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

[lollabun]

A few more comments on NFP and today’s trading
Friday, April 6, 2012 - 06:00

Release time: 12:30 p.m. GMT

Societe Generale: the pace of hiring has probable decelerated to 190K in March but likely upward revisions to prior months along with another drop in the unemployment rate to compensate the impact of slightly slower payroll growth. Employment growth between 1% and 1 ½% is weaker than in an 'old normal' recovery and may not be able to generate GDP growth above 2%, but it is pretty good insurance against a slip back into recession. However, QE3 may return to the agenda before June as the pace jobs growth declines. “Payrolls on a bank holiday is a good enough reason to take risk off for anybody.”

Goldman Sachs: forecast for March gain in nonfarm payrolls is raised from 175K to 200K on the better-than-expected ADP employment report.

Bank of New York Mellon: “The whisper number could be something larger than 250K. The problem is that everyone is talking about it, but nonfarm payroll data is so unpredictable and if the figure comes in below 200K, stocks are likely to sell off”.

Reuters’ consensus: +203K.

Trading implications

A good reading will encourage short-term Treasury yields and, consequently, the greenback, while the single currency will get under pressure.

For now EUR/USD has managed to find support at the bottom of the daily Ichimoku Cloud after hitting 3-week minimum at $1.3034 yesterday. At the same time, this support looks really fragile as the market’s still seems seriously concerned about Spain.

Analysts at Bank of Tokyo-Mitsubishi claim that euro’s slide below $1.30 looks inevitable.

A few more comments on NFP and today

 

[lollabun]

Societe Generale: trading recommendations on USD/CHF
Friday, April 6, 2012 - 06:30

Strategists at Societe Generale recommend going long on the greenback against the Swiss franc, entering the trade at 0.9200 with a stop at 0.9075 and a target of 0.9600.

According to specialists, the American currency this week is growing both versus the euro and the Swiss franc on positive U.S. economic data and new troubles in Europe (unsuccessful Spain’s bond auction). In their view, the European problems may be “creeping back on the table."

Societe Generale: trading recommendations on USD/CHF // FBS Markets Inc.

 

[lollabun]

It was a grim week for the euro area
Friday, April 6, 2012 - 07:15

The single currency hit 3-weel low versus the greenback and lost 2.7% this week against Japanese yen showing the steepest 5-day slide since the week ended September 9.

Spain

The main theme of the past week was Spain. Analysts at Citigroup said that the nation was at “a greater risk than ever before” of a debt restructuring. Spain’s main IBEX 35 index touched the lowest in 7 months approaching to its post-credit-crisis minimum.

Spain’s 10-year borrowing costs returned above 5% after bottoming at 4.815% after the ECB’s second long-term refinancing operation (LTRO) in February. In March the indebted country shocked markets by announcing that it had missed its 2011 budget deficit target of 4.4% and set a lower goal of 5.3% for 2012. Spanish government failed to sell the planned amount of debt at this week’s auction (April 4) managing to borrow only 2.59 out of 3.5 billion euro target.

Bank stocks plunge

It’s also necessary to note that this week was the worst for European bank stocks since December with Italy’s Unicredit falling by more than 11% and Banca Poplare di Milano slumping by more than 15%.

ECB: downside economic risks

The ECB President Mario Draghi repeated that downside economic risks prevail and called talk of an exit strategy from LTO premature.

Discouraging data

German February industrial output data: -1.3% m/m vs. the Reuters consensus forecast of -0.5%.

EUR/USD

Scotiabank: watch the bearish signals from MACD, RSI and candlesticks. However, EUR/USD is still caught in sideways trend between $1.30 and $1.35 which has been in place since the end of January. As a result, wait for the breach of $1.2974 support for bearish confirmation.

It was a grim week for the euro area // FBS Markets Inc.

 

[lollabun]

NFP: Bloomberg survey in details
Friday, April 6, 2012 - 07:15

Bloomberg Survey

================================================================
Nonfarm Private Unemploy Hourly
Payrolls Payrolls Rate Earnings
,000’s ,000’s % MOM%
================================================================

Date of Release 04/06 04/06 04/06 04/06
Observation Period March March March March
----------------------------------------------------------------
Median 25 215 8.3% 0.2%
Average 208 220 8.3% 0.2%
High Forecast 250 265 8.4% 0.2%
Low Forecast 175 185 8.1% 0.1%
Number of Participants 80 45 76 49
Previous 227 233 8.3% 0.1%
----------------------------------------------------------------
4CAST Ltd. 200 215 8.2% ---
ABN Amro Inc. 210 230 8.3% ---
Action Economics 210 215 8.3% 0.2%
Aletti Gestielle 200 --- 8.3% ---

Read more here NFP: Bloomberg survey in details // FBS Markets Inc.

 

[lollabun]

RBS is extremely bullish on GBP
Friday, April 6, 2012 - 07:45

Analysts at RBS expect the British pound in April to be on a rise against the euro, yen and Swiss franc. However, the sterling looks less likely to do well against the Australian and the New Zealand dollar.

According to specialists, in April sterling has traditionally been strong against a range of currencies. Moreover, higher than expected construction, manufacturing and services PMIs (56.7, 52.1 and 55.3 respectively) bring bullish sentiment to the market.

At the current run rate, previously announced asset purchases wouldn’t run off until early May. The further expansion of monetary easing is unlikely taking into account the improvement of UK economy.

RBS is extremely bullish on GBP // FBS Markets Inc.

