Comments and forex-analytics from FBS Brokerage Company

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BoA Merrill Lynch: forecast for euro

 

The single currency has made a significant advance versus the greenback during the last several days. The pair EUR/USD climbed from the 8-month minimum at $1.3145 hit on October 4 to the levels in the $1.3800 area.

 

Analysts at Bank of America Merrill Lynch explain euro’s gains by squaring of excessive short positions. In their view, the up move is a correction and the European currency won’t be able to grow on the sustainable basis.

 

The specialists claim that EUR/USD may rise to $1.4000 in the next 1-2 weeks and then the bears will once again take the situation in their hands. So, investors are to look for the chance to resume selling the pair.

 

The bank also points out that the dynamics of euro is strongly correlated with the oil prices: when the latter increases, oil exporters tend to convert their dollar earnings in euro to keep their assets balanced. As a result, it’s necessary to take into account that as long as China’s economy stays in a good shape and the demand for commodities is high, the single currency will be supported against its US counterpart.

 

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Minutes of FOMC September meeting

 

Last month, the Federal Reserve decided to perform Operation Twist or, in other words, replace $400 billion of Treasuries in the central bank’s portfolio with longer-term debt to reduce borrowing costs.

 

According to the minutes of the US Federal Open Market Committee’s last meeting that took place on September 20-21, the majority of FOMC members are in favor of unveiling more information about the Fed’s goals and how they influence the central bank’s decisions. In addition, many policymakers think that it’s necessary to establish specific levels of inflation and unemployment as conditions for keeping interest rates near zero.

 

Some FOMC officials including Fed’s Chairman Ben Bernanke believe that asset purchases would be a more efficient tool than the Operation Twist and that QE should be retained as an option, while others warned that further expansion of the Fed’s balance sheet would more likely raise inflation and inflation expectations than stimulate economic activity. The Fed has also Fed bought $2.3 trillion in housing and government debt in two rounds of QE from December 2008 to June 2011. However, US economy still remains weak.

 

The FOMC was also discussing the possibility of communicating its decisions through other way than the post-meeting statements.

 

Analysts at Daiwa Capital Markets America believe that most FOMC members would like to save QE as the last measure in case the economy starts contracting and there is the risk of deflation.

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Commerzbank: technical comments on EUR/USD

 

Technical analysts at Commerzbank expect the single currency to stay today below resistance in the $1.3838/48 area (July minimum/50% Fibonacci retracement of the decline from the August maximum) trading versus US dollar.

 

If EUR/USD managed to overcome the mentioned levels, it would be able to rise to $1.3936 (September 15 maximum) and $1.4013 (61.8% Fibonacci retracement) before another move down.

 

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Wells Fargo: comments on AUD/USD

 

Australia’s dollar finds itself under the impact of both positive and negative factors.

 

On the one hand, the payrolls in Australia increased in September by 20,400 exceeding the median forecast by more than in 2 times. On the other hand, Chinese exports increased last month at the slowest pace in 7 months, while the trade surplus of Australia’s main trading partner declined from 17.8 billion yuan in August to 14.5 billion in September.

 

Analysts at Wells Fargo see moderate strength for Aussie. In their view, the currency will be appreciating taking onto account accommodative policy of the Federal Reserve, but will underperform other commodity currencies as the rate hikes of the Reserve bank of Australia are unlikely, while rate cuts are possible.

 

The pair AUD/USD rose from 1-year minimum in the 0.9390 area hit on October 4 to the levels above the parity.

 

Resistance levels for Aussie are found at $1.0377 (200-day MA), $1.0398 (September 16 maximum), $1.0664 and $1.0767 (September maximums). Support levels are situated at $0.9866 and $0.9388 (October minimums).

 

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BarCap, RBC: China’s exports growth slows down

 

Chinese exports increased last month at the slowest pace in 7 months adding only 17.1% in September from a year earlier, down from 24.5% rise in August, and below economists' median forecast of a 20.3% expansion. Exports slowed more than imports and the nation’s trade surplus declined from 17.8 billion yuan in August to 14.5 billion in September.

 

Analysts at RBC Capital Markets think that the pace of China’s exports growth will keep declining in the coming months due to the weaker external demand. The specialists note, however, that the slump seen at the end of 2008 won’t repeat.

 

Strategists at Barclays Capital keep the forecast for China’s exports growth in 2011 at 20%. The trade surplus, in their view, will be equal to $162 billion or 2.2% of GDP in 2011. In 2010 Chinese trade surplus accounted for 3.1% of GDP.

