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

[FBS_analytics]

16/09/10


Goldman Sachs: Japan’s intervention will be a success
Analysts at Goldman Sachs Group Inc. in London believe that Japan’s currency intervention will turn out to be successful.
According to the specialists, the efforts of Japanese monetary authorities will drive yen’s down to 90 yen per dollar in a year. There is still the risk that Japanese currency will be strengthening during the next half of the year to the record maximum at 79 yen versus the greenback under the influence of US monetary easing, Japanese trade surpluses and the market’s testing the authorities’ resolve to intervene. As a result, Japan may have to sell more yens in order to prevent national currency from excessive gains that affect the country’s economy.
There are different estimates for Japan’s intervention – from $1.2 billion by the Nikkei newspaper to $20 billion from BNP Paribas SA’s point of view.

Morgan Stanley: end of recommendation to sell EUR/CHF
Analysts at Morgan Stanley in London stopped advising investors to sell the single currency versus Swiss franc. The recommendation was ended as the specialists believe that the Swiss National Bank (SNB) may intervene to the currency market to prevent franc from excessive strengthening after the same actions performed by Japanese monetary authorities. Although Switzerland’s fundamentals are still strong, the risk-reward has worsened, claims Morgan Stanley.

Hedge funds lost on Japan’s intervention
Yesterday currency intervention conducted by Japan to weaken yen from its 15-year maximum made lose hedge funds betting on the strengthening of Japanese currency.
Many funds were looking forwards to the further yen’s appreciation on the negative outlook for the world’s economy regarding it as a refuge currency. Some investors, especially Japanese, were stimulated by low returns in global stock markets. Yields on Japanese long-term government bonds remain under 2% but Treasuries yields aren't much higher. As a result, there is little incentive to go to the overseas markets.
Japanese currency that climbed by 10% since the beginning of this year slumped by 3% on Wednesday as Japanese monetary authorities sold the national currency.
John Taylor managing FX Concepts, a $7.8 billion hedge fund, notes that the situation is serious and that it’s necessary to buy some dollars. Mr. Taylor believes that yen may return higher in 1-2 months. However, he noted that the Bank of Japan tends seems to be quite decisive when the rate reaches extreme levels, so future dynamics of yen looks uncertain.
Even though the fund cut so far its portfolio in trades wagering on yen from 55% to 35%, it lost 2% on Wednesday. All in all, FX Concepts gained 12% this year also due to earlier advance of yen. Among other losers there are Aspect Capital Ltd. and Winton Capital Management.

Mizuho: USD/JPY will retest minimums
Technical analysts at Mizuho Corporate Bank claim that yesterday’s long bullish engulfing candle will make the pair USD/JPY stay above at least Wednesday’s minimum at 82.87 for the rest of the week.
The specialists regard current advance as a possibility for new decline to the minimums that may take place the next six or more weeks.
As a result, Mizuho strategists recommend selling the greenback at 85.35 with stop orders above 86.05. The target for the pair is set at 84.90 and maybe at 84.00.

Citigroup: EUR/USD will rise to $1.325
Technical analysts at Citigroup Inc. in New York claim that the single currency may climb to $1.325 versus the greenback.
The specialists note that the pair EUR/USD overcame $1.292 level forming reverse “head and shoulders” figure. There are 3 minimums with the lowest in the middle.
Never the less, Citigroup strategists point out that general sentiment is still bearish, although not as strong as it used to be.

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21/09/10 & 22/09/10

21/09/10

Forecast Pte: AUD/USD may rise to 0.9850
Technical analysts at Forecast Pte in Singapore expect that if Australia’s dollar overcomes resistance at 0.95 (psychological level) and 0.9650 (May 21 and 22, June 9, and July 2 maximums), it may rise to the record maximum versus the greenback at 0.9850 set in July 2008.
Daily momentum indicators also point at Aussie’s future advance. The Australian currency’s MACD today was equal to 0.0125 that is above the signal line situated at 0.0100.
The pair AUD/USD finds itself in an upward channel created by an upper trend line that connects June 18, June 22 and August 6 maximums and a lower trend line that connects June 8 and July 6 minimums. As a result, Aussie is thought to be gaining as long as it doesn’t break below the lower trend line. Forecast Pte specialists note that Australian currency’s rate seems to be rather firm, so there are no signs of a downturn yet.
Australian dollar added this month 6.2% versus its American counterpart. Yesterday AUD/USD climbed to 2-year maximum at 94.94 cents.

Citigroup advises to sell euro versus dollar
Technical analysts at Citigroup Inc. advise investors to sell the single currency versus the greenback. Such recommendation is based on the forecast that the pair EUR/USD will lower to one-month minimum.
According to Citigroup, it’s necessary to place sell orders at $1.3095 with target at August 24 minimum of $1.2588. The specialists note that on Friday, September 17, euro capped at $1.3158 level representing 76.4% Fibonacci retracement of decline from 3-month maximum on August 6 to August 24, the minimal level since July.
On the upside, if EUR/USD overcomes resistance area at $1.3158/$1.3228, it will be able to advance to $1.3334.

BNP Paribas advises to sell pounds versus Aussie
Strategists at BNP Paribas recommend selling pounds versus Australian dollars.
Bank specialists confessed that they keep preferring commodity currencies and Aussie the most. Sterling, on the other hand, seems to have quite negative prospects. British currency is strongly affected by discouraging housing market data. The number of mortgage approvals, for example, fell from 47,000 in July to 45,000 in August as yesterday’s data has shown.
As a result, UK monetary policy is very likely to remain extremely loose for longer period of time and pound will stay under pressure.


