Analytics from FBS Holdings Inc.

Royal Bank of Scotland: sell euro at $1.30

Analysts at Royal Bank of Scotland Group Plc advise investors to sell the single currency if it rises to $1.30 area.

According to the specialists, there’s important resistance around $1.3275 that already acted as a support in March and April and the breakdown of which led the pair to several year minimums. Royal Bank of Scotland claims that it’s necessary to regard euro’s rebound and stability in euro zone’s debt markets without forgetting common currency’s slump in the previous half of the year. Economic tightening will pressure the region’s economic growth.

Euro’s slightly losing to the greenback. The single currency’s trading at 1.2700. Yesterday there was a 2-month minimum at $1.2739.

UBS: end of recommendation to sell pounds versus dollars

Analysts at UBS AG stopped advising investors to sell pounds versus the greenback. Such decision may be explained by the growth of British currency. Sterling got above the bank’s upper limit that was established to prevent losses.

The pair GBP/USD is now trading at the level of $1.5220 and isn’t yet able to overcome key resistance at $1.5250 – 61.8% Fibo retracement of decline from November to May.

MF Global: loonie will consolidate in narrow range

Canadian dollar went down from 3-week maximum at C$1.0277 versus the greenback. Crude oil that is Canada’s biggest export lost today 0.7%.

Strategists at MF Global Holdings Ltd. believe that loonie will consolidate before Bank of Canada’s meeting on July 20 on which the country’s central bank will determine interest rates. The specialists expect that after the recent advance Canadian currency will trade in the narrow range in the short-term.

Last week’s loonie’s 2.8% growth may be explained by the speculation that higher borrowing costs weren’t fully included in the price. On June 1 the rate was raised to 0.5% and Bank of Canada Governor Mark Carney claimed that the future dynamics of the rate will depend on Canada’s economic growth pace.

BNP Paribas: China's economic growth may slow down

Analysts at BNP Paribas claim that during the next half of the year the markets will be concerned that growing inflation pace may cause “hard landing” of Chinese economy.

According to the specialists’ forecast, the world’s fastest growing economy’s growth pace will fall to 9.8% in 2010 and then to 8.4% in 2011. That will happen as inflation rate’s expected to climb to the 20-months maximum, so China’s government won’t able to conduct monetary easing. Tightening measures will affect consumers’ demand and country’s economic growth.

As a result, there will be a lot of uncertainty about the situation in China. Economists surveyed by Bloomberg News believe that tomorrow data will show that Chinese second quarter GDP gained 10.5% after 11.9% increase in the first 3 months of the year.
 
Goldman Sachs: dollar will drop versus euro by January

Analysts at Goldman Sachs Group Inc. expect the greenback to drop versus the single currency by January. It’s already the second time in two months that Goldman Sachs changes its forecast. In June the analysts announced that they projected US dollar to climb to 7-year maximum against euro.

According to the specialists, dollar will weaken as the pace of US economic growth will decline, while European macroeconomic data seems rather strong and euro zone’s political and fiscal problems are less serious than it was expected. Goldman establishes poor growth prospects for United States up to the second half of 2011.
In addition, the analysts lifted up yen prospects. Japanese currency’s likely to rise against American one to the maximal level since 1995 as the possibility that the Federal Reserve will increase interest rates and that Japanese authorities would intervene at the currency market reduced.

Goldman Sachs also notes that euro may lower to 1.27 francs in 3 months as investors will increase demand for Swiss currency as for the safer one.

Mizuho: euro's rebound will fail

The single currency was trading in 1.2720 area on short coverings during the past week. Technical analysts at Mizuho Corporate Bank believe that the situation is likely to change.

According to the specialists, EUR/USD has approached the top of the daily Ichimoku Cloud. The majority of economists claim that euro’s short-covering rebound is nothing but interim and project the decline of the European currency, claims Mizuho.

The current outlook for the pair seems to be bullish. Euro turns out to be slightly overbought and the 9-day MA is successful in lifting its rate up. Mizuho analysts note that if the pair closes the week above 1.2800, there will be another round of short-covering.

Bank of Japan kept benchmark rate at 0.1%

The Bank of Japan left its benchmark interest rate at the current level of 0.1% claiming that low rates are making the country’s economy stronger.

Japanese monetary authorities claimed that national economy is developing according to BOJ April outlook, domestic demand’s recovering and the rebound of corporate sector extends to the households. The BOJ specialists pointed that it’s necessary to ensure markets trust Japan’s fiscal sustainability and keep watching the currency market as advance of yen and decline in stock markets may affect the economy.

According to the BOJ, the Europe’s financial market is still far from stability. The central bank hopes that stress tests of euro zone banks will help to improve the situation.

In addition, policy makers lifted up their growth forecast for the year ending March 2011 from 1.8% according to April estimate to 2.6% and reduced next year’s projection from 2% to 1.9%. Economists at HSBC Securities Japan Ltd. in Tokyo note that such upward revision can’t be regarded as sign of BOJ’s confidence about Japan’s economic recovery as there are too many risks from Europe and the United States.

Macquarie Securities: 11 European banks won’t pass stress tests

Analysts at Macquarie Securities expect that 11 European banks won’t pass the EU's stress tests as they need to have a higher amount of capital in case euro zone bonds will lose their value. Among such banks are all Greek banks, Bankinter, Postbank, Banco Popolare, BCP, Commerzbank and Sabadel.

These banks will firstly have some time to recapitalize themselves. If raising funds at the market isn’t successful the troubled banks will have to apply for governments’ help and then to EU support.

According to Macquarie Securities specialists, even though the number of banks that will potentially fail the tests is rather small, but there’s no doubt that this fact will affect the entire banking sector of the region.

Macquarie Securities is relatively sure in such financial institutions as BNP Paribas, UBS, SEB, DnB NOR, Nordea, and Erste Bank.

Eisuke Sakakibara: euro will fall to 100 yen be the end of 2010

Eisuke Sakakibara, the former Japan’s top currency official that was right to predict yen’s advance to 90 yen per US dollar in November 2008, expects that the single currency will decrease to 100 yen be the end of 2010. The economist claims that European Union and its euro are surviving disintegration.

European currency has already lost 15% versus Japanese yen since the beginning of this year and hit the 8-year minimum at 107.32 yen on June 29. Euro was weakening under the negative impact of euro zone’s debt crisis that made investors raise demand for yen as a safer asset.

In addition, Sakakibara shares the opinion that US economic growth will slow down.
 
Ueda Harlow: dollar may drop to 85 yen

Technical analysts at Ueda Harlow Ltd. in Tokyo expect the greenback to fall to the 2010 minimum at 85 yen. Such forecast is based on the bearish signals from weekly and daily Ichimoku charts.

The specialists note that dollar’s short-term conversion lies below the longer-term baseline. On the weekly Ichimoku chart dollar’s conversion line is at 90.31 yen and the baseline is 90.98. On the daily chart its conversion line is at 88.09 yen, below the baseline of 89.55. In addition, American currency is found below the bottom of the Cloud. Both of these facts suggest that the greenback will decline.

