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Old 23-02-2012, 01:56 AM   #11
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Default Nomura: USD/JPY forecast revised up

Analysts at Nomura revised up their forecast for USD/JPY from 75 to 79 yen by the end of the first quarter of 2012. The forecasts for the end of Q2 and the year-end were left unchanged at 80 and 81 yen consequently.

The specialists claim that odds that the greenback will resume its decline decreased due to the Bank of Japan’s additional quantitative easing, better US macroeconomic data and easing tensions in the euro area.

Nomura draws investors’ attention to the fact that Japanese central bank decided to increase investment in the government bonds with maturity of 1-2 years. This would cap the possibility of 2-year yield growth. As a result, the yield differential between 2-year US and Japanese securities will increase encouraging USD/JPY. In addition, internal capital flows also point at yen’s gradual depreciation.



Chart. Daily USD/JPY


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Old 24-02-2012, 12:46 PM   #12
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Default Barclays Capital expects USD/JPY to consolidate

Analysts at Barclays Capital claim that the greenback will consolidate between 78.50 and 80.50 yen ahead of the US February jobs report which is released on March 9.

The specialists think that after the pair USD/JPY has made such an impressive progress this month rising from 76 to 80.50 yen it currently lacks strong indicators for further advance, so the market will likely stand still ahead of the labor market data. According to the bank, the risk of the Federal Reserve announcing another round of quantitative easing is low.



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Old 25-02-2012, 08:54 AM   #13
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Default FBS Breakeven Trading

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Old 27-02-2012, 02:47 PM   #14
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Default USD/JPY again renewed maximums

The greenback made a spike higher today spiking to almost 4-month maximum at 81.67 yen due to improved US economic data and the increased possibility that the crisis in the euro area will be contained. After reaching the new high dollar backed down correcting after a rapid advance.

Analysts at Ueda Harlow claim that investors aren’t afraid to sell yen anymore as they believe that the worst case scenario for global economy will be avoided. The G-20 is making efforts to solve the debt crisis, note the specialists.

Strategists at UBS think that the pair USD/JPY is now trending upwards. In their view, the Bank of Japan has finally shown its determination to use aggressive approach combating yen’s appreciation.

Analysts at Westpac claim that US currency is currently overbought and will return to 79 yen and then resume growth. According to the bank, USD/JPY will meet resistance at 82 yen. If the pair breaks above this level, it will be able to rise to 85.60 yen.



Chart. Daily USD/JPY


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Commerzbank: comments on USD/CHF

Technical analysts at Commerzbank believe that the greenback may fall versus Swiss franc to 0.8788/71 (78.6% Fibonacci retracement and 200-day MA).

According to the bank, key support for USD/CHF is situated at 0.8568 (October minimum).

The specialists are bearish on US currency as it dropped below 0.8960 (61.8% Fibonacci retracement of the pair’s advance from October to January). In their view, the short-term outlook remains bearish as long as US dollar trades below resistance in the 0.9066/88 area.

In the medium term Commerzbank expects USD/CHF to return to the levels around 0.9595 (January maximum).



Chart. Daily USD/CHF


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Banks' forecasts for FX majors




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SocGen: EUR/USD will decline

Analysts at Societe Generale claim that the single currency may weaken by 6% versus the greenback sliding to $1.2590.

The specialists keep thinking that euro’s advance from this year’s minimum at $1.2624 hit on January 13 was only a correction within the middle-term downtrend. In their view, the resistance line of the descending channel at $1.3570 will likely cap euro on the upside.

According to the bank, EUR/USD will decline to $1.2590/$1.2620.



Chart. Daily EUR/USD


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CFTC trader positioning data

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

• Euro shorts declined from the previous week’s total of 148.6K to 142.3K contracts.
• British pound shorts decreased from 40.6K contracts on February 14 to 31.3K contracts on February 21. Longs on sterling were cut by almost 8K contracts, while shorts were reduced by almost 11K contracts.
• Japanese yen net longs declined from 29.4K contracts reported on February 14 to 17.3K as the data on February 21 showed.
• Swiss franc net shorts extended from 15.9K net short contracts on February 14 to 19.8K contracts on February 21. Short positions increased surpassing small increase of longs.
• The value of US dollar's net long position rose to $17.25 billion in the week ended February 21 from $16.98 billion the previous week.

