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Forex Flash: Japanese life insurers set to release fiscal year outlooks - BBH

FXstreet.com (Barcelona) - Brown brothers Harriman analysts note that Daido Life, one of the smaller of the Big 9 life insurance firms in Japan that dominate the industry, released its outlook for the fiscal year.

They add that others will do so over the next week or two. According to press reports, they note that Daido Life said that it will slow the pace of its JGB purchases, which appears at least partly forced upon it by the BOJ intent to buy 70% of the new supply. It expects the 10- yield to trade in a range of 0.3%-0.7%. They feel that it implies that when yields approach the upper end of the range, it will likely be a better buyer of JGBs. Currently the yield is just below 0.6% and when the yield is at the lower end of the range, it will likely be a better buyer of foreign bonds. Further, they add that it indicated that it will buy more foreign bonds this year than last, but did not say how much more. They write, “In the last fiscal year it bought JPY120 bln. In most of the discussions of Japanese purchasing of foreign bonds, little attention is paid to the fact that the currency exposure is often hedged. Daido Life said that it would keep it currency hedge ratio steady near 70%.” They explain that means that the demand for foreign bonds is not the same as demand for the foreign currency and it expects the dollar to trade between JPY90 and JPY120 this year and the euro to trade between JPY105-JPY145. They finish by noting that currently, the dollar is near JPY98 and the euro is near JPY128.80.

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Apr 17, 2013

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Forex Flash: BOJ plan not significantly more aggressive than Feds QE - Nomura

FXstreet.com (Barcelona) - Richard Koo, Chief economist at the Nomura Research Institute notes that the BoJ plan is not significantly more aggressive than the Fed´s QE and using this concept of the statutory reserve deposit multiple, the BOJs new policy would lift potential growth in the money supply, and therefore inflationfrom 4.8x to 18.7x.

He adds that the latter number is much higher than the corresponding figures of 9.7x for the UK or 3.8x for the eurozone, but is roughly equal to the US multiple of 16.0x and somewhat less than the 21.6x peak there. In that sense, the BOJs easing program can be viewed as an attempt to catch up with (and overtake) the Fed on the easing front. He writes, Estimates based on the quantitative easing schedule provided by the BOJ suggest that Japans monetary base (as a multiple of statutory reserves) will overtake the UK sometime this autumn and pass the US next summer.

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Apr 17, 2013

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Forex Flash: AUD/USD strategy profile – Westpac

FXstreet.com (Barcelona) - There is little to distract markets ahead of Wednesday’s Q1 CPI, which we see at a muted 0.5% q/q average core, no barrier to RBA easing whenever they believe demand needs a boost. Markets are closed Thursday for ANZAC Day.

Gold isn’t going to drop 9% every day, as it did on Monday the day that produced the bulk of AUD/USD decline in the past week. However, China’s GDP report was flat out disappointing and weakness in base metals, most notably copper, is hardly encouraging. Fair value estimates have slid into the mid- 0.90s. “With spec positioning still puzzlingly long last week and pricing for RBA easing returning to -40bp, AUD/USD should test the 1.0200 area in the week ahead, which is now also our one month target.” suggests Global FX Strategist at Westpac.

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Apr 18, 2013

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Forex: USD/MXN in lows around 12.2200/50

FXstreet.com (Barcelona) - The Mexican peso is gaining ground against the greenback on Friday, despite the unemployment rate in the Aztec economy ticked higher in March to 5.01% from 4.76%. The bias continues to favour the riskier assets today, giving extra support to the MXN.

As of writing, the cross is down 0.48% at 12.2146 with the next support at 12.1640 (low Apr.18) followed by 12.1467 (MA200h) and finally 12.0085 (weekly low Aug.14 2011).

On the upside, a break above 12.2590 (MA21d) would bring 12.3350 (high Apr.18) and then 12.3523 (high Apr.3).

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Apr 19, 2013

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US: Existing Home Sales fall unexpectedly by -0.6% to 4.92M in March

FXstreet.com (Barcelona) - Instead of improving to 5.01M in March, US existing home sales fell from 4.95M to 4.92M, disappointing analysts. February data was revised lower from 4.98M to 4.95.

