Comments and forex-analytics from FBS Brokerage Company

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FX majors from top forecasters

 

Here are the forecasts for EUR/USD, GBP/USD, USD/JPY, USD/CHF and EUR/JPY from top forecasters. Data were submitted on August 24.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/bezymyannyy.png

 

Source: FX Week

 

 

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EUR/USD: range trading is expected this week

 

EUR/USD is taking a pause after reaching last week the 7-week high at $1.2590.

 

On the one hand, the single currency may find support ahead of Ben Bernanke’s speech in Jackson Hole on Friday, August 31. On the other hand, many analysts think it would be quite difficult for euro to overcome the recent maximum in the near term.

 

Credit Agricole: “There's a lot of event risk, and I think this event risk will keep the euro capped. The currency will struggle to get above $1.26 this week.”

 

Mizuho Securities: “We can see fundamentals deteriorating in the euro region. The euro is in a long-term downtrend.”

 

Saxo Capital Markets: “We're having the same old issues coming out on the headlines about Greece. That's a capping point for the euro. This week EUR/USD is going to stay in range roughly between $1.2650 and $1.2400, not really breaking out of the highs that we saw last week.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/h4_eurusd_11-52.gif

 

Chart. H4 EUR/USD

 

 

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USD/JPY: technical update

 

USD/JPY managed to rise from last week minimums around 78.30 and tested 78.80 (38.7% of the recent 130-pip decline, daily Kijun-sen). For now, this resistance remains unbroken. Today the market players seem uncertain: the greenback swayed up and down and is now once again close to the opening level around 78.70.

 

The next resistance for the pair lies at 79.00 (psychological level, 50-day MA), 79.25 (200-day MA), 79.45 (100-day MA) and 79.65 (August 20 maximum). Support for US dollar lies at 78.60, 48.45 (today’s minimum, June 4 maximum), 78.30, 78.15, 78.00 and 77.90 (August 1 minimum).

 

If the prices manage to break above 78.80/90, the bulls will likely test 79.25. Otherwise, USD/JPY will keep moving sideways above 78.00 as it did in the second half of July and in the first half of August.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/daily_usdjpy_12-58.gif

 

Chart. Daily USD/JPY

 

 

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AUD/CAD: selling opportunity

 

Analysts at Barclays Capital claim that although Canadian data have been rather weak so far due to external factors, domestic factors remain solid, so one may expect Canada’s modest economic growth for in the coming months. Among the positive factors the specialists mention pick-up in the US economy and the rebound in oil prices. “While disappointing retail sales and trade balance data suggest downside risks to our forecast, job growth and manufacturing shipments remained solid,” says Barclays.

 

Barclays proposes buying loonie versus its Australian counterpart as Canada’s economic prospects seem brighter than those of Australia. Aussie will stay under the negative impact of soft Chinese HSBC PMI data.

 

From the technical point of view we see that a close below the 100-day MA at 1.0290 and 1.0270 (50% retracement of the advance from May low to August highs) would make AUD/CAD vulnerable for a slide to 1.0200 and then to 1.0100.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/daily_audcad_13-41.gif

 

Chart. Daily AUD/CAD

 

 

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Macroeconomic indicators

 

The table below provides recent data on the main macroeconomic indicators and is an extremely valuable resource for any trader.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/bezymyannyy2.png

 

 

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AUD/USD: technical update

 

AUD/USD is testing the levels below $1.0400 for the second trading day in a row. The uptrend channel within which Aussie traded since mid-June has been broken to the downside.

 

If the pair declines below $1.0370 (23.6% Fibo retracement of the pair’s advance from June minimum to August maximum; today’s low), it may slide to $.0220 (38.3% retracement). Support levels for Aussie lie at $1.0340 (50-day MA), $1.0300 (200-day MA).

 

Also watch if the pair closes below $1.0440 (former trend line support, July 19 maximum, August 21 minimum) or not. This level will play the role of the near-term resistance. In addition, there are more support/resistance levels to watch taking into account new declining channel since August 9. There’s more of the resistance at $1.0475 (April 27 maximum), $1.0500, $1.0535 and $1.0600.

 

Westpac: Aussie’s affected by the declined iron ore prices and lower mining investment plans. However, the Fed QE3 hopes should limit losses to $1.0350/75.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/daily_audusd_16-02.gif

 

Chart. Daily AUD/USD

 

 

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Jackson Hole may disappoint

 

Dovish FOMC meeting minutes released last week did move the markets. However, many analysts doubt that the Fed’s Chairman will use his Jackson Hole speech to suggest QE3.

