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02/06/10

J.P. Morgan: yen declines as Japanese Prime Minister resigns
Japanese currency declined versus all of its main competitors. It happened as the country’s Prime Minister Yukio Hatoyama the leader of Democratic Party of Japan announced he would resign as the majority of Japanese population was dissatisfied as he didn't keep his promise to remove US military base from Okinawa.
As a result, investors stopped regarding yen as a refuge. Analysts at Gaitameonline Co. believe that political problems will harm yen’s status. However, strategists at Global Hunter Securities claim that although the market seems to be cautious, the demand for yen didn’t fall dramatically. As the most of attention will be still focused on the European debt crisis, yen’s decline will bring the currency to a more favorable level for purchasing, claims J.P. Morgan.

CIBC: euro will fall to $1.18 in the third quarter
Analysts at CIBC Monthly FX expect that the single currency will keep falling in the third quarter to hit 1.1800. This will happen under the negative impact of the debt crisis and the reduction of government spending.
The specialists forecast that after that euro may start to rebound gradually to 1.2000. As for the next year, CIBC predicts that the European currency will appreciate slightly to 1.22 in the first quarter, 1.24 – in the second and 1.30 – by the end of 2011.

ANZ National Bank: kiwi rose versus Aussie
New Zealand’s dollar reached week’s maximum versus its Australian counterpart as the country’s central bank is expected to raise this month key interest rate from the minimal 2.5% level. Australia’s rate is equal to 4.5%.
Strategists at ANZ National Bank Ltd. in Wellington claim that it’s likely that New Zealand’s monetary authorities will follow Bank of Canada that lifted the rates yesterday. The specialists note that investors are now stimulated to buy New Zealand’s dollar. In addition, New Zealand’s May commodity export price index set a record maximum rising by 30% over the past 12 months.
Never the less, New Zealand’s Prime Minister John Key doesn’t believe that kiwi will be able to outrun higher-yielding Aussie.

Mizuho: pound strengthened versus US dollar
British currency rose today getting to the maximal level in almost 3 weeks versus the greenback. It happened as British company Prudential Plc abandoned its $35.5 billion takeover of American International Group Inc.’s main Asian life-insurance unit.
Strategists at Mizuho Corporate Bank Ltd. claim that the failure of the largest transaction of such kind resulted in pound’s strengthening because sterling won’t be sold for foreign currencies.

BNP Paribas: SNB interventions will affect higher-yielding currencies
Analysts at BNP Paribas SA suppose that the efforts of Swiss National Bank to prevent national currency from appreciation versus euro can lead to the lowering of higher-yielding currencies.
If Switzerland’s central bank buys the single currency, this will absorb euro liquidity causing the drop of European bank stocks. As a result, there will be no way for investors but to stop commodity and high-yield trade.

USD/CHF: comments
The pair USD/CHF was trading yesterday with high volatility. Firstly, it bounced from the session’s minimum at 1.1525 to year’s maximum at 1.1730 and then slumped again losing 300 pips.
The rate returned today to the previous level between 1.1535 and 1.1590. The greenback is currently trading at 1.1530/40 area.
If US dollar is up, resistance levels will be found at 1.1730 and 1.1774. If the pair declines, support lies at 1.1449.

USD/JPY: comments
The greenback rose from Tuesday’s minimum at 90.55 versus Japanese yen and went above 91.75. The pair USD/JPY is currently trading at 91.90. If US dollar gets above this level, it may climb to 93.50. If the pair declines, important support will be at 91.60.

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03/06/10

Standard Bank: yen won't be depreciated
Analysts at Standard Bank Plc predict that yen won’t significantly decline after Yukio Hatoyama left the post of Japanese Prime Minister. Such assumption is made as the national currency wasn’t much affected when the leaders resigned in the past.
The specialists underline that investors keep avoiding risks preferring safer assets. As a result, the demand for yen won’t suffer much.

BNP Paribas: SNB will start interventions at 1.4110
According to strategists at BNP Paribas SA, the Swiss National Bank (SNB) is likely to keep intervening at the foreign exchange market to prevent franc’s excessive strengthening versus the single currency.
The specialists expect that the Switzerland’s central bank will be selling national currency versus euro when the franc is approaching the key technical level at 1.4110.

Royal Bank of Scotland: euro can be used to finance carry trade
Analysts at Royal Bank of Scotland Group Plc claim that the depreciation of commodity-currencies provides investors with possibility to buy them against euro and yen.
Although commodity currencies aren’t expected to start rising again soon, their current weak level can be used for carry trade versus European and Japanese currencies. The specialists note that as euro didn’t manage to follow the upward dynamics of US stock market, it can play the role of funding currency.

Standard Bank: euro will decline to C$1.2230
Strategists at Standard Bank Plc expect that euro will decline versus Canadian dollar getting down to C$1.2230. As a result, the specialists advise investors to sell the single currency versus loonie. The pair EUR/CAD is currently trading at 1.2720/30 area.
In addition, New Zealand dollar’s dollar is expected to climb versus the greenback to 70.60 U.S. cents, so Standard Bank also recommends starting kiwi purchases. The pair NZD/USD is currently trading at 0.6860 area.