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Apr 22, 2013

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Commodities Brief – Precious metals held by key resistances, crude fortified above 88.00

FXstreet.com (Barcelona) - The yellow metal was rebuffed by the 1428 resistance Tuesday, unable to achieve prolonged stability above this key upside mark. Having failed to summit this level, the price has fallen lower, trading negatively during US trading. With a bearish engulfing now present for gold, the price has settled currently at USD $1418.26 per oz. A retest or breach of the 1428 level will ultimately cancel the bearish outlook.

Silver cannot scale 23.00

Silver has faced headwinds ever since this mornings Chinese PMI printed lackluster results. Having unsuccessfully held above the 23.70 resistance, the white metal has now surrendered its grip on the 23.00 level. During US trading, silver spot prices were negotiating a price of just USD $22.93. A close above the 23.00 level will ultimately help lend stability to the embattled metal.

Crude holds above 88.00

The movement up to the 89.00 level topped out near the 88.74 figure, subsequently driving the price of WTI crude oil lower. While a bullish correction could ultimately transpire, the immediate price action appears to be negative, with crude prices settling at USD $88.12/bbl Tuesday. A hold above the 88.00 level is requisite to avoid any bearish scenario, which could effectively drive the price below 87.00.

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Apr 23, 2013

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Forex: USD/CAD flat around 1.0260

FXstreet.com (Barcelona) - The positive data from the Canadian retail sales during February, rising 0.8% on a monthly basis, sparked a rally that dragged the cross to the boundaries of 1.0250, although bouncing later to levels below 1.0270.

“The USD has struggled to make much headway through the upper 1.02 region in the past week so the risk of some short-term, corrective pressure back to the low 1.02 area may build near-term. We doubt that near-term downside potential extends much beyond that, however”, assessed S.Osborne and G.Moore, Strategists at TD Securities.

At the moment, the cross is up 0.03% at 1.0260 with the next resistance at 1.0286 (high Apr.22) followed by 1.0295 (high Apr.17) and finally 1.0315 (high Mar.8).

On the other hand, a breach of 1.0248 (low Apr.22) would bring 1.0217 (MA10d) and then 1.0210 (low Apr.17).

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Apr 23, 2013

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Forex Flash: Commodity-based currencies remain convoluted – UBS

FXstreet.com (Barcelona) - UBS Strategists, Gareth Berry and Geoffrey Yu take a technical perspective at today's commodity-based currencies and outline the technical positions.

In terms of the AUD/USD, “There’s scope for more downside with the bearish conditions persisting. Support is at 1.0202 ahead of 1.0115. Resistance is at 1.0308 ahead of 1.0359.” In addition, the USD/CAD indicators suggest a bullish outlook, as resistance is at 1.0294, a break above this would open 1.0342 – support is at 1.0230 ahead of 1.0203.

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Apr 24, 2013

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Forex: AUD/USD rejects the 1.0340 and falls to 1.0310

FXstreet.com (San Francisco) - After climbing from 1.0315 to reach fresh intra-week high at 1.0340, the AUD/USD has been rejected by this level and now the pair is trading down at the 1.3010 area. It’s 0.30% positive on the day.

The AUD/USD is trading slightly bearish according to the FXstreet.com trend index. Indicators such as CCI and Momentum are pointing south while the MACD and the Stochastic are neutral in the 15-minutes chart.

Next supports are at 1.0300, 1.0290 and 1.0270. On the upside, resistances are at 1.0325, 1.0340 and 1.0360.

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Apr 25, 2013

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Forex Flash: Will fed surprise markets with rate changes? – Goldman Sachs

FXstreet.com (Barcelona) - According to the Economics Research Team at Goldman Sachs, “The real risk in present day for 10-year US treasuries is less from a 1994-style move in short rates, and more from an increase in long-dated yields. However, the sea-change in the Fed’s operation and communication strategies since 1994 makes us more confident that the Fed will not intentionally surprise markets, and it has more tools to moderate the pace of any unwarranted increases.”