22/09/10

BNP Paribas: euro will rise to $1.40 by the end of October
Technical analysts at BNP Paribas SA in New York believe that the single currency may rise to 7-month maximum versus the greenback as it managed to overcome its 200-day MA at $1.3220. The pair EUR/USD broke the trend line for the first time since May 2009.
BNP Paribas expects that euro will advance to $1.40 by the end of October or at the beginning of November. The fact that the European currency was able to close above $1.32 yesterday means points at its strength in the longer-term. This week its rate can rise already to $1.33 or $1.34, forecast the specialists.
On Tuesday the pair EUR/USD gained 1.6% rising from $1.3061 to $1.3265 at 4:52 p.m. in New York.

RBS Morgans: Aussie may rise to US$0.978
Australia’s currency supported by rising risk appetite renewed 2-year maximum at 0.9582 during today’s Asian trade. Then its rate lowered a bit staying between 0.9560 and 0.9570, 0.14% above yesterday’s closing level.
Australian dollar was helped today by the encouraging economic data – MI Leading Index added 0.4% in July after losing 0.1% in the previous month.
It’s very important that minutes from the Reserve Bank of Australia’s this month meeting released yesterday suggested that interest rates may be lifted up to correspond the country’s economic expansion. Specialists at Gaitame.com Research Institute Ltd. in Tokyo note that the opposite direction of Australia’s and US monetary policy will keep driving Aussie up.
Technical analysts at RBS Morgans are quite bullish on Australian dollar expecting that the pair AUD/USD will advance to US$0.978 in coming months. Some traders even bet that Aussie’s going to strengthen to parity with its US counterpart.
If the pair keeps climbing, resistance levels will be found at 0.9600 and 0.9660. If the rate goes down, support levels will lie at 0.9520 and 0.9480.

BofT-Mitsubishi UFJ: euro may rise to 114.00 yen
Strategists at Bank of Tokyo-Mitsubishi UFJ claim that the pair EUR/JPY that has renewed so far 6-week maximum trading currently above 113.0 may climb today to 114.00. In their view, the demand for the single currency has increased after the FOMC (Federal Open Market Committee) statement suggested that US monetary authorities intend to allow additional stimulus measures.
The bank’s specialists note that the market is still very cautious on the prospect that Japanese monetary authorities will perform currency intervention to prevent the national currency from excessive growth. The near term resistance level is found, according to Bank of Tokyo-Mitsubishi UFJ, at 115.00.

The Fed is expected to extend monetary easing
Although US monetary authorities didn’t announce new purchases of securities, they claimed yesterday that the Federal Reserve will be ready to conduct additional stimulus measures in case of necessity. The purpose of such policy is to stimulate the country’s economic growth and support prices.
The majority of analysts agree that the Fed aims to extend monetary easing that will certainly have a negative impact on the greenback. The Federal Open Market Committee statement also said that the FOMC keeps closely watching the country’s economic prospects and changes at financial markets.

Commerzbank: EUR/USD will rise to 1.3465/1.3510
The single currency rose yesterday above 200-day MA at 1.3210 and overcame 1.3000 level today. Technical analysts at Commerzbank claim that the pair EUR/USD is now moving towards August maximum at 1.3334 and then to double Fibonacci retracement in 1.3465/1.3510 area.
Never the less, the specialists note that there’s a gap at 1.3150, so euro may firstly lower to fill it and only then start gaining. The outlook for the pair is bullish above the 1.3020, says Commerzbank.

Analysts on negative prospects of dollar-crosses
US dollar was losing versus its major counterparts since the FOMC (Federal Open Market Committee) statement suggested that US monetary authorities intend to allow additional stimulus measures. The yields on 10-year Treasury bond dropped almost to summer minimums in 2.45/40% area.
Strategists at Barclays Capital expect that if the pair GBP/USD closes the week above 1.5680, USD/CHF – below 0.9915, the prospects of the greenback will be regarded as quite bearish till the end of this year.
Specialists at UBS suppose that it’s possible to conclude on the Fed’s comments that the monetary policy will be eased on the next FOMC meeting in November even if the country’s economic growth doesn’t get much worse. According to UBS forecast, the pair EUR/USD will keep trading 1.30 and 1.40, USD/JPY– in 83-87 range, USD/CHF – in 0.95-1.02 range and GBP/USD – between 1.50 and 1.60.

CBI reduced Britain’s 2011 growth forecast
Confederation of British Industry reduced its forecast for the pace of UK economic growth. According to the institution, the country’s GDP will add only 2% in 2011, while its previous estimate made in June pointed at 2.5% increase.
Such deterioration of the expectations was caused by the anticipated effect of the biggest postwar budget spending cut that with no doubts will harm British economy.
In addition, the CBI claimed that the Bank of England is unlikely to lift up interest rates until the second quarter of the next year.
As for 2010 GDP forecast, it was revised upwards from 1.3% to 1.6% as economic activity in the second quarter revives a bit.

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28/09/10

Gaitame: AUD/JPY will fall to 2-week minimum
Technical analysts at Gaitame.Com Research Institute Ltd. expect Australian dollar to hit 2-week minimum versus Japanese yen.
The specialists note that the line, connecting September 8 and 14 minimums, shows that Aussie has reached its maximums. The pair AUD/USD went below this line on September 23, so it’s possible to say that Australian currency tests its way downwards and the line is turning from support to resistance.
According to Gaitame, Aussie will lower to its 20-day MA at 79 yen area. If its rate gets under this level, the slump to the line that connects August 25 and 31 minimums lying approximately at 78.33 yen. Last time the currency dropped below this level was on September 15.