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.


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Old 28-02-2012, 03:48 AM   #15
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Default US employment forecasts improved

US National Association for Business Economics announced today that the forecasts for US employment improved.

According to NABE’s survey of the leading economists, payrolls will rise 170,000 a month on average in 2012. In November the consensus was of 127,000 new jobs a month. Unemployment will average 8.3%, down from 8.9% be the previous estimate.

Such change in expectations reflects a potential positive shift in consumer confidence and better growth prospects for the world’s largest economy. At the same time, economists maintained forecasts for consumer spending, which may rise 2.1%, and predicted GDP to add 2.4% in the fourth quarter from a year earlier, unchanged from the November survey.

In January US non-farm payrolls by 243,000, showing the biggest advance in 9 months, while the unemployment rate fell to the minimal level since February 2009 at 8.3%.

US February labor data will be released on March 9.


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Old 28-02-2012, 05:14 PM   #16
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Default Forecast Pte: USD/JPY is facing correction

Yesterday the greenback spiked to 81.67 yen reaching the maximal level since May 31. Since the end of January it gained more than 5%.

However, technical analysts at Forecast Pte claim that the pair USD/JPY may lose about 1.5%.

The specialists base their conclusions on the momentum indicators. The greenback’s 14-day relative strength index was at 72 yesterday, above the 70 level some traders see as a sign an asset’s price is set to change course.

“The candle formation looks to signal a possible reversal,” say the analysts noting that American currently seems to be extremely overbought.

As a result, the specialists think that US dollar will go though correction in the short term. In their view, USD/JPY may drop to 78.85 yen (50% retracement of dollar’s advance from the February 1 minimum to yesterday’s maximums). Then the pair may climb to 85 yen in the next 1-3 months.



Chart. Daily USD/JPY


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BBH: US dollar’s under pressure due to oil prices

Analysts at Brown Brothers Harriman note that as oil prices are rising, US dollar will find itself under pressure.

The specialists say that the current oil price’s advance is caused by several factors. Firstly, supply from Sudan, Syria and Yemen has sharply contracted due to political instability if not to mention Libya and Iran. Secondly, Japan’s increasing oil consumption replacing nuclear fuel. Moreover, the unusual cold in Europe may be fueling demand as well.

According to BBH, high oil prices increase the risk that the Federal Reserve will launch another round of quantitative easing as the economy of the United States will suffer as oil import becomes more and more expensive.

The Fed’s Chairman Ben Bernanke will be testifying before Congress on Wednesday and Thursday, so the bank recommends watching his comments for the hints of the central bank’s opinion on the issue.


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Westpac: trading ahead of LTRO

The European Central Bank will conduct its second LTRO operation on Wednesday, February 29.

The first round of low-cost refinancing operation took place in December: European banks got 489 billion euro in 3-year credits.

Analysts at Westpac claim that if the region’s banks borrow less than 480 billion euro, investors will worry that the markets are too illiquid and will buy the safe-haven greenback against Canadian dollar. At the same time, if banks borrow more than 480 billion euro, one should sell US dollar versus its Canadian counterpart.

The specialists favor the second outcome and recommend traders to take risk. Westpac advices to go short on USD/CAD stopping at 1.0060 and targeting 0.9770.

At the same time, the bank warns that one has to be careful as investors could soon change course if they reevaluate and decide that a large take-up implies weakness in the system.



Chart. Daily USD/CAD


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Barclays: comments on USD/JPY

Technical analysts at Barclays note that the pair USD/JPY tested the levels above the weekly Ichimoku Cloud and are now looking for confirmation of the bullish trend.

The specialists claim that the greenback may add about 10% versus Japanese yen if it managed to close the month above 21-month MA at 80.90 yen. In this case American currency will climb to 88 yen.



Chart. Daily USD/JPY


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Nomura: forecast for euro is still bearish

Nomura has made the best 3-month forecasts for EUR/USD and USD/JPY, according FX Week. Such conclusion was made due to the comparison of the bank’s 3-month projections made in the middle of November and the actual rates at the middle of February. What does the bank expects next?

