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Deutsche Bank: GBP/USD forecast Analysts at Deutsche Bank think that sterling’s decline versus 2011 maximums versus the greenback in the $1.6740 area will continue. In their view, pound will stay under pressure due to high possibility of the second quantitative easing program in UK. According to the bank, pound will fall to $1.5100 in the fourth quarter of 2011 and then consolidate between $1.4800 and $1.4900 during major part of 2012 before jumping to $1.5600 at the end of next year.

ANZ: the possibility of the RBA rate cut increased Australian dollar fell to 1-year minimum versus its US counterpart at $1.9413. It happened as the Reserve bank of Australia reported that the easing inflation pressure may allow it to reduce the borrowing costs in order to encourage economic growth. The central bank’s Governor Glenn Stevens said that inflation may now be more consistent with the 2-3% target in 2012 and 2013. The market now expects that the RBA will cut its benchmark interest rate from 4.75% to 4.25% be November and by 50 basis points more by the end of the year, claims ANZ. The specialists point out that it would be necessary to watch Q3 inflation reading as it would be the basis for November decision. Analysts at Commonwealth Bank of Australia believe that AUD/USD may drop below $0.9000. Technical analysts at Commerzbank think that as long as the pair stays below $0.9580 (23.6% retracement of the entire 2001 — 2011 move), it risks sliding to $0.9407/.9390 (late 2009 and early 2010 maximums).

Forecast Pte: technical comments on EUR/JPY Technical analysts at Forecast Pte claim that he single currency may fall below 100 yen. The specialists point out that euro’s MACD (moving average convergence/divergence) is in the downtrend: the indicator was found today at minus 1.8267 that’s below the signal line of minus 1.6881. The pair EUR/JPY hit today the 100.74 level, the lowest since June 2001. According to the strategists, euro may slide to 96.84 yen, the level last visited on December 11, 2000.

Deutsche Bank: USD/JPY forecast Analysts at Deutsche Bank claim that USD/JPY will test in the short term the levels below 75 yen. The specialists expect the greenback to trade sideways versus Japanese yen in the 78.00 area during the first half of 2012. According to the bank, the global economic slowdown will keep encouraging high demand for yen. Japanese monetary authorities will likely limit themselves by the verbal interventions as long as the exchange rate moves slowly. Later the pair will strengthen to 84.00 in the third quarter of 2012 and to 90.00 by end of the next year. BMO Capital: trading recommendations ahead of NFP US September Non-Farm Payrolls data is released on Friday, October 7, at 12:30 pm GMT. The figures will be watched more than ever after US jobs growth stagnated in August. Analysts at Bank of America Merrill Lynch expect to see the figure of 75,000, but warn that the risk is to the downside. Strategists at BMO Capital say that if the market expects NFP to be somewhere close to 50,000 and the indicator posts 70,000, one should sell USD/CAD. If the published NFP figure finds itself between 70,000 and 30,000, it would be better to refrain from actions. If the figure comes below under 30,000, the specialists recommend buying the greenback versus Swedish krona. According to BMO, the first scenario is the most likely. As a result, the specialists advise investors to sell US dollar versus its Canadian counterpart at 1.0400 stopping just above 1.0470 and targeting 1.0155. At the same time, economists at J.P. Morgan point out that investors need to be cautious with trade like this watching other data released on Friday – Canadian nonfarm payrolls and Ivey PMI survey.

Euro: this week’s events and analysts’ comments The single currency remains near the 8-month minimum versus the greenback at $1.3313 hit earlier today and close to the 10-year minimum against Japanese yen at 101.92 hit on September 26. The market is concerned about the possibility of Greece’s default and the health of the euro zone's banking sector. Coming events The focus this week will be on the monetary policy and growth. The European Central Bank meets on Thursday, October 6. Some investors are looking forward to a 25-basis-point rate cut even despite high September inflation data. The ECB President Jean-Claude Trichet speaks on Tuesday, October 4, at 1:00 pm GMT. It’s also necessary to note that today begins 2-day meeting of the European finance ministers. The Ecofin is expected to put pressure on Greece to implement agreed structural reforms and to discuss the ways of increasing the European Financial Stability Facility’s (EFSF) financial firepower. The decision about granting Greece the sixth tranche of the bailout – 8 billion-euro ($11 billion) – is postponed to the middle of October as the nation tries to reduce its huge budget shortfall. Bearish forecasts UBS: EUR/USD shorts will increase. ING: euro will fall to $1.30/1.31. Commerzbank: the pair will slide down to $1.2860 (2010 minimum) and $1.2000. Key resistance in the short term is seen at $1.3937 (September 15 maximum).

