Comments and forex-analytics from FBS Holdings Inc. brokerage company

[wynnasuju]

The essentials of Ben Bernanke’s testimony
Thursday, March 1, 2012 - 07:45

- The Fed’s Chairman confirmed that the interest rates are likely to stay low at least until the end of 2014 as unemployment level is still high and inflation outlook is subdued.

- Bernanke didn’t mention additional monetary stimulus measures like QE3.

- “Gasoline prices have moved up, primarily reflecting higher global oil prices – a development that is likely to push up inflation temporarily while reducing consumers’ purchasing power.”

- Comments on the situation in euro area: “if Europe has a mild downturn… and if the financial situation remains under control that the effect on the US might not be terribly serious”. At the same time, there is “significant risk” of stress and contagion from “a major financial accident”.

Analysts at Barclays Capital note that US central bank is passively moving away from excessive easing approach that will be a positive factor for US dollar.

According to the data released yesterday, US GDP added 3% in the final 3 month of last year (vs. the consensus forecast of 2.8% growth). Conference Board said that confidence among US consumers climbed to a 12-month maximum in February.

Beige Book, regional business survey, also published yesterday showed that American economy expanded at a “modest to moderate pace” in January and early February, the main driver of the expansion was manufacturing.

Bernanke will continue giving its semiannual testimony to the House Financial Services Committee.

The essentials of Ben Bernanke

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[wynnasuju]

Comments on EUR/USD
Thursday, March 1, 2012 - 08:00

Today is the first day of EU economic summit. The meeting of the European leaders will be focused on the ways of reviving the region’s economy postponing the discussion of Europe’s financial-crisis firewall.

Analysts at Mizuho Securities claim that the markets are still concerned about the future of the euro area. The specialists are bearish on EUR/USD expecting the pair to slide to $1.25 by June 30.

The single currency dropped versus the greenback yesterday from nearly 3-month maximums in the $1.3480 area to the levels around $1.3315 after the ECB allotted 530 billion euro of cheap three-year credits to the European banks as investors were “buying on rumors, selling on facts”. Then euro was hit after the Fed’s Chairman Ben Bernanke didn’t signal another round of quantitative easing.

Support for EUR/USD is currently situated at $1.3293 (100-day MA).

Chart. Daily EUR/USD

http://www.fbs.com/analytics/2012-03-01/16768-comments-eurusd

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[wynnasuju]

Commerzbank is bearish on EUR/USD
Thursday, March 1, 2012 - 11:00

Technical analysts at Commerzbank think that the pair EUR/USD may have reversed downwards.

The specialists claim that support for EUR/USD is situated at $1.3318 (February 1 maximum), $1.3293 (February 21 maximum), $1.3199 (late December maximum), $1.3126 (the uptrend channel support) and $1.3066 (55-day MA).

According to the bank, resistance lies at $1.3389 (yesterday’s minimum), $1.3436 (50% Fibonacci retracement) and $1.3487 (February maximum).

Commerzbank says that the outlook for euro will remain bearish as long as it’s trading below $1.3487. If the European currency overcomes this level, it will get chance to climb to $1.3550 (December maximum) and $1.3628 (61.8% Fibonacci retracement of the decline from October to January).

Chart. Daily EUR/USD

Commerzbank is bearish on EUR/USD // FBS Markets Inc.

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[wynnasuju]

SocGen: China may lower GDP target
Thursday, March 1, 2012 - 11:30

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.

SocGen: China may lower GDP target // FBS Markets Inc.

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[wynnasuju]

Rabobank: comments on EUR, AUD, CAD
Thursday, March 1, 2012 - 11:45

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

Rabobank: comments on EUR, AUD, CAD // FBS Markets Inc.

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[wynnasuju]

BofA revised forecasts for euro, pound
Thursday, March 1, 2012 - 12:00

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

BofA revised forecasts for euro, pound // FBS Markets Inc.

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[wynnasuju]

Ichimoku. Weekly forecast. GBP/USD
Monday, March 12, 2012 - 09:45

Weekly GBP/USD

British pound kept declining versus its US counterpart from late February minimum at $1.6000. On the weekly chart GBP/USD closed last week below the Standard line (1), which is currently acting as resistance. The prices will get support from the Turning line (2) which is moving slowly upwards.