Citigroup: loonie will rise to 0.9931 versus US dollar
Technical analysts at Citigroup Inc. believe that Canadian dollar will rise to the maximal level since April 21 versus its US counterpart at 0.9931.
It’s possible, claim the specialists, that loonie’s growth will continue up to 0.9059 stimulated by rising crude oil that is Canada’s biggest export. The analysis of crude oil’s trend, in its turn, shows that its price may advance to $100 a barrel as converged weekly MA indicate strong advance of the commodity in the near term.
Citigroup strategists note that the pair USD/CAD formed 3 minimums testing 1.0110/40 area. According to them, when it happens for the fourth time, the greenback’s rate may break down.
Canada’s dollar reached record maximum on November 7, 2007, at 0.9058.

UBS: franc keeps showing its strength
Technical analysts at UBS note that the pair USD/CHF is still trapped within the downtrend. If the greenback falls below 0.9786, it will be pulled down to support at 0.9625. If dollar’s rate goes up, resistance levels will be found at 0.9983 and 1.0183.
As for the pair EUR/CHF, the specialists expect it to trade in range 1.2991 and 1.3391. If the single currency breaks down below 1.2991, it will return to the recent minimums at 1.2766 zone.

Commerzbank: EUR/USD will consolidate
The single currency recovered versus the greenback from 1.2700 area at the beginning of September to 5-month maximum in 1.3500 zone.
Technical analysts at Commerzbank claim that further advance of the pair EUR/USD was held by double Fibonacci retracement at 1.3465/1.3510 levels. As euro has reached its initial target, it’s likely to consolidate in the near term. The bank specialists regard profit taking in this area and consequently some decline as quite possible.
If European currency manages to rise above 1.3510, it will start advancing to 1.3608 (55-week MA) and then to 1.3915 (200-week MA) in the medium term. Then the market will lose its pace and begin moving down, believes Commerzbank.

UBS cut forecast for US dollar versus euro
Analysts at UBS AG cut their short-term forecasts for the greenback versus the single currency looking forward to quantity easing conducted by the Federal Reserve. The specialists expect that the Fed will increase Treasury purchases in order to stimulate the country’s economic growth.
UBS reduced 1-month forecast from $1.28 to $1.35 per euro and diminished 3-month estimate – from $1.15 to $1.25 per euro.
It’s also necessary to mention that the strategists increased 3-month projection for the Swiss franc from 1.30 to 1.28 francs per euro.

Barclays Capital: dollar will fall to 83.90-83.50 yen
Technical analysts at Barclays Capital have negative sentiment for the prospects of the greenback in its trade versus Japanese yen.
The specialists underline that the pair USD/JPY closed lower after its Friday’s upside spike that means that market players prefer selling. Since then the pair’s rate began fluctuating within the narrow range limited on the upside by resistance at 60-day MA at 85.75 and 84.10 yen level on the downside.
As a result, Barclays Capital expects US currency to move down towards 83.90-83.50 yen.

MIG bank: GBP/USD may rise to 1.6458
Technical analysts at MIG bank claim that British pound is moving firmly upwards versus the greenback forming the second in a row bullish weekly “thrust” pattern.
The recent minimum at 1.5297 is regarded by the specialists as the end of the correction of the 1.4230/1.5997 bullish swing, with support in 1.5511/1.5675 area.
Bank analysts believe that if the pair GBP/USD manages to overcome swing’s maximum at 1.5997, it will be able to rise to 1.6458, while the key resistance will be found at 1.6878/1.7043 levels (August/November 2009 maximums).
If sterling drops below1.5511 would, it would mean that the pair’s advance from 1.5297 was corrective, increasing the risk of eventual breakdown through 1.5297 for 1.4948/1.5000 (outside week support/psychological) and 1.4781.

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30/09/10



Barclays Bank: euro’s advance versus yen will be over
Technical analysts at Barclays Bank Plc in Tokyo claim that euro’s 2-week advance versus Japanese yen may be over as it’s getting closer to resistance in 114.05/45 area. The 114.05 yen level represents 38.2% Fibonacci retracement of drop from April 5 maximum at 127.92 yen to August 24 minimum at 105.44 yen, while at the level of 114.45 yen there are May 21 and July 27 maximums.
In addition, the single currency’s 14-day stochastic oscillator against yen was today at 95, while the threshold for the indicator is at 80 level. As a result, it’s possible to say that euro is overbought and that it’s likely to start falling in the near term.
If the pair EUR/JPY gets down below support levels at September 21’s minimum of 111.45 yen, the pair will definitely cap. The European currency gained 5.2% versus its Japanese counterpart this quarter.

ANZ Bank expects correction of AUD/USD
Specialists at ANZ Bank in New York joined the economists who expect that Australian dollar will rise to parity with its US counterpart. In their view, the pair AUD/USD will reach 1.0000 level in 2011, though on a short period of time.
However, the specialists underline that there’s correction risk in the near term, so they advise to sell before 0.9850 and then buy at 0.9300.
ANZ strategists believe that the greenback will rebound in the middle of 2011 as American economic situation improves, but note that the Reserve bank of Australia may be quite aggressive raising rates that will provide strength to Aussie as well.

RBNZ about factors influencing kiwi's rate
Officials at the Reserve Bank of New Zealand claim that since financial crisis broke out in 2008 the rate of New Zealand dollar was influenced more by risk appetite than interest-rate differentials. According to the country’s central bank such relation may be explained by the fact that markets have become much more volatile.
Averagely, over 50% of time the pair NZD/USD was following the movements of yield differential between New Zealand and the United States, during the 30% of time – commodity prices and the rest of the time –the changes in risk appetite.
RBNZ specialists note that if New Zealand’s rates remain so much below Australia’s ones, demand for the kiwi may slump. This quarter New Zealand’s dollar added 7.5% versus the greenback, while its neighbor’s currency managed to add 15% against US dollar.
New Zealand’s central bank also reported that turnover volume in the national currency market has declined by about 30% from 2005 to 2007. Investors’ demand for kiwi is less than for Australian and Brazilian currencies due to its lesser liquidity and lower relative borrowing costs in the country.