Wells Fargo: bearish EUR/USD forecast Analysts at Wells Fargo are bearish on the single currency in the medium term. In their view, the pair EUR/USD will drop to $1.3200 by the end of this year and may slide to $1.2500 by the end of 2012. The specialists believe that the weak economic outlook will hamper the results achieved due to the policymakers’ actions. In addition, the ECB’s approach has changed from the hawkish mode to the more dovish one. The central bank is likely to cut rates or conduct liquidity easing measures during the next few months. Deutsche Bank: EUR/USD is poised to decline Analysts at Deutsche Bank point out that the European currency has fallen versus the greenback from the May maximums in the $1.4940 area to the levels below $1.3400. In their view, euro’s decline is going to continue: the specialists expect EUR/USD to keep weakening during the next 12 months. According to the bank, the pair will fall to $1.3000 in 3 months, then slide to $1.2700 by the end of the first quarter of 2012 and then reach $1.2500 in 12 months time. The strategists think that euro’s dynamics will depend on the actions the euro zone’s policymakers will make to stem the crisis. Here it’s necessary to take the account the monetization risks and the downgrade risk of the member nations and the European Financial Stability Fund (EFSF) itself.

SNB pledged to keep franc from appreciation The Swiss National Bank’s President Philipp Hildebrand claimed yesterday that the central bank is firm in its decision to defend franc’s peg to euro. Hildebrand didn’t unveil the amount of foreign currency purchases the SNB has to make in order to keep EUR/CHF above 1.20 and prevent the national currency from excessive strengthening that affected the nation’s exporters and posed recession risks. According to him, this measure is “totally credible.” The single currency hit the record minimum versus franc of 1.0065 on August 9. The SNB announced the ceiling for franc on September 6. Next week the SNB will release currency holdings for September. At the end of August the central bank’s reserves accounted for 253.4 billion francs ($280 billion). Hildebrand said that though Swiss economic growth will weaken in the second half of the year, the cap will help to lower the threats of recession and deflation. In his view, franc is strongly overvalued.

MIG Bank: comments on USD/CHF The greenback’s decline from Monday’s maximum in the 0.9185 area was limited by the support in the 0.8915/25 zone. Technical analysts at MIG Bank are positive on the USD/CHF prospects. In their view, as US dollar has managed today to return above 0.9000, it will be able to return up to 0.9185. According to the bank, the bearish pressure on the pair will activate if it slips below 0.8880. The larger correcting will be triggered if American currency tests the levels below 0.8647.

Mizuho: USD/JPY will fall to 60 yen in 2013 Currency analysts at Mizuho Corporate Bank say that the greenback may fall to 60 yen in 2013 basing their conclusions on USD/JPY dynamics during the past 40 years. The specialists note that US dollar has bottomed out around 30% below the preceding minimum on four occasions since 1971 experiencing slumps by 100, 80, 60 and 40 yen. US currency was at 360 yen until the gold standard was ended in 1971. Then it slid to 254.45 yen in 1973, 177.05 yen in 1978, 121.25 yen in 1987 and 79.75 yen in 1995. According to Mizuho, in 2 years this will happen for the fifth time: USD/JPY will fall by 20 yen from the previous minimum at 79.75 yen hit on August 19.

Commerzbank: comments on GBP/USD Technical analysts at Commerzbank believe that British pound has finished its upward correction versus the greenback from 1-year minimum at $1.5325 hit on September 22 as it reached this week the levels in the $1.5700 area. The specialists think that GBP/USD will resume its decline. In their view, the sell-off of sterling will be triggered when it dips below $1.5500. According to the bank, support for the pair is found at $1.5297. In the longer term, British currency is poised down to the 2009-2011 uptrend line at $1.4973.