Nomura is still bearish on the single currency. According to Nomura, the pair EUR/USD will fall to $1.20 by the middle of this year. The analysts think that the sovereign debt crisis will continue in spite of last week's bail-out package for Greece as other European economies may find themselves in need of bailouts as well.

The specialists think that the European Central Bank's second longer-term refinancing operation LTRO on Wednesday will be lower than expected: the banks will get only 200-300 billion euro from the ECB. At the same time, according to the survey of Nomura’s clients most people are expecting ECB to grant the region’s 500 billion euro in credits. As a result, the bank thinks that euro will start sliding in case of the lower number.



Chart. Daily EUR/USD


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Old 29-02-2012, 01:42 PM   #17
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Default Citigroup: sell EUR/GBP

According to the Confederation of British Industry, the gauge of retail sales growth improved from minus 22 in January to minus 2 in February (versus -17 forecast).

British pound declined by 1% versus the single currency since February 21, the day before Bank of England minutes showed two policy makers voted for a larger increase in asset purchases than agreed at this month’s meeting.

Analysts at Citigroup think that now there’s a good chance to buy pound n the dips. The specialists advise traders to open shorts on EUR/GBP at 0.8473 targeting 0.8250 and stopping at 0.8555.



Chart. Daily EUR/GBP


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BOTMUFJ: EUR/USD technical forecast

Technical analysts at Bank of Tokyo-Mitsubishi UFJ claim that the single currency may rise to the 200-day MA at $1.3722.

The specialists note that EUR/USD’s 5- and 21-day MAs are both pointing up – long-term bullish signal.

At the same time, the bank says that if euro doesn’t manage to overcome $1.3509 (38.2% Fibonacci retracement from the pair’s decline from the May 4 maximum at $1.4940 to January 13 minimum at $1.2620), it may slide to the 90-day MA at $1.3243. As the recent advance of the single currency was very rapid, EUR/USD may survive short-term correction.



Chart. Daily EUR/USD


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ECB allotted 530 billion euro to euro zone’s banks

The single currency fell versus the greenback after the European Central Bank the injected a huge amount of three-year cash into the banking system.

The ECB allotted 530 billion euro in 3-year contracts at 1% interest. The first long term refinancing operation (LTRO) in December accounted only for 489 billion euro. However, the figure was close to what the market has been expecting, so EUR/USD got limited on the upside.

One may see that euro’s correlation with risky assets has broken as higher-yielding currencies such as Australian and New Zealand’s dollars rallied against US dollar. The reason is that increased liquidity may boost carry trades in which investors use lower-yielding currencies buy riskier assets, so that EUR will get under pressure.

On the one hand, money from the ECB will help the region’s banks to meet their financing needs and continue easing tension at the euro zone’s bond market. On the other hand, LRTO can’t resolve the euro zone debt crisis and the excess liquidity could weigh on the single currency in coming months.

Support levels for EUR/USD lie at $1.3400 and $1.3388, while resistance levels are situated at $1.3485, $1.3500 and $1.3547.



Chart. Daily EUR/USD


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Old 02-03-2012, 02:54 PM   #18
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Default SocGen: China may lower GDP target

The National People's Congress will convene in China on March 5 and last for a week discussing the Government Work Report which will reveal the nation’s targets for growth and inflation, detail the fiscal budget and the priorities for reforms in 2012.

Analysts at Societe Generale believe that the general direction of Chinese policymakers will remain the same: the nation will continue being focused on “making progress while maintaining stability”. In their view, China will reiterate “prudent monetary policy” and “proactive fiscal policy”.

According to the bank, China will likely diminish GDP target to 7.5% indicating increasing commitment to structural reforms and less appetite for aggressive investment stimulus.


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Rabobank: comments on EUR, AUD, CAD

Analysts at Rabobank believe that the single currency will fall to $1.25 versus the greenback by the middle of May and then return to growth targeting $1.40 in the longer-term as the specialists believe that US dollar will be weakened by the Fed’s policies and economic growth slowdown.

The bank is bullish on the Australian dollar and the Canadian dollar. In their view, these commodity and growth-linked currencies are helped by the success of the LTRO which improved investors’ sentiment. The analysts aren’t sure that Aussie and loonie will be able to maintain the gains for the duration of the year, but for now they seem to be supported well enough.