According to Ueda Harlow, US dollar will firstly lower to 86.97 yen that’s the level from which the currency began its July growth. Failure there would mean that the decline will resume and that USD will drop to 85 yen. If US currency’s able to keep trading above resistance around this year’s minimum, the pair USD/JPY may form double-bottom pattern and rebound into the lower part of the Ichimoku Cloud.

Faros Trading: euro and yen will rise due to China's policy

Strategists at Faros Trading LLC believe that euro and yen will advance as China’s reducing the amounts of its investments in US Treasuries in favor deep European, Japanese and British bond markets that correspond to more liquid currencies.

The specialists expect the single currency to add 6% during 2 months that follow China’s June 19 decision to stop yuan’s peg to the greenback and rise to the maximum since April. Chinese Premier Wen Jiabao referred today to Europe as a major market for China to place its foreign-exchange reserves.

Nowadays China has the largest foreign-exchange reserves equal to $2.45 trillion at the end of June and the biggest overseas holdings of US Treasuries. It’s necessary to mention, that the United States account for 20% of China trade, while the EU’s and Japan’s shares are respectively 20% and 16%.

As a result, Faros Trading claims that there is the need of changing the ratio of country’s reserves allocation taking into account that China is now able to conduct more flexible monetary policy after its national currency is no more fixed to US dollar.

Mizuho: USD/JPY dynamics may be negative

The pair USD/JPY is trading volatile in 87.00 area and dollar’s struggling to erase the losses it made during this week.

Technical analysts at Mizuho corporate Bank believe that if the pair gets down to test again pivotal support at 87.00 and close the week below this level, would mean very negative prospects for the greenback. According to Mizuho, USD/JPY is currently trading at rather low regression level since 1980. However, when it was at these levels last time in 1995 it was well over two standard deviations from that equivalent level.

As a result, Mizuho analysts claim that all evidence shows the necessity of short positions and that investors have to be cautious as there’s the risk of currency intervention.

EUR/USD: new 2-month maximum at 1.2978

The single currency’s reached new 2-month maximum at 1.2978 after advancing by 1.6% on Thursday. According to technical analysts, the outlook for euro improved by Thursday's close above the Ichimoku cloud at $1.2785 for the first time since December.

The market’s attention moved from euro zone’s problems to the discouraging US data released this week and concerns about the growth pace of American economy strengthened again.

European currency gained more than 8% rebounding from 4-year minimum at $1.1875 hit on June 7 helped by successful bond auctions in Greece, Portugal and Spain.

If the pair EUR/USD gets above resistance at $1.3000, it would activate resistance at $1.3125 level representing 38.2% retracement of the euro's slump from November to June.

Never the less, the analysts believe that further decline of US dollar against other major currencies may be limited. In the longer term US currency can start gaining as the demand for it as a safer asset rises. Even though the Federal Reserve may be postponing interest rates lift up for a long period of time, it’s very unlikely that the ECB will raise its key rate ahead.

Francois Fillon: crisis was caused not by euro's weakness

French Prime Minister Francois Fillon claimed today that the main factor provoking euro zone’s debt crisis that made the economists discuss the future of the currency union was the poor management of public finances, but not the fundamental weakness in the single currency system.

It was sovereign debt that resulted in the current problems, noted Fillon. According to him, fiscal situation in Europe isn’t worse than in the United States and Japan that also have high levels of deficits and debts.

Goldman Sachs: euro will rise to $1.35 in 6 months

Analysts at Goldman Sachs Group Inc. expect the single currency to drop to $1.22 in 3 months and then advance to $1.35 in 6 months and to $1.38 in a year. The previous forecast of the specialists made in June was that euro will slump to 7-year minimum at $1.15 over 3 and 6 months.

In addition, the bank believes that European currency will strengthen to 1.30 francs in 6 months and to 1.33 francs in a year.

As for the pair USD/JPY, the greenback will break down 2010 minimum falling to 83 yen in 6 months compared with the previous estimate at 94 yen. In 3 months US dollar will trade at 85 yen and in 12 months – at 90 yen, while before it was expected to be at 92 and 98 respectively.
 
Deutsche Bank: dollar’s weakened versus euro during a month

The analysts at Deutsche Bank AG see the reason of dollar’s weakening versus the single currency during the last month in the combination of negative US data and the positive European one. According to the specialists, American economic results turned out to be much below the expectations in the last several weeks.

The index provided by Citigroup Inc. shows that US economic data began deteriorating since June 10. The indicator for the United States dropped today to minus 33.5, while the euro zone’s index gaining since April 16 rose today to positive 44.3 today.

High Frequency: euro will fall on the stress tests results

Economists at High Frequency Economics expect the single currency to fall versus all of its counterparts after the results of 91 banks’ stress tests will be released this week. These tests are necessary to check if euro zone’s banks are able to survive possible losses on sovereign-bond holdings.

According to the specialists, on the one hand, if any banks don’t pass stress tests, investors’ reaction will be very strong. On the other hand, if no banks fail, the market will anyway be weak as such information won’t be regarded as credible.

High Frequency strategists project that by the end of the week there will be a sentiment of inevitable European banking system’s crisis. The same turmoil will be observed on the bond markets with safe yield curves flattening and riskier ones getting steeper.

UBS: euro recovered from slump after Ireland’s downgrade

The single currency was trading today under its 2-month maximums versus the greenback affected by Ireland’s downgrade by Moody's Investors Service and the breakdown of negotiations between Hungary and the International Monetary Fund.

Later euro managed to rebound from 1.2943 to 1.2966 area. It happened as investors are looking forward to the results bank stress tests that will be released on Friday.

Strategists at BNP Paribas note euro climbed as investors closed their previous negative bets warning that this is only a temporary effect and that the common currency will remain under pressure in the medium term.

Moody's rating agency cut Ireland's sovereign bond rating from Aa1 to Aa2. In addition, as the IMF and the EU suspended on Saturday a review of Hungary's funding program, Hungary will not have access to remaining funds in a $25.1 billion loan package.

Strategists at UBS noted that the negative impact of Ireland’s rating reduction was limited as stable outlook for the country was preserved. The specialists think that euro will stay weak and the stress tests will provide the last possibility to sell EUR/USD.

If the European currency declines, the near-term support will be found around $1.2850 level representing 50% retracement of the euro's slump from maximum close to $1.3820 reached on March 17 to 4-year minimum at $1.1876 hit at the beginning of June.
 
Royal Bank of Scotland: euro will stop growing

Analysts at Royal Bank of Scotland Group Plc in Sydney claim that the single currency is close to failure. Such assumption is made as investors’ confidence seems to be too weak.

The specialists point out that the market’s confidence depends on the European economic growth. If the growth data worsen, it will strongly affect euro rate. According to the strategists, the situation on Europe’s debt market’s unlikely to improve. Stress tests may help to lift up the confidence in the short-term, but Royal Bank of Scotland specialists ate sure that it and the European currency are close to their maximal levels.

Euro gained 0.6% rising to $1.3014 at 7:16 a.m. in London and added 1% strengthening to 113.28 yen.

Commerzbank: euro will advance at least to 1.3120/50

European currency managed to climb last week to 1.3000 resistance zone. Technical analysts at Commerzbank claim that euro was staying under pressure during the last 2 days forming "inverse Head & Shoulders" pattern.