 

[lollabun]

USD/JPY: analysts’ forecasts
Friday, April 6, 2012 - 09:15

The pair USD/JPY was trading sideways this week opening and closing in the 82/83 yen area.

Today the main event for all dollar crosses is the Non-Farm Payrolls release at 12:30 GMT.

Bank of Tokyo-Mitsubishi UFJ: USD/JPY may rise to 84 yen if NFP data exceed expectations.

JP Morgan: USD/JPY will likely trade next week between 81 and 83 yen.

Analysts at Brown Brothers Harriman claim that unless the Bank of Japan announce some aggressive easing measures on Tuesday, April 10, yen’s dynamics will be determined by external factors. The specialists underline that the LTROs in Europe may have already given all positive effect they could and that political and economic headline risk in the weeks ahead are on the downside. As a result, BBH believes that safe-haven demand for yen will increase and USD/JPY may decline to 80-81 yen, while EUR/JPY may slide to 104-106 yen.

USD/JPY: analysts

 

[lollabun]

The week ahead: events to watch
Monday, April 9, 2012 - 06:00

Monday:

• New Zealand, Australia, Germany, France, Switzerland, Italy and Great Britain: Bank holidays (Easter).
• Ben Bernanke speaks (11:15 p.m. GMT) in Stone Mountain. The Fed’s Chairman will likely mention the unexpectedly weak NFP (payrolls added only 120K in March vs. the expected increase of 207K).

Tuesday:

• Japan: The release of monetary policy statement and overnight call rate is scheduled. At a policy-setting meeting the BOJ is supposed to refrain from further quantitative easing steps due to weak yen and signs of improving economic conditions, although policymakers could take action at the following meeting on April 27. With interest rate expected to stay near zero, the BOJ doesn’t possess a remarkable liberty of action.
• China: Trade balance in March is likely to be less terrifying than in February: analysts forecast the trade deficit to decline from 31.5 billion to 3.0 billion. Investors have become increasingly nervous about China's depressed economy in recent sessions.
• Greek T-bill auction.

Wednesday:

• Italian T-bill auction.

Thursday:

• Australia: Labor market data should be widely watched. The unemployment rate in March is forecasted to increase slightly from 5.2% to 5.3%. Number of employed people may increase by 6,700 versus February’s 15,400 contraction. Weak February figures may mean that strong Aussie burdens the Australian economy and that the RBA may decide to cut rates in the coming months.
• U.S.: PPI growth accelerated from 0.1% in January to 0.4% in February. In March American producer prices are seen gaining 0.3%. The PPI is climbing more than the Fed anticipated, though the central bank claims that the rise in energy prices is only temporary. Higher prices diminish the chances for additional QE. Trade deficit in March may contract from $52.6 billion to $51.9 billion. However, according to TD Economics, rising energy prices will continue to widen the trade deficit in February; analysts expect the deficit to rise to $53 billion, the maximum since October 2008. A slight decrease in a weekly number of unemployment claims is forecasted (355,000 versus previous 357,000 – a 4-year minimum posted last week). However, broader outlook on the U.S. labor market in 2012 remains cloudy.
• Italian bond (BTP) auction.

Friday:

• China: Economy is expected to contract in the first quarter: GDP may decline to 8.4% from 8.9% in the last quarter 2011. Strategists at Barclays Capital warn that the Aussie and other commodity currencies could be weighed down until it is clear the China’s slowdown has bottomed out.
• U.S.: Consumer Price Index is forecasted to rise to 0.2% in March versus 0.1% in February. TD Economics analysts expect the downward trajectory in annual CPI (drop to 2.5% y/y from 2.9% y/y in February) regardless of the surge in energy prices.
• Ben Bernanke speaks (5:00 p.m. GMT). There may be a surge of volatility on the Chairman’s comments.
The week ahead: events to watch // FBS Markets Inc.

 

[lollabun]

Mizuho: short-term bearish on USD/JPY
Monday, April 9, 2012 - 07:15

Analysts at Mizuho Corporate Bank believe that the greenback may drift lower versus Japanese yen sliding to 80.00 in the next 2 weeks.

“When we look at the amount of short positions in the yen, we see that they really have not decreased. Their volume is large. At some point, these positions will be closed, leading to an increase in the yen. Employment data can serve as an impetus for this,” say the specialists.
Mizuho: short-term bearish on USD/JPY // FBS Markets Inc.

 

[lollabun]

Ifr Markets: option expiration for today
Monday, April 9, 2012 - 07:45

Analysts at Ifr Markets, key analytical data provider, claim that today the following options expire:

EUR/USD: $1.3400, $1.3225, $1.3300, $1.3500, $1.3315.
USD/JPY: 82.25, 84.00 83.15, 83.00.
EUR/JPY: 108.00.
AUD/JPY: 83.75.
AUD/USD: $1.0200, $1.0300.

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

 

[lollabun]

CFTC trader positioning data
Monday, April 9, 2012 - 08:00

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

• The net short euro position dropped to 79.5k contracts, the smallest such net position since late November 2011. Long positions increased 5.8k contracts, while shorts shrank by 3.8k contracts.
• The net short yen position declined to 65.1k contracts from 67.6k. Longs rose by 3.7k, whereas shorts rose by 1.1k contracts.
• The net short pound position went down to 8.8k contracts from 11.1k. Both longs and shorts increased (2.7k and 380 contracts respectively).
• Swiss franc net shorts decreased to 14.7k from 15.1k contracts. Longs grew by 322 contracts and shorts were pared by almost 100 contracts.

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.
CFTC trader positioning data // FBS Markets Inc.