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Societe Generale: comments on Swiss franc The Swiss National Bank increased its GDP growth forecast for 2012 from 0.5% to 1%. The central bank lowered inflation forecasts for 2012-2013 to -0.6% and 0.3% respectively. Analysts at Societe Generale claim that although Swiss franc is still overvalued and inflation risks are subdued, the SNB sees no reason to immediately take new initiatives to weaken the national currency. The specialists underline that the bullish pressure on franc has somewhat eased due to the increased liquidity in the euro area and improved risk sentiment. However, many investors still don’t dare to sell Swiss currency. A continuation of the rally in stocks and commodities alone won’t be enough to make the market players go short on franc. As a result, the prospects of EUR/CHF will depend primarily on further actions of the SNB and the ECB. Societe Generale don’t see how the European Central Bank will be able to take a less dovish approach amid the euro zone’s economic weakness caused by severe austerity measures. As a result, the analysts see now point in buying EUR/CHF anytime soon.

US: Lacker comments, upcoming data releases Jeffrey Lacker, president of the Richmond Federal Reserve Bank claimed today that he thought interest rates would need to be raised in 2013. Lacker underlined that US economy is expanding at a moderate pace, while inflation is close to the FOMC's 2% target level. US dollar has strengthened this week versus its major counterparts as the possibility of QE3 in the US declined. US data releases to watch today: - Industrial production (February) – growth expected; - Consumer sentiment (University of Michigan preliminary index, March) – may have risen to 1-year maximum (Bloomberg News survey); - CPI (March) – the analysts look forward to biggest increase in 10 months of 0.4% (Bloomberg News survey). Capital Economics: “Rising gasoline prices aren’t a good thing because households cannot avoid them. But outside of that, inflation isn’t going to really rock the boat too much for too many households.” Westpac: bullish on the greenback in the coming weeks.

Greece defaults… Who’s next? During the recent weeks the market was focused on the events unfolding in Greece. At the same time there are other nations in the list of the euro zone’s problem economies. As a result, the question arises: was Greece a “completely unique case” as German Finance Minister Wolfgang Shaeuble said last week or will the indebted peripheral countries follow its path (conducting debt swaps and retroactively enacting collective-action clauses in its debt contracts)? The yields of peripheral European debt have been relatively quiet so far. Portugal's 10-year yields, for example, slid from the record maximum of 18.29% in January to 13.71%, though still far from normal levels. Are we witnessing the first signs of improvement or is it a lull before the storm? Portugal Portugal is seen as the first candidate for default. The nation’s sovereign debt is lower than the Greek one, but Portugal has a far higher level of private sector debt – 200% of GDP versus Greece’s 120%. Such level of debt is hardly sustainable and will need writing down through the banking system and, consequently, sovereign help to support the banks. Analysts at Deutsche Bank think that talks about a second international bailout for Portugal may begin later this year as the current 78 billion-euro aid plan will keep the nation funded only through September 2013 and the IMF “cannot disburse if a twelve-month funding outlook is not guaranteed.” Portugal's economy fell by 1.6% in 2011 and may lose 3.0% this year, Troika experts say. The European Commission, the ECB and the IMF appraised Portugal for austerity measures. However, the specialists point out that last year the nation manages to lower deficit to the 5.9% level which is in line with the target only through transferring funds (5.6 billion euro or 1.9% of GDP) from the banking-sector pension system to the government social security one. The country’s public debt may reach 118% of GDP in 2013 from 102.7% of GDP last year. Spain According to governmental forecasts, Spanish economy will contract by 1.7% in 2012. The nation’s jobless rate is the highest in Europe: unemployment rose from 21.7% in December to 23.3% in January and is expected to reach 24.3% this year. Spain was supposed to cut its deficit-to-GDP ratio to 4.4% in 2012, a goal agreed with EU finance ministers, but the new government announced earlier this month that it would only be able to cut its deficit to 5.8% of GDP for this year and promised to maintain a 2013 target of 3%. On Monday European finance ministers ordered Spain to bring its deficit down to 5.3%. Meanwhile, the Spanish employees demonstrate against the government's new labor reform. It affects most worker entitlements, making the dismissal of employees simpler, reducing salaries and increasing working hours. The government is aiming at revitalizing the economy and proving that Spain will not require a bailout to overcome its problems. However, opponents of the reform say it does nothing towards creating new jobs in the country and represents profound social regression. All in all, the threat of contagion remains an urgent problem and Europe may have to spend much more than it already did to keep all the member states funded. Europe must assure markets that such big economies as Spain (and Italy) won’t default on their debts. The euro area will likely remain in stress as contracting GDPs in peripheral countries will undermine their efforts to reduce debt and deficit ratios. To some extent, Greece’s scenario in other nations would help the currency union as it would at least lower the degree of uncertainty. Emergency financing from the European Central Bank is no more than a temporary solution. Postponing the final reckoning will only increase the economic pain and the cost of the inevitable bailouts.