EUR/USD: comments
The single currency rose from 4-year minimum at 1.2110 to European trade’s maximum at 1.2325. Euro is now declining again getting below 20-hour SMA at 1.2270. The pair EUR/USD is currently trading at area 1.2250/55.
If euro falls below 1.2235, the pair may survive a further decline to 1.2180/1.2200 and then to 1.2150 and 1.2110. To enter the uptrend the pair has to climb above 1.2285. In this case advance to 1.2310/30 is regarded as possible.

Bank of Montreal: optimistic outlook for loonie
Canadian dollar reached today the maximal level in more than 2 weeks trading versus its US counterpart. Loonie was helped by the 0.4% growth in oil price and 0.3% Standard and Poor’s 500 Index futures increase. All in all, Canada’s currency rose by 1.7% versus the greenback after the Bank of Canada lifted its interest rate to 0.5%.
Strategists at Bank of Montreal claim the increase in rates has certainly contributed to loonie’s strengthening. They are quite positive on the currency’s future dynamics expecting that tomorrow government report will show the advance of employment.

US: jobless claims
According to the data for the week before May 29, the number of initial jobless claims diminished by 7,000 and got equal to 453,000. The four-week average rose slightly to 459,000. As for continuing claims, they increased by 31,000 to 4.666 million at the week before May 22.
The Department of Labor figures show that the situation in the labor market didn’t get much better as the level of claims keeps being high.

BNP Paribas: sell pound at its advance to $1.51
British currency was rising today versus the greenback. Sterling was helped by the positive UK housing market data and advance in British stocks.
Nationwide Building Society announced that the average cost of a home rose in May by 0.5% to the maximal level in almost 2 years. British government managed to sell 2 billion pounds ($2.9 billion) of securities maturing in 2034. FTSE 100 Index extended by 1.7%. Analysts at Royal Bank of Canada in London note that there’s some slight evidence of the country’s economic recovery.
Specialists at BNP Paribas SA expect that pound may climb to $1.51. Never the less, the specialists believe that the data is not encouraging enough for making British currency rise in the long-term. As a result, they advise investors to use pound’s advance to sell sterling.

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Commerzbank: the target of EUR/USD decline is at 1.2065
The single currency didn’t manage to get higher than 1.2325 on Thursday. Technical analysts at Commerzbank note that EUR/USD is getting closer to its 4-year minimum at 1.2110 while the decline target is set even lower. Euro’s now trading versus the greenback at 1.2180 area.

According to the specialists, the pair may fall to 1.2065 level representing 38.2% Fibo retracement of the advance from 1985 to 2008 and further, to the psychological mark at 1.20.
In order to regain upward power European currency has to get above end of May maximum at1.2454. Main resistance levels are found at 1.2735/1.2850.


Goldman Sachs: US payrolls will rise
The greenback approached the 4-year maximum versus euro ahead of the employment report. It’s expected that US payrolls showed in May the most significant growth since 1983. According to the Bloomberg News survey, American economy added 536,000 jobs in May, while Goldman Sachs Group Inc. estimates this figure at 600,000.

Yesterday Kansas City Federal Reserve Bank President Thomas Hoenig offered to raise the country’s key interest rate to 1% by the end of the summer. Economists at Tokyo Tomin Bank Ltd are sure that the Federal Reserve will be the first G3 central bank to lift up rates and dollar is likely to benefit from this fact.

Analysts at Shinko Research Institute Ltd. regard the encouraging data as the signs of US economic improvement. They are looking forward to the inflow of capital to the United States.


JPMorgan Chase: death cross and dubble bottom on AUD/USD
Technical analysts at JPMorgan Chase & Co. in New York expect Aussie to fall to the year’s minimum versus the greenback as the currency formed death cross and double-top patterns.
Australian dollar’s 50-day MA went down this week below the 200-day MA. The same situation was observed in September 2008 when it slumped by 26% during 8 weeks. The only chance for the currency to overcome bearish pressure is to rise above resistance levels at 85.78 (February minimum) and 87.12 cents.

According to the specialists at Barclays Capital, Australian currency is likely to lose 9% in 3 weeks after the double-top figure that consists of November 16 and April 12 maximums and February 5 bottom. As a result, the analysts predict that Aussie will drop to 77 US cents. They claim that Australlian dollar is also negatively affected by the falling base metals prices.


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07/06/10

BNY Mellon: euro will fall to 1.0500 in a year
Analysts at BNY Mellon expect that euro will resume trading in downtrend during the rest of this year and the first half of 2011. European currency has already slumped from 1.50 zone at the beginning of December getting below 1.20 in June.
Even though the pace of decline may reduce, the single currency is likely to hit 1.1500 in the third quarter of 2010 and fall to 1.1000 by the end of the current year. As a result, in the first quarter of 2011 European currency will reach 1.0750 and depreciate to 1.0500 in a year.

Telegraph: euro won't “live” more than 5 years
According to the survey conducted by British newspaper Telegraph among 25 leading London economists, the single currency will exist no more than 5 years. 12 respondents project that euro won’t be able to survive this Parliamentary term, while 8 asserted it would and 5 didn’t have clear opinion.
The forecasts about euro’s life expectancy differ greatly. For example, Douglas McWilliams of the Centre for Economics and Business Research doubts that euro won’t collapse during 5this week, while Tim Congdon of International Monetary Research believes that Greece, Portugal and possibly Ireland may be excluded from the euro area. The final break-up may occur due to the antagonism between France and Germany.

