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

[lollabun]

Key options expiring today
Thursday, April 12, 2012 - 06:15

EUR/USD: $1.3050, $1.3120, $1.3170, $1.3175;
USD/JPY: 81.00, 81.45, 81.50, 82.00;
EUR/GBP: 0.8320;
AUD/USD: $1.0250, $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).

Photo Brendan Mcdermid / REUTERS

Key options expiring today // FBS Markets Inc.

 

[lollabun]

Short-term outlook for loonie
Thursday, April 12, 2012 - 07:00

Canadian dollar hit yesterday the minimal level against its US counterpart since the end of January: USD/CAD posted high at 1.0051 before returning today to the parity level.

On the fundamental part, CAD has its main drivers rising equities and oil prices in action. The current fluctuations are by the approaching release of the Bank of Canada’s monetary policy report (the central bank will meet on April 17 and publish quarterly report on April 18).

From the technical point of view, there may be a “double top pattern” confirmed in case of steady trading back below the neckline of the pattern at 1.0010, so we may expect more bearish moves today.

Scotia Capital: buying loonie seems OK for now, though one should close USD/CAD shorts if the pair closes above 1.0050/1.0070 breaking out of the range within which it has been stuck for months.

RBS: bullish on CAD versus euro and US dollar. As conditions in Canada, the United States and the world as a while have improved, the BOC should revise up the domestic and international outlook.

Data to watch: Canada’s February trade balance (forecast: 2.2 billion surplus), New housing price index (forecast +0.2% m/m in February).

Chart. H4 USD/CAD

Short-term outlook for loonie // FBS Markets Inc.

 

[lollabun]

AUD/USD grows after employment data
Thursday, April 12, 2012 - 07:15

The Australian dollar jumped to a one-week high on the backdrop of the surprisingly positive employment data.

Strong labor market figures lower concerns that the RBA will cut interest rates from current 4.25% level. Australia’s 3- and 10-year bond yields increased 8 and 3 basis points respectively.

In March 44K new jobs were created in Australia versus 6.4K forecasted and 15.4K decline in February. The unemployment rate remains unchanged at 5.2%, compared with forecasts to grow to 5.3%.

BNP Paribas specialists expect the Aussie to trade at $1.0500 level in Q2. Moreover, China’s GDP data on Friday may surprise the market and create additional support for AUD/USD.

However, analysts at Commerzbank remain bearish on the Aussie vs. the greenback. In their view, there is a strong resistance on the $1.0405 level. They expect the pair to weaken to $0.9863 (Dec. 15 minimum).

Early Thursday AUD/USD strengthened to $1.0391, the highest level since April 3.

Chart. Daily AUD/USD

AUD/USD grows after employment data // FBS Markets Inc.

 

[lollabun]

Beige book: no surprises
Thursday, April 12, 2012 - 08:00

According to the Beige book report, released on Wednesday, each of the 12 U.S. bank districts keeps expanding at a modest-to-moderate pace from mid-February through the end of March.

The Fed pointed at stronger manufacturing sector, consumer spending, better demand for professional business services, increased tourism and some improvement in the real-estate market. The survey also noted that hiring was steady or increased in most of the country.

In general, the estimates remain unchanged from previous Beige book release, but with slightly increased optimism on the back of positive March U.S. data.

Beige book: no surprises // FBS Markets Inc.

 

[lollabun]

BNY Mellon: USD/JPY is to get higher
Thursday, April 12, 2012 - 08:30

Analysts at Bank of New York Mellon think that Japanese authorities will refrain from active monetary interventions for now using only verbal comments ahead of the next Bank of Japan’s meeting at the end of April. BNY Mellon reminds that the quantitative easing conducted by the BOJ in February was much more effective than the previous intervention.

According to the economists, Japanese Ministry of Finance “has (sensibly) tried to keep a degree of unpredictability about its operations in order to preserve their effectiveness.”

So, the bank’s main scenario is more asset purchases on April 27 and positive near-term outlook for the greenback. USD/JPY may rise to 83 and 84 yen.

Chart. Daily USD/JPY

BNY Mellon: USD/JPY is to get higher // FBS Markets Inc.

 

[lollabun]

UK trade deficit wider than expected
Thursday, April 12, 2012 - 09:30

Britain’s trade deficit grew to £8.7 billion in February from revised £7.8 billion in January, despite the forecasted gap of £7.7 billion. The export slippage is caused mostly by decreasing trade volumes with non-EU countries (U.S., China and Russia).

According to recent surveys, Britain has just returned to a moderate economic growth after the threat of a recession blew over. However, a slowdown in Britain's main trading partner, the euro zone, could weigh on exporters' prospects.

