus Japanese yen and Swiss franc through the end of the third quarter as yen and franc are already very expensive and the Swiss National Bank and the Bank of Japan intervene to stem their gains.

At the same time, analysts at Citigroup claim that the currencies of commodity-producing nations such as Australia, New Zealand and Canada lose some of their attractiveness due to the global economic slowdown. In their view, if the commodities and equities keep suffering, one should buy US currency in the short term.

According to the data from the Organization for Economic Cooperation and Development, the greenback is undervalued by 47% versus CHF and by 31% against JPY. The OECD also says that USD is 37% below fair value against AUD and 20% versus CAD.

Never the less, economists at Royal Bank of Scotland believe that until dollar can demonstrate some independent strength, in particular, until it is supported by stronger economic data, it won’t show much of advance. The bank forecasts the greenback to end the third quarter at $1.45 versus euro and at $1.06 versus Aussie.

Commerzbank: ECB may stop hiking rates

2011-08-30 17:11

According to the data from the European Commission, economic sentiment in the euro area fell from 103 in July to 98.3 in August, while the economists were looking forward to the decline only to 100.5. European quarterly GDP growth went down from 0.8% in the first 3 months of the year to 0.2% in the second quarter.

The ECB President Jean-Claude Trichet claimed yesterday that as the euro zone’s economic growth slows down, the central bank is reviewing its assessment of inflation risks – the results will be released in September.

It seems that Trichet’s views have changed: at the beginning of August 2 he said that risks to the inflation outlook were on the upside, while now the situation is quite the opposite. Analysts at Commerzbank note that this may mean that the European Central Bank’s rate hiking cycle is over.

As a result, the single currency fell versus the greenback. The pair EUR/USD dropped from yesterday’s maximum at $1.4550 to the levels in the $1.4400 area.

wynnasuju · September 2, 2011

UBS: EUR/USD and AUD/USD technical levels

2011-08-31 11:02

Analysts at UBS are bullish on the single currency and Australian dollar versus the greenback. Here’s their technical forecast.

EUR/USD

Resistance: $1.4578;

Target: $1.4697 (June 7 maximum);

Support: $1.4328, $1.4259.

daily eurusd 10-59

AUD/USD

Resistance: $1.0786;

Target: $1.1007 (late July maximums);

Support: $1.0561.

Commerzbank: comments on EUR/USD

2011-08-31 12:22

The advance of the single currency versus the greenback stopped at $1.4550 – between July 4 maximum at $1.4577 and July 27 maximum at $1.4535 – and euro eased to $1.4400/50.

Technical analysts at Commerzbank note that EUR/USD may slide lower, to $1.4316. At the same time, the specialists say that in the longer term the outlook for the pair will remain bullish as long as it’s trading above 2-month support line at $1.4272.

If euro breaks down this level, it will be poised down to August minimum at $1.4055.

Standard & Poor's about European economy

2011-08-31 14:06

Standard & Poor's warned yesterday that the risk of double dip recession in the euro area has increased due to slowdown of the region’s economic growth. The rating agency notes that high unemployment and recent slump of equities may affect spending – S&P is going to watch the dynamics of consumer demand in the coming quarters.

The specialists still think, however, that Europe will be able to avoid the double dip due to such drivers of growth as demand from emerging markets and the recovery, though sluggish, in corporate capital spending.

Euro zone GDP growth slowed from 0.8% in the first 3 months of the year (q/q) to 0.2% in the second quarter casting doubts on the euro area’s prospects over the next 18 months through 2012. In addition, the agency notes that there’s still strong divergence on the European nations’ economic growth.

Standard & Poor's lowered the region’s growth forecast from 1.9% to 1.7% this year and from 1.8% to 1.5% in 2012.

WSJ: What Greel default would mean for Europe?

2011-08-31 17:37

Economists at Wall Street Journal note that the yield on Greek 1-year government bills hit 60% yesterday. In their view, the nation’s default seems inevitable and its terms will be extremely brutal for investors with recovery rates possibly even lower than the currently anticipated 50%.

It’s very difficult to foresee the consequences in case of Greek default, but the economists believe that they’ll be beyond expectations.

According to the Bank for International Settlements, European banks have a total exposure of 94 billion euro to the Greek economy (French institutions account for 40 billion euro, while the German ones – for 24 billion euro). The International Accounting Standards Board is worried that European financial institutions have been fudging their exposure to Greece, so the situation may be actually much dimmer.

The IMF Managing Director Christine Lagarde said that European banks need urgent recapitalization. WSJ points out that the banks should seek private resources at first, but then they are to be granted with public funds if necessary. If the banks get no additional capital, there will be a significant credit contraction derailing economic growth of the core nations of the currency union. As a result, the demand for exports of the peripheral countries will fall causing a downward spiral throughout the single-currency region.

The WSJ analysts worry that it may be too late for recapitalization now as investors won’t surely be eager to pump more capital into the banks. In their opinion, such efforts should be taken a year ago.

According to WSJ, European authorities face a choice – to rescue banks or to save peripheral European economies – the first option seems to be more costly as until now Greece was supported mainly be pledges of action.

Wall Street Journal warns that the tensions between the region’s nations are likely to escalate: the European Financial Stability Facility may be seriously affected by Finland’s insistence to get additional collateral from Greece.

TD Bank: Canada’s economic forecast

2011-08-31 18:43

Analysts at TD Bank reduced Canada’s economic growth forecast from 2.8% to 2.3% in 2011 and from 2.5% to 2% in 2012.

According to the specialists, Canadian economy is very tightly connected with the US one, so if American GDP contracts, the same will happen with Canada’s economy.

The bank expects that the United States will avoid recession in the coming quarters, but if it's wrong that would mean serious problems for Canada.

According to the data released today, Canada’s GDP contracted by 0.4% on the annual basis 3.6% advance in the first 3 months of 2011. US annual economic growth pace in Q2 was revised downwards from 1.3% to 1%.

wynnasuju · September 2, 2011

Mizuho: risk aversion eased, yen weakened

2011-09-01 12:26

China’s Manufacturing PMI rose from 29-month minimum of 50.7 in July to 50.9 in August.

Currency strategists at Mizuho note that investors’ risk aversion has decreased. That made Japanese yen weaken versus the majority of its counterparts. The pair USD/JPY reached week’s maximum at 77.23 yen. The MSCI Asia Pacific index of regional shares is rising during the 6th day in a row.

According to the data of Japan’s Ministry of Finance, last week Japanese invested 146.3 billion yen ($1.9 billion) overseas. That’s the most since last September.

Daiwa Securities: Japan can’t conduct interventions frequently

2011-09-01 13:16

According to the government survey of 61 large manufacturers, 63% of respondents are calling for sustained currency market intervention to weaken yen. The participants of the survey see the average rate of USD/JPY in a fiscal year through March 2012 at 81.10 yen and EUR/JPY – at 112.80 yen.

Never the less, analysts at Daiwa Securities claim that it’s difficult for Japanese monetary authorities to conduct currency interventions frequently. There are political obstacles as such moves would be criticized by other leading nations. In addition, it’s very hard to reverse the market that keeps regarding yen as a safe haven against the global growth concerns and euro zone’s debt crisis.

Wells Fargo: bullish middle-term forecast for NZD/USD

2011-09-01 13:43

In August New Zealand’s dollar weakened versus its US counterpart falling from the August 1 maximum at 0.8841 to end the month in the 0.8500 area. However, analysts at Wells Fargo are still bullish on NZD/USD in the medium term.

Among the positive factors for kiwi the specialists cite recovery in the country's economic activity and higher inflation that increases the possibility of the RBNZ rate hike.

The specialists expect New Zealand****'s dollar to recover paring last month’s decline. In their view, in the first half of 2012 the pair will trade at record highs in the 0.9100 region.

BMO Capital expects good NFP data

2011-09-01 15:33

US August Non-Farm Payrolls data are released tomorrow at 4:30 pm (GMT+4).

Economists surveyed by Bloomberg project that the number of jobs in the United States increased in August by 75K after gaining 117K in July. The unemployment rate is seen unchanged at 9.1%.

ADP report showed that the number of employed in American private sector rose by 91K versus 109K in July.

The Federal Reserve’s Chairman Ben Bernanke claimed in Jackson Hole that the nation’s economic growth was insufficient to achieve sustained reductions in unemployment.

Analysts at BMO Capital believe that the data may surpass the expectations. The specialists advise investors to take risk selling US dollar versus its Canadian counterpart in the short term targeting 0.9520 and stopping at 0.9920.

UBS: we face the crisis of capitalism

2011-09-01 16:22

George Magnus, economist at UBS regards the current crisis in the developed nations as the crisis in capitalism: companies seeking for greater profits and productivity are cutting jobs. As a result, income inequality in the US approached the highest level since the 1920s.

The specialist advises the policymakers to turn to Karl Marx for the possible solutions. In his view, it’s necessary to lower employer payroll taxes and to create fiscal incentives to encourage companies to hire people, to allow eligible households restructure mortgage debt and to ease capital adequacy requirements for well-capitalized and well-structured banks so that they could credit smaller companies.

Magnus proposes European creditors to extend the lower interest rates and longer payment terms proposed for Greece. According to the analyst, instead of QE programs central banks should target nominal GDP growth rate.

ING: SNB rate outlook

2011-09-01 16:48

Economists at ING think that the Swiss National Bank won’t lift up interest rates until the middle of 2012.

The specialists note that strong Swiss franc has seriously affected the national economy: according to the data released today Switzerland’s economic growth slowed down from 0.6% in the first 3 months of the year to 0.4% in the second quarter. In their view, the same pressure will be seen on the figures for the third quarter.

The effect of SNB's recent rate and liquidity injections will be seen in the final quarter of the year. Never the less, ING believes that the central bank won’t be able to ensure 2% growth rate in 2011.