Differences in exposures between 2012 and 1994 also point to a more reassuring conclusion: a larger share of the fixed income market seems to be in the hands of unleveraged market participants; leveraged holders (US banks) have a significantly smaller share of USTs; and bank leverage has declined.

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Apr 25, 2013

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Forex Flash: All eyes on USD/CHF as European economies eyed – UBS

FXstreet.com (Barcelona) - The recent price action surrounding the EUR/CHF has the renewed weakness of the franc this week - at a time when the dataflow has showed the Eurozone's largest economy clearly slowing – may reflect concerns about Germany as much as unsubstantiated speculation about the SNB's exchange rate regime.

“Investors should therefore pay close attention to the franc. Further declines in Switzerland's currency would show that Germany and the rest of the stronger core economies in Europe are being adversely affected by the Eurozone's weaker peripheral members.” writes the UBS Research Team.

If the USD/CHF in particular breaks through key resistance levels between 0.95-0.9600 it would point to the greenback making gains now against the healthier core European economies and not just the Eurozone overall. “That would be a bullish development for the greenback.” they add.

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Apr 25, 2013

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Forex Flash: Italian maelstrom calms with likely vote of confidence – Deutsche Bank

FXstreet.com (Barcelona) - In Italy, the center-left politician Enrico Letta was nominated by the President to be Italy's next prime minister. Letta said he would start talks to form a broad-based coalition on today and it is likely to go to parliament for a vote of confidence by early next week.

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “the PM designate is expected to select a group of ministers, likely to be a mixture of politicians and technocrats. The new government will be backed primarily by Letta's center-left and the center-right PDL party led by Berlusconi.

Away from Italy, Fitch yesterday downgraded Bank of England's credit rating to AA+/Stable from AAA. This follows on from its downgrade of the sovereign rating last week.

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Apr 25, 2013

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Forex: EUR/JPY drawing third Doji in a row

FXstreet.com (Barcelona) - The EUR/JPY retested its daily highs once again, peaking at 129.87 just before the US claims data, and then the cross started a new declining movement back to its lower band of the daily range, finding some support at 129.20.

Given that the market trades quite close to yesterday’s close of 129.41, the EUR/JPY may be drawing its third doji daily candlestick in a row.

“The EUR/JPY's unimpressive bounce after the 23 April bullish reversal suggests a weakening short-term upside momentum. Monitor the hourly support at 127.87 (23/04/2013 low). Another support can be found at 126.44”, wrote MIG Bank analysts Bijoy Kar and Luc Luyet, suggesting an hourly resistance at 129.99 (intraday high).

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Apr 25, 2013

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Forex: USD/MXN flat ahead of rate decision

FXstreet.com (Barcelona) - The Mexican peso is trading in a narrow range between 12.1600 and 12.1800 on Friday, ahead of Retail Sales in the Aztec economy and the more relevant Banxico meeting, with consensus expecting the central bank to stay put at 4.0%.

According to Annette Beacher, FX Strategist at TD Securities, “There is a possibility that the market will find in the MPC’s guidance reasons to believe in further easing…. So we’re of the view that the risk of a ‘neutral’ message is higher, supporting a normalization of market implied rate expectations (currently 10-12bp of easing priced in 6m-9m)”.

At the moment, the cross is down 0.05% at 12.1620.

Next support levels align at 12.0626 (low Apr.15) ahead of 12.0189 (low Apr.11) and finally the psychological level at 12.0000.

On the upside, a breakout of 12.2043 (MA10d) would expose 12.3535 (high Apr.22) and then 12.3750 (high Apr.23).

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Apr 26, 2013

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US: Reuters/Michigan Consumer Sentiment beats consensus and jumps to 76.4 in April

FXstreet.com (Barcelona) - The April report of Reuters/Michigan Consumer Sentiment index points to a surprising rise from 72.3 to 76.4, beating the market consensus of 73.2.

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Apr 26, 2013

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Forex: EUR/USD back to the 1.3000 zone

FXstreet.com (Córdoba) - The euro continues to consolidate around the 1.3000 mark versus the greenback, as the US GDP's inspired strength was only temporally and found resistance at the 1.3035 area.