Societe Generale: risks from China property market Economists at Societe Generale warn that investors’ optimism for the global economic prospects is vulnerable to the signs of fragility in U.S. growth momentum or of the slowdown of Chinese property market and bank loan growth. The specialists claim that in the second quarter China's property sales may contract by about 10% in weighted prices losing nearly 20% of volume. In their view, while the decline may be rapid, it will be constrained. This year will likely be the bottom for Chinese property market. China’s Premier Wen Jiabao claimed today that the nation’s home prices are still are still significantly above the reasonable level. Wen underlined that China would have to maintain efforts to curb real estate speculation as the property bubble would harm the economy if it burst. Property sales in the world’s fastest-growing economy fell by 20.9% in the first two months of 2012 from a year earlier as the government had introduced a series of measures including property sales taxes and lending restrictions to curb speculation.

Analysts: Comments on FOMC statements On Tuesday FOMC decided to leave the strategic points of its monetary policy unchanged not excepting the cash rate and quantitative easing program. However, additional easing is still an option. Specialists were not long in commenting the recent data. Wells Fargo Securities: For more stimulus the economy had to weaken again, but FRS is still not slamming the door on more QE. International Strategy and Investment Group: The FOMC’s meetings in April and June would be good opportunities for the Fed to do something if policy makers see additional stimulus as needed. Capital Economics: The Fed can hardly be accused of acting as a cheerleader for the recovery. Nevertheless, the improvement in the incoming data may persuade the Fed to shelve any plans it had for additional monetary stimulus in the near term. Tokyo-Mitsubishi: The Fed's direction will become clearer in late April when policymakers meet next and update their projections for economic growth, inflation, unemployment and interest rates. BNP Paribas: Either the economic outlook will continue to improve, or the Fed will take action to inject more liquidity into markets. Nomura: Within the next six months $500 billion operation is expected to occur, consisting of purchases of both mortgage backed securities and Treasuries. Asset purchases would be “sterilized” using reverse repos and term loans in order to appease inflation hawks. Most analysts agree that growth in the current quarter and throughout the rest of the year will be slower than in last year's fourth quarter.

Barclays Capital lifted up USD/JPY forecast Analysts at Barclays Capital increased forecasts for USD/JPY from 82 to 90 yen in 6 months and from 84 to 90 yen in a year. As the reason for such revision the specialists cited Japan’s current-account decline and differences in monetary policy of the 2 nations’ central banks: the Fed’s statement showed a gradual reduction in the central bank’s dovish stance, while the Bank of Japan will likely increase monetary stimulus to achieve 1% inflation goal.