Bank of Tokyo-Mitsubishi UFJ: buy dollar, yen and franc
Analysts at Bank of Tokyo-Mitsubishi UFJ Ltd. recommend investors to purchase the currencies that are thought to be the safest in the long-term – US dollar, yen and Swiss franc.
According to the specialists, governments’ efforts to reduce budget deficits through the process of fiscal tightening will have a negative impact on the world’s economic recovery.
Such assumption is confirmed by the current currency dynamics. Yen was up versus all its major competitors, the Dollar Index was strengthening for the seventh day in a row, while Swiss franc appreciated trading at less than 1.40 per euro for the second consecutive day.

Standard Bank: franc can rise to 1.35 per euro in a month
Swiss currency was trading close to its maximum versus euro at 1.3853. It happened as investors turned to safer assets awaiting the deepening and spreading of the European debt crisis.
Analysts at Standard Bank Plc in London claim that the Swiss National Bank won’t be able to do much to overcome bearish pressure on euro. It’s expected that Switzerland’s central bank gave up intervening in order to prevent franc from excessive rising. According to the specialists, Swiss franc can rise to 1.35 per euro in a month.
The pair EUR/CHF went down below the benchmark 1.40 level to trade at the moment at 1.3870/80 area.

Nouriel Roubini: euro may drop to the parity with dollar
According to Nouriel Roubini, professor at the New York University who predicted the financial crisis, the single currency may drop to the parity with the greenback.
The economist claims that the risk of the euro zone’s break-up can be regarded as high due to the high budget deficits. He believes that the decline of euro represents the only possible solution to save the euro area from collapse as it would allow European countries to raise their competitiveness.
In addition, Roubini claims that although austerity measures will send European economy into recession, they are inevitable for the survival of the monetary union.

Swiss e Trade Strategy Team: USD/CHF will fall to 1.1590
The greenback is falling versus Swiss franc from daily maximum at 1.1675 set during the Asian trade getting below 20-hour MA at 1.1625. According to the analysts at Swiss e Trade Strategy Team, US dollar may survive further decline to weekly pivot point at 1.1590.
If USD/CHF manages not to drop below 1.1590, resistance levels will lie at 20 hourly MA at 1.1625 and 1.1705. If the pair declines, support is at 1.1560/80 area representing 50 and 200 hours moving averages and today's daily pivot point.

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08/06/10

Mizuho Corporate Bank: dollar may fall below 84.83 yen
Technical analysts at Mizuho Corporate Bank Ltd. are bearish on USD/JPY. The specialists expect the greenback to fall below the minimal level since July 1995 at 84.83 yen.
According to Mizuho Corporate Bank, dollar is still staying within weekly Ichimoku chart that means that American currency keeps following the downtrend from 2007. The cloud’s baseline is situated this week at 89.94 yen. If US dollar gets down below 90 yen, it may lose much more.

Westpac: euro will reverse at $1.16/20 and begin rising
Analysts at Westpac Banking Corp. in Wellington claim that the single currency seems to be oversold. According to the specialists, euro entered strong support zone between $1.16 and $1.20 where it may reverse its trend and begin rising.
In addition the European currency’s relative strength index went down yesterday below the level of 30 that means that the pace of its decline was too high and it is very likely to switch upwards.

RBC: euro will fall to $1.15 by the end of 2010
Strategists at Royal Bank of Canada in Hong Kong expect the single currency to fall to $1.15 by the end of 2010. The forecast is based on the market’s expectations that the Federal Reserve may lift up rates faster than the ECB.
According to Bloomberg survey, ECB won’t conduct any actions at this direction until the second quarter of 2011. At the same time Ben Bernanke says that the Fed will raise its key interest rate from the minimal level before the US reaches full employment or inflation gets higher.
Eisuke Sakakibara, the former Ministry of Finance official, believes that the European currency may decrease by 20% versus the greenback and drop below 100 yen during the next few months. The economist supposes that euro’s decline will resume as investors are still worrying that the situation in Europe will worsen.

BNP Paribas: euro will fall to $1.08 by the end of the year
Analysts at BNP Paribas believe that the single will keep declining until the end of 2010 even though this process is going to be slower than in the first half of the year.
The specialists set euro’s targets at 1.2200 at the end of the second quarter, 1.1600 in the third quarter and 1.08 at the year’s end.
As for the near-term period, BNP Paribas is also bearish on euro despite the slight rebound that the pair EUR/USD is showing now. The analysts expect euro to decline to $1.1645 under the negative influence of concerns that Greek debt crisis will continue to spread over euro-zone borders affecting Hungary.

AUD/USD: comments
Australian currency went down from last week’s maximum at 0.8500 and was supported at 0.8080/8100 zone.
Even though Aussie attempted to get higher, it didn’t manage to overcome resistance at 0.8215 area. The pair AUD/USD is trading flat not far from the 11-month minimum at 0.8065. The pair remains trapped between downtrend lines on the upside and May minimums and the 0.8000 psychologically important level on the downside.
If the pair declines, support levels are at 0.8151, 0.8127 and 0.8087. If Aussie goes up, resistance levels are found at 0.8197, 0.8234 and 0.8266.

