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09/08/10
Bank of Tokyo-Mitsubishi: the Fed’s policy will ease
Specialists at Bank of Tokyo-Mitsubishi UFJ Ltd claim that the Federal Reserve’s likely to loosen its monetary policy. Such assumption’s based on the butterfly spread that’s calculated by subtracting doubled 5-year yield it from 2- and 10-year rates.
Bank of Tokyo-Mitsubishi notes that the last time the spread got to its current negative level of 34 basis points was in December 2008 after Lehman Brothers’ collapse and, earlier, in 2001 after the Internet bubble burst. Negative figure shows that there are more bets that the Fed will reduce borrowing costs or hold interest rates near zero for longer.
If the butterfly spread gets gown below the mark reached after the collapse of hedge fund Long-Term Capital Management LP in 1998, it will come close to 1981 levels hit during postwar double-dip recession. Bank of Tokyo-Mitsubishi analysts note that even if the United States avoids recession scenario, its economic growth will be only just above 1% that will strengthen deflation risks.
According to the strategists, the 5-year yield that reflects the potential monetary policy switches lowered that means that the possibility of further easing is already processed and priced in be the market.
Mizuho: short-covering on EUR/USD is possible
The single currency rose last week to 3-month maximum above 1.3300 and managed to close the week above 38% Fibonacci retracement resistance.
Technical analysts at Mizuho Corporate Bank believe that there’s a possibility of short-covering above 1.3510 level representing 50% Fibonacci retracement of decline from December to June.
According to the specialists, in the longer-term it’s necessary to remember the market’s consensus of the pair’s slump to 1.2600 in 3 months and 1.2000 in a year. Mizuho notes that euro’s a bit overbought versus the greenback.
Goldman Sachs: Japan’s and US growth forecast reduced
Economists at Goldman Sachs Group Inc. reduced their estimates of US and Japanese economic growth prospects.
According to the new forecast, Japan’s economy will add 1.4% in 2011 and not 1.7% as it was expected before. As for American one, it’s thought to rise by 1.9%, while the previous prediction was equal to 2.5%.
The macroeconomic data supports such downward revision. Japan’s current-account surplus decreased for the second month in a row affected by export income’s decline. In addition, jobless rate in the country reached 7-month maximum and factory output dropped in June. Goldman specialists are also looking forward to severe consumer spending decline in the country.
The slowdown of American growth may be explained by the fact that lawmakers are against of extending several stimulus measures. The analysts suppose that the unemployment rate which was at 9.5% in July may advance to 10% the beginning 2011. As a result, claims Goldman Sachs, the Federal Reserve may start again conducting unconventional monetary easing.
Barclays: dollar will gain versus yen, Aussie and kiwi
Analysts at Barclays Plc in London claim that the greenback may rise versus Japanese, Australian and New Zealand’s currencies as they believe that the Federal Reserve won’t decide to ease its monetary policy tomorrow.
According to the specialists, if the Federal Open Markets Committee leaves monetary policy unchanged, short-term yields will climb making the greenback advance as well.
The strategists recommend acting in this situation using the pair USD/JPY traditionally connected with short-term interest rates, although they are also sure that AUD/USD and NZD/USD will decline.
If it happens that the Fed announces a clear plan to help the economy dollar may drop below 85 yen and possibly beyond 84 yen.
USD/JPY: comments
The greenback fell versus Japanese currency from 88.10 at the end of July getting to the new 8-month minimum on Friday at 85.00. After that US dollar managed to find support there and rebound to 85.75 during the European trade before meeting resistance and returning to 85.55.
Technical analysts believe that the pair is still within a downtrend targeting to November 2009's minimum at 84.83.
If the pair USD/JPY goes up, resistance levels will be found at 85.70 (August 3/5 minimums), 86.20 (August 6 maximum) and 86.45 (August 5 maximum). If American currency declines, support levels will be at 85.00 (August 6 minimum), 84.80 (November 2009 minimum) and 84.32 (June 1995 minimum).
Bank of England's forecast will be negative
It’s expected that the Bank of England will be negative in its short-term outlook for the British economy. The country’s central bank is likely to forecast weak economic growth and high inflation.
Never the less, the pound may continue gaining before investors will once again become negative on sterling. If the British currency manages to overcome 1.60/1.61 levels, it will be able to rise to 1.65.
The Bank of England’s Governor Mervyn King will speak on Wednesday August 11 at 9:30 GMT.