 

JPMorgan Chase: “We don’t think Bernanke wants to make Jackson Hole into a policy-signaling event. That may be reserved for the FOMC meetings on September 12-13”.

 

High Frequency Economics: “The Fed Chairman’s Jackson Hole address has traditionally been used more for laying out broad themes than for sending specific policy signals. Nor do we expect Mr. Bernanke to send a definitive signal this year.”

 

Barclays: “It would be odd” for Bernanke to “take a strong position in advance of receiving the August jobs numbers a week later. We’re not looking for QE3 in September or beyond because we do expect stronger data in the second half of the year.”

 

BNZ: “Some of the market impact of Bernanke’s speech has been nullified by last week’s dovish Fed minutes. The speech is expected to be used to map out the policy (easing) options facing the Fed. If this has the effect of hardening Fed easing expectations then the USD should continue to suffer.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/27_08_12/jackson-4.jpg

 

Jackson Hole, Wyoming

 

 

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August 28: forex news

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/utro_eng.jpg

 

Demand for risk has decreased due to continued talk of China’s slowing economy, commodity price declines and low expectations coming out of Jackson Hole. Japan’s government downgraded its assessment of the national economy for the first time in 10 months. Moreover, investors expect sour data from Germany today.

 

Australian new home sales fell by 5.6 % in July reminding that housing construction remains one of the weakest sectors of the economy. AUD/USD fell to $1.0350. NZD weakened versus the majority of its counterparts as the world’s largest dairy exporter Fonterra cut its forecast payout to farmer suppliers. USD/JPY slid to 78.50, closer to the lower border of its range. USD/CAD is consolidating right above 0.9900.

 

EUR/USD is trading below $1.2500. In Europe watch for the release of German Gfk consumer sentiment at 06:00 GMT, Spanish final Q2 GDP at 07:00 GMT and EU M3 money supply at 08:00 GMT. Herman Van Rompuy, the president of the European Council, meets Spanish PM Rajoy at 11:00 GMT. Spain and Italy will try to sell short-term debt.

 

Later today in the US watch for S&P/CS Composite-20 HPI at 13;00 GMT and CB Consumer Confidence at 14:00 GMT.

 

 

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Key options expiring today

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.2305, $1.2500 (large), $1.2505, $1.2550 (large);

 

GBP/USD: $1.5750, $1.5775, $1.5780, $1.5800;

 

USD/JPY: 79.00;

 

AUD/USD: 1$.0375, $1.0400, $1.0450;

 

EUR/JPY: 96.50, 97.35, 99.25 (large);

 

AUD/JPY: 83.65.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/01_08_12/flatline.jpg

 

 

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[fallenDC]

AUD/USD is under pressure

 

AUD/USD hit 5-week minimum today at $1.0345 due to the worries about China’s economic slowdown. Shanghai Composite fell to 3 1/2-year minimums on Monday.

 

Bank of Tokyo-Mitsubishi UFJ: “Given that the Aussie's fair value based on purchasing power parity is around $0.70, a level above $1.05 would be difficult to maintain. On the other hand, the Australian central bank is not as inclined to ease as the Fed and the ECB. There’s buying in the Aussie by central banks which want to increase the Aussie in their foreign reserves. So we do not expect it to fall below parity against the dollar.”

 

Skandinaviska Enskilda Banken AB: “If AUD/USD goes below $1.0342, it may decline to $1.0170. Since Friday’s low point, a three wave upside correction has been completed and the market made a second attempt to extend the break lower.”

 

Commerzbank: “There will be direct bearish bias while the pair trades below $1.0545 (last week’s high).”

 

On the daily chart we see AUD/USD struggling between the support of the 50-day MA ($1.0345) and the 23.6% Fibo retracement of the advance from June minimums to August highs ($1.0370).

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/daily_audusd_10-59.gif

 

Chart. Daily AUD/USD

 

 

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IG: USD/JPY is rangebound this week

 

Analysts at IG Markets Securities claim that USD/JPY has traded this month above a support level of about 78.15 yen and below 79.14 yen, the upper end of its daily Ichimoku Cloud.

 

“Before the Fed event, the dollar doesn’t have enough power to break the range. You may have to wait until September to see moves to the upside or downside.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/daily_usdjpy_11-30.gif

 

Chart. Daily USD/JPY

 

 

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Scotiabank: brace for September turmoil

 

Analysts at Scotiabank claim that relatively quite August will soon change into rather violent September. “September is littered with event risk,” underline the specialists saying that key events will likely sway both euro and US dollar at different times.