Estonia will enter euro area
European finance ministers are for Estonia entering the euro zone without regarding that the country will have to make many efforts in order to restrain the inflation. Estonia that used to be Soviet republic and joined the European Union in 2004 will begin to use the single currency since January 1 2011.
The country’s inflation rate was equal to 2.5% in April and this figure is projected to rise in the coming years as Estonia’s economic growth pace is above euro area’s average. Estonia’s economic output is only 14 billion euro ($17 billion), so it will be the second-smallest economy of the area ahead of Malta.
As a result, the EU demonstrates that the Greek crisis won’t stir the currency union’s enlargement to the east. Yesterday’s endorsement will be reviewed by government leaders at a June 17 summit, with a formal decision by finance ministers on July 13.

Mizuho Corporate Bank: investors improved their attitude to pound
British currency was rising versus the greenback in the first half of today’s trading day and approached the maximal level against the single currency since November 2008. It was helped by the positive economic data according to which retail spending rose in May. Sales at stores open at least a year added 0.8% from the previous year while they declined by 2.3% in April.
The market was encouraged to expect that the country will be able to deal with budget deficit more successfully than its European neighbors, claim analysts at Mizuho Corporate Bank Ltd. in London.
Today Britain is planning to sell 1.1 billion pounds of inflation-linked bonds maturing in 2027. Prime Minister David Cameron claimed yesterday that the spending cuts shouldn’t be postponed. He also announced that interest payments may reach 70 billion pounds ($101 billion) in five years.

BNY Mellon: pound declined due to Fitch Ratings comments
British currency was losing to its major counterparts as demand for safer assets grew after Fitch Ratings noted that the country’s facing serious fiscal problems to be solved.
The greenback rebounded versus sterling as Federal Reserve Chairman Ben Bernanke announced that US economic rebound won’t be very rapid.
Currency strategist at Bank of New York Mellon Corp. in London believe that the market was very fast reacting on Fitch’s information that means that it’s extremely sensitive to all developments of the debt issue. According to the specialists, the market’s still dominated by the uncertainty.

EUR/CHF: comments
The single currency set a new absolute minimum trading versus Swiss franc at 1.3782 ruining its trading channel of the last 2 days. The pair declined from May 31 maximum at 1.4590 to be trading currently at 1.3820 area.
If the pair EUR/CHF declines, support levels will be at 1.3785 (session’s minimum), 1.3760 and 1.3730. If euro goes up, resistance levels will be found at 1.3845 (previous absolute minimum), 1.3910 (session’s maximum) and 1.3940 (June 7 maximum).

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09/06/10

HSBC: AUD/USD forecast dropped
Analysts at HSBC Plc dropped their forecast that Aussie will rise to the parity with the greenback by the end of 2010. Last year Australian currency managed to gain 28% following Chinese economic growth. Now China that’s Australia’s main trade partner is acting in order to restrain property prices that jumped in April by 12.8%.
Chinese government rose mortgage rates and the payment requirements. HSBC expects significant slowdown in the development of this market. If China’s property bubble deflates, this may harm the banks of South Pacific region. According to the specialists, Aussie will trade at 85 US cents by December.

Saxo bank: daily currency forecast
EUR/USD: analysts at Saxo Bank advise investors to buy the single currency from 1.1920 to 1.1960. According to the specialists euro may rise to 1.2040.
USD/JPY: it’s necessary to sell dollars from 91.50 to 91.75 as the pair is likely to fall to 90.80.
EUR/JPY: the trend for the pair is regarded as neutral.
GBP/USD: sterling can rise to 1.4550, so it’s recommended to but from 1.4430 to 1.4474.
AUD/USD: Aussie may advance to 0.8360, so it’s advised to but from 0.8260 to 0.8286.
USD/CAD: it’s necessary to sell dollars from 1.0470 to 1.05 as the pair is likely to fall to 1.04.

UBS AG: SNB raise foreign-currency reserves by more than half in May
According to the data from the Swiss government, Swiss National Bank bought last month foreign-currency reserves for 78.8 billion Swiss francs ($67.7 billion) increasing them by more than half to prevent the excessive appreciation of the national currency against euro. Analysts at UBS AG estimate such interventions as the biggest ever conducted by any country except for China. Switzerland has trade and fiscal surpluses and its debt is equal only to 40% of GDP. It’s necessary to point out that Chinese economy is 33 times bigger than the Switzerland’s one.
After conducting such huge interventions in May the country’s central bank has chosen not to intervene this month. As a result, the single currency hit the record minimum versus franc at 1.3744 francs.
Never the less, economists at Deutsche Bank in New York believe that even the positive indicators aren’t sufficient to explain such high demand for Swiss currency claiming that Switzerland looks attractive mainly in contrast with highly indebted euro zone. While the absence of SNB’s intervention would make import prices slump and rise deflation risks, intervening with interest rates close to zero is likely to provoke inflation even despite the fact that Swiss economy is growing.

Mizuho Corporate Bank: “falling wedge” on EUR/USD
The single currency keeps consolidating in narrow range below 1.2000 in its trade versus the greenback. Technical analysts at Mizuho Corporate Bank claim that the pair EUR/USD is forming a “falling wedge” with minimal volumes.
According to the specialists, 9-day MA interflows the top of the "wedge", while 26-day average is declining.
The analysts place resistance at 1.1978, 1.2010 and 1.2025. Support levels are set at 1.1900, 1.1876/1.1868 and 1.1850/1.1826.