Barclays Capital sees potential for pound’s advance

2011-09-01 17:45

Analysts at Barclays Capital believe that if Switzerland and Japan manage to stop appreciation of their national currencies, British pound may strengthen.

The specialists say that there are several reasons for that. Firstly, exports don’t account for a big part of UK GDP, secondly, sterling’s advance doesn’t tend to affect stock markets and, finally, pound may be undervalued. In addition, the investors won’t expect UK government to stem pound’s growth.

Barclays underlines that the pair GBP/CHF showed better results than EUR/CHF when the SNB Vice President Tomas Jordan said on August 11about the possibility of pegging franc to euro. Pound also performed well when Japan intervened on August 4.

The strategists say that the only potential negative effect on pound may come from Britain’s economic weakness.

wynnasuju · September 2, 2011

RBC: comments on USD/CAD

2011-09-02 16:51

Analysts at Royal Bank of Canada say that if Canadian dollar rises too steeply and gets too high versus its US counterpart, it will start affecting the nation’s economy. The negative economic impact, in its turn, will pull loonie lower, so the self-correction will happen.

The specialists don’t rule of the possibility of USD/CAD slipping to 2007 minimum, but they think that the pair won’t stay low for long.

This year Canadian currency had a series of ups and downs. Although in the second quarter Canadian economy contracted by 0.4% on the annual basis, the majority of economists expect this decline to be a short-lived correction.

Comparing 2 nations, Canada has healthier fiscal system and greater weighting to commodities. If commodity sector is strong, loonie will perform quite well. According to RBC, from the point of Canada's economic fundamentals 1.0000/0.9520 range is normal for USD/CAD.

It’s also necessary to note that RBC is concerned about the impact of the euro-zone debt crisis on the global economy. The specialists note that investors have to be prepared for an extended period of slow growth both in the United States and Europe.

Mizuho: forecasts for EUR/USD

2011-09-02 17:13

Currency strategists at Mizuho updated forecasts for EUR/USD. According to the specialists, the single currency will be steadily rising versus the greenback to reach $1.5000 in a year from now. The analysts see euro strengthening to $1.4300 in September and to $1.4650 in 3 months.

UBS, Commerzbank: comments on EUR/CHF

2011-09-02 17:39

Currency strategists at UBS note that Swiss franc keeps appreciating versus the single currency and US dollar due to the encouraging economic data from Switzerland and the lack of comments from the Swiss national bank. Commerzbank notes that the data indicate that Swiss economy is fundamentally sound increasing demand for franc as a safe haven.

Switzerland's economy expanded 2.3% in the second quarter on the annual basis after gaining 2.5% in the first 3 months of the year. Swiss retail sales grew only 1.9% in July after adding 7.9% in June as Swiss prefer to go shopping abroad.

According to UBS, the pair EUR/CHF may hit the 1.1000 level or get even lower. Analysts at Commerzbank say that if euro drops below 1.1023 it will eased down to stabilize in the 1.0800 area.

Goldman Sachs changed RBNZ rates forecast

2011-09-02 18:05

Analysts at Goldman Sachs believe that the Reserve bank of New Zealand will keep official cash rate unchanged at 2.5% until March, while earlier the specialists thought that the central bank will raise the borrowing costs. The RBNZ meeting is scheduled on September 15.

NFP disappoints: unchanged in August

2011-09-02 18:25

The market has certainly looking forward to better Non-Farm Payrolls figures, but the indicator remained unchanged in August, while the economists surveyed by Bloomberg expected 65,000 increase. The unemployment rate remained at 9.1%.

It’s necessary to note that the poor situation at the labor market is one of the reasons why the Fed’s Chairman Ben Bernanke said the central bank still has tools available to stimulate growth. As the result, the possibility that the Federal Reserve launches QE3 has increased.

wynnasuju · September 5, 2011

Ichimoku. Weekly forecast. GBP/USD

2011-09-05 12:24

Weekly GBP/USD

On the weekly GBP/USD chart we see the sideways trend: the majority of the Indicator lines are directed horizontally (1, 2, 3), only

Senkou Span B has gone a bit up narrowing the bullish Ichimoku Cloud.

Last week the prices closed below the Standard line (1), while this week sterling began below the Turning line (2). Both lines are

currently acting as resistance for pound.

Tenkan-sen (2) and Kijun-sen (1) still keep the “dead cross” in place, though the signal isn’t strong as it was formed above Kumo,

but keeps the pair from getting higher.

Chart. Weekly GBP/USD

Daily GBP/USD

Last week the prices went down ruining the short-term uptrend. Tenkan-sen (1) and Kijun-sen (2) have formed the “dead cross”.

The short-term Turning line and Senkou Span A (3) are going down (3) and the Ichimoku Cloud is narrowing due to its descending upper

border.

It’s also necessary to note that the lagging Chinkou Span has breached the price chart – the bearish signal (5). In addition, the

prices have tested the levels below the Ichimoku Cloud – it happened where Kumo has switched and was thin. As a result, sterling may

have lost an important support.

The longer term Standard line (2) and Senkou Span B (4) remain horizontal that means that this week the decline could be partially

compensated. At the same time, it’s necessary to remember about the resistance. It’s possible that the bears pull the rate down to

$1.6100/$1.6050.

Chart. Daily GBP/USD

Ichimoku. Weekly forecast. USD/JPY

2011-09-05 12:36

Weekly USD/JPY

On the weekly USD/JPY the situation didn’t change much. The prices remain in the area of the record minimums, in the narrow range

between 76 and 77 yen. High demand for yen is still competing with the risk of further Bank of Japan’s interventions.

The greenback still lacks support, while resistance is provided by the declining Tenkan-sen (1) and the horizontal Kijun-sen (2) as

well as by the descending Ichimoku Cloud (3). The Turning line (1) and the Standard line (1) still keep the strong “dead cross” in

place.

Chart. Weekly USD/JPY

Daily USD/JPY

The fact that all lines of the Indicator are moving sideways (1, 2, 3 and 4) means that US currency’s consolidation in the current

narrow range may drag on.

During the whole week the bears kept the prices mainly below the Turning line (1).

Tenkan-sen (1) and Kijun-sen (2) keep the “dead cross” in place. The bearish Ichimoku Cloud (3, 4) still keeps US currency under

pressure.

Chart. Daily USD/JPY

Ichimoku. Weekly forecast. USD/CHF

2011-09-05 12:39

Weekly USD/CHF

After the 3 consecutive weeks of growth the pair USD/CHF dropped last week testing the levels below the turning line (1).

The lines of the Indicator go smoothly down (1, 2, 3 and 4) that means that the downtrend keeps on and the August advance of US

currency may be nothing more than correction.

Tenkan-sen (1) acts as support, while Kijun-sen (2) represents a rather strong resistance. The prices will likely stay between

Tenkan and Kijun.

Chart. Weekly USD/CHF

Daily USD/CHF

Last week the pair USD/CHF has approached the Ichimoku Cloud, but didn’t manage to overcome Senkou Span A (3). After that the prices

broke above the Turning line (2) and now support is provided only by the Standard line (1).

Tenkan-sen (2) and Kijun-sen 91) hold the “golden cross” in place (3), though its power isn’t very high as it was formed below Kumo.

The Cloud that has turned bullish (4) is still extremely thin. The lagging Chinkou Span (5) didn’t manage to stay above the price

chart and once again fell below it.

It’s necessary to note that Tenkan and Kijun are moving horizontally that allows us to expect consolidation of the rate between the

Standard line and the Ichimoku Cloud.

Chart. Weekly USD/CHF

Commerzbank: sell EUR/USD

2011-09-05 13:04

The single currency fell from last week’s maximum versus the greenback at $1.4550 set on Monday to the levels below $1.4200 today.

The pair EUR/USD breached the short-term uptrend support line.

Technical analysts at Commerzbank advise investors to sell euro. In their view, the pair is on its way down to $1.4055/1.3997

(August minimum, 200-day MA and the 200-week MA).

According to the bank, the bears will make several attempts to break down. The specialists say that if the European currency closes

the week below $1.3837, it will be poised down to $1.2000 in the longer term.

Chart. Daily EUR/USD

BNZ: forecasts for NZD/USD

2011-09-05 13:39

Analysts at BNZ believe that the fair value New Zealand’s dollar versus its US counterpart has declined by 4 cents during the past

month to $0.6950/0.7050 as the risk appetite index fell from 46.4% to 36.2%. As the pair NZD/USD is currently trading in the $0.8400

area, it seems to be overvalued.

However, the economic data from New Zealand is encouraging and the demand for kiwi is high. That means that the currency has become

less sensitive to the surges of risk aversion. As a result, the specialists expect the pair to enjoy solid support.

According to the bank, NZD/USD will climb to $0.8700 by the end of the year. Support for the pair lies at $0.8110, while resistance

is at $0.8570 in the short-term.

Chart. Daily NZD/USD

BMO Capital Markets: GBP/USD forecast for 2011-2012

2011-09-05 17:04

British pound has been trading within a downside channel versus the greenback: it fell August 19 the maximum at $1.6618 to the

levels in the $1.6100 zone.

Currency strategists at BMO Capital Markets believe that GBP/USD will keep declining during the next quarters.

The specialists think that sterling will trade in the $1.6200 region during the third quarter and then hit $1.5800 by the end of the

year. According to BMO, in the first 3 months of 2012 the pair will reach its lowest point at $1.5500 and then start rising to

$1.5700 in the second quarter, $1.6100 in the third and $1.6400 in the final quarter of the next year.

Chart. Daily GBP/USD

UBS: EUR/CHF will keep declining

2011-09-05 17:26

The single currency dropped versus its Swiss counterpart from last week’s maximum of 1.1975 reached on Monday to Friday’s minimum of

1.1000.

