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

[wynnasuju]

Credit Agricole and Commerzbank about AUD/USD
Tuesday, March 13, 2012 - 12:45

Analysts at Credit Agricole note that Australian dollar reached critical level versus the greenback. To maintain medium-term uptrend AUD/USD must close today above $1.0505 (March 7 maximum, “bullish hammer” reversal pattern). Otherwise, the sideways range may widen or Aussie will start sliding. The bank recommends buying Australian currency at the current levels stopping below $1.0505 and targeting recent highs in the $1.0800 area.

Strategists at Commerzbank think that AUD/USD has topped at $1.0856 on February 29 and is now going to weaken to $1.0406 (200-day MA) and $1.0382 (December maximum). Below these levels the pair will be poised down to the parity and lower. According to the bank, the outlook for Aussie will remain negative as long as it’s trading below resistance at $1.0670.

Chart. Daily AUD/USD

Credit Agricole and Commerzbank about AUD/USD // FBS Markets Inc.

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[wynnasuju]

Bank Sarasin: comments on franc and euro
Tuesday, March 13, 2012 - 13:45

Economists at Bank Sarasin are strongly convinced that the Swiss National Bank won’t raise the threshold EUR/CHF higher than 1.20 unless recession continues and deflationary threats keep looming in Switzerland. The analysts say if there was no floor set for the pair, the rate could be as low as 1.10.

Although the franc has strengthened since the start of the year, it has remained above the 1.20 floor, trading at 1.2057 against the euro on March 13. The bank thinks, however, that the threat of further SNB intervention will contain franc’s advance in the near future.

According to Bank Sarasin’s specialists, European growth is going to resume in the second quarter after the ECB liquidity injection. Perhaps, the liquidity will buy the time that is needed for a recovery, and in a long-term period EUR/USD may climb to $1.38 or $1.40. On the other hand, the economists warn that excessive liquidity always weakens the currency.

Bank Sarasin: comments on franc and euro // FBS Markets Inc.

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[wynnasuju]

Main economic & market news
Wednesday, March 14, 2012 - 06:30

• FOMC meeting results:

- benchmark rate is left unchanged near zero and it planned to be kept there through at least late 2014;
- additional easing is still an option;
- US economic outlook was upgraded from "modest" to "moderate" growth;
- however, unemployment rate is “elevated” and “significant downside risks” are still in place. Inflation outlook is “subdued.”

• Australian consumer confidence is down by 5% this month, while housing starts dropped in the fourth quarter by 6.9% versus 3% decline expected (q/q).
• Japanese business sentiment sharply deteriorated in the first quarter.

• According to The Telegraph which citing a leaked Troika report, Greek budget deficit will probably fall to 1.5% in 2012 in line with the forecasts but “current projections reveal large fiscal gaps in 2013-2014.”

• The Fed released US banks stress test results: 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario. The 4 banks which wouldn’t have enough capital if economic situation worsens (13% unemployment) are Ally Financial, Suntrust, MetLife and Citigroup. Analysts at RBC Capital Markets showed that the fact that the majority of the banks succeeded in passing the test shows that US banking system is strong.

DJIA reached the highest level since 2007. Yields on 10-year Treasuries increased to 2.13%. Specialists at Bank of Tokyo-Mitsubishi UFJ think US yields rise because the nation’s economy strengthens. In their view, the Federal Reserve may be forced to raise the key rate before the end of 2014, probably the next year. American currency generally strengthened.

Asian stocks rose, EUR/USD went a bit lower to yesterdays’a minimums in the $1.3050 area. The pair opened below 55-day MA. USD/JPY keeps rising.

Chart. Daily EUR/USD

Main economic & market news // FBS Markets Inc.

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[wynnasuju]

Sumitomo Mitsui: euro will rise on the 5th Elliot Wave
Wednesday, March 14, 2012 - 07:15

According to Sumitomo Mitsui specialists, EUR/JPY may strengthen to 112.80 by May, its highest level in more than 7 months. Strategists say it makes sense to apply the Elliot Wave Theory to analyze the current euro movements.

The Elliott Wave Principle, proposed by accountant Ralph Elliott in the 1930’s, is a form of technical analysis based on the theory that investor psychology moves between optimism and pessimism in natural sequences. It seeks to predict prices by dividing trends into 8 waves.

First wave: Jan. 16-26 (rally from 97.04 to 102.21);
Second wave: Jan. 27 - Feb.1 (decline from 102.21 to 99.25);
Third wave: Feb. 2-27 (rebound from 99.25 to 109.93);
Fourth wave: Feb. 28 - March 6 (drop from 109.93 to 105.65).

Sumitomo Mitsui: EUR/JPY is now in the middle of the fifth wave of the multi-month upward cycle,” which is projected to end around April. The market swings follow a predictable five-stage structure.

Today EUR/JPY is trading at 108.47 after having risen more than 11% over the past 2 months.

Chart. Daily EUR/JPY

Sumitomo Mitsui: euro will rise on the 5th Elliot Wave // FBS Markets Inc.

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[wynnasuju]

Barclays Capital lifted up USD/JPY forecast
Wednesday, March 14, 2012 - 07:15

Analysts at Barclays Capital increased forecasts for USD/JPY from 82 to 90 yen in 6 months and from 84 to 90 yen in a year.