Sumitomo Mitsui: euro will rise on the 5th Elliot Wave According to Sumitomo Mitsui specialists, EUR/JPY may strengthen to 112.80 by May, its highest level in more than 7 months. Strategists say it makes sense to apply the Elliot Wave Theory to analyze the current euro movements. The Elliott Wave Principle, proposed by accountant Ralph Elliott in the 1930’s, is a form of technical analysis based on the theory that investor psychology moves between optimism and pessimism in natural sequences. It seeks to predict prices by dividing trends into 8 waves. First wave: Jan. 16-26 (rally from 97.04 to 102.21); Second wave: Jan. 27 - Feb.1 (decline from 102.21 to 99.25); Third wave: Feb. 2-27 (rebound from 99.25 to 109.93); Fourth wave: Feb. 28 - March 6 (drop from 109.93 to 105.65). Sumitomo Mitsui: EUR/JPY is now in the middle of the fifth wave of the multi-month upward cycle,” which is projected to end around April. The market swings follow a predictable five-stage structure. Today EUR/JPY is trading at 108.47 after having risen more than 11% over the past 2 months.

Main economic & market news • FOMC meeting results: - benchmark rate is left unchanged near zero and it planned to be kept there through at least late 2014; - additional easing is still an option; - US economic outlook was upgraded from "modest" to "moderate" growth; - however, unemployment rate is “elevated” and “significant downside risks” are still in place. Inflation outlook is “subdued.” • Australian consumer confidence is down by 5% this month, while housing starts dropped in the fourth quarter by 6.9% versus 3% decline expected (q/q). • Japanese business sentiment sharply deteriorated in the first quarter. • According to The Telegraph which citing a leaked Troika report, Greek budget deficit will probably fall to 1.5% in 2012 in line with the forecasts but “current projections reveal large fiscal gaps in 2013-2014.” • The Fed released US banks stress test results: 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario. The 4 banks which wouldn’t have enough capital if economic situation worsens (13% unemployment) are Ally Financial, Suntrust, MetLife and Citigroup. Analysts at RBC Capital Markets showed that the fact that the majority of the banks succeeded in passing the test shows that US banking system is strong. DJIA reached the highest level since 2007. Yields on 10-year Treasuries increased to 2.13%. Specialists at Bank of Tokyo-Mitsubishi UFJ think US yields rise because the nation’s economy strengthens. In their view, the Federal Reserve may be forced to raise the key rate before the end of 2014, probably the next year. American currency generally strengthened. Asian stocks rose, EUR/USD went a bit lower to yesterdays’a minimums in the $1.3050 area. The pair opened below 55-day MA. USD/JPY keeps rising.

Bank Sarasin: comments on franc and euro Economists at Bank Sarasin are strongly convinced that the Swiss National Bank won’t raise the threshold EUR/CHF higher than 1.20 unless recession continues and deflationary threats keep looming in Switzerland. The analysts say if there was no floor set for the pair, the rate could be as low as 1.10. Although the franc has strengthened since the start of the year, it has remained above the 1.20 floor, trading at 1.2057 against the euro on March 13. The bank thinks, however, that the threat of further SNB intervention will contain franc’s advance in the near future. According to Bank Sarasin’s specialists, European growth is going to resume in the second quarter after the ECB liquidity injection. Perhaps, the liquidity will buy the time that is needed for a recovery, and in a long-term period EUR/USD may climb to $1.38 or $1.40. On the other hand, the economists warn that excessive liquidity always weakens the currency.

Credit Agricole and Commerzbank about AUD/USD Analysts at Credit Agricole note that Australian dollar reached critical level versus the greenback. To maintain medium-term uptrend AUD/USD must close today above $1.0505 (March 7 maximum, “bullish hammer” reversal pattern). Otherwise, the sideways range may widen or Aussie will start sliding. The bank recommends buying Australian currency at the current levels stopping below $1.0505 and targeting recent highs in the $1.0800 area. Strategists at Commerzbank think that AUD/USD has topped at $1.0856 on February 29 and is now going to weaken to $1.0406 (200-day MA) and $1.0382 (December maximum). Below these levels the pair will be poised down to the parity and lower. According to the bank, the outlook for Aussie will remain negative as long as it’s trading below resistance at $1.0670.