Currency strategists at UBS point out that euro’s decline was accelerated by concerns about the euro zone’s debt crisis and

disappointing US labor market data. In their view, worries about the new slump of EUR/CHF are increasing as can be seen from rising

option implied volatilities in the EUR/CHF exchange rate.

The bank warns that the pair may lose more during the next few weeks unless the Swiss National Bank tries to stabilize the rate of

its national currency.

Chart. Daily EUR/CHF

J.P.Morgan: trade ob ECB meeting

2011-09-05 17:48

The European Central Bank meeting is taking place on Thursday. The ECB will announce its benchmark rate at 3:45 pm (GMT+4).

Strategists at J.P.Morgan Asset Management advise investors to be very attentive to the language of the ECB President Jean-Claude

Trichet.

If Trichet’s comments sound less dovish than the market hopes, that may give euro a lift versus the greenback. The specialists

recommend selling EUR/USD on its advance in the $1.45 with target at $1.41 and stop at $1.47.

Chart. Daily EUR/USD

wynnasuju · September 6, 2011

TD Securities, BarCap: RBA didn’t cut rates

2011-09-06 11:08

The Reserve Bank of Australia decided to leave the benchmark interest rate unchanged at 4.75%.

The RBA Governor Glenn Stevens said that the domestic outlook is strong enough and the nation is still benefiting from a mining boom, though the situation at the global financial markets remains extremely uncertain, so it’s not appropriate either to increase or reduce the borrowing costs. It’s necessary to note that the central bank still regards inflation as a problem and sees it rising above the target level.

Analysts at TD Securities believe that the next move of the RBA will be to the upside though the market is pricing in the rate cuts. The specialists make such assumption due to the solid prospects of Australia’s main trading partners, primarily China.

Strategists at Barclays Capital share this point of view. According to them, Australia’s strength is coming from high domestic demand and as commodity prices.

Economists at NAB think that the RBA may stay on hold until the middle of 2012 when they expect the economy to start growing at above trend rates.

The pair AUD/USD hit the minimal level in more than a week at $1.0489 on the concerns about the European debt crisis and its negative impact on the world’s economy.

Chart. Daily AUD/USD

UBS about the euro zone's future

2011-09-06 11:44

Analysts at UBS believe that the current structure of the European Monetary Union and its current membership aren’t suitable for the common currency. The specialists claim that either one or the other will have to change.

According to the bank, the most likely outcome is the slow movement towards the some kind of fiscal integration in Europe. The break-up of the currency bloc would be more costly and quite unlikely, UBS says.

The economists note that countries can’t be expelled, but sovereign states could choose to leave the euro area, though the consequences of such step in various discussions seem to be underestimated.

If one of the stronger core nations such as Germany quitted, that would lead to the corporate default, recapitalization of the banking system and collapse of international trade and cost 6,000-8,000 euro for every German in the first year (20-25% of GDP) and 3,500-4,500 euro per person per year thereafter.

UBS also warns that the union break-up may threaten to cause some form of authoritarian or military government or a civil war.

Chart. Daily EUR/USD

BBH, Socgen: negative outlook for euro

2011-09-06 12:56

Analysts at Brown Brothers Harriman note that the lack of action from the euro zone’s authorities begins erasing the line between a banking crisis and a euro crisis. In their view, political protectionism amid solvency problems of the peripheral nations ruin euro's defenses by undermining the proposed extension of the EFSF (European Financial Stability Fund) and the ECB's government bond purchases and increasing the risk of a disorderly default in Greece.

The recent strengthening of EUR/USD was due to the expectations of policy containment of global risks, but European political tensions and the discouraging US labor market data released on Friday deprived the European currency of this kind of support.

If Europe's credibility crisis enters a state of no confidence to both economic governance and political unity, it would be very hard for euro to hold above $1.40. BBH is sure that euro will ultimately fall to the 200-day MA at $1.4013.

Currency strategists at Societe Generale note that the single currency looks very vulnerable without the support of the hawkish European Central Bank. In their view, if EUR/USD drops below $1.3900, it would be poised down to $1.3000.

Chart. Daily EUR/USD

SNB fixed floor for EUR/CHF: comments

2011-09-06 13:48

The Swiss National Bank set a minimum exchange rate target for EUR/CHF at 1.20 as strong franc has negative impact on the nation’s economy. The SNB pledged to buy foreign currency in unlimited quantities to keep the pair above the target level.

The single currency bounced versus Swiss franc by about 9% from the levels in the 1.1000 area to 1.2186 before easing to 1.2030/40.

The analysts burst out with comments on this development.

NAB: EUR/CHF should stay above 1.25 to rule out the deflationary threat. Euro may rise to 1.25/1.30 during the next month.

Societe Generale: SNB’s move will encourage demand for French and German government bonds helping to stabilize the situation in both Switzerland and Europe.

Capital Economics: SNB had no choice but to act as Switzerland’s exports are in danger.

Morgan Stanley: this time the SNB may succeed in reducing demand for franc. It was a hard decision for the central bank to step into the market as its previous interventions led to huge losses.

Chart. H4 EUR/CHF

Key events for the euro area this week

2011-09-06 15:31

Tuesday. The finance ministers of Germany, the Netherlands and Finland are meeting to discuss collateral for loans to Greece. Earlier Finland has proposed that Greek state assets be transferred to a Luxembourg-based holding company and held as security for new loans to Athens.

Wednesday. Germany's constitutional court will rule on the legality of euro zone bailouts. The court's judgment will settle whether Chancellor Angela Merkel's government breached the German people's property rights in agreeing to the initial bailout of Greece in 2010, whether the nation’s authorities should have asked the parliament before taking part in the bailouts of Ireland and Portugal and whether the European Central Bank's purchases of government bonds are legal. The possibility that the court rules the aid for euro zone partners as unconstitutional is low, but it may force German government to seek for the Bundestag’s approval of future loan packages. That would slow down the process of combating the euro area’s debt crisis.

Thursday. There’s the European Central Bank’s meeting. The ECB is expected to signal the pause in its rate tightening cycle. The Minimum Bid Rate is announced at 3:45 pm (GMT+4).

Friday/Saturday. Finance ministers and central bankers of G7 nations are meeting in Marseille, France. If no solution comes, the market will suffer greatly.

Chart. Daily EUR/USD

Commerzbank: comments on EUR/CHF and USD/CHF

2011-09-06 16:08

Technical analysts at Commerzbank believe that the longer-term outlook for EUR/CHF remains positive: the pair is on its way up to 1.2346/1.2400 (December 2010 and March 2011 minimums and June 2011 peak). Then euro will advance to the 55-week at 1.2668 and then to this year's maximum at 1.3245. In their view, the recent decline of the single currency from August 29 maximum at 1.1971 to minimums in the 1.1000 was only a correction.

Chart. Daily EUR/CHF

As for the pair USD/CHF, for the outlook to become bullish the greenback has to break above the 50% Fibonacci retracement from December 2010 maximums at 0.8567 and June maximums at 0.8575. US dollar will be supported at 0.8375, 0.8250/40 and the top of the previous trading channel at 0.8200.

Chart. H4 USD/CHF

wynnasuju · September 7, 2011

Citigroup: EUR/USD may fall to $1.35

2011-09-07 10:53

Analysts at Citigroup believe that the single currency may fall to the 7-month minimum versus the greenback at $1.35.

The specialists note that investors seek refuge in German government bonds that makes their yields slide. The spread between 2-, 5- and 10-year German bond yields and the similar US debt yields fell to the lowest level since February. During the same period the pair EUR/USD has lost 1.8% but the pace of its decline lagged behind that of the drop in bond spreads. As a result, the bank expects that the market concerns about the euro zone’s debt crisis will soon begin to be more reflected in the currency’s rate.

Citigroup points out that euro closed last week at $1.4205, below the $1.4327 that signals downward reversal.

Chart. Daily EUR/USD

Wells Fargo lowered Swiss franc's forecast

2011-09-07 11:27

Analysts at Wells Fargo revised downwards their forecasts for Swiss franc after the Swiss National Bank yesterday pegged franc to euro.

The specialists think that this time Switzerland’s monetary authorities will succeed in stemming franc’s gains – their previous attempt to weaken the national currency led to $21 billion loss last year. At the same time, the economists don’t believe that franc has much room for depreciation as the market remains in the risk-off state.

Wells Fargo increased its 3- and 6-month projection for EUR/CHF from 1.06 to the SNB target level of 1.20. In their view, in 9 months franc will ease to 1.22 per euro.

Strategists at Schneider Foreign Exchange say that SNB’s move was surprising, but now when the central bank has to some extent decreased the safe-haven flows to franc, investors may turn to other currencies such as Norwegian krone.

However, analysts at Lloyds note that though the near-term outlook for franc has changed to the downside, in the longer term the SNB is likely to fail to hold EUR/CHF above 1.20 as the situation in the euro zone may significantly deteriorate.

Chart. Daily EUR/CHF

ANZ: comments on NZD/USD

2011-09-07 11:53

New Zealand’s dollar is correcting upwards versus the greenback after its recent decline from August 31 maximum at 0.8572 to yesterday’s minimum in the 0.8200 zone.

Among the drives for NZD/USD the analysts at ANZ cite strong performance of Asian equity markets and better-than-expected Australian GDP figures. In their view, resistance for the pair lies at 0.8320, while support is found at 0.8240.

The MSCI Asia Pacific Index of shares rose by 2.2%. Australia’s economy added 1.2% in the second quarter (q/q) after declining by 0.9% in the first 3 months of 2011, while the economists surveyed by Bloomberg News were looking forward to only 1% increase.

Chart. H4 NZD/USD

Commerzbank: comments on EUR/USD

2011-09-07 12:13

Technical analysts at Commerzbank are bearish on EUR/USD. In their view, yesterday’s spike high to 1.4284 didn’t change the negative prospects of the single currency in the near-term.