The market, however, is reacting on the negative trade balance data oddly: cable climbed to a one-week high $1.5955.

Commerzbank: GBP/USD is rebounding near term from $1.5827 level (55-day MA). We expect the pair to find intraday resistance at $1.5935/65 and continue to view the market as having topped at $1.6062.

Resistance for the pair lies at $1.5937 (Apr. 11 maximum), $1.6062 (April maximim), and $1.6200 (psychological resistance), support – at $1.5850 (Apr. 11 minimum), $1.5724, and $5600 (lowest since March 12).

Chart. Daily GBP/USD

UK trade deficit wider than expected // FBS Markets Inc.

 

[lollabun]

Euro zone: Italian auction, Greece, weak data
Thursday, April 12, 2012 - 10:00

EUR/USD reiterated from today's highs at $1.3145 affected by the latest news’ releases.

Italian government sold BOT of 4.884 billion euro meeting the targeted amount, though the yields were higher – not an entirely positive picture. Here are the details:
- 2.884 billion euro of 2015 BTP yield 3.89 % (from 2.76%) out of a targeted 2-3 billion euro;
- 2 billion euro of three-off-the run issues due in 2015, 2020, 2023. The off-the-run sale had been announced for an overall amount of between 1.0 billion and 2 billion euro. The overall bid-to-cover was 2.20.

In addition, Greek unemployment rate rose from 21.0% in December to 21.8% in January. Moreover, euro zone’s industrial production declined by 1.8% (y/y) in February.

Chart. H1 EUR/USD

Euro zone: Italian auction, Greece, weak data // FBS Markets Inc.

 

[lollabun]

World Bank trimmed China’s growth forecast
Thursday, April 12, 2012 - 12:30

The World Bank reduced forecast for China’s 2012 GBP growth from 8.4% to 8.2% (13-year minimum). According to the economists, there’s “potential for growth to be bumping along the bottom for longer”.

“We see cyclical weakness continuing, but that the prospects for a soft landing remain high,” said the specialists noting that Chinese authorities have enough resources to help bolster the economy if risks to the downside accelerate.

The main problems of Chinese economy are the decreased external demand for its goods and risks connected with the real estate market.

Note that the World Bank increased 2013 forecast for China from 8.3% to 8.6% expecting activity to rebound next year.

Official data on the nations Q1 economic growth is released on Friday, April 13. Consensus forecast is a gain of 8.4% down from 8.9% in the final 3 months of 2011.

World Bank trimmed China

 

[lollabun]

RBS: trading AUD/USD
Thursday, April 12, 2012 - 13:00

Analysts at RBS recommend buying the Aussie vs. the U.S. dollar at the current levels, with a stop at $1.0210 at targeting at $1.0612.

Strategists see support at $1.0320 (recent lows), $1.0240 (61.8% retracement from a Dec. 15 low) and $1.0201 levels, and resistance – at $1.0496 (recent support, now resistance) and $1.0612 (23.6% retracement from a Dec. 15 low).

According to RBS analysts, the Australian dollar will be the best performing currency in April due to seasonal patterns. Specialists also point that a lot of negative news were priced into the AUD/USD, that’s why they advise to play on the dips now.

Chart. Daily AUD/USD

RBS: trading AUD/USD // FBS Markets Inc.

 

[lollabun]

French elections: Hollande wins the first round, concerns on euro
Monday, April 23, 2012 - 06:30

Socialist Francois Hollande won the first round of French election with 28.5% of votes versus Nicolas Sarkozy who got 27.1%.

IG Markets Securities: “Hollande’s victory may mean a collapse of the ‘Merkozy’ axis and that would hamper efforts on the debt crisis.” EUR/USD may finally breach support at $1.30.

Lloyds: bond yields rose last week due to the concerns that Hollande may relax the nation’s deficit-tackling policy if he’s elected.

CBA: “European politics are going to come up in the next few weeks and add a lot of volatility to the euro.”

French Socialists are hoping to return to the Elysée Palace for the first time in almost two decades. According to survey by the Ipsos polling firm, Hollande would beat Sarkozy by 54% to 46%. The Socialist got support from the left parties in the final round.

The centrist François Bayrou remains in an influential position, but has not said yet whether he will endorse a candidate. As for Sarkozy, he will now try to attract the far-right voters by pledging to tighten border controls, tighten immigration rules and take new steps to fight crime.

The next round of the election will take place on May 6.

Photo Christophe Ena/AP

Chart. Daily EUR/USD
French elections: Hollande wins the first round, concerns on euro // FBS Markets Inc.