 

The Fed’s Chairman will speak in Jackson Hole on Friday August 31; the ECB President Mario Draghi will give a speech on September 1, while China will release manufacturing PMI. Then there will be the ECB’s meeting on September 6, Germany’s top court decision on the constitutionality of providing aid to troubled euro zone countries and the September 13 Fed’s gathering when then central bank could announce QE3. Moreover, it’s not clear when or whether Spain will request sovereign bailout. In addition, though the while “commentaries following the meetings between Chancellor Merkel, President Hollande and Prime Minister Samaras appear to support the view that Greece will receive its next tranche of 31 billion euro, a negative report would push Grexit back into the headlines.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/6a00d83451d7d869e2014e606af3cf970c-800wi.jpg

 

Image from chatswood.co.nz

 

 

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Commerzbank: comments on EUR/USD

 

Technical analysts at Commerzbank point out that EUR/USD is trading between $1.2597/1.2600 (78.6% of the move from June and 38.2% of the move this year) and $1.2478 (61.8% Fibonacci retracement).

 

EUR/USD is now moving up to the upper border of this range. There’s the risk of a double top around $1.2600 as resistance may prove strong enough to stop the second attempt of the bulls to break higher.

 

The specialists underline that the medium term downtrend will resume only after the pair breaches support of the short-term uptrend. As for further resistance, it lies at $1.2624/26 and $1.2672.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/h4_eurusd_13-17.gif

 

Chart. H4 EUR/USD

 

 

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MIG Bank: trading GBP/USD

 

GBP/USD dipped to $1.5753 that is just above the 100-day MA earlier today before returning to the levels right under $1.5800. Sterling reached 3-month maximum at $1.5912 on August 23.

 

Analysts at MIG Bank underline that British pound has breached its 2-month consolidation range to the upside. In their view, the pair’s recent uptrend will hold as long as it’s trading above $1.5708. The specialists recommend trying longs at $1.5810 targeting $1.5912/1.6190/1.6302.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/dailu_gbpusd_14-41.gif

 

Chart. Daily GBP/USD

 

 

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RBC: bearish on NZD/CAD

 

Analysts at RBC Capital Markets recommend selling NZD/CAD. The pair is declining for the third day after it recoiled down from the 50-day MA. On its way down New Zealand’s dollar has already breached 200-day MA at 0.8050 and 100-day MA at 0.8006.

 

RBC explains their recommendation by the fact that New Zealand’s authorities are concerned about NZD strength. Continuing strength of the NZD is eroding any gains from the improvement in commodity prices. NZ commodity prices (in NZD terms) are at the lowest level since November 2009. Today NZ dairy giant Fonterra reduced its forecast payout for the 2012/13 season. This cut to farmers' incomes is worth ~0.2-0.3% of GDP and poses downside risk to RBNZ's GDP forecasts (from its June MPS). The Bank of Canada, on the other hand, is relatively calmer about CAD.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/daily_nzdcad_15-39.gif

 

Chart. Daily NZD/CAD

 

 

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EUR/GBP: technical comments

 

EUR/GBP breached descending trend line resistance from March 28 around 0.7930. It seems that there are some buy limits above 0.7960/65 (August 6, 7 highs). Resistance for the pair lies at 0.8000 (100-day MA, psychological level).

 

Analysts at Commerzbank say that the medium term outlook for EUR/GBP will remain bearish as long as it stays below 0.7963. At the same time, the pair will resume its downtrend only if it slips below Tuesday’s minimum at 0.7856.

 

Analysts at RBS claim that increased support for euro zone sovereign bonds through some form of ECB purchases has provided some support for the EUR over the last week. However, it looks unlikely that the market will see any substantive developments ahead of the September ECB meeting. While, short term fair value for EUR/GBP is 0.8109, there is risk of some downside in the near term if Draghi disappoints on September 6.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/28_08_12/daily_eurgbp_16-54.gif

 

Chart. Daily EUR/GBP

 

 

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August 29: forex news

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/29_08_12/utro_eng.jpg

 

EUR/USD returned above $1.2500 yesterday and pushed the pair higher. Today its advance has stalled below $1.2575. Italy will offer 6-month bills today and as much as 7.5 billion euro ($9.4 billion) in bonds tomorrow. Italian Prime Minister Mario Monti meets with German Chancellor Angela Merkel in Berlin today.