As the reason for such revision the specialists cited Japan’s current-account decline and differences in monetary policy of the 2 nations’ central banks: the Fed’s statement showed a gradual reduction in the central bank’s dovish stance, while the Bank of Japan will likely increase monetary stimulus to achieve 1% inflation goal.

Chart. Weekly USD/JPY

Barclays Capital lifted up USD/JPY forecast // FBS Markets Inc.

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[wynnasuju]

Analysts: Comments on FOMC statements
Wednesday, March 14, 2012 - 08:45

On Tuesday FOMC decided to leave the strategic points of its monetary policy unchanged (Federal funds rate and quantitative easing program). However, additional easing is still an option. Specialists were not long in commenting the recent data.

Wells Fargo Securities: For more stimulus the economy had to weaken again, but FRS is still not slamming the door on more QE.

International Strategy and Investment Group: The FOMC’s meetings in April and June would be good opportunities for the Fed to do something if policy makers see additional stimulus as needed.

Capital Economics: The Fed can hardly be accused of acting as a cheerleader for the recovery. Nevertheless, the improvement in the incoming data may persuade the Fed to shelve any plans it had for additional monetary stimulus in the near term.

Tokyo-Mitsubishi: The Fed's direction will become clearer in late April when policymakers meet next and update their projections for economic growth, inflation, unemployment and interest rates.

BNP Paribas: Either the economic outlook will continue to improve, or the Fed will take action to inject more liquidity into markets.

Nomura: Within the next six months $500 billion operation is expected to occur, consisting of purchases of both mortgage backed securities and Treasuries. Asset purchases would be “sterilized” using reverse repos and term loans in order to appease inflation hawks.

Most analysts agree that growth in the current quarter and throughout the rest of the year will be slower than in last year's fourth quarter.

Analysts: Comments on FOMC statements // FBS Markets Inc.

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[wynnasuju]

Societe Generale: risks from China property market
Wednesday, March 14, 2012 - 09:30

Economists at Societe Generale warn that investors’ optimism for the global economic prospects is vulnerable to the signs of fragility in U.S. growth momentum or of the slowdown of Chinese property market and bank loan growth.

The specialists claim that in the second quarter China's property sales may contract by about 10% in weighted prices losing nearly 20% of volume. In their view, while the decline may be rapid, it will be constrained. This year will likely be the bottom for Chinese property market.

China’s Premier Wen Jiabao claimed today that the nation’s home prices are still are still significantly above the reasonable level. Wen underlined that China would have to maintain efforts to curb real estate speculation as the property bubble would harm the economy if it burst.

Property sales in the world’s fastest-growing economy fell by 20.9% in the first two months of 2012 from a year earlier as the government had introduced a series of measures including property sales taxes and lending restrictions to curb speculation.

Societe Generale: risks from China property market // FBS Markets Inc.

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[wynnasuju]

Societe Generale: comments on Swiss franc
Friday, March 16, 2012 - 06:15

The Swiss National Bank increased its GDP growth forecast for 2012 from 0.5% to 1%. The central bank lowered inflation forecasts for 2012-2013 to -0.6% and 0.3% respectively.

Analysts at Societe Generale claim that although Swiss franc is still overvalued and inflation risks are subdued, the SNB sees no reason to immediately take new initiatives to weaken the national currency.

The specialists underline that the bullish pressure on franc has somewhat eased due to the increased liquidity in the euro area and improved risk sentiment. However, many investors still don’t dare to sell Swiss currency. A continuation of the rally in stocks and commodities alone won’t be enough to make the market players go short on franc. As a result, the prospects of EUR/CHF will depend primarily on further actions of the SNB and the ECB.

Societe Generale don’t see how the European Central Bank will be able to take a less dovish approach amid the euro zone’s economic weakness caused by severe austerity measures. As a result, the analysts see now point in buying EUR/CHF anytime soon.

Societe Generale: comments on Swiss franc // FBS Markets Inc.

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[wynnasuju]

BOJ will have to ease policy because of China
Friday, March 16, 2012 - 06:45

The deterioration of China’s trade position may force the Bank of Japan to do more aggressive monetary easing.

Last month China posted trade deficit of $31.5 billion. The nation’s authorities have signaled that it might suspend its long-standing policy of allowing yuan’s gradual appreciation versus US dollar in order to boost its exports’ competitiveness or at least keep them from further shrinking.

As China is Japan’s largest trading partner, Japanese economy will surely be affected by weaker renminbi. As a result, the BOJ will have to take measures to keep yen sliding.

BOJ will have to ease policy because of China // FBS Markets Inc.

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[wynnasuju]

BOJ meeting minutes: inflation issue
Friday, March 16, 2012 - 07:00

The opinions of the Bank of Japan’s board members on further policy actions divided in February:

- One member proposed to lift inflation target up to 2%. Some members said that 1% CPI growth is enough as the inflation goal for the time being as the current level of
inflation is low, though added that the option of changing the target should be kept for future.
- After discussion about the appropriate terms concerning inflation, members agreed that it would be appropriate to refer to the inflation rate that is consistent with price stability sustainable over the medium to long term as “the price stability goal in the medium to long term.”

For more into on the BOJ monetary policy approach see the text of the central bank’s February 13-14 meeting here (http://www.boj.or.jp/en/mopo/mpmsche_minu/minu_2012/g120214.pdf).

BOJ meeting minutes: inflation issue // FBS Markets Inc.

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