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

[wynnasuju]

Merkel’s firm on austerity plans
Thursday, May 10, 2012 - 09:45

In her speech to Bundestag today German Chancellor Angela Merkel said that:

- Europe's only hope is to implement structural reforms alongside austerity measures.

- Economic growth may be reached through structural reforms. The calls for growth through debt would throw the region back to the beginning of the crisis.

- It would take a long time to overcome the crisis.

Germany keeps favoring austerity measures in the euro area, but will anyone follow its lead now when Merkel’s main ally – France – no longer supports such approach?

Image from debatepolitics.com

Merkel

 

[wynnasuju]

Barclays: bearish on EUR/GBP
Thursday, May 10, 2012 - 10:30

Analysts at Barclays are bearish on the single currency versus British pound. This week euro hit the minimal levels versus sterling since 2008.

In their view, EUR/GBP will weaken to firstly to 0.7960 and then to 0.7700 (October 2008 minimum) and 0.7300 in the medium and long terms.

According to the bank, the pair’s prospects will remain negative as long as it's trading below 0.8075/0.8100.

Chart. Weekly EUR/GBP

Barclays: bearish on EUR/GBP // FBS Markets Inc.

 

[wynnasuju]

2 ways of trading GBP/USD
Thursday, May 10, 2012 - 10:45

Danske Bank: sell GBP/USD at $1.6155 targeting $1.6055 and stopping at $1.6208.

Commerzbank: try small longs at $1.6085 targeting $1.6300 with tight stops at $1.6065/50.

Chart. Daily GBP/USD

2 ways of trading GBP/USD // FBS Markets Inc.

 

[wynnasuju]

BOTMUFJ: comments on AUD/JPY
Thursday, May 10, 2012 - 11:45

Technical analysts at Bank of Tokyo-Mitsubishi UFJ believe that there’s a chance of Australian dollar to start gaining versus Japanese yen.

Yesterday AUD/JPY hit 3 1/2-month minimum at 72.06, but today it returned above key support levels at 80.35 (50% Fibonacci retracement of the pair’s advance from October minimum to March maximum) and 80 yen (psychological level).

The specialists think that if the bulls manage to hold the rate above these levels, the pair will get chance to strengthen to 84 yen (90-day MA).

Chart. Daily AUD/USD

BOTMUFJ: comments on AUD/JPY // FBS Markets Inc.

 

[wynnasuju]

Will good jobs data keep RBA from cutting?
Thursday, May 10, 2012 - 12:45

The Australian dollar strengthens on the back of the unexpectedly positive employment data released on Thursday.

The unemployment rate fell to 4.9% in April compared with 5.3% forecast and 5.2% in March. Australia’s economy surprisingly added 15K new jobs this month against a 4.8K decline forecasted and a 37.6K decline in March. Payrolls rose mostly due to the part time work, which added 26K jobs to payroll, while the full time employment declined by 10.5K.

However, many analysts still expect the Reserve bank of Australia (RBA) to cut rates by 25 b.p. on its next meeting in June in order to stimulate economic growth. ANZ Banking and Westpac think that risk aversion together with loose fiscal and monetary policy will put Aussie under pressure.

Societe Generale, on the other hand, claims that today’s positive employment figures change the game. According to the specialists, rate cut in June is not likely, so close to the recent 50 b.p. reduction; the next cut is expected in August. Employment figures show a large deviation from expectations, but the full-time employment still continues to decline. The April employment gain, therefore, will generate less additional household income than if it had come from full-time employment.

Chart. Daily AUD/USD

Will good jobs data keep RBA from cutting? // FBS Markets Inc.

 

[wynnasuju]

May 11: today's economic focus
Friday, May 11, 2012 - 06:45

Risk aversion continues to dominate markets on Friday, weighing on the high-yield currencies.

Data released in China confirms that the economy may extend losing streak. Industrial production in April rose by 9.3% compared with March's 11.9%, sharply underperforming expectations. Retail sales also underperformed forecasts for an annual growth of 15.2%, rising instead by 14.2% in April from a year earlier.

China’s CPI slowed down from 3.6% in March to 3.4% in April. Now the nation has more scope for monetary easing. According to Reuters poll, the market consensus is for 150 bps of more RRR cuts this year. Nomura analysts claim that the policy focus will remain on promoting growth to support the economy.

Risk sentiment was hurt during US session as JP Morgan announced $2-billion losses in credit derivatives trades. UK Nationwide consumer confidence fell from 52 in March to 44 in April.