Fitch and S&P downgraded New Zealand New Zealand’s dollar fell to the 6-month minimum versus the greenback at $0.7626 after Standard & Poor’s and Fitch Ratings downgraded the nation’s debt from AA+ to AA with stable outlook. The agencies explained their decision by New Zealand’s high external debt and its persistent current account deficit. Strategists at Citigroup underline that Fitch’s and S&P’s move seems surprising as everyone has been aware about these problems for a long time. It’s also necessary to note that the survey conducted by ANZ National Bank that was released today showed that New Zealand’s business sentiment has worsened: only 30.3% of companies expect the economy will improve during the next 12 months compared with 34.4% in August. In addition, China, New Zealand’s second-biggest export market, reported the longest contraction of the PMI (Purchasing Managers Index) in 2 years. Analysts at Westpac note that the global outlook remains rather discouraging, so commodity currencies like Aussie and kiwi will likely stay under pressure. In the view, New Zealand’s dollar may slide to $0.7500. The pair NZD/USD lost 10% in September, while AUD/USD dropped by 8.8%.

J.P.Morgan: trade ob ECB meeting The European Central Bank meeting is taking place on Thursday. The ECB will announce its benchmark rate at 3:45 pm (GMT+4). Strategists at J.P.Morgan Asset Management advise investors to be very attentive to the language of the ECB President Jean-Claude Trichet. If Trichet’s comments sound less dovish than the market hopes, that may give euro a lift versus the greenback. The specialists recommend selling EUR/USD on its advance in the $1.45 with target at $1.41 and stop at $1.47.

UBS: EUR/CHF will keep declining The single currency dropped versus its Swiss counterpart from last week’s maximum of 1.1975 reached on Monday to Friday’s minimum of 1.1000. Currency strategists at UBS point out that euro’s decline was accelerated by concerns about the euro zone’s debt crisis and disappointing US labor market data. In their view, worries about the new slump of EUR/CHF are increasing as can be seen from rising option implied volatilities in the EUR/CHF exchange rate. The bank warns that the pair may lose more during the next few weeks unless the Swiss National Bank tries to stabilize the rate of its national currency.

BMO Capital Markets: GBP/USD forecast for 2011-2012 British pound has been trading within a downside channel versus the greenback: it fell August 19 the maximum at $1.6618 to the levels in the $1.6100 zone. Currency strategists at BMO Capital Markets believe that GBP/USD will keep declining during the next quarters. The specialists think that sterling will trade in the $1.6200 region during the third quarter and then hit $1.5800 by the end of the year. According to BMO, in the first 3 months of 2012 the pair will reach its lowest point at $1.5500 and then start rising to $1.5700 in the second quarter, $1.6100 in the third and $1.6400 in the final quarter of the next year.

BNZ: forecasts for NZD/USD Analysts at BNZ believe that the fair value New Zealand’s dollar versus its US counterpart has declined by 4 cents during the past month to $0.6950/0.7050 as the risk appetite index fell from 46.4% to 36.2%. As the pair NZD/USD is currently trading in the $0.8400 area, it seems to be overvalued. However, the economic data from New Zealand is encouraging and the demand for kiwi is high. That means that the currency has become less sensitive to the surges of risk aversion. As a result, the specialists expect the pair to enjoy solid support. According to the bank, NZD/USD will climb to $0.8700 by the end of the year. Support for the pair lies at $0.8110, while resistance is at $0.8570 in the short-term.

Commerzbank: sell EUR/USD The single currency fell from last week’s maximum versus the greenback at $1.4550 set on Monday to the levels below $1.4200 today. The pair EUR/USD breached the short-term uptrend support line. Technical analysts at Commerzbank advise investors to sell euro. In their view, the pair is on its way down to $1.4055/1.3997 (August minimum, 200-day MA and the 200-week MA). According to the bank, the bears will make several attempts to break down. The specialists say that if the European currency closes the week below $1.3837, it will be poised down to $1.2000 in the longer term.

Barclays Capital sees potential for pound’s advance Analysts at Barclays Capital believe that if Switzerland and Japan manage to stop appreciation of their national currencies, British pound may strengthen. The specialists say that there are several reasons for that. Firstly, exports don’t account for a big part of UK GDP, secondly, sterling’s advance doesn’t tend to affect stock markets and, finally, pound may be undervalued. In addition, the investors won’t expect UK government to stem pound’s growth. Barclays underlines that the pair GBP/CHF showed better results than EUR/CHF when the SNB Vice President Tomas Jordan said on August 11about the possibility of pegging franc to euro. Pound also performed well when Japan intervened on August 4. The strategists say that the only potential negative effect on pound may come from Britain’s economic weakness.