Commerzbank: the pair EUR/USD will consolidate
Technical analysts at Commerzbank note that the single currency climbed versus the greenback to its 55-week MA at 1.3611. According to them, there’s some divergence on the daily RSI showing that the pair EUR/USD is likely to consolidate.
The specialists believe that on the downside euro will find support in 1.3510/1.3465 area and advise to buy there looking forward to the pair’s advance towards 300-week MA at 1.3916.
If the European currency breaks down through support at 1.3465, it may start falling to 200-day MA at 1.3190, forecasts the bank.

Mizuho: euro under pressure of negative news
European currency found itself today under pressure of negative news losing to 14 of its 16 main counterparts.
Firstly, Moody’s Investors Service reduced Spain’s rating by one step to Aa1 from Aaa with stable outlook. The downgrade was made due to the country’s economic weakness.
Secondly, the Irish central bank announced that 2 Irish banks need additional capital of 14.4 billion euro. If all goes well the Anglo Irish Bank that was nationalized last year will need 6.4 billion euro from the government and in case of unexpected losses it may require 5 billion euro more. Support of Allied Irish bank will cost 3 billion euro in capital and the government is going to announce plans to recapitalize the lender.
Analysts at Mizuho Corporate Bank Ltd. in Tokyo claim that the current situation in Ireland unveils serious structural problems in the euro area. In their view, there can be another round of euro’s decline.

Societe Generale: month and quarter end weights on euro
Strategists at Societe Generale SA in Paris claim that euro’s decline was provoked partly by the bearish players who set sell orders after the single currency added 10% versus the greenback this quarter.
Economists at Lloyds Banking Group believe that the extra volatility is delivered by the end of September as well as the end of the third quarter as the market players struggle with month-end fixings notes.
The bank says that it’s expected that the ECB lunchtime fix is likely to be negative for euro, while the afternoon London fix, on the contrary, will weight on US dollar.

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04/10/10 & 05/10/10

04/10/10

Commerzbank: euro will rise to 1.3920/55 versus US dollar
The single currency climbed above 1.3700 to reach the 6-months maximum at 1.3800.
Technical analysts at Commerzbank claim that euro’s poised to rise to 1.3920/55 area limited by 200-week MA and 50% retracement of the decline from 2008. The specialists note that the pair EUR/USD is likely to find resistance in this zone and reverse downwards.
If the European currency breaks down through support at 1.3638, it would be the first sign that upside momentum is fading and the 200-day MA at 1.3184 will come in sight as the possible target.

Aussie ahead of RBA meeting
Australian dollar traded today near its 2-year maximum at 0.9749 versus its American counterpart as it’s widely expected that the Reserve Bank of Australia will raise tomorrow its key interest rate from 4.5% to 4.75%.
Strategists at National Australia Bank Ltd. regard the potential rates’ hike as necessary in order to ease inflation pressure. Analysts at Barclays Capital claim that the pair AUD/USD may show significant advance if the rates are increased.
If Australian central bank doesn’t increase borrowing costs or provide steady accompanying statement, Aussie may be affected on its way to the maximums in 0.9850 area.


Wen Jiabao: China will buy Greek bonds
Chinese Prime Minister Wen Jiabao claimed in Athens that the country supports stable euro and won’t reduce its holdings of European bonds. China’s official approved of the measures adopted by the European Union and International Monetary Fund.
The Premier said he aims to improve the domestic investment climate in China and hopes the EU rejects its protectionism.
Wen said that China plans to buy Greek bonds once Greece applies again to the international markets for funding. The country plans to issue new bonds in 2011 after conducting austerity measures to reduce the EU’s second-biggest budget deficit.

05/10/10

Mizuho: EUR/JPY advance comes to an end

Technical analysts at Mizuho Corporate Bank Ltd. in Tokyo claim that the pair EUR/JPY may start declining after 3-week advance. In their opinion, the single currency is getting close to the key resistance on the weekly Ichimoku Chart trading versus Japanese yen.
The specialists underline that euro’s short-term conversion line at 110.155 yen was below its longer-term baseline at 116.68 that means that the currency is losing momentum.
In addition, European currency has almost reached 116.68 yen area representing 50% Fibonacci retracement of its decline from April 5 maximum at 127.92 to the 9-year August 24 minimum at 105.44 yen.
The strategists note that although euro has climbed to 4-month maximum versus yen it didn’t manage to return to 120 yen level where its subsequent decrease began. It’s important that, according to Mizuho, even if the euro falls after failing to break through upside resistance, its decline will be limited by the top of a daily Ichimoku Cloud in 110 yen area.


Westpac: RBA didn't change benchmark rate
The Reserve Bank of Australia (RBA) decided today to keep its benchmark interest rate unchanged at 4.50%, while the majority of the economists expected its hike to 4.75%.
Strategists at Westpac claim that such decision of Australian monetary authorities surprised the markets noting that Aussie may find itself under negative pressure during more than 24 hours. In their view, all attention will be focused from now at the inflation data that will be released at the end of October. The specialists note that if inflation rate rises, the RBA will have to take some measures of monetary tightening.
According to Westpac, support level for the pair AUD/USD lies at 0.9460. If Australian dollar manages to bounce off this level, its rate may return to the previous range. Otherwise, there will be a greater correction.