On-line analytics from FBS always is available on: Free Forex Charts, Fundamentsl Forex Market Analysis, Live Forex Trading Charts, Forex Technical Analysis, Forex Forecasts - Analytics and market news - FBS
Bank of Tokyo-Mitsubishi: the Fed’s policy will ease
Specialists at Bank of Tokyo-Mitsubishi UFJ Ltd claim that the Federal Reserve’s likely to loosen its monetary policy. Such assumption’s based on the butterfly spread that’s calculated by subtracting doubled 5-year yield it from 2- and 10-year rates.
Bank of Tokyo-Mitsubishi notes that the last time the spread got to its current negative level of 34 basis points was in December 2008 after Lehman Brothers’ collapse and, earlier, in 2001 after the Internet bubble burst. Negative figure shows that there are more bets that the Fed will reduce borrowing costs or hold interest rates near zero for longer.
If the butterfly spread gets gown below the mark reached after the collapse of hedge fund Long-Term Capital Management LP in 1998, it will come close to 1981 levels hit during postwar double-dip recession. Bank of Tokyo-Mitsubishi analysts note that even if the United States avoids recession scenario, its economic growth will be only just above 1% that will strengthen deflation risks.
According to the strategists, the 5-year yield that reflects the potential monetary policy switches lowered that means that the possibility of further easing is already processed and priced in be the market.
Mizuho: short-covering on EUR/USD is possible
The single currency rose last week to 3-month maximum above 1.3300 and managed to close the week above 38% Fibonacci retracement resistance.
Technical analysts at Mizuho Corporate Bank believe that there’s a possibility of short-covering above 1.3510 level representing 50% Fibonacci retracement of decline from December to June.
According to the specialists, in the longer-term it’s necessary to remember the market’s consensus of the pair’s slump to 1.2600 in 3 months and 1.2000 in a year. Mizuho notes that euro’s a bit overbought versus the greenback.
Goldman Sachs: Japan’s and US growth forecast reduced
Economists at Goldman Sachs Group Inc. reduced their estimates of US and Japanese economic growth prospects.
According to the new forecast, Japan’s economy will add 1.4% in 2011 and not 1.7% as it was expected before. As for American one, it’s thought to rise by 1.9%, while the previous prediction was equal to 2.5%.
The macroeconomic data supports such downward revision. Japan’s current-account surplus decreased for the second month in a row affected by export income’s decline. In addition, jobless rate in the country reached 7-month maximum and factory output dropped in June. Goldman specialists are also looking forward to severe consumer spending decline in the country.
The slowdown of American growth may be explained by the fact that lawmakers are against of extending several stimulus measures. The analysts suppose that the unemployment rate which was at 9.5% in July may advance to 10% the beginning 2011. As a result, claims Goldman Sachs, the Federal Reserve may start again conducting unconventional monetary easing.
Barclays: dollar will gain versus yen, Aussie and kiwi
Analysts at Barclays Plc in London claim that the greenback may rise versus Japanese, Australian and New Zealand’s currencies as they believe that the Federal Reserve won’t decide to ease its monetary policy tomorrow.
According to the specialists, if the Federal Open Markets Committee leaves monetary policy unchanged, short-term yields will climb making the greenback advance as well.
The strategists recommend acting in this situation using the pair USD/JPY traditionally connected with short-term interest rates, although they are also sure that AUD/USD and NZD/USD will decline.
If it happens that the Fed announces a clear plan to help the economy dollar may drop below 85 yen and possibly beyond 84 yen.
USD/JPY: comments
The greenback fell versus Japanese currency from 88.10 at the end of July getting to the new 8-month minimum on Friday at 85.00. After that US dollar managed to find support there and rebound to 85.75 during the European trade before meeting resistance and returning to 85.55.
Technical analysts believe that the pair is still within a downtrend targeting to November 2009's minimum at 84.83.
If the pair USD/JPY goes up, resistance levels will be found at 85.70 (August 3/5 minimums), 86.20 (August 6 maximum) and 86.45 (August 5 maximum). If American currency declines, support levels will be at 85.00 (August 6 minimum), 84.80 (November 2009 minimum) and 84.32 (June 1995 minimum).
Bank of England's forecast will be negative
It’s expected that the Bank of England will be negative in its short-term outlook for the British economy. The country’s central bank is likely to forecast weak economic growth and high inflation.
Never the less, the pound may continue gaining before investors will once again become negative on sterling. If the British currency manages to overcome 1.60/1.61 levels, it will be able to rise to 1.65.
The Bank of England’s Governor Mervyn King will speak on Wednesday August 11 at 9:30 GMT.
On-line analytics from FBS always is available on: Free Forex Charts, Fundamentsl Forex Market Analysis, Live Forex Trading Charts, Forex Technical Analysis, Forex Forecasts - Analytics and market news - FBS