UBS AG: demand for Swiss franc will stay high till 2020
Analysts at UBS AG expect that high demand for Swiss franc will define its upward dynamics up to 2010 and 2020. The specialists believe that successful performance of Swiss economy led by rising exports to Germany will support Swiss currency providing it a significant advantage in comparison with euro weakened by euro zone’s debt crisis.
Franc gained 7.1% versus the single currency since the beginning of 2010 and is regarded now as a safe currency that came after the German mark. In May Swiss National Bank’s interventions raise the country’s foreign-currency reserves to 232.4 billion Swiss francs ($202 billion) that helped to increase its authority and influence.

USD/JPY: comments
The greenback recovered from Wednesday’s minimum at 90.90 to the Asian session’s maximum at 91.60 trading versus Japanese yen. Since that time USD/JPY kept fluctuating in narrow range between 91.55 and 91.25.
The analysts expect dollar may decline to 90.36 during the next sessions and then go up to 92.00.
If the pair goes down, support levels will be found at 91.05, 90.96 and 90.83. If the pair increases, resistance levels will lie at 91.68, 92.07 and 92.20.

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11/06/10

Tokyo-Mitsubishi UFJ: dollar may rise to 92 yen
Analysts at Tokyo-Mitsubishi UFJ Ltd believe that the greenback is likely to break out of a “triangle” it has formed since the first week of May trading versus Japanese yen after it managed to rebound in March and April. The specialists expect US dollar to rise to 92 yen.
The maximums and minimums of the pair’s rate create ascending and descending trend lines that tend to meet in one point this month. As a result, support line becomes stronger limiting the downward moves.
In addition, the cloud on the daily ichimoku chart can’t be seen from June 10 to June 21 that means that dollar is trading just below facing weak resistance.
Saxo bank: daily currency forecast
EUR/USD: although the trend for the pair is regarded as neutral it’s likely to break out. As a result, the analysts recommend buying if the single currency gets above 1.2148 and selling if it falls below 1.2093. According to Saxo Bank, upward dynamics is more possible.
USD/JPY: the trend for the pair seems to be neutral.
EUR/JPY: although the trend for the pair is regarded as neutral it’s likely to break out. As a result, the analysts recommend buying if the single currency gets above 111.28 and selling if it falls below 110.46. According to Saxo Bank, upward dynamics is more possible.
GBP/USD: the specialists see the beginning of “morning star” formation. In the near-term the trend also seems to be neutral. Saxo Bank believes that the pair may reverse to the downtrend over the weekend.
AUD/USD: Aussie may advance to 0.8490, so it’s advised to but from 0.8380 to 0.8400.
USD/CAD: it’s necessary to buy dollars from 1.0300 to 1.0334 as the pair is likely to advance to 1.04.

Commerzbank: euro may rise to 1.2440/1.2775
European currency went up from the 4-year minimum getting yesterday above 1.2100. The maximal level of today’s session was set at 1.2148. As a result, technical analysts at Commerzbank claim that we can observe the destruction of the downtrend.
The specialists note that there are some bullish signals for the short-term period. For example, daily RSI has diverged on its way to the new minimum and the long-term MA reversed so far, so it’s possible to await the corrective rebound of EUR/USD. According to Commerzbank, the pair may rebound to 1.2440/1.2775 zone.
However, when the single currency reaches this levels it is likely to drop again and continue declining, believe the analysts. Commerzbank places intraday support at 1.2000, 1.1960 and recent minimum at 1.1876.

Barclays Bank: Australia’s and New Zealand’s dollar declined
Australia’s and New Zealand’s dollars were down decreasing weekly advance versus the greenback. It happened as Chinese inflation pace turned out to be the highest in 19 months with consumer prices gaining 3.1% from the level of 2009 while analysts forecasted only 3% increase.
As a result, the country is expected to take some measures to cool its economy. Such assumptions affect investors’ demand for riskier assets harming Aussie and kiwi.
Strategists at Barclays Bank Plc in Tokyo claim that China’s inflation data can make its monetary authorities to raise interest rates or revaluate yuan earlier than it was expected. According to the specialists, the risk aversion in this case will get higher.

GBP/USD: comments
British currency went up from Monday’s minimum at 1.4345 to the week’s maximum at 1.4760. However pound failed at this level and declined by 100 pips falling below 1.4700 to session’s minimum at 1.4660 area.
The analysts believe that the pair GBP/USD set a temporary top below the important resistance at 1.4780 and is likely to fall to 1.4240 and then to 1.3760. If the pair declines support levels will be found at 1.4600 and 1.4490/4500.
The advance of British Output PPI released today was equal only to 0.3% in May compared with 0.6% forecasted increase.

BofT-Mitsubishi: euro won't be able to rise in the long term
The single currency strengthened versus the greenback and yen as the market’s concerns about the euro zone’s debt crisis have eased.
Euro was supported by the stocks’ advance during the fourth consecutive day that diminished the demand for the less risky assets. In addition European Central Bank President Jean-Claude Trichet announced yesterday that offerings of unlimited cash and will government-bond purchases will continue as the measures against the crisis.
Strategist at the Bank of Tokyo-Mitsubishi UFJ Ltd note that although that euro quickly reacted on this positive news the data is not enough to ensure euro’s growth in the longer term.
Analysts at Brown Brothers Harriman in New York claim that one more positive factor for the European currency was German court's rejection of a challenge to Germany's contribution to the nearly $1 trillion European Union-International Monetary Fund-led rescue plan.