As a result, the specialists name the trend for the pair EUR/USD is neutral or positive. Commerzbank expects euro to advance at least to 1.3120/50.

If the common currency goes down, support will be situated at 1.2730/1.2610 levels.

UK budget shortfall rose to GBP20.90 billion

British currency dropped after UK public sector finance data turned out to be worse than expected. GBP/USD fell from session’s maximum at 1.5310 approaching 1.5200 support area.

Public sector's net debt rose to the maximal level in the last 17 years at 63.9% of GDP. Public sector's net cash requirement went up to GBP20.90 billion in June, while the analysts were looking forward to advance only to only GBP15.0 million. Public sector's net borrowing got equal to GBP14.5 billion exceeding expectations of GBP13.2 billion.

Analysts at Mizuho Corporate Bank Ltd. in London claimed that in such conditions the Bank of England will have to continue its loose monetary policy. UK Treasury called for the urgent measures in order to reduce budget shortfall.

BNP Paribas SA: dollar will fall to 84.95 yen

Analysts at BNP Paribas SA expect the greenback to drop to 8-month minimum versus Japanese yen as US returns lowered reducing foreign investors’ demand for US Treasuries.

Treasury 2-year yields were close to the record minimum. The past month’s American economic data release turned out to be very negative. According to US government’s data, in May Japan, regarded as a traditionally one of the main foreign investors in American securities, withdrew money out of the Treasury market at the fastest pace in 2 years decreasing its Treasury holdings by $8.8 billion to $786.7 billion.

The specialists predict that US dollar will depreciate to 84.95 yen getting close to the minimal level since November 2009.

Ewald Nowotny: markets’ reaction on stress tests will be positive

Ewald Nowotny, the member of ECB Governing Council, claimed today that he expects markets to react positively to stress test results that will be strict to eliminate any possible doubts. If the tests show that some banks don’t have the sufficient amount of capital, they are to get government support.

Nowotny also noted that there’s no direct connection between stress test results and option of extending ECB liquidity support. According to him, it’s reasonable to keep bond buying option in place, but not active at the moment.

In addition, the official said that he doesn’t think that there’s a risk of double dip recession in the euro zone.

Japan wants weaker yen, while banks are bullish

Although Japanese authorities want the national currency to be weak in order to stimulate exports, large banks such as Goldman Sachs Group Inc. and Standard Chartered Plc and other significant speculators bet on yen’s advance against euro and dollar. In January Naoto Kan who occupied that time the post of Japan’s finance minister set the optimal yen’s level versus the greenback at mid-90s level.

Stronger yen has a very negative impact on the country’s exports that were the main driving force that helped Japanese economy out of the recession lasted from November 2007 to March of this year. Economists in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co. expect that if yen keeps trading 10% above the average export hedging rate set by Japanese companies, annual corporate profits would fall by almost 5%, while real GDP will fall by 0.4 percentage point. The International Monetary Fund decreased its forecast for Japan’s 2011 economic growth on July 8 from 2% to 1.8%.

Analysts at Standard Chartered believe that yen will depreciate versus US dollar by the end of September not to 98 yen per dollar as in was thought before but only to 93.5 yen per dollar.

Strategists at Bank of America Merrill Lynch in Tokyo explain that the principal reason why yen will grow is the global risk aversion and lower US yields. Traders are taking into account the euro zone’s debt crisis and the fall in Chinese demand. The specialists also changed their yen forecast upwards from 97 yen per dollar by the end of 2010 to 90 yen.

According to Dow Jones Newswires, if yen remains in 85 yen per dollar zone, The Bank of Japan may loosen monetary policy. Economists at Japan Research Institute Ltd., a unit of Sumitomo Mitsui Financial Group Inc. note that Japanese currency may fall even below this level affected by the market’s concerns about the situation in Europe and as it’s unlikely that US interest rates will be raised.

Yen exceeded its 8-year maximum of 107.32 yen per euro on June 29 and strengthened to 86.27 yen per dollar on July 16.
 
RBS: Aussie will advance to 90 US cents

Analysts at Royal Bank of Scotland Group Plc expect Aussie to advance to 2-month maximum. Such forecast is based on the yield differential between Australia and the United States that makes investors’ demand for Australian currency higher.

Australia’s economy’s growing, so the country’s central bank is likely to raise its key interest rate from the current 4.5% level. Reserve Bank of Australia’s decision about lifting up the rate will depend on the results of European bank stress tests and local inflation figures that will be released next week.

On the other hand, the growth pace of American economy may turn out to get lower making the Federal Reserve keep rates at the record low between zero and 0.25%. As a result, Australia’s yield advantage over the US may even grow.

According to RBS currency strategists, Aussie seems to be rather cheap and that risk appetite improved due to the minimal level of US rates. The specialists believe that Australian dollar will rise to 90 US cents the level reached last time on May 13.

SNB lost 4 billion Swiss francs in the first half of 2010

The Swiss National Bank (SNB) is looking forward to reporting the loss of about 4 billion Swiss francs ($3.81 billion) in the first half of 2010. Such dramatic figures can be explained by the slump of the single currency caused by the Greek debt crisis that depreciated the country’s international reserves.

Switzerland’s central bank increased its foreign currency investments by 132 billion francs in first half of the year. The SNB had to sell national currency to hold its growth versus euro, reduce deflation risks and protect Swiss exports. The majority of the funds were placed in euro-denominated assets. As the franc strengthened by 8.6% versus the common European currency, the SNB may have survived exchange-rate losses of over 14 billion francs.

The ultimate data will be released by the SNB on August 13.

Commerzbank: EUR/USD may fall 1.2785/55

The single currency wasn’t able to overcome 1.3000 level and started European trade today at 1.2900 area. Technical analysts at Commerzbank believe that the pair’s decline in the near term has become more likely underlining that euro’s struggle lasts already 4 days.

According to the specialists, EUR/USD may fall to 1.2785/55 or 1.2590. If European currency manages to rise, the pair may strengthen at least to 1.3120/50 as the rate formed inverse head and shoulders pattern.

Merrill Lynch: dollar may drop below 85 yen

The analysts at Bank of America Merrill Lynch believe that the greenback may drop below 85 yen falling to the 14-year minimum if the Federal Reserve loosens its monetary policy while the Bank of Japan doesn’t.

According to the specialists, easing in US will lead to the decline in American yields and make investors selling dollars versus Japanese yen. Deputy Governor Hirohide Yamaguchi claimed today that the Bank of Japan won’t take policy action based on the yen’s rate.

Today Fed Chairman Ben Bernanke will give his semiannual report on monetary policy to the Senate Banking Committee today and will testify at the House Financial Services Committee tomorrow.

The spread between yields on US 10-year Treasuries and similar Japanese bonds decreased on July 6 to the minimal level since May 2009 at 180 basis points. The spread was equal to 186 basis points today.

The release of BoE minutes

Sterling gained versus the greenback and the single currency after the release of Bank of England meeting minutes, according to which UK policy makers decided to leave the rate at the record minimum of 0.5%. In addition, Britain’s central bank decided to maintain their debt-buying program at 200 billion pounds ($306 billion).

The members of the Monetary Policy Committee voted 7-1 with Andrew Sentence proposing again to raise the rate by 25 basis points and 8-0 to continue quantity easing.