The EUR/USD failed to sustain gains and slid back to the 1.3000 area, and it is currently trading around 1.3010, virtually unchanged since opening.

"Stocks are higher, and dollar lower against most of its rivals, which suggests the downside for EUR/USD will remain limited by 1.2970/1.3000 price zone", says Valeria Bednarik, chief analyst at FXstreet.com. "However, only steady gains above 1.3040 should favor a short term bullish movement, with 1.3080/1.3100 being a probable top for today".

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Apr 26, 2013

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Forex Flash: Quality of lending declines in Spain – Goldman Sachs

FXstreet.com (Barcelona) - Alongside the fall in lending volumes, the quality of lending in Spain has also declined. According to the Economics Research Team at Goldman Sachs Too much credit is extended to unhealthy sectors with poor growth prospects, such as construction, and too little net new credit creation towards more growth-friendly entrepreneurial and export-oriented sectors. This suggests the reallocation of capital has been somewhat inefficient, providing too little support to economic restructuring.”

Policy support from the ECB has been essential in avoiding a disorderly deleveraging by banks. Yet there have been costs associated with this support, which may have contributed to the low quality of lending and too little economic restructuring. The generous provision of bank funding has reduced bank balance sheet flexibility and encouraged banks to ‘evergreen’ existing loans. “These steps may have resulted in insufficient new credit becoming available, thus raising the costs of unsecured funding.” the team adds.

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Apr 26, 2013

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Forex: EUR/USD on wait and see mode ahead the big bank's week

FXstreet.com (San Francisco) - The Euro traded mostly sideways on Friday against the Dollar. The pair was unable to break above the 1.3035 resistance and it closed the day at 1.3030. The EUR/USD seems to be trading in wait and see mode just ahead of the big banks week ahead when the Fed and the ECB will hold their monetary policy meetings.

The EUR/USD closed its second negative week in row, extending declines from the 1-month high at 1.3200 reached on April 16. On the daily chart, the pair is slightly bearish according to the Fxstreet.com's trend index. Indicators such as CCI and Momentum are bearish while the Stochastic is neutral and the MACD is bullish.

"The EUR/USD has spent most of the last two weeks trading in a tight range, trapped in between Fibonacci levels," FXstreet.com's analyst Valeria Bednarik comments in a recent report. "After a non lasting test of 1.3200, the pair retraced all the way back to the 23.6% retracement of its latest daily fall from 1.3710 to 1.2744, around 1.2970."

The week ahead

Speaking about the days to come, as BK Asset Management's analyst Kathy Lien says it’s better to "strap on your seatbelts." Next week will have a bunch of volatility as key economic data are schedule across the world.

Market will be focusing mainly on the Fed and ECB meetings and the NFP report. Lien doesn't expect "much from the FOMC statement. Instead, non-farm payrolls will be the number to watch." The market consensus on NFP is about 160K new payrolls in April, well below 2012 average of 180K. In this line, Lien states that "the performance of the dollar could be mixed in the coming days depending upon how Chinese, U.K. and Australian data fare and whether the ECB cuts interest rates."

The UBS analyst team states that "with the latest indicators pointing to improving conditions, consensus expects a better payrolls report." Looking the March's figures at 88K new payrolls, the April's "nonfarm payrolls should increase by 145K and private by 170K, while the unemployment rate is expected to remain unchanged at 7.60%."

A reading below expectations, especially below 100K, would drive the USD lower. On the other said, a "job growth between 100K to 175K will be a relief for the Fed but probably won't inspire much optimism in the market," Says Lien. She believes that market needs to see a "job growth in excess of 200K" to fuel confidence.

The big bank week

With the recent economic data, it seems status quo in the United States will remain unchanged. "All talk of imminent QE downscaling can be forgotten for a while," as ING said in a report following the US Q1 GDP.

But the situation in Europe is kind different with Spain (27.2%), France (11.5%), Italy (11.6%), Greece (27.2%), Portugal (16.9%) and the whole Eurozone with 12% are in a desperate situation. Forex.com analyst's Eric Viloria believes "that a cut is likely and may weigh on the common currency in the week ahead. If the bank announces targeted policy to provide support for periphery, this would likely boost the EUR."