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15/06/10
Forecast Pte: euro will rise to $1.2672
Technical analysts at Forecast Pte in Singapore expect that the single currency may climb to the 3-week maximum versus the greenback.
According to the specialists, last week euro rose to $1.2097 level that represents the upper trend line of the descending wedge linking the maximums of May 21 and June 3, while the wedge itself is formed of group of lower highs and lows.
The destruction of the wedge has to be regarded as the bullish signal, so the European currency is thought to extend to May 21 maximum at $1.2672.

Saxo Bank: daily currency forecast
EUR/USD: the analysts place key support at 1.2190/95. If the single currency gets below these levels, it may fall to 1.2140. Otherwise, the pair will be trading at in range between 1.22 and 1.23.
USD/JPY: the trend for the pair seems to be neutral and the pair is trapped at the area of 91.00/30.
EUR/JPY: if euro gets below 111.55, it is likely to extend its decline to 110.70/80. All in all, the trend rests neutral and we’ll see the pair fluctuating in range between 110.80 and 112.20.
GBP/USD: if pound falls below 1.4720, it may continue decreasing to 1.4670. At this level it will be necessary to buy looking forward to the pair’s advance to 1.48. Put stop below 1.4620.
AUD/USD: the trend for the pair is regarded as neutral. Aussie would stay in range between 0.8540 and 0.8600.
USD/CAD: the analysts place key support at 1.0295. If the greenback gets below this level, it may fall to 1.0225. Otherwise, the pair will be trading at in range between 1.0290 and 1.0350.

Commerzbank: pound will grow above 1.5001 versus US dollar
British currency fell to 1.4500 zone on Friday, then recovered to 1.4800 yesterday getting into resistance range at 1.4770/1.4870 where double Fibonacci and the February minimum are found.
Technical analysts at Commerzbank believe that pound may get out of this area climbing to 1.5001 level that represents 6-month resistance line or even upper to 1.5240/50 area containing the double Fibonacci retracement.

Moody’s: Greece's rating cut
Moody’s Investors Service reduced Greece’s credit rating to non-investment grade from A3 to Ba1. The country is trying to deal with its huge budget deficit. That means that the risk of Greek default is regarded to increase although it’s still not high and general outlook seems to be stable, claimed the specialists.
Currency strategists at UBS AG in Singapore keep targeting euro at $1.15 in 3 months. They note that austerity measures conducted by Greece in order to receive 110 billion-euro ($134 billion) aid package from the European Union and the International Monetary Fund will harm economic growth. As a result, the current situation won’t be able to improve for a long time.
Strategists at Commerzbank AG in Frankfurt claimed that the downgrade made invertors return to their bearish view on the single currency breaking its upward movement.

Nomura: Australia's rates won't be lifted until the yearend
Australia’s currency declined from June 14 maximum at 0.8666. It happened due to the expectations that the Reserve Bank of Australia won’t change interest rates until at least the fourth quarter strengthened after the central bank claimed that euro area’s debt crisis would undoubtedly affect the growth of world’s economy.
Currency specialists at HiFX underline that risk aversion has high impact on investors. According to the economists, huge budget deficits of European countries are unprecedented that increases uncertainty about how shortfall problems will be solved.
Analysts at Nomura Australia Ltd. in Sydney claim that the RBA will be looking forward to second-quarter CPI to make the decision about rates. As a result, the specialists are sure that interest rates won’t be lifted until August or even the yearend.
New Zealand’s dollar was also down for the first day in four following the downward dynamics of Asian commodity stocks that fell after Greece’s credit rating was reduced.

Citigroup: Britain has more chances to cut deficit that euro zone
According to British new budget forecasting office (Office for Budget Responsibility, OBR) created by Prime Minister David Cameron's new coalition government, in the next few years the country will need to borrow less than expected. Never the less, long-term growth is also thought to be less significant than it was estimated before.
Growth forecasts were cut from the previous government's 3.25% to 2.6% for 2011. In 2012 and 2013 UK growth rate will be equal to 2.8% and 2014 – to 2.6%, while March projection stated 3.5% advance for each of these three years.
As for the improved borrowing forecast, the OBR decreased total net borrowing expectations by £23 billion ($33.45 billion) to a total of £544 billion for the five financial years to the spring of 2015. Such assumptions are explained by anticipated stronger tax receipts and a lower unemployment rate.
Economists at Citigroup believe that the main problem for the United Kingdom is fiscal sustainability. The forecast showed that the country has more chances to solve this issue than the indebted European nations.

Euro and pound are gaining
European markets jumped up and euro and pound are rising getting towards yesterday’s maximums. It’s happening despite Moody's downgrade of Greece's sovereign debt and negative euro area economic data with the ZEW economic expectations Index losing almost 20 points to 28.7. British Consumer prices’ rose in May only by 0.2% compared with expected 0.3% monthly increase.
The single currency was supported at 1.2165 level and climbed above 1.2250 area trading versus the greenback. Sterling advanced from today’s minimum at 1.4680 to 1.4750 area.

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16/06/10

Jim Rogers: buying euro and oil
Well-known investor Jim Rogers confessed today that he bought the single currency on Friday and Monday making this decision on the euro’s rebound that followed yesterday stock markets growth.
According to the specialist, reforms should cover not only the country level, but also the level of the entire union. In addition, Rogers recommended buying oil for the long-term period as the demand for it will increase due to the reduction of drilling opportunities since US administration is thinking about restricting offshore operations after huge BP oil spill.
Euro managed to reach 2-week maximum versus the greenback at the beginning of the European session. Never the less, investors were worried about the situation in Spain and, as a result, Europe’s authorities had to reassure the market that the EU, the International Monetary Fund and the US Treasury weren’t regarding the possibility of providing a credit line for the country. Economist Nouriel Roubini claimed yesterday that Spanish crisis could be much more dangerous than the Greek one as Spain is one of the four largest EU economies with such serious problems as 20% unemployment.