Later today watch British PPI Input data (decline’s expected), Canada’s labor market figures (forecast: lower increase of payrolls, higher unemployment rate) and US PPI and consumer sentiment (consult FBS economic calendar). Also note that there will be an Italian BOT auction around 9 a.m. GMT.

May 11: today's economic focus // FBS Markets Inc.

 

[wynnasuju]

Key options expiring today
Friday, May 11, 2012 - 07:45

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).

Here are the key options expiring today:

EUR/USD: $1.2900 (also barrier), $1.2950, $1.2975, $1.3000 and $1.3100.
GBP/USD: $1.6050, $1.6150 and $1.6200.
EUR/GBP: 0.7970.
AUD/USD: $0.9950, $1.0120, $1.0150, $1.0195 and $1.0200.
AUD/JPY: 83.00.
USD/JPY: 79.50, 80.00, 80.10 and 81.00.

Image from Seoklass -

Key options expiring today // FBS Markets Inc.

 

[wynnasuju]

To risk or not to risk?
Friday, May 11, 2012 - 09:00

The markets remain in the cautious mode. The situation has become highly driven by the politics that immensely complicates any attempts to predict its further developments.

The highest risks are currently concentrated in Greece (elections in June?), France (Hollande vs. Merkel?) and Spain (can it survive on its own?). With all that in mind it’s difficult to expect much risk appetite in the foreseeable future. Surely on Monday (G7 meeting) the leaders of the advanced economies won’t be able to avoid the discussion of European problems, but we’ve already seen that the European leaders tend to maintain uncertainty and deliver some measures only when there’s already almost no air for breathing. All eyes will be focused on Hollande-Merkel meeting on Wednesday, May 16.

There is, however, some positive news. Though Greece will likely get stuck in political indecisiveness for weeks, the EFSF has agreed to pay out its next 5.2-billion-euro tranche, while Spain, nationalized troubled Bankia-BFA. The question is whether it enough to sustain positive risk sentiment. The answer is: hardly. The markets will likely continue pricing in grim prospects. Does that mean that we favor safe havens?

Goldman Sachs thinks that the “currency of last resort” is still gold, not the safe-haven greenback as US economic recovery remains unstable. Both Goldman and Bill Gross from Pimco believe that the Fed is moving closer to announce additional asset purchases.

Apart from gold and dollar vs. commodity currencies, we’re looking to yen, bearish on EUR/JPY and AUD/JPY. The Bank of Japan’s board member Sayuri Shirai claimed that sufficient firewalls have been set in Europe to prevent the crisis from going global, so the BOJ will have some time to take a thorough look at how its latest policy action will affect the economy. Note though that yen’s attractiveness is a very relative thing: the central bank’s still under heavy pressure from the real sector. We also recommend watching the RBA’s monetary policy meeting minutes on Tuesday, May 15. After the positive jobs report released this week, the central’s bank rate cut in June is no longer that evident, although with disappointing Chinese data (remember: main trading partner) Australian authorities may feel the need for stimulus all the same.

Image from Young And Thrifty | Saving Generation Y

To risk or not to risk? // FBS Markets Inc.

 

[wynnasuju]

Demand for EUR as reserve currency is illusive
Friday, May 11, 2012 - 09:15

Despite the serious debt problems in the region, the common currency still remains resilient. The key support for the euro is created by the demand on it as on a reserve currency.

However, according to analysts at Deutsche Bank, the euro’s status as a reserve currency may be more vulnarable than meets the eye.

Specialists point the regulators increase reserves mainly in order to weaken its national currency and to support exports. For example, 35% of the overall allocated euro reserve growth in 2011 was achieved due to the Swiss National Bank, buying euro to maintain the 1.20 peg for the Swiss franc.

The regulators do not have real confidence in the euro, and the shift in structure of central bank's reserves may badly influence the currency.

Source: Bloomberg

Demand for EUR as reserve currency is illusive // FBS Markets Inc.

 

[wynnasuju]

Commerzbank: comments on EUR/JPY
Friday, May 11, 2012 - 10:00

Technical analysts at Commerzbank claim that the single currency’s consolidating versus Japanese yen after it has reached 102.54 (61.8% Fibonacci retracement of advance from January minimums to March maximums).

The specialists claim that all attempts of the bulls to push EUR/JPY higher will look unconvincing until the pair’s trading below 104.625 (April minimum). If euro breaches support at 102.50, it will become vulnerable for a decline to 100.12/00 where the bank expect market to try to base. According to Commerzbank, if EUR/JPY manages to rise above 105.56 (May 4 maximum), the picture will turn positive.

Chart. Daily EUR/JPY

Commerzbank: comments on EUR/JPY // FBS Markets Inc.