British policy makers think CPI likely to be higher through rest of 2010 than forecast in May inflation report, while GDP growth prospects in the medium term got worse.
Currency strategists at Commerzbank AG claim that they are still optimistic on the pound as, according to them, UK the economy is much more flexible than the euro zone’s one.

Lloyds: euro will fall to $1.2750

Analysts at Lloyds Banking Group Plc expect the single currency to fall ahead the release of European bank stress test results scheduled on Friday. According the specialists, the pair EUR/USD will be pulled back to $1.2750 area.

Euro has broken Asian session’s consolidation range going down below 1.2875 support to session’s minimum at 1.2845.
 
Tokai Tokyo Securities: EUR/JPY will fall below 107.32

Technical analysts at Tokai Tokyo Securities Co. claim that the European currency may fall to 8-year minimum versus Japanese yen as EUR/JPY chart formed triple top.

Euro began advancing versus its Japanese counterpart 3 times since June. Each growth attempt of the single currency found maximum between 133 yen and 114 yen. As a result, the specialists note that euro is trading in a gradual downtrend and may drop extending its 16% decline against yen since the beginning of 2010.

According to Tokai Tokyo Securities, the common currency’s likely to go down under this year’s minimum at 107.32 yen hit on June 29. It will happen, if euro shows a clear breakdown below the baseline of Ichimoku chart in 110.37 yen area. The last time the pair got below this level was in November 2001.

FX360: loonie may fall to 83.54 yen

Specialists at FX360, online currency research firm, advise investors to be ready to sell Canadian dollar versus Japanese yen during the next few days.

The analysts cite “bearish Gartley” pattern that will be formed in the chart if loonie advances to the sell point at 85.34 yen. According to FX360, Canada’s currency will depreciate to 83.54 yen. It’s necessary to stop at 86.52 yen level that lies just above the double-top pattern made of July 12 and July 14 maximums.

Currency strategists underline that the trade will remain valid until the pair CAD/JPY stays above 82.29 yen per loonie.

Mizuho: USD/JPY may decline

The greenback rose from yesterday’s minimum at 86.35 and consolidated in 87.00 area during the Asian trade. Technical analysts at Mizuho Corporate Bank claim that the pair USD/JPY is still under bearish pressure which may strengthen if dollar closed the below 87.25.

The specialists note that the pair’s consolidation took place below the first Fibonacci resistance and the 9-day MA. It’s possible that dollar will survive today another decline.

According to Mizuho, if the greenback falls down, support levels are found at 86.73, 86.34/86.27 and 86.00. If the pair goes up, resistance levels will lie at 87.23, 87.45/87.58 and 87.75.

Goldman Sachs: investors expect 10 banks to fail stress tasts

Goldman Sachs performed a survey by among 376 respondents such as hedge funds and long-only investors about the results of European banks’ stress tests that are going to be released later today. It turned out that the respondents expect that 10 out of the 91 banks being examined will fail.

The average forecast of surveyed investors is that Europe’s banks will need additional capital of 37.6 billion euro ($48.4 billion). Spanish, German and Greek banks are thought to require the biggest amount of capital from the public and private sectors.

The majority of interviewed is sure that the amount of capital raised will be enough for normal capitalization of the banks, while the rest claim that capital deficit will remain.

BNP Paribas: dollar forecast’s reduced

Analysts at BNP Paribas SA decreased their forecast for the greenback versus the single currency from their previous estimate of dollar moving to the parity with euro. Now, according to the bank, by March 31, 2011 dollar will advance to $1.12 per euro. The specialists explained the change in their predictions saying that the Federal Reserve’s likely to diminish interest rates and European bank stress tests results may be encouraging.

BNP Paribas raised the projection of future euro value from $1.16 to $1.20 in the third quarter and from $1.08 to $1.15 by the end of 2010.

The specialists note the weaker prospects of US economic growth and underline the poor condition of the housing market as housing starts fell in June to the minimal level since October and consumer confidence slumped in July. As a result, the specialists wait for the easing of Fed’s monetary policy.

BNP Paribas think that stress tests will be successful as European authorities will use their results in the best possible way in order to restore investors’ confidence.

Bank of Tokyo-Mitsubishi: euro's advance after stress tests will be temporary

Analysts at Bank of Tokyo-Mitsubishi UFJ Ltd. believe that any euro’s advance versus the greenback that will take place after the release of European banks stress tests results will be nothing but temporary.

According to the specialists, when uncertainty disappears, investors are likely to buy euro in the short-term if the European data will turn out to be strong enough. Never the less, Bank of Tokyo-Mitsubishi strategists are sure that the details will be negative and the single currency won’t be able to hold above $1.30. Deteriorating sentiment may be beneficial for Japanese yen.
 
The number of bears on euro market reduced

More investors and analysts start to bet on euro’s growth reducing the number of bearish players. During the past 2 weeks Goldman Sachs Group Inc. and Wells Fargo & Co. increased their estimates of the single currency’s future value joining HSBC Holdings Plc and Deutsche Bank AG.

Euro zone debt crisis with euro losing 15% versus dollar in the first half of the year was for a long time the main purpose of investors’ concerns. However, now poor US data switched the attention to American economic problems and dollar went down from its four-year maximum reached in June.

Strategists at HSBC in London note that investors got overexcited about the possible collapse of the European monetary block and forgot that United Stated also has a lot of economic weaknesses. The specialists forecasted at the beginning of June that euro will strengthen to $1.35 be the end of 2010.

There was also some positive information from the euro zone. Germany’s Ifo institute business climate index bounced to maximum since July 2007. A composite index of European services and manufacturing industries climbed to 56.7 in July from 56 the month before.

Commerzbank: GBP/USD will advance

British currency keeps being rather strong helped by better investor’s confidence. Sterling strengthened to 3-month maximums getting above 1.5470. Technical analysts at Commerzbank expect the pair GBP/USD to show further gains.

According to the specialists, pound broke up its 1.5310 descending channel and is trading on an uptrend channel from May minimums. The target for sterling’s advance is set at 1.5525/60 area representing April maximum and Fibonacci retracement. If the pair declines, pound will get under serious pressure below 1.5188/205.

Mizuho: bullish momentum for pound

British currency rose to the 3-month maximum versus the greenback. Pound climbed from July 21 minimum at 1.5125 to break through 1.5470 resistance ahead of the European session opening and overcome 1.5500 level.

Technical analysts at Mizuho Corporate Bank believe that Britain’s currency’s trading on the strongest bullish momentum during the year. According to the specialists, the pair GBP/USD was supported by the rising 9-day MA.

Sterling was helped by 0.7%.advance of UK benchmark The FTSE 350 Banks Index after the major British banks such as HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc successfully passed stress tests.

Mizuho: EUR/USD consolidation will last the whole week

European currency managed to erase the losses it had after the results of banks' stress tests were released on Friday. Euro climbed from 1.2800 area and closed the week at 1.2900.

Then the pair EUR/USD consolidated in 1.2900/50 area and technical analysts at Mizuho Corporate Bank think that it may be trading in this range during the rest of the week. According to the specialists, 9-week MA will act as a support.

If euro strengthens, resistance levels will be found at 1.2944/1.2966, 1.3008 and 1.3029. If the pair declines, support levels will stay at 1.2856, 1.2794 and 1.2732.
 