Loonie may strengthen versus the greenback On Monday Canadian dollar declined against its U.S. counterpart as weak Chinese export data hurt commodities. According to the data released on Saturday, China posted its biggest trade deficit in at least a decade in February ($31.5bn), fanning concerns about growth in the world's second largest economy. After that the price of crude oil, Canada’s biggest export, fell by 1.9%. Today USD/CAD is trading at 0.9900 after opening at 0.9924. According to analysts, market sentiment towards the Canadian dollar has turned favorable, with weekly CFTC data showing consistent increases in CAD long positions since mid-January. Strategists at Scotia Capital say that recent M&A activity, including talk of a takeover of Viterra, Canada's largest grain holder, helps the currency. Typically any large M&A announcement has the psychological impact of reminding market participants that Canada has a lot of interesting assets that can be M&A targets in the future. Analysts at UBS are bullish on CAD due to the solid domestic macroeconomic data and the fact that the BOC Governor Carney has accordingly become less dovish in his outlook. In their view, although loonie’s rate has already priced in potential policy tightening, loose monetary policy of other major central banks will make Canadian dollar very attractive. Canadian currency is the best performer among 10 developed-nation counterparts over the past week, adding 1%, according to Bloomberg Correlation Weighted Currency Indexes. The U.S. dollar lost 0.1% and the euro gained 0.3%. Loonie will trade at parity with its U.S. counterpart by the end of the second quarter, according to the median of 40 forecasts compiled by Bloomberg News.

BOJ refrains from easing, but yen’s outlook seem negative The Bank of Japan kept monetary policy unchanged at today’s meeting in line with the expectations. The benchmark interest rate remains below 0.1%. Some traders got disappointed as the BOJ didn’t increase asset purchases after boosting them by 10 trillion yen in February. The Bank of Japan’s decision may be explained by the fact that yen backed off the record maximums, stock markets are showing positive dynamics and the tensions in the euro area eased after the Greek deal. Instead the central bank expanded by 2 trillion yen ($24 billion) to 5.5 trillion yen a loan scheme aimed to encourage banks to fund prospective growth industries and extended its deadline by two years to March 2014. One trillion yen will be used in a new credit line using the BOJ's dollar reserves to encourage investment and loans denominated in foreign currencies. Such actions aren’t as powerful as QE, but still indicate the central bank’s willingness to help national economy. Japanese yen strengthened from 11-month minimum versus US dollar after the BOJ meeting’s results were announced, but then dollar-bulls regained power: the pair USD/JPY has initially dipped to 82 yen, but then set daily high at 82.79 yen. RBS: “The Bank of Japan is basically maintaining its stance of monetary easing after setting an inflation goal of 1%. To clarify its determination to beat deflation, the BOJ could ease policy further as early as late April.” Citibank: Although some investors got disappointed, “today's decision is not something that can reverse the yen's fall.” Among the reasons to remain bearish on yen one may name Japan's trade balance switching to deficit, monetary outflows from Japan as Japanese companies are seeking to enter foreign markets and relatively low odds of QE3 in the U.S.

Citigroup: which G20 currencies outperform others Analysts at Citigroup claim that while the market players are obsessed with EUR/USD and USD/JPY, a much more profitable trade is to sell G4 majors against other G20 currencies. The specialists analyzed the average (unweighted) performance of eighteen currencies – Australian, New Zealand’s, Taiwan’s, Singapore’s and Canadian dollars, South African rand, Norwegian krone, Swedish krona, Mexican, Argentinian and Chilean pesos, Indonesian rupiah, Indian rupee, Russian ruble, Turkish lira, Brazilian real, Chinese yuan, Malaysian ringgit – and measured their performance against the average of US dollar, euro, British pound and Japanese yen. According to the bank, “G20 smalls” have the highest return relative to their realized volatility so far this year. It may be explained by the liquidity added to the market by the ECB and the BOJ which encouraged risk appetite and somewhat stabilized the global economy improving prospects for the smaller countries in the G20 and, consequently, their currencies. Buying G20 currencies is a way to limit via diversification one’s exposure to risks connected with euro. Such trade is a strong bet on the outperformance of risky assets.