Russian may add Australian and Canadian dollars to international reserves
Russia may is likely to start using Australian and Canadian dollars for its international reserves that were equal to $458.2 billion on June 4 being the third biggest in the world. Such decision may be explained by high volatility of the greenback and the single currency.
Loonie and Aussie aren’t usually regarded as international reserve currencies as they have limited liquidity. However, these currencies showed the best results during the last year. They are connected to the demand for raw materials that rose on the expectations of global economic recovery. Canadian dollar added 10% versus US dollar and 23% versus euro, while Australian dollar – 8.6% and 21% respectively. Ruble advanced by nearly 11% against euro and 0.2% versus dollar.
In November Russian reserves consisted of 47% US dollars, 41% euro, 10% sterling and 2% Japanese yen. In 2006 the share of American currency was higher, at 50%, while euro represented 40% and pound and yen together accounted for 10%. The country was trying to diversify its reserves as the greenback weakened versus euro by 34% during 2.5 years. The current situation is quite opposite with the European currency that decreased by 22% since November 25 as investors lost confidence in it because of euro zone’s debt crisis. According to last month forecast of BNP Paribas, the greenback will represent more than half of Russia’s foreign currency reserves by the end of 2010.

BNP Paribas: euro’s growth was a correction
European currency declined versus the greenback as investors were worrying about debt crisis affecting Spain. There was a speculation that the country would be provided with a credit line for 250 billion euro ($307 billion).
Strategists at BNP Paribas in London underlined that euro wasn’t able to keep trading above $1.235 level that indicated its ability to grow. According to the specialists, previous rebound of the single currency is nothing more but correction and the downtrend is going to continue in the near term.
Currency analysts with Danske Bank A/S in Copenhagen expect euro to fall to $1.15 in three months.

USD/JPY: comments
The greenback rose from yesterday’s minimum at 91.05 and reached 91.80 at European opening. Then the pair USD/JPY reversed again declining below 91.50. As a result, dollar was trading today in range between 90.85 and 92.10 versus yen.
The pair is likely to advance when it’s above 91.08. If dollar manages to rise above 92.02, it may head towards resistance at 92.90.
If US dollar keeps moving down, support levels will be found at 91.05 (June 15 minimum) and 90.85 (June 8 minimum). If the rate goes up, resistance levels will be at 91.80 (session’s maximum), 92.10 (June 7/14 maximums) and 92.25/35 (intra-day levels).


Bank of Nova Scotia: CAD declined on the risk aversion
Canadian dollar went down from its maximal closing level in more than a month at C$1.0254 affected by the decline of demand for riskier assets. Strategists at Bank of Nova Scotia in Toronto note that risk aversion is getting higher with the advance of yields of indebted European nations.
Loonie that’s depending on the economic growth was as usual following global equities dynamics. Futures on Standard & Poor’s 500 Index that lost 0.4%. In June Canadian dollar rose by 1.5%, while S&P 500 Index increased by 2.4%.

EUR/USD: trade comments
At the beginning of the week it was thought that European currency’s trend versus the greenback had reversed upwards. The main bullish activity was provided by central banks such as Russian and Swiss ones.
Today traders were selling at 1.2340 and 1.2315 accusing central banks of unsuccessful attempts to place 1.2360/65 stops for the following decline. Now the stops are situated below 1.2250.
Some pessimistic factors that investors previously ignored have become influential on the price, for example, investors are greatly concerned by the fact that Spain may need financial help.

UBS: demand for yen increased
Japanese currency was gaining versus the majority of its counterparts as investors raise demand for it as a safer asset. It happened due to the concerns about euro zone’s debt crisis and the expectations that the pace of US economic rebound will reduce.
Strategists at UBS AG in Stamford claim that bad news have now much stronger impact on the market that the positive ones.
US dollar is down against yen for the third consecutive day. Housing starts decreased by 10% showing the most significant decline since March 2009. Building permits surprisingly dropped to one-year minimum.


George Soros: euro area will face recession in 2011
According to well-known billionaire investor George Soros, euro area will face recession in 2011. The economist believes that the crisis is the fault of European lawmakers. The measures conducted to fight the crisis resulted in exclusive circle.
Mistakes made during the launching of the single currency become now clear. Soros thinks that euro crisis may provoke the crisis of the whole European Union. The main problem is in absence of adjustment mechanism or plan letting the countries leave the European Economic and Monetary Union.
Germany made other countries adopt the mechanism of using $1 trillion to bailout euro zone economies and forces the rest of the euro region to agree to its standards of trade surplus and high savings for all European countries. However, it’s not possible to act as a lender and have trade surplus without another country to get a deficit. Here is the danger of the current situation: budget discipline intrusion in time when demand is insufficient and banking system remains weak leads to the exclusive circle, notes Soros.
Germany in this case won’t have any problems as weak euro will help the economy, but the rest of Europe will suffer from the long-term stagnation. European banking system will have to deal with confidence crisis. Soros doesn’t eliminate the possibility of euro zone’s collapse.