The specialists expect the pair to fall to the 2010-2011 uptrend line at $1.3939 noting that the DMI (directional movement indicator) has confirmed the sell signal.

At the same time, the bank sees a lot of divergence on the hourly chart and warns that euro may correct upwards today rising to $1.4193.

Chart. H4 EUR/USD

USD/JPY: fundamental analysis, intervention prospects

2011-09-07 14:14

Swiss franc and Japanese yen have so far reached the record maximums. Yesterday the Swiss National Bank set the floor for EUR/CHF at 1.20 and many investors now expect the Bank of Japan to take the similar measures in order to weaken yen.

The new Japanese finance minister Jun Azumi said that he will try to convince other G7 nations that strong yen poses a threat to the world's third-biggest economy. Strategists at Credit Suisse think that it might be easier for Japan to defend its position after the SNB’s move.

At the same time, analysts at JPMorgan Securities say that Japanese economy is currently on the rebound and corporate and exporters are doing better than expected. In their view, there’s no national emergency and this fact may hold Japan’s monetary authorities from currency interventions and additional easing.

In addition, while the currency peg was reasonable for the euro area as 70% of Swiss exports go to the European Union, it doesn’t fit Japan as less than 20% of its trade is done with the United States so Japan isn’t likely to follow SNB’s example.

It’s also necessary to note that the BOJ will have more difficulties in stemming the appreciation of the national currency as the size and liquidity of the Japanese government bonds market is actually a lot bigger than that of the Swiss National Bank's one, so they are more attractive for investors, especially domestic.

UBS specialists claim that Japanese government will be more preoccupied with reconstruction problems after March earthquake and tsunami than with forex issues.

BOJ meeting

The BOJ left today its key rate unchanged at the minimal levels below 0.1%, but didn’t announce more easing measures. Last month the Bank of Japan expanded its asset purchase program from 40 to 50 trillion yen. The central bank expects the national economy to return to a moderate recovery path from the second half of the current fiscal year.

Strategists at Mizuho Securities claim that the BOJ may ease its policy at its next meeting on October 6-7 or conducts an emergency meeting and it will happen even sooner. The easing move may be catalyzed by FOMC meeting on September 20-21, weak Tankan business sentiment survey and rising demand for yen.

Chart. Daily USD/JPY

UBS increased GBP/USD forecast

2011-09-07 18:12

Analysts at UBS increased 3-month forecast for British pound’s rate versus the greenback from $1.6200 to $1.6500 keeping the 6-month estimate at $1.6800 and the 12-month projection at $1.7500.

The specialists claim that, on the one hand, pound is attractive in comparison with the single currency and the greenback due to the debt problems of the euro area and the United States, but on the other hand, it may be affected by the effects of another round of quantitative easing by the Bank of England.

Chart. Daily GBP/USD

wynnasuju · September 8, 2011

Mizuho: USD/JPY downtrend will resume

2011-09-08 10:57

Technical analysts at Mizuho Corporate Bank believe that the greenback’s longer-term downtrend versus Japanese yen will resume.

The specialists underline that triangle consolidation in May and June led to the decline of USD/JPY and think that so will do another triangle formed in August. In addition, all elements of the weekly Ichimoku Cloud give bearish signals.

According to the bank, the pair is poised down to 74.50 and 73.50.

Unicredit: euro zone needs more austerity

2011-09-08 11:52

Analysts at Unicredit say that the current euro zone crisis will force European leaders to ponder over whether the single currency is worth keeping. In their view, the debt problems are the test for the currency bloc.

The specialists think that the indebted nations have to conduct more sizeable budget cuts in order to free up more resources. In particular, Unicredit claims that Italy has more potential to bring down its budget deficit by putting more assets on the market for privatization.

According to the bank, the policymakers have to show more visionary and strong approach. The economists underline that it’s not up to the European Central Bank to support the problem nations by buying their sovereign debt.

Obama and Bernanke are to speak today

2011-09-08 16:54

US President Barack Obama will address a joint session of Congress on proposals to speed job creation that may inject more than $300 billion into the economy next year.

Almost half the stimulus may come from tax cuts, including an extension of a 2-percentage-point reduction in the payroll tax paid by workers due to expire December 31 and a new decrease in the portion of the tax paid by employers.

In August US job growth stagnated, while the unemployment remained high at 9.1%.

As a result, it has become less likely that Federal Reserve will also engage in easing its policy. Analysts at BNZ remind that the Fed’s Chairman Ban Bernanke was calling for fiscal measures to help the nation’s economic growth, so once such steps are taken the need for the central bank to take further action will reduce. That, in its turn, would be positive for the greenback.

Bernanke will speak today at 5:30 pm GMT and Obama makes a speech at 11:00 pm GMT.

Nomura lowered EUR/USD forecast

2011-09-08 17:18

Currency strategists at Nomura revised down their forecasts for the single currency versus the greenback in the fourth quarter from $1.40 to $1.30. The bank left the 3 quarter target unchanged at $1.40.

The reason for EUR/USD estimate’s reduction is the deteriorating debt situation in the euro zone. Even though the specialists think that Greece will avoid disorderly default, size constraints on the European Financial Stability Fund (EFSF) will add fuel to the flames. As a result, Nomura expects euro to stay under pressure.

Goldman Sachs: more BoE’s QE in November

2011-09-08 20:02

British pound rose today versus the greenback and the single currency as the Bank of England left the borrowing costs unchanged at 0.5% and didn’t extend the 200-billion-pound asset-purchase program.

Asset purchases or quantitative easing increased the monetary supply and weakens the national currency, so the decision not to boost the program was sterling-positive.

The pair GBP/USD rose from almost 2-month minimum at $1.5911 to the levels above $1.6000.

In Monetary Policy Committee last month only Adam Posen called for additional QE, while Spencer Dale and Martin Weale stopped voting for the rate hike.

Economists at Goldman Sachs believe that British central bank will resume bond purchases in November. In their view, the amount of QE will be 100 billion pounds during 2 quarters.

Recent economic data

National Institute of Economic and Social Research: UK economic growth slowed from 0.6% in 3 months through July to 0.2% in 3 months through August.

Inflation rate: 4.4% (July), more than twice above the BoE target.

UBS lowered Switzerland’s growth forecast

2011-09-08 20:05

Analysts at UBS lowered Switzerland’s economic growth forecast from 2.7% to 2% in 2011 and from 2.2% to 1.3% in 2012.

The reason of the downward revision is strong Swiss franc that is affecting the nation’s exports.

The specialists note that all in all they remain optimistic due to Switzerland’s advantages: sound private household finances and firm public sector.

According to the bank, the Swiss national bank will keep conducting loose monetary policy at least until the end of 2012.

wynnasuju · September 10, 2011

Bernanke and Obama speak

2011-09-09 12:50

Bernanke

Federal Reserve Chairman Bernanke claimed yesterday that quick deficit reduction may affect US economic recovery and said that the central bank will regard the possible measures to spur growth and hiring at its meeting on September 20-21.

Earlier in Jackson Hole Bernanke outlined the tools that the Fed may use. They are quantitative easing and lengthening the duration of securities in its $1.65 trillion Treasury portfolio. Analysts at Barclays Capital believe that this month the Fed will decide to resort to the latter.

The Fed’s head said that Obama and Congress should improve the federal government’s finances in the longer term but be careful not to hurt the economy by the fiscal consolidation in the short term. Bernanke didn’t comment on how the American authorities may reach that goal.

Obama

Another important speech is the one of US President. Barack Obama proposed to Congress the plan to stimulate job’s growth that would inject $447 billion into the economy (nearly 3% of GDP) through infrastructure spending by cutting in half the payroll taxes paid by workers and small-business owners and by providing subsidies to local governments to stem teacher layoffs.

Analysts at Capital Economics note that if Obama’s bill passes the Congress it would certainly influence 2012 GDP growth, which they currently expect to be only 2%. Economists at Goldman Sachs think that if enacted in its entirety, this proposal could shift the fiscal impulse in 2012 from -1.1% of GDP to +0.4% of GDP. However, the specialists have serious doubts that the congressmen will manage to agree on any of the multitude of different measures the bill includes.

G7 may be against Japan’s intervention

2011-09-09 13:18

Japanese new finance minister Jun Azumi promised to tell his Group of Seven counterparts that Japan is ready to act vigorously in currency markets when necessary.

Yesterday G7 released statement that the officials of the world’s leading developed countries will “closely consult” each other on currencies. Rintaro Tamaki, Japan’s former vice finance minister who currently occupies the post of deputy secretary-general of OECD, thinks that it means that Japanese intervention has to be done in agreement with the G-7 as opposed to unilaterally.

As a result, the specialist claims that Japan may face opposition to further yen sales after acting on its own twice in the past year. Tamaki underlined that one of G7 key principals is that the markets should determine foreign-exchange levels.

Japan’s economy is affected by stronger yen: in the second quarter the nation’s GDP fell by 2.1% in comparison with the previous year level.

Commerzbank: comments on USD/CHF

2011-09-09 13:45

The greenback advanced versus Swiss franc getting above the 50% Fibonacci retracement of the decline since December 2011 at 0.8567.

Technical analysts at Commerzbank say that US currency may climb higher, to the 200-day MA at 0.8858 where traders may take profits.

The specialists claim that resistance for the pair USD/CHF is situated at 0.8850/0.8920 (double Fibonacci retracement and March 2011 minimum), 0.9158 (the 55-week MA) and 0.9340/0.9400 (March 2011 maximums and double Fibonacci retracement). According to the bank, support levels lie at 0.8520/0.8365 (23.6% and 38.2% retracements of US dollar’s September growth).

UBS: time to buy GBP/USD

2011-09-09 14:13

British pound fell versus its US counterpart from yesterday’s maximum at $1.6084 to 2-month minimums at $1.5915/20.