UBS, RBS: EUR/USD forecasts UBS: “US payrolls data were again strong in February, with both the headline figure beating expectations and previous months' seeing decent upwards revisions. Continued employment creation at this pace makes it increasingly hard for Federal Reserve doves to keep pushing the case for further quantitative easing, especially in light of the fact that tail risks associated with the possibility of a European meltdown have been cut back materially. The ECB's successful LTRO operations and the positive Greek PSI outcome have helped in this regard.” RBS: “Less QE (quantitative easing) in the U.S. is positive for the dollar ... dollar will do better against the yen, euro and sterling. In Europe the weakest data is in the countries with the weakest fiscal position, which is worrying and it's still a case of selling euro on any rallies.” According to the bank, EUR/USD will fall to $1.26 during the next 2-3 months in case U.S. data in the coming weeks is positive. Credit Agricole: “There's a risk of EUR/USD sustaining a move below $1.31. There are worries about whether Portugal will follow Greece, whether Greece will need another bailout, whether the underlying issues in the country will be resolved.” Deutsche Bank: “U.S. growth forecasts are being scaled back even as the labor market picks up and that will weigh on the U.S. dollar” – American economic growth is expected to slow this quarter from the fourth quarter's 3% growth (y/y) as consumer spending flattened and exports remained sluggish. However, taking into account euro zone’s problems (primarily, uncertainty about Spain and Italy), the bank’s “baseline scenario remains the euro to drop towards $1.25 in coming months.”

BMO: trading on FOMC meeting Analysts at BMO Capital recommend investors selling the single currency versus the greenback ahead the FOMC meeting later today. In their view, one should open EUR/USD shorts at $1.3170 stopping at $1.3275 and targeting $1.2875. The specialists think that the Fed’s Chairman Ben Bernanke will discourage the expectations of QE3 due to the recent favorable economic data, especially employment figures. This is BMO’s baseline scenario. However, the analysts underline that the Federal Reserve is always capable of surprises and if the central bank hints on further quantitative easing, one should try another type of trade like buying Mexican peso against the greenback. BMO doesn’t agree with those experts who advise trading emerging market currencies instead of the major ones. The bank points out that the developing nations are aggressively lowering interest rates, so the risk-on, risk-off trading patterns to which traders have got used may be altered.

RBS: analyzing GBP crosses Analysts at RBS claim that the recent strong US data is having a negative impact on the pair GBP/USD because of rate spreads and reduced probability of the Fed’s QE3. In addition, recent dynamics shows that EUR/GBP is also finding itself under pressure. UK manufacturing data released last week (+0.1% m/m in January after +1.1% in December) shows that GBP weakness isn't rebalancing the nation’s economy. It may also mean that that sterling’s decline can be structural rather than cyclical and further weakness is likely. According to RBS, GBP/JPY is overvalued by less than 4%, GBP/AUD may be around 4.7% overvalued, while GBP/NZD is estimated to be 2.3% overvalued. The specialists say that GBP/USD and EUR/GBP look fairly valued from a short-term perspective. The bank underlines that the key driving force of all GBP G10 crosses is rate spreads. The dynamics of pound versus euro, US dollar, Japanese yen, Australian and New Zealand’s dollars is also influenced by significant moves in balance sheets. As for the correlation with risk, it has weakened during the past month for most GBP G10 currency pairs except GBP/USD and GBP/JPY where positive correlations have tightened marginally. EUR/GBP has a positive correlation with risk but this has edged lower since March 5. Further worries over the solvency of Euro zone countries may loosen this correlation further.

Banks' forecasts for FX majors Data were submitted on March 9. Data from FX Week

EUR/USD: main technical levels Technical analysts at Commerzbank underline that the single currency is facing strong resistance versus the greenback in the $1.3291/1.3325 area. As long as euro’s trading below these levels, the outlook for it will remain bearish. Support is situated at $1.3095 (last week's 3-week minimum), $1.3080 (55-day MA) and $1.3050 (50% Fibonacci retracement from this year's advance) and $1.3000. EUR/USD risks dropping to $1.2974/54 (February minimum) and $1.2624 (January minimum). If the pair slides below the latter, it will be poised down to $1.2000. Strategists at Varengold Bank analysts expect to close today below support at $1.3100 citing negative signals from the MACD.