Chart. Daily EUR/USD


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BofA revised forecasts for euro, pound

Analysts at Bank of America claim that although the single currency declined yesterday versus the greenback after the LTRO results and Bernanke’s testimony, EUR/USD prospects have so far improved.

The specialists expect the market’s risk sentiment to stay elevated as the situation at the European peripheral debt markets as well as the general state of global economy improved.

The bank increased EUR/USD forecast from $1.25 to $1.30 by the end of the second quarter and from $1.30 to $1.33 by the year-end. In addition, the projections for EUR/JPY were revised up from 91 to 105 yen by June 30 and from 99 to 109 yen by the end of December.

Bank of America thinks that Canadian, Australian and New Zealand’s dollars have good chances for appreciation. As for British pound, the analysts are pessimistic and lowered forecast for GBP/USD for the end of 2012 from $1.53 to $1.51.



Chart. Daily EUR/USD


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Ireland will hold referendum on the Fiscal Compact

Ireland's Prime Minister Enda Kenny announced on Tuesday that he would sign the EU’s new fiscal treaty on Friday, but then the issue will be put on a public referendum. The date for that isn’t defined yet, but it may be scheduled for May or June.

The outcome is uncertain as the Irish rejected the two most recent European Union treaties before passing them in repeat referendums only after concessions were offered.

The fiscal treaty agreed in January by 25 of the 27 EU countries (except the UK and Czech Republic) proposes tough new deficit and debt limits for euro zone members in order to prevent future financial crises. The so-called Fiscal Compact will become binding once 12 of the euro zone's 17 members ratify it, so the Ireland’s decision isn’t critical for the treaty’s fate.

However, as for Ireland itself it seems to be a matter of great importance as the fiscal treaty emphasizes that any members who fail to ratify the pact by March 2013 will be blocked from receiving funds from the future European Stability Mechanism. In 2010 Ireland got bailout from the EU and the IMF and will be funded until late 2013. Never the less, many experts think that the nation will need new loan package next year.

Analysts at Danske Bank believe that the “yes”-vote is the most likely outcome of the referendum. In their view, the Treaty may be possibly ratified in a second vote like it was with the Lisbon treaty.


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Yen will keep declining due to BOJ’s loose policy

The greenback rose versus Japanese yen approaching February 27 maximum at 81.67 yen.

Yen weakened versus the majority of its counterparts as, according to the data released today, the nation’s CPI fell by 0.1% in January (y/y) declining for the fourth month in a row. According to Bloomberg Correlation-Weighted Indexes, yen lost 6.9% during the past 3 months versus other developed-market currencies.

Last month the Bank of Japan set inflation target at 1%, so the market expects that it will keep easing monetary policy in order to meet this goal. The central bank will meet on March 12.

Analysts at Morgan Stanley increased forecast for USD/JPY for the first quarter from 75 to 80 yen citing “more aggressive dovish” approach of the BOJ.

Strategists at UBS don’t agree with the widespread idea that yen may strengthen towards the Japanese fiscal year-end at March 31. The specialists think that Japanese investors won’t need to repatriate their profits as domestic financial sector looks quite healthy. In addition, Japanese investment flows were net buyers of foreign assets in the first quarter since 2007, and that trend seems unchanged. According to UBS, USD/JPY will rise to 85 7yen in 3 months. Among the reasons why to be negative on yen the bank names high likelihood of further monetary easing in Japan, the widening of the gap between the US and Japanese benchmark bonds and the increasing oil prices.



Chart. Daily USD/JPY


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Citi: comments on EUR/USD

Analysts at Citi believe that traders will sell the single currency on any rallies versus the greenback unless we see a sustained improvement in euro zone’s fundamentals. The specialists say that EUR/USD may face resistance at $1.3500 marking the level where selloffs are likely to start.

In their view, the ECB’s LTRO made euro often used as a funding currency. At the same time, Citi points out that on the downside, EUR’s decline will be contained as oil exporters convert their dollar revenues into euro and the fact that investors are extremely short on euro. As a result, some short-term short-covering advances may happen. So, Citi expects the pair to trade sideways for some time.



Daily EUR/USD


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RBC: technical levels for USD/JPY

Analysts at RBC Capital Markets claim that if the greenback manages to close today above 81.47 yen, its chances for sustained growth will significantly increase.