Bank of Japan unexpectedly reduced the rate
Japanese yen survived today the biggest decline versus the greenback during the last 3 weeks as Bank of Japan reduced its key interest rate from 0.1% level on which it stayed since December 2008 to the range of 0-0.1%. According to the country’s central bank, the rates will be kept low in the longer term until prices stabilize and the economy begins recovering.
In addition, Japan’s monetary authorities pledged to expand its balance sheet by 5 trillion yen ($60 billion) to buy assets ranging from government bonds and short-term government securities to commercial papers and corporate bonds.
The BOJ maintained its bank credit program at 30 trillion yen, while its target for monthly purchases of government bonds remained at 1.8 trillion yen.
Strategists at Mitsubishi UFJ Morgan Stanley Securities note that BOJ actions turned out to be more aggressive than the market\s players had expected and believe that monetary easing will determine yen’s dynamics during some time.


Schneider: SNB won't sell the national currency
Specialists at Schneider Foreign Exchange in London claim that Swiss National Bank (SNB) won’t make efforts to devaluate its currency like the other major world’s central banks do.
According to the analysts, further franc sales may trigger the growth of Switzerland’s inflation rate, even though the country’s CPI remains within the downtrend. Growth of the money supply on franc’s market will make the SNB refrain from interventions to weaken the national currency.
Swiss franc lost 1.6% versus the single currency during the last 3 months showing the first decline since the second quarter of 2009.


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05/10/10 & 06/10/10

05/10/10

Moody’s: Ireland's rating may be reduced
Rating agency Moody’s Investors Service announced today that it may again reduce Ireland's credit rating by one notch from current Aa2.
Among the reasons for the downgrade the specialists name the high amount of additional capital required by the country’s banks to survive, weak economic recovery and rising borrowing costs in form of surging yields.
As a result, Moody’s notes that there are risks to the financial strength of Irish government as well as the danger of further increase of Ireland’s debt and its serving costs.
The last time the agency cut Irish rating was on July 19, while last month it downgraded bailed-out Anglo Irish bank.

Commerzbank: resistance and support for USD/JPY
The greenback jumped from 83.15/20 zone setting maximum at 84.00 area as the Bank of Japan decided to ease its monetary policy surprising the markets.
Technical analysts at Commerzbank claim that the next resistance levels for the pair USD/JPY are found at 84.29 (20-day MA) and 85.13 (55-day MA). According to the specialists, trend reversal will be confirmed only if US dollar closes the day above the latter.
Support levels lie at the recent minimum of 82.87 and 2-year support line at 82.67. The bank supposes that the pair will be able to hold at the lower level increasing the chances of the trend’s switch upwards.

Barclays Capital: EUR/USD will advance in the near term
The single currency was advancing versus the greenback today rising from the day’s minimum at 1.3637 above 1.3770.
Euro was supported by high demand from the Asian central banks that are trying to diversify currency reserves from US dollar built up in order to curb excessive gains of their national currencies.
Strategists at Barclays Capital expect that the pair EUR/USD will continue advancing in the near term as American currency is affected by the slump of 2-year US yields to the record minimum and extreme weakness in USD/CHF that hit today 0.9656 level.

Rabobank: USD/JPY will return to 82.80
Analysts at Rabobank believe that additional monetary easing measures conducted by the Bank of Japan won’t be able to change bullish market’s sentiment about yen.
The specialists note that the policy of cheap yen didn’t help in the past. In their view, Japanese currency’s appreciation is triggered mainly by Japan's strong current account surplus and high demand for it as a refuge.
As a result, today’s actions of Japan’s central bank just delayed the USD/JPY slump to its post-intervention minimums in 82.80 area.


06/10/10

Goldman Sachs: negative outlook for US economy
Analysts at Goldman Sachs Group Inc. in New York regard the outlook for the US economy over the next 6-9 months as negative giving 2 possible scenarios. According to them, the situation may be either “fairly bad” or “very bad”.
In the first case, American economic growth rate will be equal to 1.5-2% through the middle of 2011, while the unemployment rate would moderately advance to 10%. The second variant associated with 25-30% probability implies that the United States will once again slide to the severe recession.
Goldman Sachs specialists believe that the Federal Reserve is likely to take measures in order to stimulate the economy at its next meeting on November 2-3. New York Fed President William Dudley, the Boston Fed’s Eric Rosengren and Chicago’s Charles Evans and well as by the Chairman Ben Bernanke spoke for increasing the volume of assets’ buying.
The market’s already anticipating such outcome – interest rates decrease, stock prices rise and dollar weakens. US 5-year yields fell today to a record minimum of 1.1755%. The analysts think that if the Fed purchases $1 trillion assets more, long-term interest rates may decline by about 0.25 percentage point.
It’s necessary to remind that The Fed bought $1.7 trillion of Treasury and mortgage debt in a program that expired in March.

TD Securities: loonie rose to 2-month maximum
Canadian dollar rose today to 2-month maximum versus the greenback at 1.0121. It happened as investors increased their demand for tied to growth loonie due to the advance in global stocks and crude oil’s strengthening to 8-week maximum.
During the recent time the demand for commodities has significantly improved making Canada benefit as it gets about half its export revenue from oil, copper, lumber and wheat.
The country’s currency managed to gain 4.2% against its US counterpart since August 31 when it fell to 6-week minimum at 1.0672.
Economists at Toronto-Dominion Bank’s TD Securities unit note that Canada’s fiscal strength provides a strong support for the currency. Analysts at Bank of Nova Scotia’s Scotia Capital note that the markets’ turned to risk and there’s upside pressure on Canadian dollar.