EUR heads towards the ends of April easing against most of its rivals, as over the past few weeks, market players have been listening ECB officials bluffing on the benefits of a rate cut, and pricing it in. Usually, the ECB's leaders like to prepare market for big movements, so the assumptions seem to be true.

However, as Investec Research Team pointed well in a today's article, "Angela Merkel came out fighting yesterday by stating that higher interest rates are better for Germany. Whether this was a pre-emptive measure to suggest that rates will ultimately rise again or a warning shot to Mario Draghi remains to be seen," So, to cut or not to cut?

"Odds are now to the downside in the pair, with a break below the 1.2970 Fibonacci level opening doors for a quick test of key 1.2880, strong static midterm support," points Bednarik. In addition, it seems that a bunch of stop orders and option barriers are below 1.2950. "Once below this last, the slide could easily extend towards 1.2740/50 area next week, but if this last gives up, then get ready for a run towards sub 1.26 level this May. "

To revert actual bearish tone, "price needs to establish above the 1.3115 resistance, 38.2% of the same Fibonacci rally, with scope then for a retest of 1.3200," continues the FXstreet.com analyst. "However, only steady gains above 1.3230, will provide basis for a bullish midterm case, with 1.3510 then at sight."

Finally, according to the FXstreet.com EUR/USD Banks, Brokers and Experts forecast pool, the short-term eurusd bias remains at 1.3000, as poll members forecast with low profile ahead of rate decisions.

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Apr 27, 2013

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Forex: EUR/JPY surrounds 128.00 after EMU confidence report

FXstreet.com (Barcelona) - With improved sentiment pushing the EUR higher, the EUR/JPY jumped to 128.32 high on the European opening and is now holding around the 128.00 mark (+0.16% on the day) after the release of the EMU confidence report.

Consumer confidence improved from -23.5 to -22.3, as expected, but economic sentiment indicator (from 90.0 to 88.6), business climate (from -0.75 to -0.93), industrial confidence (from -12.3 to -13.8) and services sentiment (from -7 to -11.1) all fell and disappointed market consensus of 89.3, -0.89, -13.5, and -7.0, respectively.

Portuguese consumer confidence rose from -55.3 to -54.2, and business confidence rose from -3.9 to -3.6. Italian business confidence eased from 88.6 to 87.6, below 88.9 consensus. Italian wage inflation remained unchanged at 0.0% (MoM) and 1.4% (YoY). The Greek PPI dropped from 0.8% to -1.5% in March.

“The risk has increased that we will see a deeper retracement towards the 122.10 5 month uptrend. Intraday rallies should now remain capped by the 128.90/130.00 for the market to remain directly offered”, wrote Commerzbank analyst Karen Jones.

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Apr 29, 2013

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Forex: USD/CHF finds support at 0.9355

FXstreet.com (San Francisco) - The US dollar is trading lower against the Swiss franc with the USD/CHF extending its decline from 0.9420 to break down the 0.9400 region and reach the 0.9355 as fresh intra-day low. But at this level, the pair has found support following the US income and spending data and the cross is trading back at 0.9370.

US personal income rose 0.2% in March; spending increased the same 0.2%.

Currently the USD/CHF is trading at 0.9370, 0.40% below opening price. The pair is strongly bearish according to the FXstreet.com trend index with indicators such as MACD, CCI and Momentum pointing lower while the Stochastic is neutral in the 15 minutes timeframe.

Below the 0.9350, next supports are at 0.9340 and 0.9290. On the upside, resistances are at 0.9400, 0.9420 and 0.9440.

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Apr 29, 2013

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Session Recap: EUR/USD struggles at 1.3100

FXstreet.com (Córdoba) - The euro advanced versus the dollar and the yen, supported by optimism after Italy formed government over the weekend. However, the shared currency is having a hard time trying to consolidate above 1.3100 as investors remain cautious ahead of the ECB decision on Thursday.