 

Economists at ANZ believe that China's export and import growth may slow even more in the fourth quarter due to a high base last year, but the value of exports and imports remain at a relatively high level.

 

The state of Chinese trade balance has a strong impact on investors’ risk sentiment and, consequently, on the higher-yielding commodity currencies.

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Society Generale: buy Aussie versus Swiss franc

 

September was a hard month for risky assets. Never the less, analysts at Society Generale expect the market’s risk sentiment to improve. As a result, the specialists advise investors to return to the higher-yielding currencies.

 

According to the bank, the good strategy is to buy AUD/CHF in the 0.9050 area stopping below 0.8850 and taking profit at 0.9600.

 

Among the positive factors for Aussie the strategists cites Australia’s favorable economic data and the potential new policy initiatives in the euro area.

 

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Inflation will make ECB harder to cut rates

 

German annual inflation rose from 2.5% in August to 2.9% in September exceeding the estimate of 2.8%.

 

As a result, it would be hard for the European Central Bank to reduce its benchmark interest rate from the current 1.5% level to support the euro area’s economic growth hurt by the debt crisis.

 

Last month the ECB revised down the region’s economic growth forecast from 1.9% to 1.6% to 2011 and from 1.7% to 1.3% in 2012. The central bank sees the average inflation at 2.6% this year and 1.7% the next.

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S&P cut Spain’s credit rating

 

Agency Standard and Poor’s lowered Spain’s credit rating from AA to AA- with a negative outlook. This is S&P’s third downgrade of the nation since 2009 when the country lost its AAA status. As the reason for the move the specialists cited the elevated risks to Spain’s economic growth prospects, difficult situation on Spanish labor market and the likelihood of further asset deterioration for Spain's banks.

 

Analysts at Westpac believe the single currency will find itself under negative pressure versus the greenback and fall below $1.3150 in a month. Strategists at BNP Paribas are also bearish. In their view, the pair EUR/USD will return down to $1.35 in the short-term.

 

It’s also necessary to note that another agency Fitch Ratings cut credit ratings of several major European banks – UBS, Lloyd's Banking and Royal Bank of Scotland – and placed Barclays Bank, BNP Paribas, Credit Suisse, Deutsche Bank and Societe Generale on negative watch.

 

Euro has so far been supported ahead of EU summit on October 23 and G20 meeting on November 3-4. Today finance ministers and central bankers from the world's 20 biggest economies meet in Paris to discuss the possible solutions of the debt crisis.

 

Bloomberg reports that, according to the unnamed G20 and IMF officials, the nations will consider the options of increasing the International Monetary Fund’s lending resources.

 

The pair EUR/USD declined from the 3-week maximum reached on October 12 to the levels in the $1.3750 area.

 

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Aussie dipped on negative news from Spain

 

Australian dollar dipped versus the greenback earlier today as the market’s positive risk sentiment was shaken after Standard and Poor's cut Spain’s credit rating from AA to AA- with a negative outlook.

 

Analysts at CMC Markets note that the downgrade made some higher-yielding currencies like Aussie hurt. The specialists underline that the initial investors’ reaction was kneejerk as traders weren’t sure how much of this downgrade had been already priced in AUD.

 

Since that AUD/USD stayed in range between $1.0145 and $1.0220. At the same time, it looks like Aussie is eager to continue its uptrend.

 

It’s necessary to note, that all in all Australia’s currency is heading for the weekly gain against its US counterpart ahead of EU summit on October 23 and G20 meeting on November 3-4. The market seems optimistic hoping that the European authorities will finally come up with the clear strategy of resolving the debt crisis. In addition, strategists Westpac remind that Aussie gets significant support from higher rates in Australia than other developed nations as well as from the favorable Australian economic data.

 

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RBC: Aussie will strengthen versus kiwi

 

Analysts at Royal Bank of Canada advise investors to buy Australian dollar versus its New Zealand’s counterpart.

 

The specialists underline that the Reserve bank of New Zealand which reduced the benchmark interest rate by 50 basis points to 2.5% in order to help the national economy recover from the Christchurch earthquake won’t raise the borrowing costs until the second half of 2012.

 

RBC underlines that unlike few years ago most mortgages in New Zealand are now adjustable-rate. That means that the rate hike would have an immediate effect on the households’ finances. In addition, the funding costs of commercial banks are high, so they may raise the interest rates they charge even without the central bank’s monetary tightening. As a result, the RBNZ will have to cautious in increasing rates that is a negative factor for kiwi.