However, analysts at UBS think that sterling won’t stay below $1.6000 for long and note that the current levels represent good buying opportunities for GBP/USD. In addition, the bank says that EUR/GBP advance above 0.90 doesn’t seem sustainable and recommends investors to sell the pair.

In the current circumstances when the central banks all over the world are keeping loose policy the specialists expect the Bank of England won’t do more stimulus during the next 1-2 months as it will be watching inflation. That, according to UBS, will likely provide pound with significant support.

wynnasuju · September 12, 2011

Ichimoku. Weekly forecast. GBP/USD

2011-09-12 13:23

Weekly GBP/USD

Last week British pound survived rather strong decline versus the greenback – the pair GBP/USD opened below the Turning line (2) and fell to the rising Ichimoku Cloud (3) losing about 270 pips. Today sterling has opened already inside Kumo.

At the same time, the situation doesn’t look totally bearish: the short-term Tenkan-sen is directed horizontally, the longer-term Kijun-sen (1) is also going sideways. The Lagging Chinkou Span (4) has breached the price chart, though the signal is weak as at the moment of the intersection the price was found below Kumo. The lines of the Cloud are horizontal slightly deviating up.

As a result, it’s possible to assume that the prices won’t drop to the lower border of the Cloud, but found support in the area of the previous minimum at $1.5780 hit on July 12.

Daily GBP/USD

On the daily chart the picture seems to be more bearish – the trend has turned negative.

Both Tenkan-sen (2) and Kijun-sen (1) raced down keeping the “dead cross” in place. The Ichimoku Cloud (3) has turned downwards and keeps widening as the short-term Senkou Span A went sharply down, while the longer-term Senkou Span B is moving sideways.

The lines of the indicator will now provide only resistance for the pair. Pound may get support only from July low at $1.5780.

Ichimoku. Weekly forecast. USD/JPY

2011-09-12 13:25

Weekly USD/JPY

Once again we have to note that the situation on the weekly USD/JPY chart remains almost the same. The prices keep consolidating between 76 and 78 yen. High demand for yen keeps contrasting with the risk of the Bank of Japan’s interventions.

The greenback still lacks support, while resistance is provided by the declining Tenkan-sen and the horizontal Kijun-sen (1) as well as by the descending Ichimoku Cloud (3). The Turning line (2) and the Standard line (1) form the strong “dead cross” (5).

Daily USD/JPY

Last Tuesday US dollar has managed to overcome the Turning line (2) that provided US currency with resistance till the end of the week. Today, however, the pair USD/JPY has broken through the Turning line (2).

The Standard line went sharply down (1). Senkou Span B (3) remains horizontal, while the other border of Kumo – Senkou Span A – has reversed down widening the range of the bearish Ichimoku Cloud (4).

Before another correction the prices will likely dip to the record minimums.

Ichimoku. Weekly forecast. USD/CHF

2011-09-12 13:27

Weekly USD/CHF

On the weekly chart the pair USD/CHF has made a very powerful breakthrough rising above resistance of the Turning line (1) and the Standard line (2) and gaining more than 950 pips. The matter is that franc has weakened after Switzerland’s central bank has pegged the national currency to euro.

Tenkan-sen (1) reversed up aiming to cross Kijun-sen (2) and form the “golden cross”. The bearish Ichimoku Cloud is narrowing as Senkou Span “A” began growing (4). Resistance for the pair is currently provided only by Kumo.

Daily USD/CHF

On the daily chart the trend has finally switched upwards.

The prices rebounded from Kijun-sen (1), broke though Tenkan-sen (2) and easily went up through the Ichimoku Cloud. The bullish Cloud itself is rising. The Turning line (2) and the Standard line (1) are pointed up.

The outlook for the pair seems to be optimistic. The pair USD/CHF can make some pulls back down, but all in all the pair is likely to keep advancing. The lines of the Indicator will now act as support.

Market’s pricing in potential Greek default

2011-09-12 14:16

The single has slumped versus the greenback and Japanese yen on the talk that German Chancellor Angela Merkel is preparing for Greek default.

The pair EUR/JPY hit the lowest level since 2001 at 103.88 yen. The pair EUR/USD dropped to the minimum since February 16 at $1.3498.

According to 3 coalition officials, German government is discussing how to support the nation’s banks in case Greece doesn’t fulfill the requirements of the aid package and won’t get the next tranche of bailout payment. Merkel is also meeting European Commission President Jose Manuel Barroso today to discuss the possible solutions of the euro zone’s debt crisis.

Greek deficit targets are 17.1 billion euro for 2011 and 14.9 billion euro for 2012. Yesterday the country’s authorities decided to reduce one month’s wages for all elected officials and impose an annual charge on all property for 2 years.

Commerzbank: EUR/JPY will fall to 100 yen

2011-09-12 14:38

Technical analysts at Commerzbank note that the single currency has broken below the uptrend line from 2010 to 2011 at 107.41, 2011 low at 106.20 and 2010 minimum at 105.44 and hit 10-year low at 103.88.

The specialists think that EUR/JPY’s decline may continue until the pair drops to the levels in the 100.00 area. In their view, resistance for euro is situated at the previous minimums in the 105.44/106.20 zone.

Bearish forecasts for EUR/USD

2011-09-12 15:53

Royal Bank of Canada: euro has breached the “bearish triangle” getting under $1.4364 and dropped below the uptrend line from June 2010 at $1.3989. According to the specialists, EUR/USD is now poised down to the minimal level since January 17 at $1.3246.

Commerzbank: the single currency closed last week below major support levels of the 2010-2011 uptrend. The strategists expect the pair to fall to $1.3428/10 (February minimum and 50% retracement of the advance in 2010-2011). In the longer term EUR/USD will slide to $1.2000. In the near term euro will be capped by resistance at $1.3723/1.3840 (intraday Fibonacci retracements and the July minimum).

Scotia Capital: EUR/USD may hit levels between $1.30 and $1.35 any time. However, the analysts advise investors avoid trading the pair turning to USD/JPY and selling US dollars versus Japanese yen.

wynnasuju · September 13, 2011

Deutsche Bank: ECB rate forecast

2011-09-13 13:02

Analysts at Deutsche Bank believe that the European Central Bank will leave its benchmark rate at 1% until the end of the year.

Then they expect the ECB to cut the borrowing costs in December by 50 basis points in line with lowered growth and inflation forecasts.

The specialists note that there will be a lot of political pressure in November as Mario Draghi takes office as the ECB President after Jean-Claude Trichet. In their view, the ECB will take a long pause after reducing rates in December.

At the same time, the bank warns that one shouldn’t entirely rule out the possibility of October rate cut.

UBS: bullish outlook for US dollar

2011-09-13 13:25

Analysts at UBS note that despite US credit downgrade, the greenback has become the ultimate safe haven as other traditional refuges – Japanese yen and Swiss franc – are undermined by the efforts of Japan and Switzerland to weaken their national currencies.

The specialists underline that the European Central Bank and the Bank of England are seen easing their monetary policies. As a result, UBS claims that unless the Federal Reserve starts the third round of quantitative easing US dollar will keep strengthening against euro and pound.

Major banks’ forecasts for euro

2011-09-13 14:33

Some major banks are revising downwards their forecasts for the single currency versus the greenback as the euro zone’s debt crisis deepens and the pair EUR/USD hit yesterday 7-month minimum in the $1.3500 area. For example, UBS is reviewing its current estimate of euro’s rate by the end of the year at $1.35 and J.P. Morgan – the one at $1.36.

However, other banks think that it’s still too early to make significant changes to the outlook.

Deutsche Bank is already quite bearish on the European currency expecting it to fall to $1.30 by the end of 2011. Barclays Capital keeps its $1.46 year-end view, though its representatives claim that the bank is always considering revisions. HSBC is looking forward to $1.44 by the end of the year and points out that from the fundamental point of view nothing has changed as the market is perfectly aware of the seriousness of European debt issues.

The most bullish view on euro’s prospects has Goldman Sachs which reiterated EUR/USD forecast at $1.50 by the end of March. Bank of America-Merrill Lynch names $1.45 as the target for the end of 2011, Credit Suisse sticks to $1.40 in 3 months, though conceding the possibility of the lower levels in the near term.

Danske Bank: trading recommendations on USD/CHF

2011-09-13 14:58

Technical analysts at Danske Bank claim that though the greenback is showing sharp rebound versus Swiss franc it remains within the longer-term bearish channel.

The specialists note that USD/CHF is facing resistance at 0.8848 (38.2% Fibonacci retracement of the decline from 2010 maximum of 1.1730 to the all-time low of 0.7067), 0.8947 (May 13 maximum) and 0.9370/0.9399 (May 7 maximum and 50% Fibonacci retracement). In their view, the pair may dip to 0.7711 (September 2 minimum) and retest the record minimum at 0.7067.

According to the bank, it’s necessary to sell dollars versus francs at 0.9370/0.9399 stopping above 0.9784 or 1.0067.

J.P. Morgan, UniCredit warn about pound’s weakness

2011-09-13 16:09

Currency strategists at J.P. Morgan note that investors are generally negative on sterling. It’s possible to give several reasons for that:

- UK weak economic outlook (although annual inflation rose from 4.4% in July to 4.5% in August, the risk of double-dip recession isn’t ruled out; the housing market remains in trouble);

- The looming possibility of more quantitative easing by the Bank of England (finance minister George Osborne claimed that he object’t against additional bond purchases);

- The risk of UK financial institutions’ credit rating downgrade (British banks are exposed to Greece and the euro-zone banking community). The nation’s banks are on review of Moody's Investors Service since May.

As a result, sterling is seen falling like euro has been doing so far rather than getting support as a safe haven like the greenback. Strategists at UniCredit expect GBP/USD to slide to $1.55.