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[FBS_analytics]

17/06/10

Saxo Bank: daily currency forecast
EUR/USD: the pair may rise above 1.2350 or fall below 1.22. The target level is set at 1.2420. It’s recommended to stop below 1.23 and 1.2165 respectively.
USD/JPY: resistance lowered to 91.40, while the next support is found at 90.85.
EUR/JPY: if euro gets below 111.90, it is likely to extend its decline to 111.50. The pair will be fluctuating in range between 111.50 and 112.50 making only slight bias.
GBP/USD: if pound falls below the near-term support at 1.4680, it may continue decreasing to 1.4615. Otherwise, the pair will be trading in range between 1.4680 and 1.4750.
AUD/USD: the trend for the pair is regarded as neutral. The next support for Aussie is found at 0.8575, while below this level the pair would fall to 0.8510 or stay in range between 0.8575 and 0.8665.
USD/CAD: the trend for the pair is regarded as neutral. The greenback found the near-term base at 1.0225 and will be trading again between it and 1.03.

Citigroup: growth pace of Australia’s economy will decrease
Australian currency declined from its 4-week maximum versus the greenback reflecting the reduced demand for higher-yielding assets that fell as Asian equities and US stock futures were down. Commodities’ prices including crude oil’s and copper’s also decreased affecting investors’ appetite as raw materials represent more than half of Australian exports.
According to Citigroup forecast, the growth pace of Australia’s economy will decrease from 3.5% to 3.25% in 2010. The specialists believe that the central bank will raise interest rates only once more in 2010 as inflation won’t exceed the central bank’s target.
New Zealand’s dollar managed to compensate its former decline on the expectations that the country’s central bank will lift up interest rates at its second meeting in July. Strategists at ANZ National Bank Ltd. in Wellington believe that the increase in the Reserve Bank of New Zealand’s rates would cause the restart of carry trade.
In June Australian dollar added 1.7% versus US dollar, while New Zealand’s currency strengthened by 2.5% as concern over Europe’s debt crisis eased. The key interest rate is equal to 4.5% in Australia and 2.75% in New Zealand.

Goldman Sachs: the SNB left the key rate at minimum
The Swiss central bank (SNB) decided to leave its key interest rate at 0.25% in line with economists’ forecasts.
In addition, the SNB loosened its policy that previously focused on preventing franc from excessive appreciation versus the single currency as the deflation risk seems to be down. Switzerland’s monetary authorities claim that even though strong franc affects the country’s exports, the advance of the national currency is compensated by the growth in foreign demand. Franc gained 8% versus euro during the past six months.
Economists at Goldman Sachs Holdings Inc. in Frankfurt note that it’s possible to see the need of rate increase in terms of the current Swiss levels inflation and economic growth. However, European environment makes it necessary for the SNB continue monetary easing.
According to the forecast of the central bank, Switzerland’s economic growth will be equal in 2010 to 2%, while the average inflation level – to 0.9%.

Mizuho: euro should rise above 1.2300
European currency rose from last week’s minimum at 1.1875 and reached 1.2355 level on Wednesday.
Technical analysts at Mizuho claim that if the pair EUR/USD rises above 1.2300, it would be much easier for the pair to show further advance. The specialists forecast that the single currency will consolidate in its current trading area. If the week is closed above 1.2300, euro will rise higher.
If euro’s rate goes up, resistance levels will be found at 1.2338, 1.2355 and 1.2388. If the pair declines, support levels will be 1.2255, 1.2200 and 1.2168/1.2140.

Pimco: the Fed won't change rates in the long term
Economists at Pacific Investment Management Co. believe that the Federal Reserve will leave its key interest rates at the current levels for a very long period of time. According to the specialists, global demand will be harmed by the euro zone’s austerity measures and deflationary fiscal policy.
Pimco managing $1.1 trillion of assets expects that the world’s economic growth will be below average, while the regulation will be strengthening and unemployment staying above natural rate during the next 3-5 years.
The Federal Open Market Committee’s meeting will take place on June 22-23 in Washington.

Commerzbank AG: dollar may rise to 93.50 yen
Technical analysts at Commerzbank AG claim that the greenback may rise to 93.50 (78.6% Fibonacci retracement of May decline) trading versus yen if it manages to stay above support area between 90.97 (support line inclined upwards) and 90.85 yen (last week’s minimum). If the pair is able to overcome 93.50 level, it may advance to 95.00.
USD/JPY is currently trading at 91.20/30.

Pound jumped on retail sales growth
British currency bounced by 0.2% almost to the month’s maximum versus the greenback. It happened as UK retail sales gained in May 0.6% while the economists were looking forward to only 0.1% increase. As a result, investors’ sentiment about the country’s economic growth improved.
Before this sterling declined after Bank of England claimed that inflation may fall as economic growth slows down making investors think that the central bank would keep rates at minimal level for a long time.

Spain organised successful bond auction
The single currency fell from yesterday' maximum at 1.2355 to today’s minimum at 1.2245. then euro bounced by 150 pips to the 3-week maximum at 1.2380 area.
Such advance of the European currency can be explained by sufficient demand for Spanish debt. The country was able to sell on today's auction long-term government bonds of 3.479 billion euro. As a result, market’s confidence to euro increased.
The analysts believe that Spain will rest in the center of investors’ attention. The results of Spanish banking system’s stress test are to be released later today.

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