The descending Ichimoku Cloud was widening for some time, though Senkou Span A (4) has turned horizontal. As a result, if Tenkan-sen (2) and Kijun-sen form “golden cross” and Kumo starts narrowing, the bulls will get chance to reverse the trend lifting sterling to the lower border of the Cloud (4). Otherwise, the pair will keep moving lower within the current downtrend.

Daily GBP/USD

On the daily chart one may see that the pair’s advance stalled last month and the rate went sideways. Pound failed to overcome important resistance and prices went below both the 9-day MA or so-called Tenkan-sen (1) and the 26-day Kijun-sen (2).

As a result, despite the bullish Ichimoku Cloud (3, 4), there’s no uptrend on the chart. GBP/USD is supported only by Kumo: if sterling enters the Cloud, it will likely dip to its lower border – Senkou Span B (4).

At the same time, the bulls are struggling to retrace at least a part of Friday’s decline and hold the priced above the Cloud.

Ichimoku. Weekly forecast. GBP/USD // FBS Markets Inc.

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[wynnasuju]

CFTC data: US dollar longs increased
Monday, March 12, 2012 - 10:00

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that speculative investors increased their net long US dollar position by $6.1 billion (80%) to $15.4 billion.

As you may see in the table below, the greenback was bought versus all IMM (International Monetary Market) currencies except Canadian dollar and Mexican peso. The latter are supported by carry trades and high oil prices. Euro, British pound and Japanese yen are sold due to the loose monetary policy of these nations’ central banks, while Australian and New Zealand’s dollars were hurt by the worsening of China’s economic prospects.

The net positions for American currency are long for 25th consecutive week, the longest period of positive dollar sentiment since 1999.

Chart. Net aggregate speculate IMM position in USD (Source: CFTC, Saxo bank, Bloomberg).

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

CFTC data: US dollar longs increased // FBS Markets Inc.

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[wynnasuju]

The Fed's policy will remain unchanged
Monday, March 12, 2012 - 10:30

On Tuesday the Fed's Open Market Committee meets to decide monetary policy. The announcement of further bond buying can pose a risk to a resurgent dollar this week, but most analysts doubt that will happen. Recent stronger-than-expected February employment numbers (NFP +227K) has quelled speculation that the central bank might resort to a third round of quantitative easing (QE3) to stimulate the economy. However, an antinomy is observed: the US labor market seems do better, but this has not been matched by a rise in production, demand or consumer spending.

Many analysts say the FOMC is unlikely to offer new measures to stimulate the economy, especially as the Fed continues with its "Operation Twist" effort to keep long-term interest rates low.
The current “Operation Twist”, a $400bn switch into Treasury securities with longer to run until maturity, will use up almost all of the shorter-term Treasuries that the Fed has to sell and take its holdings of some long-term Treasuries close to limits on market liquidity.

Bank of America-Merrill Lynch: While the FOMC is likely to acknowledge the oil market risk, as well as the general improvement in activity data recently, we anticipate the statement will still be supportive of the current easing bias.
BNY Mellon: Good data will reinforce the Fed's view that what they're doing is working and they're not going to stop now. They seem determined to fight the devil they know instead of the devil they don't.

The chance of an even more-dovish FOMC could once more upend the dollar. The fact that these days the dollar seems to be a safe-harbor from Europe's debt crisis may also help the dollar go up at the euro's expense. On the other hand, investors look forward to Bernanke’s announcements about QE3. The Chairman’s silence of may cause the correction.

The Fed's policy will remain unchanged // FBS Markets Inc.

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[wynnasuju]

EUR/USD: main technical levels
Monday, March 12, 2012 - 12:00

Technical analysts at Commerzbank underline that the single currency is facing strong resistance versus the greenback in the $1.3291/1.3325 area.

As long as euro’s trading below these levels, the outlook for it will remain bearish. Support is situated at $1.3095 (last week's 3-week minimum), $1.3080 (55-day MA) and $1.3050 (50% Fibonacci retracement from this year's advance) and $1.3000.

EUR/USD risks dropping to $1.2974/54 (February minimum) and $1.2624 (January minimum). If the pair slides below the latter, it will be poised down to $1.2000.

Strategists at Varengold Bank expect EUR/USD to close today below support at $1.3100 citing negative signals from the MACD.

EUR/USD: main technical levels // FBS Markets Inc.

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