 

According to the analysts, the situation in Australia is quite opposite as the market has priced in the interest rate cuts, while RBC is sure this won’t happen.

 

The bank recommends being long on AUD/NZD at the current levels expecting the pair to reach 1.32 by the end of the first quarter of 2012.

 

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Commerzbank: technical comments on USD/CHF

 

The greenback went down from the multi-week maximum versus Swiss franc at 0.9315 reached on October 6 to find support in the 0.8927/18 area (September 12 maximum, September 29 minimum).

 

Technical analysts at Commerzbank believe that dollar’s decline will likely to limited by the 1-month uptrend support line and USD/CHF may return up to 0.9150.

 

If the bears manage to breach the mentioned support, the pair will be poised down to 0.8783/0.8778 (the 3-month support line and the 200-day moving average).

 

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Wells Fargo: forecast for USD/CHF

 

Analysts at Wells Fargo are bullish on the greenback versus Swiss franc in the coming months.

 

The specialists underline that the Swiss National Bank has managed to weaken its national currency by keeping EUR/CHF above 1.2000. In addition, the bank expects US dollar to strengthen against euro that, in its turn, may give USD bulls more powers to push up the pair USD/CHF.

 

According to Wells Fargo, USD/CHF will reach 0.9175 in 3 months, 0.9375 in 6 months, 0.9700 in 9 months and reach the parity in a year from now.

 

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Ichimoku. Weekly forecast. GBP/USD

 

Weekly GBP/USD

 

Pound keeps trading inside the weekly Ichimoku Cloud. On the upside, the advance of the British currency is limited by the resistance provided by the gradually declining Turning line (1) and the horizontal Standard line (2) as well as the upper border of Kumo – Senkou Span A. On the downside, the prices have been successfully supported by the lower border of the Ichimoku Cloud (3).

 

The Cloud itself has recently switched to the negative mode (4) though it still remains very thin, so the bears haven’t gained enough strength yet.

 

As the same time the short-term Tenkan-sen (1) looks down that means that sterling will likely drift lower to Senkou Span B (3) and the bears would probably manage to improve their position.

 

http://static2.fbs.com/upload/image/technical_analis/Ichimoky/October2011/17_10_11/49e13ca718e15dfa82763b85bfa6d591.gif

 

Daily GBP/USD

 

Last week the prices have managed to bounce off the support of the Turning line (1) and get higher overcoming resistance provided by the Standard line (2). Now the only obstacle for the bulls is the Ichimoku Cloud (3, 4).

 

Never the less, it’s necessary to note that although Tenkan-sen (1) and Kijun-sen (2) are likely to intersect soon forming the “golden cross”, the positive signal will be weak as this will happen below the Cloud. In addition, descending Kumo has widened – Senkou Span A (3) declined, while Senkou Span B remained horizontal.

 

As a result, the pair still may correct upwards, though the general outlook is currently more in favor of bears.

 

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Ichimoku. Weekly forecast. USD/JPY

 

Weekly USD/JPY

 

On the weekly chart US currency has edged a bit higher and closed above the Turning line (1) for the first time since the end of April. All in all, the pair is trading between 76 and 78 yen – in the range within which it has been trading since the beginning of August.

 

The greenback still faces resistance of slightly decreased Standard line (2) and the bearish Ichimoku Cloud that has widened a bit (3, 4).

 

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Daily USD/JPY

 

On the daily chart the prices managed to overcome resistance of the Turning line and the Standard line and approach the lower border of the descending Ichimoku Cloud – Senkou Span A (2).

 

The lines Tenkan-sen and Kijun-sen intersected forming the “golden cross” – weak signal taking into account the fact that it happened below Kumo.

 

The bulls will likely test the levels inside the Cloud and the pair will consolidate in the area of Senkou Span A.

 

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Ichimoku. Weekly forecast. USD/CHF

 

Weekly USD/CHF

 

Last week the pair USD/CHF bumped into resistance provided by Senkou Span A (3) – the bulls didn’t manage to enter the declining Ichimoku Cloud from the first time (4). At the same time, it seems likely that they will repeat this attempt.

 

The lines Tenkan-sen (1) and Kijun-sen (2) which formed a weak “golden cross” a week before last are supporting the pair.

 

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Daily USD/CHF

 

On the daily chart the greenback breached support provided by Tenkan-sen (1) and Kijun-sen (2).

 

At the same time, the rising Ichimoku Cloud (3, 4) keeps widening and supporting the prices, while the Turning line (1) and the Standard line (2) are horizontal. As a result, it’s possible to assume that we may see some sideways trade here.