Nomura: USD/JPY forecast’s reduced

Analysts at Nomura Securities Co. reduced their forecast for the pair USD/JPY. The specialists explain the change in their future estimate of the greenback’s rate by the declining pace of US economic growth and the speculation that the Fed won’t hike its benchmark interest rate until the first half of 2011.

According to Nomura, by the third quarter dollar will trade not at 95 yen as they predicted before but at 90 yen. The estimate of the greenback’s value by the end of the year was decreased from 97 to 87.5 yen. The forecast for the fourth quarter of 2011 remained at the same level of 90 yen.

IMF: yuan’s considerably undervalued

According to two unnamed officials, the International Monetary Fund regards Chinese currency as considerably undervalued. The IMF is determined to make the country appreciate yuan that has gained 0.7% since its peg to the greenback was ended on June 19. United States, Germany, France and Britain share the opinion of the organization.

Meanwhile, Chinese monetary authorities have made several statements on this point. Hu Xiaolian, a respected deputy governor of the People's Bank of China, explained in her third speech on Monday why more flexible yuan that’s against the interest of the country’s exporters is important for China citing the necessity of easing inflationary pressure and making the monetary policy more effective.

The full IMF analysis will be to be released in September if China doesn’t revoke its permission for that.

Mizuho: short squeeze’s possible

The single currency was able to become stronger than in the first half of the year. Euro managed to rebound from the year minimum at 1.1880 and rose to 1.3000 area. Technical analysts at Mizuho Corporate Bank believe that if the pair EUR/USD overcomes resistance at 1.3030, there will be another short-covering squeeze.

According to the specialists, European currency is supported and pushed upwards by the 9-day MA. The pair is likely to go up to 1.3020 and 1.3100/25. As a result, Mizuho advises to try longs at 1.3005, adding to 1.2900 and stopping well below 1.2800.

Euro’s trading near 2-month maximums at $1.30

The single currency was trading at $1.30 during the last several hours. However, investors don’t rush to take too large positions on euro waiting for more details about how euro zone debt crisis affected Deutsche Bank.

Even though Deutsche claimed that the second quarter profits are in line with the market’s expectations, the bank didn’t reveal the information about the debt crisis’s impact according to the stress test result.

Some traders note that if Deutsche Bank unveils the data and the news won’t be somehow menacing, that will help to raise confidence in the European banking system and finally and promote buying of the common currency. In this case, the target of euro’s rebound will be at last week’s maximum at $1.3029 and then at $1.3125 level representing 38.2% Fibo retracement of decline from November to June.

Despite the negative opinions about European banks stress tests, German interest rates are growing, euro’s advancing that leads to the short-covering on the single currency, claims Citibank.

AUD/JPY may advance

Aussie seems to be stable trading at $0.9020 after gaining 0.9% during Monday’s trade. Yesterday Australian currency was helped by the risk appetite revival after the release of European banks stress tests.

Chart analysis shows that Australia’s dollar is very likely to advance versus Japanese yen. On the daily Ichimoku chart AUD/JPY Tenkan-sen rose above Kijun-sen that’s regarded as the bullish signal.

The top of the Ichimoku Cloud lies at 80 yen level. If the pair gets above this point, it will climb much further.

SNB and BIS are selling euro

According to the market rumors, the Swiss national Bank and the Bank for International Settlements set offers at 1.3020/25. In addition, China’s selling euro at 1.3010/15. The pair EUR/USD is now trading in 1.3002 area. Before there was the information that Saian sovereign fund was buying the single currency versus the greenback during the Asian trade.

*Bank for International Settlements (BIS) is an intergovernmental organization of central banks which “fosters international monetary and financial cooperation and serves as a bank for central banks”.

Danske Bank: sell yen versus euro

Japanese yen fell almost to 7-week minimum against euro. It happened due to the improved investors’ sentiment about US economic recovery that raised the demand for riskier assets.

Analysts surveyed by Bloomberg expect that tomorrow data will show that American orders for durable goods went up by 1% in June after losing revised 0.6% in May. Specialists at GfK AG believe that German consumer confidence is likely to increase in August as economic growth gained pace.

Analysts at Danske Bank A/S in Copenhagen recommend selling Japanese currency as it’s not likely to strengthen much. Bank of Japan’s Tankan survey released July 1 showed that Japan’s large manufacturers project that yen will trade at 90.16 versus the greenback in the six months to March 2011.

Strategists at Mizuho Corporate Bank noted that euro was also helped by last week's European banks stress tests results that didn't bring any big negative surprises. The Dow Jones Industrial Average compensated this year’s decline and extended by 1% yesterday.
 
JPMorgan Chase: pound will rise versus dollar

Technical analysts at JPMorgan Chase & Co. stopped being bearish on British currency as the pound managed to overcome April’s maximum at $1.5526.

According to the specialists, sterling may decrease in the short term to support at $1.5385, but the general outlook is regarded as positive and cable may rise to $1.5750 and $1.5865.

Bloomberg reports that pound got above its 200-day for the first time since January 28.
The pair GBP/USD is currently trading above $1.56.

Commonwealth Bank of Australia: AUD/USD may fall to 88.50

Australian currency survived the biggest decline in more than a week after the pace of consumer prices growth turned out to be lower than it was expected making the August hike of the Reserve Bank of Australia’s interest rates less likely.

The country’s CPI added in the second quarter only 0.6%, while in the first one it increased by 0.9%. The analysts surveyed by Bloomberg News were looking forward to 1% increase.

Currency strategists at Commonwealth Bank of Australia in Sydney believe that Australia’s central bank won’t have incentives to raise its key rate next week, but point out that this may happen later this year. According to the specialists, it’s possible that Aussie is moving to 88.50 US in the short term.

Commerzbank: euro may rise to 1.3120/50

Technical analysts at Commerzbank note that the single currency keeps trading in 1.3000 area for the second day in a row. Euro consolidated after strengthening last week from its minimum at 1.2730.

The specialists set the temporary target of the pair EUR/USD at 1.3120/50 area representing the move upwards from the “head and shoulders” figure’s neckline and 38.2% retracement of this year’s decline. According to the bank, these levels will be able to hold the initial test and cause some profit taking.

If the pair declines, support levels will be found at 1.2880, 1.2733 and 1.2508.

USD/CHF: comments

The greenback reached yesterday 2-week maximum at 1.0640 trading versus Swiss franc. Today it was slightly losing its advance during the Asian trade and got below 1.0600 at the beginning of the European session.

If the pair USD/CHF manages to overcome resistance at 1.0675, it will become clear that downtrend from June 1 maximum at 1.1730 already ended at 1.0394. It’s still possible that US dollar will advance later today to test this resistance. Otherwise, there’s a risk that the pair will drop to 1.0300.

The pair USD/CHF is currently trading at 1.0610/15 zone.

CMC Markets: euro and pound can benefit from US consumer confidence decline

Analysts at CMC Markets believe that the decline of US consumer confidence may be encouraging for European and British currencies due to the yield differential.

Conference Board’s sentiment index went down to 5-month minimum at 50.4 beating the analysts’ expectations.