Standard Bank: sell EUR/JPY

2011-09-13 16:21

Currency strategists at Standard Bank advise investors to sell the single currency versus Japanese yen at 104.90 targeting 103.50 and 100.40. The specialists recommend placing stops at 108.10.

The pair EUR/JPY lost 9.2% during the past 3 months hitting yesterday 10-year minimum at 103.88.

wynnasuju · September 14, 2011

UBS: AUD/USD will fall to $1.0111

2011-09-14 12:20

Technical analysts at UBS note that Australian dollar fell versus the greenback from the recent maximums in the $1.0700 area and breached 61.8% Fibonacci retracement of the advance from August 8 to September 1 at $1.0250. The specialists believe that the pair AUD/USD is on its way down to $1.0111.

Credit Suisse, BarCap: the SNB's peg will spur inflation

2011-09-14 13:19

Analysts at Credit Suisse and Barclays Capital warn that Swiss National Bank’s decision to peg franc to euro threats to flood the nation’s financial system with cash spurring inflation. As a result, the central bank won’t fulfill its goal of price stability.

The SNB has also resorted to such policy in the 1978 when it set the ceiling for franc versus Deutsche mark. That led to a decade of surging inflation – annual price growth jumped from 1% that year to 7.5% by the middle of 1981. In addition, there was a real-estate bubble in the 1980s – in 4 years after the peg was announced the costs of rental apartments bounced by 52%.

Economists at the University of Zurich expect inflation to break above the SNB’s 2% limit during the next 3 years even if Swiss economic growth stumbles.

In August Switzerland’s CPI added 0.2% from the levels of the previous year. By the end of August SNB’s foreign-currency holdings reached the record maximum of 253.4 billion francs ($305.1 billion) that’s about a half of the nation’s GDP.

The SNB is now focusing on the exchange rate than on inflation. As the central bank’s head Philipp Hildebrand said, Swiss policy makers have started “a challenging journey” with possible “very high” costs.

Commerzbank: comments on USD/CAD

2011-09-14 15:48

Technical analysts at Commerzbank note that the greenback’s decline versus its Canadian counterpart from the parity levels was contained by the 55- and 200-day MAs in the 0.9783/21 region.

The specialists believe that the fact that US dollar managed to find support at those levels means that the minimums in the 0.9400 zone hit at the end of July will remain the long-term lows.

According to the bank, resistance levels for USD/CAD are situated at 1.0042 and 1.0058 (January 31 maximum). If the pair overcomes the latter level and closes above it fir 2 times in New York, it will be poised up to 1.0109/1.0139.

wynnasuju · September 16, 2011

The ECB will provide euro zone banks will dollar liquidity

2011-09-16 11:34

The single currency rose this week versus the greenback after the European Central Bank announced that it will lend US dollars to euro-zone banks in a series of three-month loans.

The ECB is going to join efforts with the Federal Reserve and other central banks to conduct three separate dollar liquidity operations on October 12, November 9 and December 7 to ensure lenders have enough of the currency through the end of the year. This would add to the central bank’s regular 7-day dollar offerings and will be fixed-rate tenders with full allotment.

Analysts at Australia & New Zealand Banking Group think that European banks are lacking liquidity because people don’t trust the economic policy structure in Europe. In their view, the dollar-swap will help to improve the situation, but still won’t be enough.

Today is the meeting of the EU finance ministers in Poland. US Treasury Secretary Timothy Geithner will also be attending the event. The ECB President Jean-Claude Trichet urged euro-area governments to act to stop the crisis.

The pair EUR/USD rose from 7-month minimum at $1.3495 hit on September 12 to the levels above $1.3800. At the same time many experts say that it would be hard for euro to get back to $1.40.

Commerzbank: comments on EUR/USD

2011-09-16 11:54

Technical analysts at Commerzbank note that euro’s upward correction versus the greenback from $1.3595 was greater when they have expected. In their view, EUR/USD faces resistance ahead of $1.4022/35 (the 200-week and the 200-day MAs) and won’t be able to overcome it.

The specialists reiterate that the longer-term outlook for the single currency is negative: the pair is seen falling to $1.3428/10 (February minimum and 50% retracement of the advance from 2010 to 2011) and then $1.20.

Credit Agricole reduced USD/JPY forecast

2011-09-16 12:50

Analysts at Credit Agricole lowered their forecast for the greenback versus Japanese yen by the end of the year from 90 to 80 yen and from 102 to 85 yen by the end of 2012.

The specialists note that there are 2 factors strengthening yen: firstly, its status of the safe haven and, secondly, US yield advantage over Japan has narrowed during the recent months. Credit Agricole underlines that the Swiss National Bank’s decision to peg franc to euro increases the attractiveness of Japanese currency. According to the bank, there is little chance that significant easing in risk aversion and/or better US economic data.

The pair USD/JPY keeps trading in the narrow range between 76 and 77.85 yen staying close to the record minimum at 75.94 yen.

FX Concepts about the situation in the euro area

2011-09-16 13:25

John Taylor, the head of the world’s largest currency hedge fund FX Concepts, believes that the single currency has to be restructured as the euro zone nations seem unable to coordinate their policy, while the continuous coherent action is what is needed to overcome the region’s debt crisis.

In his view, the ECB liquidity plan won’t solve any of the European major problems.

Taylor claims that there’s a mixture of a very unpleasant things in the euro area – a “horrific cocktail” – that consists of monetary restraint, tightness and fiscal austerity.

The specialist says that Greece ought not to leave the monetary union. In his opinion the nation is getting pushed out of the currency bloc but the policymakers do nothing to stop that process.

RBC: forecasts for USD/CAD

2011-09-16 14:08

Currency strategists at RBC Capital Markets believe that the greenback’s upward potential versus its Canadian counterpart in the medium term is limited as there’s no great demand for US currency.

The specialists note that loonie seem to be attractive for investors on the back of European debt crisis and easing policies conducted by the most of the developed nations’ central banks. In their view, in the current circumstances Canadian dollar is perceived as the hard currency that is widely traded all over the world and may serve as a good store of value.

The bank underlines that loonie was one of the worst performers June 2010 showing better results only against US dollar, so this may eventually help CAD strengthen versus other G10 currencies.

According to the bank, the pair will finish 2011 at 1.01, the first quarter of the next year at 1.00 and end 2012 at 0.98.

Credit Agricole corrected EUR/USD forecasts

2011-09-16 14:35

Analysts at Credit Agricole continue being bearish on the prospects of the single currency versus the greenback.

Never the less, the specialists revised their forecast for EUR/USD by the end of the year a bit higher from $1.3000 to $1.3700. Such change of the outlook reflects the expectations that the period of US economic weakness will last longer than it was thought before and that the Federal Reserve will further loosen its policy, though not in the form of the third round of quantitative easing.

The bank has cut 2012 euro zone’s growth forecast as well from 1.6% to 1.1%, while the growth in the second half of this year is seen as minimal. The ECB is likely pause its tightening cycle.

Nomura: euro will rise to $1.40

2011-09-16 14:59

Despite the deepening crisis in the euro area strategists at Nomura Securities see some light for the single currency. In their view, in the short term euro may strengthen versus the greenback.

The specialists underline that the central banks will likely buy euro to rebalance their portfolios for the end of the quarter. Nomura says that Greece may soon receive financial aid.

In addition, the Federal Reserve is expected to sound dovish on its meeting that is taking place next week on September 20-21 – dollar-negative factor.

According to Nomura, EUR/USD will reach $1.40 in the near term. However, the analysts are still bearish on the pair in the medium term – in the fourth quarter they see it drop to $1.30. As a result, the economists advise traders to use euro’s advance to sell it.

wynnasuju · September 19, 2011

European policymakers offered no plan

2011-09-19 11:12

The single currency opened with a bearish gap versus the greenback as the debt situation in the euro area remains very tough. The markets are extremely disappointed as the European finance ministers didn’t offer any solution of the debt crisis during the Ecofin summit in Poland.

US Treasury Secretary Timothy Geithner who attended the meeting proposed to increase the size of The European Financial Stability facility (EFSF) with the ECB funds, but German Finance Minister Wolfgang Schaeuble and Bundesbank President Jens Weidmann rejected this suggestion.

Today Greek Finance Minister Evangelos Venizelos meets the EU and the IMF officials to decide whether the nation can meet the conditions of the rescue loans and is eligible for the next tranche of the bailout payment in October and for a second rescue package.

It’s also necessary to note that Angela Merkel’s Christian Democrats were only second in Berlin state election – the sign that Merkel’s intention to save euro at any cost providing financial help for the troubled periphery nations is becoming more and more unpopular.

The pair EUR/USD lost 1% sliding from Friday’s close at $1.3795 to the levels below $1.3700.

Ichimoku. Weekly forecast. GBP/USD

2011-09-19 13:41

Weekly GBP/USD

Last week the bears have won once again: pound declined approaching the middle of the Ichimoku Cloud.

The lines Tenkan-sen (1) and Kijun-sen (2) have quitted neutral state deviating down. That means that the prices are likely to aim to the lower border of Kumo.

The bullish Cloud (3) itself is narrowing – the bulls keep losing powers.

Daily GBP/USD

On the daily chart the picture seems to be more bearish. All attempts of the bulls to push sterling higher were in vain. The Turning line (1), the Standard line (2) and Kumo are providing solid resistance for the pair GBP/USD.

All lines of the Indicator are directed down (1, 2, 3 and 4). The descending Ichimoku Cloud is widening as Senkou Span A (3) is moving only downwards.

As a result, technical analysis points out that the pound may keep depreciating.

Ichimoku. Weekly forecast. USD/JPY

2011-09-19 13:43

Weekly USD/JPY

The situation on the weekly USD/JPY chart remains almost the same. The prices keep consolidating between 76 and 78 yen. High demand for yen keeps contrasting with the risk of the Bank of Japan’s interventions.