Commerzbank: USD/CHF may fall to 0.9500
The greenback fell yesterday versus Swiss franc below support level at 0.9700 to the record minimum at 0.9642. Technical analysts at Commerzbank claim that if US dollar loses more, it will slump towards 0.9500.
According to the specialists, it’s quite likely that the all time low will be able to hold initial test. Never the less, they point out that there is not enough evidence to look forward the trend’s upside reversal.
The downside pressure may ease if the pair USD/CHF manages to overcome 0.9921 level, notes the bank.

Japan won't intervene ahead of G7 meeting
Japanese yen is approaching 3-week maximum at 82.87 versus the greenback. The pair USD/JPY is currently trading in 83.00 area.
Yen strengthened due to the expectations that Japan won’t conduct currency interventions before the meeting of finance ministers and central bankers of G7 nations that will take place October 8 in Washington.
Specialists at JPMorgan Chase & Co. in Tokyo note that even if the country’s monetary authorities decide to intervene, the intervention is likely be small-sized and short-lived. Any impact on the yen will probably be limited.

Analysts on EUR/USD prospects
Strategists at Barclays Capital claim that as long as the pair EUR/USD holds above 1.3640, the single currency is likely to rise above 1.40.
Analysts at BNP Paribas note, however, that there are 2 risks for euro in the near term. Firstly, it’s the European Central Bank’s meeting scheduled on Thursday as the ECB isn’t satisfied with euro’s strengthening. Secondly, it’s the International Monetary Fund’s meeting on the weekend. The bank specialists note that if the IMF decides that undervalued Asian currencies should be appreciated more quickly against the greenback, this may make European currency’s rate decline.
Specialists at UniCredit, on the contrary, expect that the demand for the American currency will stay low until the FOMC November 3 meeting. In their view, even the advance of US payrolls on Friday and the G7 meeting on the weekend won't be able to change dollar-negative market sentiment.

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08/10/10

Westpac: AUD/USD will rise to $1.02 by the end of 2010
Technical analysts at Westpac Banking Corp., the second-best foreign-exchange forecaster for the 6 quarters through September 30 after Standard Chartered Plc, expect that Australian dollar will climb this year above the parity with its US counterpart.
The specialists claim that it’s quite likely that the Federal Reserve will ease monetary policy while the Reserve Bank of Australia will raise its key interest rate by 75 basis points during the next 9 months. According to Westpac’s estimate, Fed will increase asset purchases by $1.5 trillion. Previously the economists cited $800 billion figure.
Westpac forecasts that Australian currency will reach $1.02 by the end of 2010 and $1.05 by June 2011.

Scotiabank: Canadian dollar’s prospects
Analysts at Scotiabank Group note that Canadian dollar has traded in a relatively tight range between 0.9222 and 1.0016 during the whole year.
According to the specialists, loonie’s strengthening may be explained by the weakness of its US counterpart. The Dollar Index (DXY) lost 5.4% in September sliding by 11.3% from its June maximum.
Among the on the factors that triggered Canadian currency’s advance there are Canada’s relatively strong sovereign position, high commodity prices, monetary inflows to the country and emerging market growth. All of them show that loonie’s ready to make its way to the parity with US dollar in the next year.
Never the less, bank strategists draw investors’ attention to the fact that in the near term the market hasn’t formed yet the attitude towards the impact that potential extension of Fed’s monetary policy and slowdown of US economy will make on loonie’s rate. It’s necessary to take into account that the two economies are closely connected and have been moving in the same direction for decades.
The economists underline that it became clear that in the situation of weakening external fundamentals the Bank of Canada will hold interest rates at 1.0% for several quarters.
All in all, Scotiabank specialists believe that the pair USD/CAD will stay until the end of 2010 in its current range as the drivers of it seem to be too controversial. The year will close in 0.95 (1.05) area and in 2011 Canadian currency will keep appreciating and overcome the parity.

Commerzbank: EUR/USD will reverse downwards
The single currency gained approximately 1.3000 pips during the past month trading versus the greenback and climbed to Fibonacci extension levels in 1.4040/50 zone. Technical analysts at Commerzbank believe that the pair EUR/USD is now likely to start declining with profit taking from current levels.
The first sign that the pair EUR/USD reversed downwards will be its breaking down through 1.3817 area that had previously brought euro upwards.

If European currency manages to rise above 1.4040, the pair will target at 1.4200 and 1.4445/50 (double Fibonacci retracement). The specialists note that they will revise their longer term downward forecast only if the common currency closes the week above 2-year downtrend line at 1.4600.

UniCredit: euro and pound will rebound versus US dollar
Currency strategists at UniCredit claim that euro’s break above 1.40 versus the greenback provoked profit taking and so did the pound’s advance above 1.60 against US dollar. Never the less, the specialists are sure that investors will use the both pairs’ retreat as the buying opportunity and, consequently, European currencies will be able to return to the recent 8-month maximums.
Analysts at Barclays Capital A claim that if the pair EUR/USD manages to close today above the top of the weekly Ichimoku Cloud and shake the target resistance at 1.4050 it will be able to rise to 1.45/46 area.