The Fed's policy will remain unchanged On Tuesday the Fed's Open Market Committee meets to decide monetary policy. The announcement of further bond buying can pose a risk to a resurgent dollar this week, but most analysts doubt that will happen. Recent stronger-than-expected February employment numbers (NFP +227K) has quelled speculation that the central bank might resort to a third round of quantitative easing (QE3) to stimulate the economy. However, an antinomy is observed: the US labor market seems do better, but this has not been matched by a rise in production, demand or consumer spending. Many analysts say the FOMC is unlikely to offer new measures to stimulate the economy, especially as the Fed continues with its "Operation Twist" effort to keep long-term interest rates low. The current “Operation Twist”, a $400bn switch into Treasury securities with longer to run until maturity, will use up almost all of the shorter-term Treasuries that the Fed has to sell and take its holdings of some long-term Treasuries close to limits on market liquidity. Bank of America-Merrill Lynch: While the FOMC is likely to acknowledge the oil market risk, as well as the general improvement in activity data recently, we anticipate the statement will still be supportive of the current easing bias. BNY Mellon: Good data will reinforce the Fed's view that what they're doing is working and they're not going to stop now. They seem determined to fight the devil they know instead of the devil they don't. The chance of an even more-dovish FOMC could once more upend the dollar. The fact that these days the dollar seems to be a safe-harbor from Europe's debt crisis may also help the dollar go up at the euro's expense. On the other hand, investors look forward to Bernanke’s announcements about QE3. The Chairman’s silence of may cause the correction.

CFTC data: US dollar longs increased The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that speculative investors increased their net long US dollar position by $6.1 billion (80%) to $15.4 billion. As you may see in the table below, the greenback was bought versus all IMM (International Monetary Market) currencies except Canadian dollar and Mexican peso. The latter are supported by carry trades and high oil prices. Euro, British pound and Japanese yen are sold due to the loose monetary policy of these nations’ central banks, while Australian and New Zealand’s dollars were hurt by the worsening of China’s economic prospects. The net positions for American currency are long for 25th consecutive week, the longest period of positive dollar sentiment since 1999. Chart. Net aggregate speculate IMM position in USD (Source: CFTC, Saxo bank, Bloomberg). It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound.

Ichimoku. Weekly forecast. GBP/USD Weekly GBP/USD British pound kept declining versus its US counterpart from late February minimum at $1.6000. On the weekly chart GBP/USD closed last week below the Standard line (1), which is currently acting as resistance. The prices will get support from the Turning line (2) which is moving slowly upwards. The descending Ichimoku Cloud was widening for some time, though Senkou Span A (4) has turned horizontal. As a result, if Tenkan-sen (2) and Kijun-sen form “golden cross” and Kumo starts narrowing, the bulls will get chance to reverse the trend lifting sterling to the lower border of the Cloud (4). Otherwise, the pair will keep moving lower within the current downtrend. Chart. Weekly GBP/USD Daily GBP/USD On the daily chart one may see that the pair’s advance stalled last month and the rate went sideways. Pound failed to overcome important resistance and prices went below both the 9-day MA or so-called Tenkan-sen (1) and the 26-day Kijun-sen (2). As a result, despite the bullish Ichimoku Cloud (3, 4), there’s no uptrend on the chart. GBP/USD is supported only by Kumo: if sterling enters the Cloud, it will likely dip to its lower border – Senkou Span B (4). At the same time, the bulls are struggling to retrace at least a part of Friday’s decline and hold the priced above the Cloud. Chart. Daily GBP/USD