In the macroeconomic front, eurozone data was broadly soft while US Personal income for March also disappointed. European markets are higher, with Italy leading gains.

Main Headlines in Europe (in chronological order):

EMU: Consumer Confidence rises to -22.3 in April

Italy bond auction goes swimmingly well

France will cut 34,000 ministry jobs

Euro resilience keeps the cross around 1.3100

European markets up on Italian politics and expectations ahead of ECB this week

Germany: Consumer Price Index (YoY) rises 1.2% in Apr; (MoM) falls 0.5%

US: PCE rose 1.0% YoY in March

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Apr 29, 2013

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Forex: EUR/USD clings to 1.3100

FXstreet.com (Barcelona) - The shared currency is hovering over the key resistance at 1.3100 on Monday, bolstered by the increasing demand for riskier assets. Collaborating with the upside, the USD continues to suffer as market participants are still digesting the poor US GDP figures from last Friday.

“There is now a clear market consensus in favour of an ECB rate cut on Thursday; a view we subscribe to. In the Bloomberg survey around 61% of forecasters favour a move and, if this week’s economic data are soft, it is possible that the conviction behind this expectation will grow”, suggested Jane Foley, Strategist at Rabobank.

At the moment, the cross is up 0.38% at 1.3098 and a break above 1.3130 (high Apr.19) would aim for 1.3202 (high Apr.16) and then 1.3229 (50% of Feb-Apr slide).

On the flip side, support levels align at 1.2988 (low Apr.25) ahead of 1.2954 (low Apr.24) and finally 1.2948 (MA200d).

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Apr 29, 2013

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US: Consumer Confidence surprises and jumps to 68.1 in April

FXstreet.com (Barcelona) - The Conference Board has reported a much better than expected consumer confidence in April, with an improvement from 61.9 (revised from 59.7) to 68.1, instead of a move to 60.8 as expected

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Apr 30, 2013

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Forex: GBP/USD rising towards yesterday’s high at 1.5546

FXstreet.com (Barcelona) - Sentiment picked up and the GBP/USD moved above the 1.5500 handle and the London morning high of 1.5518 on the New York opening. The pair has reached ground at 1.5530 area, so far, and is closer to yesterday’s high of 1.5546.

The Conference Board has reported a much better than expected consumer confidence in April, with an improvement from 61.9 (revised from 59.7) to 68.1, instead of a move to 60.8 as expected. The April Chicago PMI has dropped below the 50.0 threshold, from 52.4 to 49.0, instead of rising to 52.5 as expected. According to the S&P/Case-Shiller Home Prices Indices, housing prices have risen by 9.3% in February, beating market consensus of 9.0% and increasing the rising pace from last month’s 8.1%.

UK money supply fell -0.9% (from -0.5%) in March (MoM), instead of rising 0.4%. YoY data eased from 0.5% to 0.3%. Consumer credit came in at £0.5B as expected and net lending to individuals eased from £1.5B to £0.9B. UK mortgage approvals rose from 51.947K to 53.504K, beating 52.500K consensus.

“The recent rise is still viewed as a rebound. A key resistance can be found at 1.5689 (13/02/2013 high, see also 200 day moving average)”, wrote MIG Bank analysts Bijoy Kar and Luc Luyet, “Hourly supports can be found at 1.5419 (26/04/2013 low) and 1.5335 (intraday high, see also the low of the rising channel)”, they added.

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Apr 30, 2013

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Forex Flash: India CPI decelerated in April but should rise further on cuts in fuel subsidies – TD Securities

FXstreet.com (Barcelona) - The Indian CPI decelerated from 5.9% in March to 5.6% Y/Y in April, printing slightly below consensus and our 5.7% forecast. According to TD Securities analysts, the decline reflected a small drop in administered and core prices, mainly fresh food, processed food and clothing. “Inflation remains above the BI’s upper target of 5.5%, and will rise further as the government has pledged to deliver cuts in fuel subsidies in May.

We expect that a rise in inflation throughout the year will drive Bank Indonesia to raise interest rates by 75bp, starting in Q4’13”, wrote analyst Marcin Budkiewicz.

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May 01, 2013

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