According to CMC Markets specialists, the fact that US bond yields reached maximum at 3.05 and then began declining while UK and German yields are rising is positive for non-dollar foreign exchange and means the reduction of demand for American currency.

BOJ: yen’s appreciation is risky

Hidetoshi Kamezaki, the member of Bank of Japan board, underlined that the country’s central bank regards yen’s appreciation as risky and will take active measures to fight deflation. The aim, according to Kamezaki, is to return to a sustainable growth path and price stability.

The official noted that stronger yen could affect exports in the short term and have a negative impact on business investment and consumer spending. There are some risks to the pace of Japan’s economic rebound.

Analysts at BNP Paribas in Tokyo believe that sharp advance of Japanese currency may stimulate monetary easing policy even in the conditions of the country’s economic recovery. The specialists note that in case of abrupt yen’s climbing, Japan’s monetary authorities to take into account the possibility of providing “longer-term liquidity”.
During the past 3 months yen added 6.9% versus the greenback and 8.3% versus the single currency as investors increased their demand for it as for a refuge currency.

Niesr: UK economy's 2nd quarter bounce is temporary

Economists at the National Institute of Economic and Social Research (Niesr) claim that the highest in 4 years growth pace of British economy in the second quarter is nothing but temporary phenomenon. Consequently, the institution believes that the Bank of England shouldn’t increase its interest rates.

In the second 3 months of 2010 UK economy gained 1.1%. As a result, it difficult for the country’s monetary authorities to make out if it’s more necessary to fight inflation by lifting up the benchmark interest rate or to stimulate the economy suffering from huge, but vital budget reduction.

Niesr specialists don’t expect that in the next few months Britain’s central bank will follow the proposition of its official Andrew Sentance to raise the rates. The Bank of England will look forward to the third quarter GDP figures to make the further judgment.

According to Niesr forecast, UK economy will add 0.1% in the third and 0.3% in the fourth quarter. The projection for 2011 was reduced from the previous estimate of 2% to 1.7%.
 
Forecast Pte: euro will rise to 116.74 yen

Technical analysts at Forecast Pte in Singapore believe that the single currency can climb to 11-week maximum gaining more than 2% versus Japanese yen.

The specialists claim that the pair EUR/JPY formed “golden cross” pattern on July 27 when its 20-day MA got above the 50-day MA. According to Forecast Pte, euro is likely to advance at least to 100-day MA at 116.74 yen, to the maximum formed after the previous golden cross in April. During the past month European currency rose by 4.3% against yen.

Forecast Pte strategists claim that initial resistance is at 115.19 yen level representing 38.2% Fibonacci retracement of the European currency’s decline from the April 5 maximum at 127.92 yen to the June 29 minimum at 107.32 yen.

Citigroup: euro may advance to $1.39

Analysts at Citigroup Inc. expect the single currency to advance to $1.39 this month for the first time since February. According to the specialists, this may happen as the situation in euro zone becomes more stable and the Federal Reserve is now more likely to make its interest rates even lower in order to stimulate economy.

Citigroup strategists note that euro managed today to overcome resistance at $1.3080 to $1.3115 and climbed to a 3-month maximum at $1.3195 reached last time at May 4. Now European currency may show further growth, claim the analysts. If the pair EUR/USD closes today above $1.31, it may strengthen to its 200-day moving average at $1.3580 and then to the maximal level since February 4 at $1.39.

Citigroup specialists underline that the outlook for euro is very optimistic and investors are willing to take risks looking at the positive dynamics of equity and commodity markets and weaker greenback.

Faros Trading: Asian central banks will reduce demand for US dollars

Specialists at Faros Trading LLC believe that the greenback will lose versus European and British currencies as Asian central banks will decrease dollar share in their foreign-exchange reserves following the example of China that is the largest dollar holder outside of the United States.

US dollar declined in July by 5.1% against euro and by 4.3% versus sterling making the region’s central banks worry.

Faros Trading strategists note that Asian central banks used to buy dollars in order to prevent appreciation of their national currencies aiming to support exports and to sell US currency versus European ones to diversify their reserves.

Chinese Premier Wen Jiabao claimed that the principal investment area for the country is Europe. In addition, in May China bought 735.2 billion yen ($8.3 billion) of Japanese bonds. As a result, the amount of US Treasuries held by China fell $900.2 billion in April to $867.7 billion at the end of May.

FX Concepts: euro’s advance will stop in September

Economists at FX Concepts LLC, hedge fund managing $8 billion in assets, claim that soon investors will need to get rid of the single currency.

The specialists project that euro’s climbing by 9.7% from its 4-year minimum hit June 7 will be over in September. Such forecast may be explained by the fact that the negative impact of austerity measures conducted by euro zone countries will begin to show up affecting the region’s economic growth.

According to data released last week Spanish consumer confidence dropped to the minimal level of the year. In addition, European banks are tightening credit standards that seems to be a bad sign for the area’s economic recovery. Survey of 21 money managers performed by ICAP Inc. demonstrated that the majority of interviewees don’t expect euro to gain during the next 3 months.

Analysts bet on euro’s decline by the end of 2010

Strategists at UBS AG in Singapore aren’t sure that the recent advance of the single currency is sustainable. The economists lowered their forecast for the euro zone’s 2010 economic growth from 2% to 1.5% and expect that euro will fall to $1.15 be the end of 2010 affected by the strong downward pressure.

According to the Deutsche Bank’s estimate, Spain, Portugal and Greece will reduce spending by an average 4.3% of GDP from 2009 to 2011.

Strategists at TD Securities Inc. in Toronto regard the fiscal challenges in front of Europe as very difficult creating the need for weaker euro. In their view, be the end of the year the common currency will drop to $1.08.

Economists at A. Gary Shilling & Co. in New Jersey keep repeating since January that euro may decline to the parity with the greenback. In their opinion, the probability of defaults and restructuring in Greece, Portugal and Spain is still high.

Commerzbank: pound may strengthen to 1.6425/40

British currency strengthened on Monday and continued advancing today getting above 1.5900. Technical analysts at Commerzbank claim that if the pair overcomes 1.5970 level, it may rise to 1.6425/40 area.

The specialists note that the pair GBP/USD ruined 55-week MA and the top of the trading channel.

If sterling declines, support levels will be found at 1.5665/75 and 1.5336 (the base of its 2-month upward channel).

Euro rose to 6-month maximum versus dollar

European currency reached 6-month maximum versus the greenback at $1.3230.

The greenback was losing affected by the expectations that the Federal Reserve won’t raise interest rates. On Monday the Fed’s Chairman Ben Bernanke claimed that US economy didn’t completely recover that creates necessity for a loose monetary police.
In addition, U.S. Treasury yield hit the record minimum at 0.534% declining during the last 2 years faster than European yields. As a result, demand for short-term American debt reduced.

From the technical point of view, the single currency managed on Monday to overcome $1.3125 level representing 38.2% Fibonacci retracement of its decline from November to June.

Strategists at SEB in Stockholm expect that the pair EUR/USD will rise to $1.33 in the near term. According to them, the market pays now more attention to US problems than to the European ones.
 