UBS: we face the crisis of capitalism George Magnus, economist at UBS regards the current crisis in the developed nations as the crisis in capitalism: companies seeking for greater profits and productivity are cutting jobs. As a result, income inequality in the US approached the highest level since the 1920s. The specialist advises the policymakers to turn to Karl Marx for the possible solutions. In his view, it’s necessary to lower employer payroll taxes and to create fiscal incentives to encourage companies to hire people, to allow eligible households restructure mortgage debt and to ease capital adequacy requirements for well-capitalized and well-structured banks so that they could credit smaller companies. ING: SNB rate outlook Economists at ING think that the Swiss National Bank won’t lift up interest rates until the middle of 2012. The specialists note that strong Swiss franc has seriously affected the national economy: according to the data released today Switzerland’s economic growth slowed down from 0.6% in the first 3 months of the year to 0.4% in the second quarter. In their view, the same pressure will be seen on the figures for the third quarter. The effect of SNB's recent rate and liquidity injections will be seen in the final quarter of the year. Never the less, ING believes that the central bank won’t be able to ensure 2% growth rate in 2011.

BMO Capital expects good NFP data US August Non-Farm Payrolls data are released tomorrow at 4:30 pm (GMT+4). Economists surveyed by Bloomberg project that the number of jobs in the United States increased in August by 75K after gaining 117K in July. The unemployment rate is seen unchanged at 9.1%. ADP report showed that the number of employed in American private sector rose by 91K versus 109K in July. The Federal Reserve’s Chairman Ben Bernanke claimed in Jackson Hole that the nation’s economic growth was insufficient to achieve sustained reductions in unemployment. Analysts at BMO Capital believe that the data may surpass the expectations. The specialists advise investors to take risk selling US dollar versus its Canadian counterpart in the short term targeting 0.9520 and stopping at 0.9920.

Wells Fargo: bullish middle-term forecast for NZD/USD In August New Zealand’s dollar weakened versus its US counterpart falling from the August 1 maximum at 0.8841 to end the month in the 0.8500 area. However, analysts at Wells Fargo are still bullish on NZD/USD in the medium term. Among the positive factors for kiwi the specialists cite recovery in the country's economic activity and higher inflation that increases the possibility of the RBNZ rate hike. The specialists expect New Zealand­­­­'s dollar to recover paring last month’s decline. In their view, in the first half of 2012 the pair will trade at record highs in the 0.9100 region.

Daiwa Securities: Japan can’t conduct interventions frequently According to the government survey of 61 large manufacturers, 63% of respondents are calling for sustained currency market intervention to weaken yen. The participants of the survey see the average rate of USD/JPY in a fiscal year through March 2012 at 81.10 yen and EUR/JPY – at 112.80 yen. Never the less, analysts at Daiwa Securities claim that it’s difficult for Japanese monetary authorities to conduct currency interventions frequently. There are political obstacles as such moves would be criticized by other leading nations. In addition, it’s very hard to reverse the market that keeps regarding yen as a safe haven against the global growth concerns and euro zone’s debt crisis.

Mizuho: risk aversion eased, yen weakened China’s Manufacturing PMI rose from 29-month minimum of 50.7 in July to 50.9 in August. Currency strategists at Mizuho note that investors’ risk aversion has decreased. That made Japanese yen weaken versus the majority of its counterparts. The pair USD/JPY reached week’s maximum at 77.23 yen. The MSCI Asia Pacific index of regional shares is rising during the 6th day in a row. According to the data of Japan’s Ministry of Finance, last week Japanese invested 146.3 billion yen ($1.9 billion) overseas. That’s the most since last September.

TD Bank: Canada’s economic forecast Analysts at TD Bank reduced Canada’s economic growth forecast from 2.8% to 2.3% in 2011 and from 2.5% to 2% in 2012. According to the specialists, Canadian economy is very tightly connected with the US one, so if American GDP contracts, the same will happen with Canada’s economy. The bank expects that the United States will avoid recession in the coming quarters, but if it's wrong that would mean serious problems for Canada. According to the data released today, Canada’s GDP contracted by 0.4% on the annual basis 3.6% advance in the first 3 months of 2011. US annual economic growth pace in Q2 was revised downwards from 1.3% to 1%.