 

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AUD/USD challenging 1.0600 resistance

 

After sliding 200 pips and bottoming out at 1.0503 early European session, the Australian Dollar found support and rebounded, trimming losses versus a broad-based strong Greenback.

 

AUD/USD bounced from the 1.0500 psychological level and rose over 100 pips toward a session high of 1.0610 before losing steam. At time of writing, the pair is quoting at the 1.0590/1.0600 zone, still down 1.0% on the day.

 

In terms of technical levels, if the pair manages to take out the 1.0600 area, next resistances could be found at 1.0650 and the 1.0700/10 area, while on the other hand supports might be faced at 1.0540, 1.0500 and then 1.0460.

 

source : fxstreet

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EUR/USD below 1.4000

 

FXstreet.com (Barcelona) - The American session pushed the EUR/USD below the 1.4000 psychological level, erasing most of last week’s gains, while investors react to the Bank of Japan intervention and to some lack of information about the implementation of the EU agreement.

 

On Monday trading, the EUR/USD fell almost 230 pips, a loss of 1.37% of its price, after failing to stay above 38.2% Fibonacci retracement of Jan-9 low. At the moment of writing, the pair is quoting at 1.3950.

 

On the upside, resistance is expected at 1.4000 (psychological level) and 1.4150 (38.2% Fib), followed by 1.4171 (daily high). On the downside, the EUR/USD is expected to find support at 1.3923 (200-hour MA), and after that, 1.3900 (psychological level and 50% Fib) and 1.3815 (100-4 hour MA).

 

source : fxstreet

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GBP/USD jumps to fresh 8-week high

 

The Sterling received a boost in recent trade and jumped versus the Greenback, extending its recovery from the 1.5965 area to levels above 1.6100 mainly through EUR/GBP, which has been heavily sold-off.

 

GBP/USD accelerated to the upside and broke decisively above 1.6100 to hit its highest level since Sep 6 at 1.6164 before easing a tad. At time of writing, Cable is quoting at the 1.6140/50 zone, 0.1% above its opening price.

 

In terms of technical levels, next resistance levels could be found at 1.6170 ahead of 1.6200/10, while supports could now be faced at 1.6100, 1.6060 and then 1.6000.

 

source : fxstreet

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EUR/GBP tumbles and falls below 0.8650

 

The EUR/GBP has fallen dramatically in the last hours as the Euro plunged across the board. The pair dropped more than a hundred pips since the European morning and bottomed so far at 0.8622, the lowest price in three weeks.

 

The Euro reached last week the strongest level in 7 weeks but it reversed sharply and is plunging on Monday, posting the biggest decline in months.

 

The EUR/GBP accelerated the decline after breaking below 0.8730 and fell a hundred pips in a few hours.

 

While the EUR/USD is falling sharply, currently testing the 1.3900 area, the GBP/USD is back above 1.6100, trading near daily highs. The Euro is the worst performer across the board since the beginning of the European session.

 

source : fxstreet

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USD/JPY settles around 78.00

 

The Dollar has erased a considerable part of its gains versus the Yen, after peaking at a 3-month high of 79.52 on the back of the third BoJ/MoF intervention this year after USD/JPY touched another record low at 75.56 during the Asian session.

 

Having pulled back 150 pips from its post intervention high, USD/JPY settled at the 78.00 area where it has spent the last hours, holding onto a 3.1% gain on the day.

 

From a technical perspective, Slobodan Drvenica, analyst at Windsor Brokers Ltd, said, "Hourly 20 day SMA at 77.65, underpins for now. Key targets above 79.52 lie at 80.00 and 80.23/50 zone. Only loss of 77.50/00 handles would signal return to the previous range levels".

 

source : fxstreet

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EUR/USD at session lows, nears 1.3900

 

The Euro weakened further and broke below the 1.3970 area during the New York session, accelerating losses and extending its slide to a fresh 2-day low of 1.3905 before finding support.

 

EUR/USD rebound however was capped by the 1.3950 zone sending the pair to the 1.3915/20 zone, where it is currently trading, recording a 1.4% loss on the day.

 

The Euro lost ground versus the Greenback on Monday, retreating further from a 7-week high at 1.4247,amid broad-based USD gains following Japan's intervention to weaken the Yen and renewed worries about last week's euro zone plan to tackle its debt crisis.

 

Despite the day's losses, the European shared currency is poised to gain nearly 5% on the month, its best monthly performance since September 2010.