Trade recommendations after Greek deal Greece’s agreement with private creditors and the following ISDA’s decision to admit the Greek debt restructuring entitling to CDS-contracts payments, became the key news events of the previous week. On the back of this deal Fitch Rating agency slashed the Greek sovereign scores from "C" to "RD" ("restricted default"). J.P. Morgan Asset Management strategists confirm that Greece raises serious concerns today. Moreover, there are also risks connected with Portugal or Spain getting infected and the results of the spring elections in France. However, analysts believe that in the short term Greece is largely resolved due to the ECB support and positive global data including the U.S. nonfarm payroll report. In particular, they recommend buying the euro against the Japanese yen. The euro is going to be helped by better risk appetite, and the yen, meanwhile, is weakening. J.P. Morgan: The best is to enter the trade at 108.20 with a target of 114.00 and a stop at 105.50. BMO Capital: If you are bullish on the euro, don't buy it against the U.S. dollar. The yen is the best way to do it because of the massive quantitative easing. Commerzbank: In the medium term the ECB’s expansionary monetary policy will put pressure on the euro, in particular if the outstanding US data continues to point towards a robust economy thus reducing the likelihood of further US quantitative easing.

Euro’s trading on the downside Yesterday euro had been growing against the backdrop of the successful Greek deal from $1.3150 to $1.3280. In a statement following closure of the offer late on Thursday, the Greek finance ministry said that the amount of PSI participation in the bailout was high enough. Today the single currency went down to an intraday low near $1.3210 and last stood at $1.3225. Analysts of Sumitomo Mitsui Banking point that it is a sell-the-fact type of reaction and there's some profit-taking. It seems that the pair EUR/USD has formed ‘head & shoulders’ top in March at $1.3190. The reversal pattern will be complete if $1.3320 (February 2 maximum) managed to hold the pair’s advance. Support for euro is lying at $1.3082 (55-day MA). Euro will certainly rise if Greece avoids default. Nevertheless, concerns about the implementation of the second bailout will keep affecting the single currency's rate. Societe Generale: “Our long-term view is still that the EUR/USD will be higher and the relative hawkishness of comments from ECB President Mario Draghi is a reminder that at its heart, the ECB 'wants' to normalize policy while Ben Bernanke 'wants' to buy more protection against disaster”. Analysts at Citigroup believe that the markets will likely get disappointed by the February NFP figures released today at 1:30 p.m. GMT in USA. In their view, economists are expecting too big increase in payrolls (+209K). According to the bank, the effect from positive data will be limited, while weak readings may provoke stronger reaction.

Comments on USD/JPY The greenback reached 9-1/2-month maximum versus Japanese yen on the news of Greece's bond swap offer. On the upside, the pair USD/JPY will now likely test resistance at 81.87 (last Friday’s maximum) and 82.07 yen (100-week MA). On the downside, support is situated at 81.30/22 yen (50% retracement of dollar’s advance from 80.60 and 81.87 yen). If US Non-Farm Payrolls posts positive result today, American currency will get chance to strengthen, especially versus its Japanese counterpart.

BOC left rates unchanged. Analysts’ comments The Bank of Canada joined its European and British colleagues in extending loose monetary policy and said the risks are shifting to quicker inflation and away from another recession. The main interest rate remained unchanged at 1%. The BOC pointed that easing global tensions and faster domestic spending may lift prices. Economists said the outlook for the Canadian economy improved significantly. The Bank of Canada said today inflation will be greater than it was forecasted in January because of “reduced economic slack and higher oil prices,” and that growth will be faster than projected in the January-March period. Bank AG of Vienna: oil prices may surpass current records of $147 a barrel in the first half of this year because of the “smoldering crisis” in the Persian Gulf. It is important to note that Canada relies on exports for about 33% of its output, and higher interest rates could boost a currency that has traded around parity with the U.S. dollar, harming the country’s competitiveness. National Bank Financial: A rate hike is expected by mid-2013 as Canada’s output gap looks set to close earlier than expected. Nomura Global Economics: the BOC is expected to raise rates before the end of the year unless there’s a severe negative shock (household debt burdens have become the most important domestic risk). Capital Economics: probably there will be an interest rate cut to 0.50% in the second half of the year due to an inevitable housing collapse. Even if the external backdrop continues to improve, the domestic situation will not. In any case analysts do not expect Canada to raise rates too far ahead of the U.S. Federal Reserve, given that higher Canadian interest rates could drive up the Canadian dollar.