Mizuho: dollar will hesitate at 85.00 yen

The greenback fell from 88.10 yen level reached on July 28 and renewed 8-month minimum versus Japanese yen during today’s Asian trade. Technical analysts at Mizuho Corporate Bank claim that the pair USD/JPY is moving towards the bottom of a potential ‘wedge’ formation and the key level at 85.00.

According to the specialists, during the coming sessions we’ll observe cautious downside testing and serious hesitation of dollar’s rate at the mentioned area. It’s necessary to note that the greenback is not oversold against the yen and downwards pressure has the same strength as last summer.

Even though Japanese monetary authorities are worrying about yen’s appreciation, the currency is currently not as ‘expensive’ in 1995 when it last time visited these trading area.

Dollar hit 8-month minimum versus yen

The greenback hit 8-month minimum against Japanese yen and may fall to lowest level since 1995 affected by negative US economic data and the speculation that will resume conducting quantitative easing measures.

The expectations that the Fed will once again start bond buying program strengthened as its Chairman Ben Bernanke spoke on July 21 about unusually high uncertainty for American outlook. On August 10 it’ll be decided whether to use cash received from the Fed’s maturing mortgage bonds to buy new mortgage or Treasury bonds.

Strategists at BNP Paribas in London claim that investors’ attention will be focused on Friday's nonfarm payrolls report. If the companies don’t hire new employees, that will mean the lack of confidence in US economy. As a result, the Fed will have to act loosening its policy and dollar will survive more losses. However, specialists at Standard Bank Plc in London point out that even the favorable payrolls won’t guarantee that the Fed won’t make simulative step. The market is currently defensive that, underline the analysts, is beneficial for yen.

Economists at ICAP Australia Ltd. in Sydney claim that investors seem to avoid risks and will demonstrate high demand for yen in the short-term.

Brown Brothers Harriman: pound paused before further growth

The 9-day advance of British currency versus the greenback that is the longest in more than 18 years ceased today.

According to the technical analysis, the pace of pound’s growth was too high. UK currency fell after capping at $1.5969 level representing 61.8% Fibonacci retracement of the drop from $1.7043 on August 5, 2009 to $1.4231 on May 20, 2010.

The RSI on the pair GBP/USD reached 75.015 today holding above 70 for the fourth consecutive day that signals that sterling is overbought.

Strategist at Brown Brothers Harriman Ltd. in London believe that before resuming its upward move pound will hold in the current area for a while. The general outlook for the currency, in their view, is positive.

There was some encouraging data for the pair today. Government-controlled Lloyds Banking Group Plc announced that it got pretax profit of 1.6 billion pounds ($2.6 billion) in the first half of the year, while economists surveyed by Bloomberg were looking forward to 694.5 million pound figure. In addition, UK house prices unexpectedly increased in July adding 4.6% from July 2009 level.

Barclays: Bank of Japan won’t intervene in the near term

Analysts at Barclays Plc in London believe that it’s likely that in the near term the Bank of Japan won’t intervene in currency markets in order to stop yen’s appreciation. Such assumption is based on the fact that the advance of Japanese currency hasn’t yet affected equity prices and, consequently, the actions of the policymakers would fail to improve the situation.

The specialists claim that the effectiveness of unilateral intervention is limited and the Federal Reserve or the European Central Bank won’t agree to support Japan’s central bank and intervene. As a result, Barclays expects Japanese monetary authorities to try influencing the market verbally before the government forces the Bank of Japan to act in the forex market.
 
Analysts bet on euro’s decline by the end of 2010

Strategists at UBS AG in Singapore aren’t sure that the recent advance of the single currency is sustainable. The economists lowered their forecast for the euro zone’s 2010 economic growth from 2% to 1.5% and expect that euro will fall to $1.15 be the end of 2010 affected by the strong downward pressure.

According to the Deutsche Bank’s estimate, Spain, Portugal and Greece will reduce spending by an average 4.3% of GDP from 2009 to 2011.

Strategists at TD Securities Inc. in Toronto regard the fiscal challenges in front of Europe as very difficult creating the need for weaker euro. In their view, be the end of the year the common currency will drop to $1.08.

Economists at A. Gary Shilling & Co. in New Jersey keep repeating since January that euro may decline to the parity with the greenback. In their opinion, the probability of defaults and restructuring in Greece, Portugal and Spain is still high.

Stiglitz claimed that US recovery is “anemic”

Joseph Stiglitz, the winner of Nobel Prize in economics, considers US economic recovery to be “anemic” and calls for another, better thought-out series of stimulus measures.
The second round of stimulus program should be devoted mainly to returns on investment, education, infrastructure and technology. Stiglitz believes that such investments will help to reduce the long-term national debt and increase future growth and says that risky actions of Obama administration don’t bring the expected outcome.

According to the famous economist, the rebound of American economy is so weak that it isn’t able even to create new jobs for those who enter the labor market citing that there are 15 million unemployed Americans.

The Labor Department data released yesterday showed that initial jobless claims had the biggest since April 19,000 gain and rose to 479,000 in the week ended July 31.
 
Bank of Tokyo-Mitsubishi: the Fed’s policy will ease

Specialists at Bank of Tokyo-Mitsubishi UFJ Ltd claim that the Federal Reserve’s likely to loosen its monetary policy. Such assumption’s based on the butterfly spread that’s calculated by subtracting doubled 5-year yield it from 2- and 10-year rates.

Bank of Tokyo-Mitsubishi notes that the last time the spread got to its current negative level of 34 basis points was in December 2008 after Lehman Brothers’ collapse and, earlier, in 2001 after the Internet bubble burst. Negative figure shows that there are more bets that the Fed will reduce borrowing costs or hold interest rates near zero for longer.

If the butterfly spread gets gown below the mark reached after the collapse of hedge fund Long-Term Capital Management LP in 1998, it will come close to 1981 levels hit during postwar double-dip recession. Bank of Tokyo-Mitsubishi analysts note that even if the United States avoids recession scenario, its economic growth will be only just above 1% that will strengthen deflation risks.

According to the strategists, the 5-year yield that reflects the potential monetary policy switches lowered that means that the possibility of further easing is already processed and priced in be the market.

Mizuho: short-covering on EUR/USD is possible

The single currency rose last week to 3-month maximum above 1.3300 and managed to close the week above 38% Fibonacci retracement resistance.

Technical analysts at Mizuho Corporate Bank believe that there’s a possibility of short-covering above 1.3510 level representing 50% Fibonacci retracement of decline from December to June.

According to the specialists, in the longer-term it’s necessary to remember the market’s consensus of the pair’s slump to 1.2600 in 3 months and 1.2000 in a year. Mizuho notes that euro’s a bit overbought versus the greenback.

Goldman Sachs: Japan’s and US growth forecast reduced

Economists at Goldman Sachs Group Inc. reduced their estimates of US and Japanese economic growth prospects.

According to the new forecast, Japan’s economy will add 1.4% in 2011 and not 1.7% as it was expected before. As for American one, it’s thought to rise by 1.9%, while the previous prediction was equal to 2.5%.

The macroeconomic data supports such downward revision. Japan’s current-account surplus decreased for the second month in a row affected by export income’s decline. In addition, jobless rate in the country reached 7-month maximum and factory output dropped in June. Goldman specialists are also looking forward to severe consumer spending decline in the country.