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12/10/10

Dollar may start rising versus euro
The greenback survived from July to September the biggest quarterly decline in 8 years. Economists at HSBC Holdings Plc, BNP Paribas SA and Nordea Bank AB suppose that such slump may be the foundation for the advance of US currency. The specialists believe that the expectations of the Fed’s quantitative easing are already priced in dollar’s rate.
Bank of Tokyo-Mitsubishi UFJ Ltd. estimates the amount of bond purchases by the Fed by $500 billion, while last year the central bank bought $1.725 trillion. Bank analysts believe that US economic data hasn’t worsened to such extent that such an aggressive monetary approach becomes necessary. According to the International Monetary Fund forecast, US growth will exceed in 2010 and 2011 the euro zone’s one nearly by 1 percentage point.
Specialists at Nomura Holdings Inc. Fed’s bond purchase program will be equal to $100 billion of Treasuries a month, while economists at Goldman Sachs estimate this figure by at least $1 trillion. In their view, neither the market, nor the Fed is able to foresee how much will this amount be in reality. As a result, investors become nervous and making people nervous and dollar’s rate stays under pressure.

BNY Mellon: US dollar will lower this week
Analysts at Bank of New York Mellon Corp. in London believe that the greenback may drop this week. Such forecast is based on the fact that the International Monetary Fund meeting didn’t bring successful outcome, while the tensions on the currency markets only strengthened.
The specialists note that the leaders of the world economy failed to find common opinion on how to deal with the global problems, such as increasing dollar weakness, massive capital flows into emerging markets and currency interventions. Currency conflict between the United States and China is becoming more and more strained.
The bank economists don’t think that any sign of agreement is likely appear by the beginning of November.

Ueda Harlow: euro will fall to $1.35
Technical analysts at Ueda Harlow Ltd in Tokyo expect that after surging by 11% during the past month the single currency will go down back to $1.35 level.
The pair EUR/USD has climbed from September minimum at $1.2644 to 8-month maximum at $1.4029 on October 7. European currency was driven upwards by the speculation the Federal Reserve will ease monetary policy.
Euro’s 14-day RSI (relative strength index) versus the greenback stayed above 70 since September 28, for the longest period since March 2008. RSI was above the level regarded as a signal that asset’s price is going to make a reversal. The specialists underline that investors should expect some selling as the pace of euro’s advance was too high and the rate reached $1.40.
In the longer term US dollar will remain under pressure. The Fed will publish today the minutes of FOMC September meeting. Next monetary policy meeting will take place on November 2-3. Ueda Harlow expects easing measures to come next month citing poor US labor market data – non-farm payrolls lost 95,000 in September, while the economists were looking forward to only 5,000 decline.

Citigroup: EUR/USD will manage to retain high levels
Analysts at Citigroup Inc. in London claim that euro will be able to hold its high levels versus US dollar. The specialists note that such outlook is quite likely after the weekend’s International Monetary Fund meeting didn’t help to find how to prevent further differences over currencies.
Citigroup notes that there are still little sings that the recent surge of the single currency is affecting euro area’s economy. The economists believe that it will take the ECB longer to express openly its concerns about euro’s rate than it took the Federal Reserve.
On the contrary, Citigroup expects that the easing policy advocated by the Federal Reserve will even make the European nation some good as it will push higher the demand for riskier assets such as Greek, Irish, Portuguese and Spanish government bonds.

BNP Paribas expects AUD/USD to decline
Aussie has been retreating from yesterday’s maximum at 0.9906 to the levels at the 0.98 area. Currency analysts at BNP Paribas expect that Australian dollar can lose more trading versus its US counterpart.
The specialists warn that the prospects of the Fed’s quantitative easing measures have already been priced in dollar’s rate. Speculation that the Federal Reserve will announce about new Treasuries purchases at the beginning of November is weakening the greenback. As a result, if the amount of monetary stimulation turns out to be less than expected, the market will get very disappointed.
According to BNP forecast, the pair AUD/USD needs to retreat to 0.95 for the further advance to 1.02.

Commerzbank: EUR/USD will drop to 1.3690/40
The single currency went lower from its 8-month maximum at 1.4029 reached on October 7 to the levels only slightly above 1.3800.
Technical analysts at Commerzbank say that the market’s getting more bearish and note that there’s a risk of more profit taking. Yesterday the pair EUR/USD was trading sideways due to the market holiday, but today the bank the bank is looking forward to further selling. As euro broke through support in the 1.3830/00 area, it is poised to decline to 1.3690/40, and then to 1.3490.
European currency will be able to rise to 1.4200 and then to double Fibonacci retracement at 1.4445/50 only if it overcomes 1.4050 level.

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[FBS_analytics]

13/10/10

CFTC: investors’ bets show that USD may advance
According to the data of Commodity Futures Trading Commission, hedge funds and other large speculators have become more bearish on the greenback than ever before. On October 5 the number of bets on US dollar’s decline versus the single currency exceeded those on American currency’s advance by 341,683 contracts.
The market’s sentiment was almost as negative at the beginning of 2008 and at the end of 2009 and it’s necessary to take into account that both time the greenback surged. The Dollar Index, which tracks the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona added 24% in the second half of 2008 and 19.6% from November 2009 to June 2010.

Mizuho: EUR/USD will consolidate
Technical analysts at Mizuho Corporate Bank expect that the pair EUR/USD will consolidate today inside a potential “flag” formation. The specialists note that there was a small “hammer” against the 9-day MA that may help the single currency provide some upward momentum.
Mizuho expects that the pair will pass the week in consolidation and closes it above 1.4030. The outlook for the European currency is rather positive. The strategists advise to take longs in 1.3960/1.3900 area stopping much below 1.3775.