The greenback still lacks support, while resistance is provided by the declining Tenkan-sen (1) and the horizontal Kijun-sen (2) as well as by the descending Ichimoku Cloud (3, 4). The Turning line (1) and the Standard line (2) keep the strong “dead cross” in place (5).

Daily USD/JPY

Last week the prices have once again dropped below the Standard line (1) and the Turning line (2) which now act as support for the greenback.

Kijun-sen (1) and Tenkan-sen (2) formed the “golden cross” (5), though the signal was rather weak as the intersection took place below the Ichimoku Cloud (3, 4).

At the same time, all lines of the Indicator turned horizontal (1, 2, 3 and 4) pointing at the continuing consolidation. US dollar may be able to rebound a bit, though it won’t manage to rise above Tenkan-sen (2).

Ichimoku. Weekly forecast. USD/CHF

2011-09-19 13:45

Weekly USD/CHF

On the weekly chart USD/CHF will keep consolidating in the 0.8700/0.8900 area after the powerful advance made after Switzerland’s central bank had pegged the national currency to euro the weak earlier.

Tenkan-sen (1) and Kijun-sen (2) have leveled up in the horizontal state providing support for the greenback. Resistance is generated only by Kumo (3, 4).

The Ichimoku Cloud is narrowing – Senkou Span A (3) is directed sideways, while Senkou Span B is moving down (3) to meet it.

Daily USD/CHF

The pair keeps moving within the uptrend.

Tenkan-sen (2) and Kijun-sen (1) have gone sharply up supporting the prices.

The bullish Ichimoku Cloud is rapidly widening as Senkou Span A (4) has jerked up, while Senkou Span B remains in the horizontal mode (3).

The rate’s consolidation seen last week may take some more time, but the general technical picture is positive.

Jyske Bank: sell GBP/USD

2011-09-19 17:06

British pound declined from last week’s maximum at $1.5870/85 to the 8-month minimums in the $1.5685 area.

Currency strategists at Jyske Bank are bearish on GBP/USD. The specialists advise investors to sell sterling taking profit at $1.5415 and placing stops at $1.6012.

According to the bank, pound is vulnerable due to the speculation that British budget deficit increased to 12 billion pounds in August after July’s almost 2-billion surplus. In such case, the UK will likely lose its credit rating.

The data on Public Sector Net Borrowing are published on Friday at 12:30 pm (GMT+4).

UBS, Nomura: dollar’s gaining ahead of the Fed

2011-09-19 18:10

US dollar strengthened versus euro, pound and commodity currencies ahead of the Federal Open Market Committee’s 2-day meeting that begins tomorrow.

Analysts at Wells Fargo, Barclays Capital and Goldman Sachs think that the FOMC may decide to replace some of the short-term Treasury securities in the Fed’s $1.65 trillion portfolio with the long-term debt in order to lower the nation’s rates. Such options in referred to among traders as «Operation Twist».

The dollar-positive factor is that the market doesn’t expect more quantitative easing. Other drivers of the greenback are renewed demand for safe havens and the elevated stock market volatility.

Analysts at UBS are positive on US currency in the medium term. Analysts at Nomura claim that the US monetary authorities are fulfilling their pledges and supporting the markets. In their view, the greenback will be more attractive than the single currency due to the continuing euro zone’s debt crisis.

However, though QE is unlikely, there’s some risk that the Fed expand its balance sheet on the negative economic data.

According to the data from the Commodity Futures Trading Commission (CFTC), the number of net short positions in euro has risen to 54,459 contracts during the week that ended on September 13.

UBS: technical comments on USD/CHF

2011-09-19 18:15

Technical analysts at UBS note that the greenback has risen from last week’s minimum at 0.8645 hit on September 15 to the levels above 0.8854. In their view, the pair USD/CHF can now climb to September 12 maximum at 0.8928 and then to April 20 maximum at 0.9012. The specialists claim that support in the near term is found at 0.8645.

wynnasuju · September 20, 2011

Commerzbank: bearish EUR/USD forecast

2011-09-20 12:04

Technical analysts at Commerzbank note that the single currency found itself under severe negative pressure versus the greenback yesterday.

The specialists underline that EUR/USD has so far closed below the major support represented by the 2010-2011 uptrend, the 55-week MA, the July minimum, the 200-week MA and the 200-day MA.

In their view, the pair is poised down to $1.3428/10 (February minimum and 50% retracement of the advance made in 2010-2011) and then to $1.2860 (2010 minimum).

As for the longer term, the bank keeps its target at $1.2000.

Forecast Pte expects GBP/USD to decline

2011-09-20 12:36

Technical analysts at Forecast Pte claim that British pound may fall versus the greenback to more than 8-month minimum at $1.5489, last seen on January 10.

This level represents 50% Fibonacci retracement of sterling’s advance from May 20, 2010, minimum at $1.4231 to the maximum of April 28, 2011, at $1.6747.

The specialists are bearish on GBP/USD as the pair has breached its 200-day MA. The MACD (moving average convergence/divergence) is still negative (at -0.0158, below the signal line at -0.012) that’s also a bearish signal.

According to the strategists, resistance is found at September 13 maximum of $1.5870. In their view, the downtrend is strong and any attempts of the bulls to push pound higher would result in nothing more than a correction.

S&P cut Italian credit rating

2011-09-20 13:53

The concerns about the euro zone’s future have strengthened as Standard & Poor’s lowered Italy’s credit rating from A+ to A.

The agency said that the nation having the second biggest debt burden in Europe after Greece will face a lot of obstacles in trying to reduce it. Among these difficulties the agency cited weakening economic growth, precarious position of Italian government and rising borrowing costs. S&P lowered Italian average annual economic growth forecast for 2011-2014 from 1.3% to 0.7%.

This month Silvio Berlusconi’s government has passed a 54 billion-euro ($74 billion) austerity package aiming to balance the budget in 2013. That allowed the ECB to buy Italian debt easing down the pressure on the nation.

The yield on Italy’s 10-year bonds rose to 5.619% that is 385 basis points more than similar German debt. Rising borrowing costs make it extremely hard for the country to sell more debt – Italy needs to sell more than 50 billion euro of bonds this year. There are 3 auctions set for next week starting on September 27.

Another major rating firm, Moody’s Investors Service, will decide next month whether to cut ratings on Italy and Spain.

BoA, Citigroup: Fed's decisions won’t affect the greenback

2011-09-20 14:25

The Federal Reserve’s 2-day meeting begins today. Tomorrow at 10:15 pm (GMT+4) the FOMC releases its statement and the Federal Funds Rate.

Investors expect American monetary authorities to announce Operation Twist – increasing the duration of the central bank’s bond portfolio in order to lower the long-term interest rates.

Analysts at Bank of America Merrill Lynch think that the news won’t make any significant impact on the greenback’s rate as they are already largely priced in by the market. The specialists underline that since such option as Operation Twist was mentioned in August the dollar index has added 4.2%, so its implementation will lead to neutral effect.

Currency strategists at Citigroup share this opinion. The bank leaves room for some short-term effects, but thinks that the market’s attention will be focused on the euro zone’s debt crisis and even on the concerns about Asian economic growth.

Barclays Capital: survey on euro’s prospects

2011-09-20 15:04

Analysts at Barclays Capital conducted survey among more than 500 institutional investors on the prospects of the single currency.

The majority of respondents (56%) believe that the European Central Bank will undertake large-scale buying of sovereign debt from troubled countries like Italy and Spain. Some of the interviewed think that the currency bloc will ultimately turn into the fiscal union. Barclays note that many investors think that some form of quantitative easing is likely in Europe.

However, almost 25% of the surveyed expect the euro area to break up. In the bank's second-quarter survey, only 1% expected sovereign-debt restructuring in many countries, leading to a euro-zone breakup in 2012. The number of respondents expecting some adverse spillover onto emerging markets almost doubled to 30% compared with the previous quarter.

Nearly 70% of foreign-exchange investors surveyed think that the markets will be focused on euro zone's issues in the next 3 months. 60% of equities investors regard the European banking crisis as the biggest risk to global stock markets. The pair EUR/USD is now seen trading below $1.35 during the next half a year.

MIG Bank: bearish view on USD/CHF

2011-09-20 15:30

The greenback rose versus Swiss franc from last week’s minimum at 0.8645 hit on September 15 but its advance was limited by the resistance around 0.8875.

Technical analysts at MIG Bank think that USD/CHF may return down to 0.8645 and then drop to 0.8400 and 0.8250. In their view, the pair remains vulnerable to the potential declines as long as it’s trading below 0.8929.

Switzerland: GDP forecast’s reduced

2011-09-20 16:53

Switzerland’s government lowered its economic-growth forecasts for 2011 and 2012 from 2.1% and 1.5% to 1.9% and 0.9% respectively. Export growth estimate was trimmed from 4.6% this year and 3% the next to 3.2% and 0.7% respectively.

The reason for this downward revision is the fact Swiss franc’s rate is still excessively strong even after the Swiss National Bank has set the ceiling for the nation currency’s rate versus euro. According to the data released today, the nation’s exports fell in August by 7%.

The nation’s authorities say that isolated quarters of economic contraction are possible, though deep recession seems to be unlikely.

wynnasuju · September 21, 2011

Commerzbank: USD/CHF is gaining on the SNB talk

2011-09-21 11:39

The greenback went up versus Swiss franc from the day’s minimum at 0.8692 getting above 0.8940 on the speculation that the Swiss National Bank has imposed a tighter peg for the national currency. There’s talk that the SNB has removed the EUR/CHF target up to 1.25 per euro. The central bank didn’t confirm the information, but franc is experiencing general weakness.