 

source : fxstreet

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AUD/USD dips on greenback strength, RBA ahead

 

The Australian dollar weakened against the greenback for a second consecutive day on Monday, falling from an earlier high of 1.0715to 1.0505 before consolidating and ending the American session at 1.0530, 170 pips below its opening price.

 

The sharp selloff in AUD/USD came after the Bank of Japan took steps to halt the appreciation of the yen. For the second time in the last three months, the central bank intervened after the Japanese currency hit another record high against the US dollar, which boosted the USD across the board.

 

In addition, Wall Street ended the day lower with the Dow Jones Industrial Average dropping 276.10 points, or 2.3%, to end at 11,955.01, marking its first loss in four sessions and fueling demand for USD safety. The boost in the U.S. dollar, in turn, weighed significantly on commodity currencies since most commodities are priced in dollars causing AUD/USD weakness.

 

At present, AUD/USD is slightly higher in early Asia ahead of the RBA cash rate decision later today which is expected to remain steady at 4.75%; the pair is last quoted at 1.0540 from 1.0530. To the downside, support lies at 1.0475 (16 June low), while, to the upside, resistance lies at 1.0575 (13 July low).

 

source : fxstreet

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EUR/USD sputters as pessimism grows for EU plan

 

There has been a broad contraction in risk appetite after the positive reaction to last week’s EU Leaders’ Summit. Last week’s agreements were as good as the market could have expected though, in isolation, market participants are skeptical they will resolve the euro zone sovereign debt crisis.

 

“Hourly charts shows the bearish momentum still strong yet the indicators near oversold extremes, which will limit further slides in the short term; consolidated stage or either a limited bullish corrective movement should come first before a new leg down,” comments Valeria Bednarik, Chief Analyst at FXstreet.com.

 

The analyst also finds that the 4-hour chart holds a bearish tone and, once EUR/USD breaks below the 1.3820 area, it should lead to stronger slides towards 1.3700 price zone.

 

EUR/USD closed the U.S. session at 1.3857, 275 pips below its starting price. At time of writing, the pair is trading a limited range between 1.3860/40 in Asia, last at 1.3850. To the downside, support levels lie at 1.3825, 1.3790 and 1.3750. To the upside, resistance levels lie at 1.3900, 1.3945 and 1.3980.

 

source : fxstreet

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USD/JPY, close above 77.86 buys Japan some time - IFR

 

Looking at what levels authorities in Japan may be trying to push Dollar-Yen to in the short-term, John Noonan, Head of IFR Markets was interviewd by Reuters Insider. He sees the 77.86 as a major level for the Dollar-Yen now: “Not only is it where the 100-day moving average comes in but it's also last month's high. A close above that level, a monthly close above that level from an all-time low, that's a key outside month reversal higher, very rare event that we see technically and a very bullish one as well.”

 

Looking at how much sticking power these measures may have given the macro environment, John comments: “Normally, when they come in by themselves and it's not a coordinated intervention, we only see it last for a few days. The macro environment may not be to their liking and may encourage more Yen buying particularly if we start seeing the stress in Europe continue. And the Federal Reserve signals that they're going to bring in QE3. That would put the pressure right back on the Dollar-Yen again. However, again technically, if we close above 77.86, they may have bought some time.”

 

source : fxstreet

[fallenDC]

GBP/USD favors consolidation while above 1.6000 – V.Bednarik

 

After a week dominated by events in Europe, there is a raft of economic data releases this week with today’s first estimate of UK GDP for Q3 the next pivotal event for Sterling.

 

The Sterling made impressive gains against the European single currency as EUR/GBP lost 150 pips on Monday. Versus its American counterpart, the Sterling closed lower after dipping into dynamic support in the 1.5960 price zone and recovering to close the U.S. session at 1.6085, 40 pips below its starting price.

 

Technically speaking, “Holding above 1.604 strong static support zone, the hourly chart shows price above a flat 20 SMA while indicators approach their midlines from overbought readings,” explains Valeria Bednarik, Chief Analyst at FXstreet.com. “4 hours chart however, shows a slightly bullish tone that favors at least a consolidative stage, as long as the pair trades above 1.6000.”

 

At time of writing, GBP/USD is under pressure in Asia, last at 1.6060 from an earlier high of 1.6090. If the pair continues its descent in the hours ahead, support levels lie at 1.6040 and 1.6000. To the upside, resistance levels lie at 1.6110, 1.6150 and 1.6190.

 

source : fxstreet