The specialists think that resistance for USD/JPY lies at 82.21 and 83.09 yen.

On the downside, if US currency closes the day below 80.02, its rate will decline to support at 79.31 and 78.23 yen.



Chart. Daily USD/JPY


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Morgan Stanley increased EUR/USD forecast

Analysts at Morgan Stanley raised forecast for the pair EUR/USD buy the end of March from $1.27 to $1.34.

In their view, the short-term outlook for the single currency has improved as the ECB’s LTROs help to ease the tensions about the European sovereign debt and banking sector.

At the same time, the specialists are still bearish on euro in the longer-term perspective. The bank reiterated that the pair will likely slide by the end of the year, though the projection was lifted a bit higher, from $1.15 to $1.19.



Chart. Weekly EUR/USD


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Old 05-03-2012, 03:49 PM   #19
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Default CFTC trader positioning data

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

• Euro shorts declined from the previous week’s total of 142.2K to 109.7K contracts.
• British pound shorts decreased from 31.3K contracts on February 21 to 23.2K contracts on February 28. Sterling positions are now their best level since September 6 when positions accounted for 13.2K short contracts.
• Japanese yen positions declined from 17.3K net long contracts on February 21 to 1.2K net long contracts on February 28. Yen speculative positions have reached minimum since May 31 when positions totaled 1.6K short contracts. Strategists at Scotia Capital note that yen longs have completely capitulated ever since the shift in stance coming from the Bank of Japan of a far more aggressive monetary policy. In their view, although the gross long position in yen shifted lower this week, the gross short has almost doubled in the last four weeks, highlighting the changing market view on the yen.
• Swiss franc net shorts slightly decreased from 19.8K contracts on February 21 to 19.4K contracts on February 28. Short positions increased surpassing small increase of longs.

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.


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Mizuho, Citigroup on USD/JPY

The greenback declined versus Japanese yen as the market players were taking profits after the pair USD/JPY reached 9-month maximum last week at 81.87 yen. At the same time, the pair’s decline was limited as Japanese importers were buying US currency on the dips.

The most eyed event this week is the release of US February Non-Farm Payrolls on Friday. Analysts at Mizuho Corporate Bank claim that if the data is strong, US dollar may add about 1.5 yen to the levels around 83 yen. However, the specialists warned that the things may not go that smooth as the employment component of the ISM manufacturing survey declined last month (m/m). According to the bank, weak payrolls figures will bring dollar down to 80.00 yen.

Strategists at Brown Brothers Harriman also advise traders to watch Greece’s debt swap deal as it may increase uncertainty and risk aversion encouraging yen this week. Bondholders have until March 8 to sign up to the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal that will see the nominal value of their holdings cut by 53.5%.

Economists at Citigroup are positive on USD/JPY in the longer term. The specialists point out that the pair closed in February above 21-month MA for the first time since 2007 – very positive technical signal. However, in the short term there’s the high risk of dollar’s correction to 78.00/50 yen. The longer term target is bullish – 98 yen in the coming weeks. The main resistance for USD/JPY is situated at 100-week MA in the 82.10 yen area.



Chart. Daily USD/JPY


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Watch US employment data on Friday

The US nonfarm payrolls report will be released on Friday, March 9.

In January US payroll rose by 243,000 and showed a highest increase during a nine-month period. The expected payroll growth in February is 250,000; however, some specialists forecast even a more significant upturn.

In case if employment increases less than by 200,000, Westpac Institutional Bank analysts recommend selling the dollar against the Japanese yen. However, it is more likely that the payrolls come in better than expected. In this case it will be beneficial to sell the dollar against the Canadian dollar because of the positive impact of the statistics on the Canadian economy. The specialists recommend going short on USD/CAD at 0.9880 stopping at 1.0060 and targeting 0.9400.

Analysts at Deutsche Bank believe that the growth of the Consumer Confidence Index and the labor market expectations point at forthcoming changes in the economy.



Chart. Daily USD/CAD


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Deutsche Bank: pound may strengthen vs. Aussie

Analysts at Deutsche Bank believe that British pound may strengthen versus Australian dollar in the coming months.