 

The ECB President Mario Draghi cancelled his attendance at this week’s Jackson Hole symposium citing his business with work. The markets interpreted this news as a sign that the ECB is preparing something big concerning the awaited bond buying plan. The ECB meets next Thursday, on September 6. Also note that the ECB reported a massive outflow of Spanish bank deposits, while Catalonia asked for 5 billion euro of aid from the Spanish central government. However, these reports didn’t disturb the markets.

 

In US watch for the release of US Q2 GDP q/q (cons.: +1.7%; prev.: +1.5%) at 12:30 GMT, pending home sales m/m (cons.: +1.1%; prev.: -1.4%) at 14:00 GMT and Beige Book survey of economic conditions at 18:00 GMT. Mixed economic data released yesterday failed to clear up the picture of the potential QE3 timing, so all eyes will be on Ben Bernanke on Friday, though many analysts warn that the Chairman won’t make the things clearer.

 

AUD was hurt as construction declined in Q2. NZD is still suffering from yesterday’s Fonterra report of reduced payouts to dairy farmers. USD/JPY was range bound inside 78.63/78.50. GBP/USD is flat above $1.5810.

 

 

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Key options expiring today

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.2450, $1.2490, $1.2500, $1.2505, $1.2525, $1.2625;

 

GBP/USD: $1.5650, $1.5730, $1.5750;

 

USD/JPY: 78.15, 79.10, 79.15;

 

AUD/USD: $1.0320, $1.0400, $1.0425, $1.0460;

 

EUR/GBP 0.7900, 0.7975;

 

AUD/JPY: 82.50.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/01_08_12/flatline.jpg

 

 

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EUR/USD is supported by the ECB expectations

 

EUR/USD has once again ascended close to $1.2600, but its advance was tempered by $1.2575. After it was announced that the ECB’s Mario Draghi won’t speak at Jackson Hole, the market’s mood brightened on the expectations that the details of the bond buying will be finally released soon.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/29_08_12/mario-draghi--007.jpg

 

Photo: Reuters

 

 

Nomura: “The only short-term option is to have the ECB buy the government debt of peripheral countries as longer-term answers to dysfunctional government bond market such as fiscal stimulus and a rule that addresses the issue of capital flight will probably take years to implement”.

 

Sumitomo Mitsui: “We can apparently avert a situation where the debt crisis will trigger a collapse of the euro. Markets are expecting Spain to ask for a bailout, but it will spur the ECB to undertake a measure like the Securities Markets Program.”

 

TD Securities: “There is a little more room for EUR gains from here, but significant resistance hovers just above, in the 1.2600 area. With a potential balance sheet expansion by the ECB as well as a rate cut, EUR should fundamentally be lower, and we think that should be the case at some point soon.”

 

Westpac: “Investors will buy EURUSD on any 50-pip pull back. But be careful of excessive investor jitters: downside support levels to watch in EURUSD are $1.2450 and $1.2370-80, so if the common currency moves below those levels, stand aside”.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/29_08_12/h4_eurusd_11-32.gif

 

Chart. H4 EUR/USD

 

 

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EUR/AUD: technical picture

 

EUR/AUD added about 500 pips in August rising from the record minimums around 1.1600 where in formed a double bottom.

 

Westpac: The pair EUR/AUD will climb at least to 1.2330/50 in the coming weeks. Euro will likely be supported by “unwinding of EUR shorts as the ECB plans intervention in EZ bond markets”, while Aussie – weakened by “ongoing softness in China's data.” “A test of 1.25 would probably require the Fed to not deliver QE3.”

 

The pair has approached resistance at $1.2145 (38.2% Fibo retracement from May maximums to August lows; February minimums). Further resistance lies at 1.2310/50 (50% retracement, 100-day MA) and 1.2480 (61.8% retracement, 200-day MA). Support lies at 1.2070, 1.2000, 1.1950 (50-day MA, 23.6% retracement). Corrections up to the latter are possible as EUR/AUD seems overbought after its advance and we see divergence at H4 MACD.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/29_08_12/daily_euraud_12-21.gif

 

Chart. Daily EUR/AUD

 

 

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[fallenDC]

CAD is supported by oil prices

 

USD/CAD has tried to recover from the minimal levels since May around 0.9840, but failed around 0.9950 and once again made a spike down to 0.9840.

 

Canadian dollar strengthened due to advance in crude oil, the nation’s largest export. Crude inventories were forecast to drop as Hurricane Isaac approached the Louisiana coast and a fire continued to burn at Venezuela’s biggest refinery. Loonie was also up against other commodity currencies as Canada is expected to benefit from US economic growth, while Australia’s and New Zealand’s economies will suffer from the Chinese economic slowdown.