Technical analysts at Commerzbank note that USD/CHF has broken up important resistance at 0.8850/0.8950 (double Fibonacci retracement, 200-day MA and May minimum). In their view, US dollar is on its way up to 0.9103 (55-week MA) and 0.9340/0.9400 (March maximums and double Fibonacci retracement).

According to the bank, support for the pair is found at 0.8640/0.8462 (23.6%/38.2% retracement of dollar’s advance in September).

BarCap: ECB will cut rates in October

2011-09-21 13:00

The International Monetary Fund claimed that the European Central Bank should lower its benchmark interest rate from the current 1.5% level if the euro zone’s economic growth remains at risk.

Analysts at Barclays Capital expect the ECB to reduce the borrowing costs by 25 basis points the next month to 1.25% and to widen the interest rate “corridor” back to +/-100 basis points which would make the deposit facility decrease by 50 basis points to 0.25%. Taking into account the excess bank reserves, that would let the EONIA (overnight) rate to trade significantly lower.

According to the bank, things remain like that until there’s need for policy normalization. The specialists believe that it may happen in the second half of 2013.

Westpac: commodity currencies are seen declining

2011-09-21 13:19

Analysts at Westpac note that the ongoing euro zone’s debt crisis is seriously hurting investors’ risk sentiment bringing their attention to Greece and Italy. In their view, the risky currencies currently seem to be very vulnerable.

The specialists recommend selling commodity currencies. In particular, the bank prefers shorts on Australian dollar versus its US counterpart targeting 1.0000 and stopping above 1.0335.

Credit Agricole: pound’s declining after MPC minutes

2011-09-21 14:19

British pound fell to the 8-month minimum versus the greenback at $1.5612.

It happened after the Bank of England’s Monetary Policy Committee’s September meeting minutes showed that the policymakers are regarding the possibility of embarking on additional monetary stimulus.

The MPC members point out that UK GDP growth in the second half of 2011 may be significantly weaker than it was thought last month.

Analysts at Commerzbank note that the central bank has made it clear that if the situation worsens, it’s going to ease it policy. In their view, Britain’s economic prospects are very uncertain and the nation is vulnerable to substantial downside risks.

The officials voted 8-1 to maintain the current size of the asset purchase program and were unanimous in keeping the benchmark rate at the record minimum of 0.5%.

Currency strategists at Credit Agricole claim that sterling will go down to test $1.55. In their view, the currency will remain under pressure during the next few weeks as the as market shifts expectations for a UK QE2 to the November meeting.

Analysts at Morgan Stanley keep being bearish on GBP/USD expecting the pair to fall to $1.53 by the end of the year and to $1.51 at the beginning of the next year.

IMF lowered economic forecasts

2011-09-21 15:09

The International Monetary Fund lowered US economic growth forecast for 2011 and 2012 from 2.5% and 2.7% (June’s estimate) to 1.5% and 1.8%. The outlook for the euro area was reduced from 2% this year and 1.7% the next to 1.6% and 1.1% respectively. The world’s GDP will increase by 4% as in 2011, as in 2012 versus 4.3% and 4.5% advance seen earlier.

According to the organization, global economy is entering a “dangerous new phase” and the policymakers are to act decisively reducing deficits in order to improve prospects and reduce risks.

Bank of Canada isn’t concerned about inflation

2011-09-21 18:21

According to the data released today, annual Canadian CPI growth speeded up from 2.7% in July to 3.1% in August, while the economists were looking forward to only 2.9% increase.

Bank of Canada Governor Mark Carney said yesterday that the central bank may keep the borrowing costs low until full output is restored. According to Carney, Canada’s recovery will be affected by economic weakness of the United States, its biggest trade partner.

The head of the central bank didn’t express any concerns about inflation. Analysts at TD Bank believe that August burst of inflation will prove to be only temporary.

Canadian GDP contracted by 0.4% in the second quarter. The IMF lowered yesterday the nation’s 2011 economic growth forecast from 2.9%, according to June’s estimate, to 2.1%.

Canadian dollar is weakening versus its American counterpart for the third day in a row on the declining oil price. The pair USD/CAD rose from Monday minimum at 0.9778 approaching the parity level.

Commerzbank: technical comments on USD/CAD

2011-09-21 18:22

US dollar rebounded this week versus its Canadian counterpart using support provided by the 200-day MA at 0.9777 reaching the parity level.

Technical analysts at Commerzbank note, however, that USD/CAD’s advance will be limited by resistance in the 1.0000/58 zone. According to the specialists, this area contains 50% retracement of the decline in 2010/2011 and January maximum. If the greenback eventually manages to overcome 1.0058 and close above this level in New York for 2 times, it will be able to rise to 1.0109/1.0139.

The bank says that support for the pair is found at 0.9742/26 (55-day MA and late August minimum).

UBS: bullish outlook for EUR/CHF

2011-09-21 18:35

Analysts at UBS are bullish on the single currency versus Swiss franc.

In their view, the outlook for EUR/CHF has become positive as the pair broke yesterday above resistance at 1.2191.

The specialists expect euro to rise to 1.2346 and then to 1.2469. Support for the European currency lies at 1.2051.

wynnasuju · September 22, 2011

The Fed conducts Operation Twist

2011-09-22 12:45

The Federal Reserve announced yesterday that it will conduct an Operation Twist or, in other words, lengthen the average maturities of the Treasuries in its portfolio from 75 to 100 months (8 1/3 years) by the end of 2012 by buying $400 billion of long-term debt (with maturities of 6-30 years) through June, while selling an equal amount of shorter-term securities maturing in 3 years or less.

In addition, the central bank will reinvest maturing mortgage debt into mortgage-backed securities instead of Treasuries in order to improve the situation in the mortgage market.

The Fed’s goal is to lower longer-term borrowing costs making financial conditions more accommodative. The Federal Open Market Committee (FOMC) reiterated its pledge to keep the benchmark interest rate near zero until the middle of 2013 as the US suffers from high unemployment and the inflation outlook is subdued. At the same time, it’s necessary to note that the rates are already pretty low – the yields on 10-year Treasuries fell from 2011 maximum of 3.74% reached in February to 1.86%.

Analysts at Barclays Capital regard Fed’s actions as a modest step. In their view, this may be only the beginning of easing and the central bank may become more aggressive if they don’t see the economic growth improving. However, Richard Fisher, Narayana Kocherlakota and Charles Plosser – the heads of the federal banks of Dallas, Minneapolis and Philadelphia – voted against the FOMC decision for the second time in a row as they are against of additional monetary stimulus.

Barclays, Citi: comments on USD/JPY

2011-09-22 13:49

Yesterday the greenback tested the levels in the 76 yen area – the lowest since it hit the record minimum of 75.95 yen on August 19.

Early today USD/JPY rose almost to 77 yen as the Federal Reserve announced the Operation Twist and not the quantitative easing. In addition, the market’s wary that the Bank of Japan’s may once again step in to weaken the national currency.

Then the pair erased its advance returning down to 76.15/30. Resistance levels are situated at 77.00 (September 19 maximum/today’s maximum), 77.35 (September 15 spike high) and 77.85 (September 9 maximum).

Analysts at Barclays note that investors become more risk-averse after the Fed’s statement as the central bank sounded pessimistic. According to FOMC, there are serious risks to the US economic prospects partly caused by the turmoil associated with the euro zone’s debt crisis. The specialists note that the talk about the possible BOJ intervention has set floor for USD/JPY.

Japanese Finance Minister Jun Azumi reiterated yesterday that the nation’s closely watching markets and will act decisively if needed. At the same time, analysts at Citi don’t worry much about the potential Japan’s action noting that Japanese officials got used to treat the effects of strong yen through exports subsidies. In addition, the nation is unlikely to make too sharp moves ahead of G20 meetings on Thursday and Friday.

AUD/USD fell below the parity level

2011-09-22 15:03

Australian dollar has slumped today below the parity versus the greenback for the first time in more than 6 weeks.

Aussie was affected by HSBC Manufacturing PMI preliminary data that declined from 49.9 in August to 49.4 in September – a reading below 50 signals a contraction in the nation’s manufacturing.

Australia & New Zealand Banking note that concerns about the global economic growth make serious negative pressure on AUD. The currency is especially vulnerable to lower Chinese figures as China is Australia’s largest trading partner, the main buyers of Australian commodities. The International Monetary Fund revised downwards its economic growth forecasts this week. In addition, analysts at Westpac claim that the Federal Reserve’s yesterday statement sounded pessimistic and the central bank didn’t surprise the market.

The pair AUD/USD went down from Friday minimum at $1.0398 to the levels in the $0.9825 area.

Greece keeps tightening belts

2011-09-22 16:23

Greece announced that it plans to accelerate budget cuts in order to obtain the next tranche of bailout.

Additional austerity measures announced yesterday include a 20% cut in pensions of more than 1,200 euro ($1,627) a month and lower wages for 30,000 state employees.

Greek government pledged yesterday to complete the 28-billion-euro cuts in June by 2014 instead of 2015.

Talks on the Greek aid payments resumed after IMF and EU monitors suspended the negotiations earlier in September after the data showed that Greece’s budget deficit this year through August widened to 18.9 billion euro exceeding the 18.1-billion-euro target. Greece aims to cut its budget shortfall from 10.5% in 2010 to 7.5% in 2011.

According to IMF forecast, Greek economy will contract by 5.5% this year and by 2.5% in 2012.

Mizuho: pound renewed minimum versus yen

2011-09-22 18:06

British pound dropped versus Japanese yen and renewed the record minimum hitting 117.00. The previous all-time low of 118.78 was set in January 2009.

Technical analyst at Mizuho Corporate Bank note that GBP/JPY is currently trading at two standard deviations below the average level of the past 10 years at 182.00, but above the 40-year mean regression at 107.00.

According to the bank, sterling may lose more sliding to 115.00 and 110.00.

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