The specialists give the following reasons for such assumption:

- Chinese economic growth is slowing down. As Australian economy is tightly connected with the China’s one which is the nation’s major export market, Australian dollar will likely get under pressure.

“To a growing cohort of offshore commentators, China is a classic bubble on the brink of collapse. Its economy is chronically unbalanced, over-reliant on investment and cheap manufacturing exports. Financial repression has spurred speculative overbuilding in real estate, and local governments have gorged on credit to fund stimulus projects of dubious value. Central planning never worked and social pressures are starting to boil over”.

Deutsche Bank doesn’t think that China’s economy is going to collapse, but that it will weaken as its economy gradually restructures.

- Aussie is already overpriced.

- Such currencies as Australian, Canadian dollars and Japanese yen have outperformed those like sterling and Mexican peso during the Third Phase of Chinese growth. According to the bank, shorting the outperformers could be expensive, but buying the laggards or constructing relative value crosses seems quite sensible. Judging by the strength of past correlations and dislocation since 2008 Deutsche choose to be long at GBP/AUD.


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BBH: buy USD/CHF

Analysts at Brown Brothers Harriman believe that euro’s decline versus the greenback which started last week is likely to continue. In their view, when Europe finalizes the amount of private sector participation in the Greek bailout, euro will likely take a blow, especially if participation is low and credit default swaps are triggered.

The specialists think that in would be wiser to stay away from euro this week. As EUR/CHF is close to 1.20, the minimal level set by the Swiss National Bank, “if euro is going to weaken sharply, Swiss franc is going to weaken faster.”

Making such assumption, BBH recommends buying US dollar versus Swiss franc. According to the bank, one should go long on USD/CHF at 0.9150 stopping at 0.8950 and targeting 0.9500.



Chart. Daily USD/CHF


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Banks' forecasts for FX majors

The following forecasts were updated on March 2.



Data from FX Week


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Commerzbank: comments on EUR/JPY

Last week the single currency fell versus Japanese yen sliding From February 27 maximum at 109.94 to close at 108 yen on Friday.

However, technical analysts at Commerzbank note that EUR/JPY has managed to hold above the 200-day MA at 106.88 yen. The specialists believe that the pair will be able to push a bit higher. In their view, resistance for euro lies at 108.85, 109.38/58 (55-day MA, July minimum) and 110.18 (50% Fibonacci retracement of the decline from April to January). According to Commerzbank, the pair’s move up will wear off in the 110.18/111.57 area.

The bank notes that support for EUR/JPY is situated at 106.78 (November 14 maximum).



Chart. Daily EUR/JPY


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Old 06-03-2012, 03:51 PM   #20
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Default Fiscal Compact's signed, but crisis is not over

An important «Fiscal Treaty» was signed on the EU summit, held on Friday, March 1-2. According to this document the budget deficit will be limited to 0, 5 % of GDP; the breakers may be penalized.

The pact was signed by 25 EU members, excluding Great Britain and Czech Republic, which are not ready to let the European Commission intervene in its economy. The Fscal Compact is mandatory only for 17 euro-zone countries.

Germany forced the conclusion of the treaty: otherwise she would refuse to finance the European Stability Mechanism. It is important to note that the document requires ratification.

Besides, the EU leaders tried to persuade everyone that the financial euro-zone crisis is over. «EU shifts from austerity measures to economic growth, » said José Manuel Barroso, the President of the European Commission.

However, some analysts find these statements groundless and forecast the situation go from bad to worse.


Kind Regards,
Jeshinta
FBS Brokerage Company



J.P.Morgan: trading EUR/USD this week

There are several central banks’ meetings this week. Today the RBA left rates unchanged at 4.25%. Wednesday is the day of the RBNZ, while on Thursday we’ll hear from the Bank of England, the ECB and the Bank of Canada.

Analysts at J.P. Morgan are focusing on the European Central Bank. In their view, Europe’s monetary authorities won’t change the interest rates. However, the specialists advise investors to pay great attention to what the ECB’s President Mario Draghi will say at the press conference the same day. If the central banker sounds more positive (according to J.P. Morgan, this seems quite likely), euro will get support as the risk aversion will subside. In addition, the European currency will be helped by the high oil prices.