 

National Bank of Canada: “Crude oil is still posting plus-$96. Any supply disruptions from Isaac could put a bid to the Canadian dollar. There are reasons to want to be long the Canadian dollar from a reserve diversification perspective. Month-end flows will be reasonable and will be biased for US dollar selling given the positive performance by most equity indices.”

 

Scotiabank: “Canadian dollar has a strong correlation with equities, confirming our view that the most important risk for the currency is the FOMC decision on QE3. That leaves the Canadian dollar particularly vulnerable to Jackson Hole.”

 

Also watch for Canadian June GDP release on Friday. Economists predict that Canadian economy expanded for a fourth straight quarter.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/29_08_12/daily_usdcad_14-35.gif

 

Chart. Daily USD/CAD

 

 

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[fallenDC]

August 30: forex news

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/30_08_12/utro_eng.jpg

 

The markets were going through consolidation phase in Asia. Equities remained weak as Japanese retail sales fell by 0.8% in July and investors are now in doubts that the Fed will announce further stimulus soon.

 

AUD keeps moving down affected by the declining iron ore price as it accounts for 20% of Aussie exports. In addition, a report showed that home-building approvals dropped by 17.3% in July from a month earlier, the largest decrease since November 2002. AUD/USD approached 200-day MA at $1.0308. NZD/USD was supported by 0.8000 and went higher.

 

USD/JPY is trapped in the 78.80/45 area. GBP/USD is moving sideways in the $1.5840/10 zone. USD/CHF is consolidating above 0.9550. EUR/USD was once again stopped by resistance around $1.2575, though the pair remains well supported.

 

In Europe all attention will be focused on Italian 10-year bond auction. Also watch for German unemployment change at 07:55 GMT. The President of the European Commission Jose Manuel Barroso speaks at 09:00 GMT. The ECB President Mario Draghi said in German weekly Die Zeit yesterday that it’s in Germany’s interest to consent to extraordinary steps to preserve the single currency. In US watch for the unemployment claims and consumer spending (cons.: +0.4%; prev.: 0.0%). The Jackson Hole symposium finally starts today.

 

 

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[fallenDC]

Key options expiring today

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.2400, $1.2410, $1.2415, $1.2500, $1.2520, $1.2550;

 

USD/JPY: 78.50, 78.70, 80.00;

 

USD/CHF: 0.9600;

 

AUD/USD: $1.0250, $1.0350, $1.0400;

 

NZD/USD: 0.8100.

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/01_08_12/flatline.jpg

 

 

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[fallenDC]

Nomura: Beige Book and Jackson Hole

 

The Fed released the Beige Book yesterday – the assessment of current economic conditions. According to the central bank, US economy continued to expand “gradually” in July and early August as improvement in housing and retail sales helped outweigh weakness in manufacturing.

 

Nomura: “The Beige Book suggests the anemic pace of growth in the economy continued into the third quarter, an assessment that does not seem to qualify as the sort of ‘substantial and sustainable strengthening’ needed to dissuade many FOMC members that ‘additional monetary accommodation’ would be needed. It does not alter expectation for the Chairman’s remarks at Friday’s Jackson Hole Summit, nor does it alter our judgment that the FOMC will eventually embark on QE3 in response to persistently high unemployment and greater downside risks in H2 2012. We expect the chairman's remarks to reinforce the key themes from the minutes of the last FOMC meeting, which include absent a significant improvement in the outlook further easing will be warranted, and large-scale asset purchases remain the most effective tool available to the FOMC.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/30_08_12/beigebook.jpg

 

 

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[fallenDC]

RBS: EUR may slide vs. AUD, CAD

 

The markets are stirred ahead of Bernanke’s speech tomorrow and the ECB meeting next Thursday. Analysts at RBS, however, say that there’s “no reason to take the gambles and run large risk over the events.” In their view, it’s necessary to “wait and see, have the events out of the way.”

 

In the medium term, RBS still favors selling euro versus commodity currencies such as Australian and Canadian dollars. The specialists are worried about the “ever ballooning” ECB balance sheet, and he thinks more liquidity will help the commodity currencies.

 

RBS thinks that EUR/AUD could fall to the 1.1200 range in the next couple of months adding that euro may experience “similar moves against the Canadian dollar.”

 

http://www.fbs.com/sites/default/files/image/analysis/August2012/30_08_12/weekly_euraud_11-43.gif

 

Chart. Weekly EUR/AUD

 

 

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