Commerzbank: comments on EUR/USD The advance of the single currency versus the greenback stopped at $1.4550 – between July 4 maximum at $1.4577 and July 27 maximum at $1.4535 – and euro eased to $1.4400/50. Technical analysts at Commerzbank note that EUR/USD may slide lower, to $1.4316. At the same time, the specialists say that in the longer term the outlook for the pair will remain bullish as long as it’s trading above 2-month support line at $1.4272. If euro breaks down this level, it will be poised down to August minimum at $1.4055. Standard & Poor's about European economy Standard & Poor's warned yesterday that the risk of double dip recession in the euro area has increased due to slowdown of the region’s economic growth. The rating agency notes that high unemployment and recent slump of equities may affect spending – S&P is going to watch the dynamics of consumer demand in the coming quarters. The specialists still think, however, that Europe will be able to avoid the double dip due to such drivers of growth as demand from emerging markets and the recovery, though sluggish, in corporate capital spending. Euro zone GDP growth slowed from 0.8% in the first 3 months of the year (q/q) to 0.2% in the second quarter casting doubts on the euro area’s prospects over the next 18 months through 2012. In addition, the agency notes that there’s still strong divergence on the European nations’ economic growth. Standard & Poor's lowered the region’s growth forecast from 1.9% to 1.7% this year and from 1.8% to 1.5% in 2012. WSJ: What Greel default would mean for Europe? Economists at Wall Street Journal note that the yield on Greek 1-year government bills hit 60% yesterday. In their view, the nation’s default seems inevitable and its terms will be extremely brutal for investors with recovery rates possibly even lower than the currently anticipated 50%. It’s very difficult to foresee the consequences in case of Greek default, but the economists believe that they’ll be beyond expectations. According to the Bank for International Settlements, European banks have a total exposure of 94 billion euro to the Greek economy (French institutions account for 40 billion euro, while the German ones – for 24 billion euro). The International Accounting Standards Board is worried that European financial institutions have been fudging their exposure to Greece, so the situation may be actually much dimmer. The IMF Managing Director Christine Lagarde said that European banks need urgent recapitalization. WSJ points out that the banks should seek private resources at first, but then they are to be granted with public funds if necessary. If the banks get no additional capital, there will be a significant credit contraction derailing economic growth of the core nations of the currency union. As a result, the demand for exports of the peripheral countries will fall causing a downward spiral throughout the single-currency region. The WSJ analysts worry that it may be too late for recapitalization now as investors won’t surely be eager to pump more capital into the banks. In their opinion, such efforts should be taken a year ago. According to WSJ, European authorities face a choice – to rescue banks or to save peripheral European economies – the first option seems to be more costly as until now Greece was supported mainly be pledges of action. Wall Street Journal warns that the tensions between the region’s nations are likely to escalate: the European Financial Stability Facility may be seriously affected by Finland’s insistence to get additional collateral from Greece.

Commerzbank: ECB may stop hiking rates According to the data from the European Commission, economic sentiment in the euro area fell from 103 in July to 98.3 in August, while the economists were looking forward to the decline only to 100.5. European quarterly GDP growth went down from 0.8% in the first 3 months of the year to 0.2% in the second quarter. The ECB President Jean-Claude Trichet claimed yesterday that as the euro zone’s economic growth slows down, the central bank is reviewing its assessment of inflation risks – the results will be released in September. It seems that Trichet’s views have changed: at the beginning of August 2 he said that risks to the inflation outlook were on the upside, while now the situation is quite the opposite. Analysts at Commerzbank note that this may mean that the European Central Bank’s rate hiking cycle is over. As a result, the single currency fell versus the greenback. The pair EUR/USD dropped from yesterday’s maximum at $1.4550 to the levels in the $1.4400 area. UBS: EUR/USD and AUD/USD technical levels Analysts at UBS are bullish on the single currency and Australian dollar versus the greenback. Here’s their technical forecast. EUR/USD Resistance: $1.4578; Target: $1.4697 (June 7 maximum); Support: $1.4328, $1.4259. AUD/USD Resistance: $1.0786; Target: $1.1007 (late July maximums); Support: $1.0561.