As a result, the analysts recommends going long on EUR/USD at $1.3150 stopping above $1.3000 and targeting $1.3500. The bank warns, however, that one should get out of the trade even of the single currency keeps sliding below $1.3500 as the private sector involvement creates dangerous uncertainty.



Chart. Daily EUR/USD


Kind Regards,
Jeshinta
FBS Brokerage Company



Scotiabank: comments on USD/CAD

Analysts at Scotiabank note that there are risks for loonie coming from potential slowdown of China’s economic growth – remember that Canadian dollar is a growth-linked currency.

“The most significant development is China’s announcement of a 7.5% growth expectation this year, below last year’s 8% and sending shivers down the spines of commodity currency traders. We are medium term CAD bulls, but view the outlook for China’s growth as one of the keys to CAD strength.”

“Technically, a USD/CAD close above 0.9953 would be bullish for short‐term traders, with the 200‐day MA of 0.9993 serving as the first level of resistance.”



Chart. Daily USD/CAD


Kind Regards,
Jeshinta
FBS Brokerage Company



UBS: what to expect from the SNB?

Analysts at UBS recommend traders to watch the Swiss National Bank’s meeting on March 15 with great attention. In their view, the pressure on the central bank increased after interim President Jordan confirmed the SNB’s commitment to defend EUR/CHF floor at 1.20 noting that Swiss franc is still greatly overvalued.

The specialists say that one may get some hints on what course the SNB will take from Switzerland’s February CPI figures which are released on Thursday. If consumer prices keep showing increasing deflation, the SNB will lift EUR/CHF peg to 1.30 in the second half of 2012.

Swiss economy has so far showed inspiring results: retail sales added 4.4% (y/y), GDP rose in the final 3 months of 2011 by 1.3% (vs. the forecast of 0.9%).



Chart. Daily EUR/CHF


Kind Regards,
Jeshinta
FBS Brokerage Company



RBA left rates unchanged

The Reserve Bank of Australia left the cash rate unchanged at 4.25%. According to the explanation, given by the RBA Governor Glenn Stevens, the decision was caused by the decrease of concerns, connected with the European economy and by its positive prospects in 2012. However, he pointed that Chinese growth is starting to moderate.

It is important to note that the RBA interest rates stay relatively high in comparison to many developed economies where policy has been loosened to extremes. This fact provides Australia with various instruments to manage the situation in case if the European crisis will gather pace.

"The resilience of growth through to the end of 2011 is notable and is consistent with our view that the RBA does not need to provide any further stimulus," affirm JP Morgan analysts. The median estimate now forecasts growth of around 0.8% in the fourth quarter, from an initial 0.7%. Growth for the year was expected to be 2.4%.

Australia’s dollar weakened to $1.0621 as of 3:18 p.m. in Sydney from $1.0671 yesterday, after touching $1.0612, the lowest since Feb. 23. The Aussie dropped 0.7 percent to 86.45 yen from yesterday, when it fell 0.9 percent.



Chart. Daily AUD/USD


Kind Regards,
Jeshinta
FBS Brokerage Company



Greece’s deal with private creditors and euro’s prospects

EUR/USD dropped to $1.3180 today amid data that the euro-zone GDP fell 0.3% last quarter from the previous three months.

Time for reflection on the question of the participation of the private sector in Greek bond swaps is running out. Greek Finance Minister Evangelos Venizelos suggested the country is ready to strong-arm private investors into accepting a deal that could have far-reaching implications for markets. He believes that private holders don’t have any better alternative than to submit to Greek terms.

Forecasts on prospects of the common currency differ. Some specialists dissuade from buying euro, because, in their opinion, now the European Central Bank is tied up with tackling the region’s sovereign-debt problem and has no room left to bolster the economy through monetary policy. Analysts at UBS claim that there are still a lot of obstacles on euro's road as even ECB’s President Mario Draghi still regards euro-zone’s economic conditions as fragile. As a result, the specialists are bearish on euro in the medium term. In their view, EUR/USD will slide to $1.25 in several months and hit $1.15 in a year.

However, other specialists believe that if the agreement on bond swaps is reached, there will be no more serious reasons for concern and a decline in short positions on euro may take place.



Chart. Daily EUR/USD


Kind Regards,
Jeshinta
FBS Brokerage Company
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