Warren Buffett: euro will face serious difficulties
Well-known billionaire Warren Buffett, the head of investment fund Berkshire Hathaway, claimed that the single currency that gained 11% versus the greenback during the third quarter will face enormous difficulties.
In his view, 750 billion euro bailout program won’t be able to solve severe problems that occur from the differences among 16 euro area’s nations.
The famous investor, who has previously bet against US dollar, warned investors in May about the dangers of common currencies. Buffett noted then that entering the currency union the risk of the countries’ default run increases as they lose the ability to determine monetary policy and can print their own money no more.
As a result, it’s quite likely that the fiscal crisis in the peripheral European nations will once

RBC: pressure on China won’t ease
China’s trade surplus deceased from $20.03 billion in August to $16.88 billion in September, while the economists were looking forward to $18.5 billion figure.
Economists at Royal Bank of Canada believe that the decline of Chinese trade surplus won’t help the country to reduce international pressure for faster yuan’s appreciation.
The specialists claim that Chinese monetary authorities have enough room for letting the national currency strengthen. September data shows further impressive growth in both imports and exports. In addition, Chinese demand is still high enough to support the global economy.

Commerzbank: USD/JPY may fall to 80.77/40
The greenback fell from 85.95 yen in the middle of September to new 15-year minimum at 81.35 hit on Monday.
Technical analysts at Commerzbank claim that even though the pair USD/JPY was consolidating during the last 2 days, the general direction of its moving remains downward. The specialists note that US dollar may weaken to 5-year support line in 80.77/40 area trading versus Japanese yen and then to the record minimum at 79.90. Below 82.78 the market remains in the power of the bears.
If the pair USD/JPY recovers, resistance levels will be found at 83.70 (20-day MA), 84.36 (the downtrend) and 84.57 (55-day MA). The rebound of the greenback will be confirmed only if it overcomes the latter.

Citigroup: AUD/USD approached the parity
Analysts at Citigroup claim that Australian currency has come too close to the parity with its US counterpart, so it will certainly manage to reach 1.00 level.
The specialists note that the Reserve Bank of Australia will almost certainly raise its key interest rate citing high consumer confidence and comments from the RBA's official McKibbin.
According to Citigroup, it would be clear during the first session after the breach of the parity if the uptrend continues or not – distinct break above the line would be regarded as a buy signal. Citigroup, however, believe that the rate may decline during the first time.
Strategists at Barclays Capital, on the contrary, claim that the pair AUD/USD may decline. In their view, Aussie may be negatively affected by Chinese trade data.


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19/10/10

UBS: USD/CAD will rebound to C$1.0379
Technical analysts at UBS AG in Zurich believe that the greenback that dropped by 1.2% versus its Canadian counterpart this month will manage to compensate October’s losses. Such forecast is based on the “morning star” reversal pattern formed on the price chart and confirmed on October 15. This upside signal will be negated only if US dollar’s rate gets below C$0.9981.
The specialists expect US dollar to add 3.3% against loonie climbing firstly to C$1.0379 and then potentially C$1.0509. According to them, momentum for the pair USD/CAD is quite bullish.
Last Thursday US currency hit the minimal level since April 26 at C$0.9981.
UBS strategists advise investors to buy dollars this week when the pair retreats to support level at C$1.0080.

Aviva Investors: euro will finish the year at $1.45
Analysts at British insurance company Aviva Investors managing about $371 billion assets claim that the single currency will rise to $1.45 by the end of 2010.
The specialists suppose the fact that euro managed to gain 19% versus the greenback advancing from its 8-year minimum hit at the beginning of June means that the European Central Bank was quite successful in stabilizing financial markets.
Such estimate for euro’s future rate is higher than the median forecast of 44 economists surveyed by Bloomberg, according to which the pair EUR/USD will be at $1.33 by the year-end.
Aviva strategists underline that the ECB President Jean-Claude Trichet noted that the exit from emergency stimulus measures won’t be slowed down.
Last week the yield spread between Greek 10-year government bonds and similar German debt got below 700 basis points for the first time since June. In addition, the ECB’s financing of Portuguese credit institutions decreased by 19% in September, while the financing of the Spanish ones – by 11%.

Commerzbank: USD/CHF will reverse only above 0.9731
Technical analysts at Commerzbank claim that the greenback keeps trading within 3-month downtrend channel versus Swiss franc.
The specialists note that US dollar will be able to reverse the current descending trend only if it manages to break above 0.9731.
If American currency strengthens, resistance for the pair USD/CHF will be found at the minimum of the middle of September at 0.9932.

Mizuho: US dollar may fall to 80 yen
Technical analysts at Mizuho Corporate Bank note that extremely narrow trading range that we observed yesterday seems to be a ‘triangle’ consolidation within a steep ‘channel’.
The specialists believe that the 9-day MA that approached the current levels that act as a resistance capping the pair USD/JPY. According to them, US dollar may still get lower this week to 81.00 and then to 80.00 even though it’s oversold.
Mizuho strategists advise investors to take shorts at 81.50 stopping above 82.25.

Commerzbank: pound may fall to $1.5665
British pound went down from the multi-month maximum at 1.6100 to the uptrend line from the minimums of the middle of September. Technical analysts at Commerzbank note that sterling is moving down to the 1.5755 area that is the key level to confirm a top.
The specialists believe if the pair GBP/USD doesn’t manage to hold above 1.5755, it would start declining towards 1.5705 (support line from June to October) and 1.5665 (55-day MA).
According to Commerzbank, as long as pound’s rate stays below resistance levels at 1.6001 (August peak) and 1.6009 (last week’s maximum), the prospects for the pair will remain negative.

BNP Paribas: G20 will help to ease currency tensions
Analysts at BNP Paribas SA in London believe that the chances that G20 meeting will bring positive results on international currency issues have increased.
The specialists note that the International Monetary Fund uses its influence to convince G-20 participants that an agreement is a must.
In addition, the specialists note that the amount of asset purchases that is going to be announced next month by the Federal Reserve will show how ready is the US to reach out to China and avoid the currency war.
G-20 Summit will take place on 11-12 November in South Korea.

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