The slowdown of American growth may be explained by the fact that lawmakers are against of extending several stimulus measures. The analysts suppose that the unemployment rate which was at 9.5% in July may advance to 10% the beginning 2011. As a result, claims Goldman Sachs, the Federal Reserve may start again conducting unconventional monetary easing.

Barclays: dollar will gain versus yen, Aussie and kiwi

Analysts at Barclays Plc in London claim that the greenback may rise versus Japanese, Australian and New Zealand’s currencies as they believe that the Federal Reserve won’t decide to ease its monetary policy tomorrow.

According to the specialists, if the Federal Open Markets Committee leaves monetary policy unchanged, short-term yields will climb making the greenback advance as well.
The strategists recommend acting in this situation using the pair USD/JPY traditionally connected with short-term interest rates, although they are also sure that AUD/USD and NZD/USD will decline.

If it happens that the Fed announces a clear plan to help the economy dollar may drop below 85 yen and possibly beyond 84 yen.

USD/JPY: comments

The greenback fell versus Japanese currency from 88.10 at the end of July getting to the new 8-month minimum on Friday at 85.00. After that US dollar managed to find support there and rebound to 85.75 during the European trade before meeting resistance and returning to 85.55.

Technical analysts believe that the pair is still within a downtrend targeting to November 2009's minimum at 84.83.

If the pair USD/JPY goes up, resistance levels will be found at 85.70 (August 3/5 minimums), 86.20 (August 6 maximum) and 86.45 (August 5 maximum). If American currency declines, support levels will be at 85.00 (August 6 minimum), 84.80 (November 2009 minimum) and 84.32 (June 1995 minimum).

Bank of England's forecast will be negative

It’s expected that the Bank of England will be negative in its short-term outlook for the British economy. The country’s central bank is likely to forecast weak economic growth and high inflation.

Never the less, the pound may continue gaining before investors will once again become negative on sterling. If the British currency manages to overcome 1.60/1.61 levels, it will be able to rise to 1.65.

The Bank of England’s Governor Mervyn King will speak on Wednesday August 11 at 9:30 GMT.
__________________
See more news at our site!
 
Gaitame.com: dollar may decline to 84 yen

Technical analysts at Gaitame.com Research Institute Ltd believe that the greenback may fall to the 15-year minimum versus Japanese yen. Such forecast is based on the Bollinger bands’ analysis that shows the signals of a strong downtrend.

The specialists note that the pair USD/JPY has gone below 20-day MA or the lower Bollinger band for at least 6 times during the past month. Strategists at Gaitame.com expect that if US dollar drops below 84.50 yen level, it'll be likely to lower to 83 yen.

On August 6 American currency decreased to the lowest level since November at 85.02 yen. It didn’t hit the levels below 84 yen since 1995.

Ueda Harlow: Aussie’s down for the second day

Australian dollar was down versus its US counterpart for the second day in a row affected by strengthening concerns about the prospects of world’s economic growth.

Analysts at Ueda Harlow Ltd in Tokyo note that risk aversion seems to be rather high and the market’s worrying mainly about American and Chinese economies due to the negative macroeconomic data from these countries. Annual pace of China’s exports growth declined from 34.1% in June to 22.7% in July, while in the United States consumer spending, pending home sales and factory orders turned out to be below the forecast levels in June.

Aussie weakened also as the National Australia Bank Ltd. reported that its July index of business confidence based on the survey of more than 400 companies between July 26 and July 30 became 2 times lower than it was in June.

Currency strategists note there are no expectations that the rates in Australia will be raised next month.

Bank of Japan won’t intervene until yen USD/JPY falls to 80 yen

Japanese currency appreciated slightly versus the greenback today. There was a speculation at the market that the country’s investors will repatriate home their gains that they’ll obtain after coupon payments of US Treasuries that are expected in the middle of August.

As it was predicted, Japan’s central bank didn’t change its monetary policy leaving the key interest rate at 0.1%.

According to traders, if US dollar gets down below 84.82 yen level, it will fall to the 15-year minimum against yen. In their opinion, such outcome is quite likely as there are little chances that Japanese monetary authorities will intervene at the currency market unless the pair USD/JPY depreciates to 80 yen area. Japan’s Finance Minister Yoshihiko Noda gave no comments on this point.

The pair’s currently trading at 85.65/70 area.

Commerzbank: GBP/USD may reverse downwards at 1.6000

British currency strengthened versus the greenback from 1.42 zone in May to find resistance at 1.5968/6000 levels. Technical analysts at Commerzbank believe that in case the pair GBP/USD isn’t able to overcome 1.6000 point, it will reverse downwards.

According to the specialists, support remains in 1.5709/1.5636 region limited by October minimum and 38.2%/50% Fibonacci cluster of the 2009 growth and the slump from 2009 to 2010. Crucial support level is found lower at 1.5530 along the 200-day MA signaling that higher this level sterling’s trend in the medium-term will keep being bullish.

However, Commerzbank strategists still ask investors to pay attention to 1.6000 level as only above it pound can manage to rise to February’s maximum at 1.6072.

Nomura Securities: dollar will fall if the Fed cuts rate

The greenback was gaining today versus its main counterparts except Japanese yen ahead of Federal Open Market Committee’s (FOMC) decision on the Federal Funds Rate that will be reported at 18:15 GMT.

The analysts claim that the Federal Reserve has a variety of different types of actions. The Fed may increase the amounts of quantitative easing, reinvest funds from maturing debt into Treasuries or mortgage-based securities, reduce interest rates on excess reserves and buy financial assets outright.

Strategists at Nomura Securities note investors will start selling greenback if the Fed cuts it benchmark interest rate today.

The pair EUR/USD is currently trading at 1.3172 area below the trend support line on the hourly chart at $1.3200.

Shirakawa: Bank of Japan’s concerned about yen’s growth

Bank of Japan Governor Masaaki Shirakawa claimed today that the members of Japanese central bank's board were discussing much the recent yen’s appreciation. It’s clear, noted the policymaker, that the growth of national currency is likely to worsen business sentiment.

Shirakawa underlined the necessity to study what influence makes this advance on Japan’s economy as a whole.

The fact that the Bank of Japan didn’t change today its key rate means that it keeps such option to act in case of future excessive strengthening of yen when it becomes clear that the country’s economic recovery is in danger.

USD/CHF: comments

The greenback was strengthening versus Swiss currency on Monday and at the beginning of Tuesday’s trade. US dollar managed to add more than 200 pips rising from 1.0335 to August 4 maximum at 1.0555. At that point the pair USD/CHF stopped and retreated to 1.0505.

Technical analysts note that pair has hit the upper limit of a larger sideways channel at 1.0560 and the sellers will regard this growth as a chance to renew their short positions.
If dollar rises above 1.0560, it will face resistance at 1.0640/55 area limited by July 27 maximum and 200-day MA and then at 1.0700.
__________
See more news at our site!
 
Commerzbank: 1.2730/35 – support for EUR/USD

The single currency dropped from maximum at 1.3335 reached on August 6. During today’s Asian trade the pair EUR/USD lowered to 1.2730/35 support zone limited by support line of the uptrend from June to August and July 21 minimum.

Technical analysts at Commerzbank claim that if euro falls below 1.2735/2, it may survive further decline to 1.2673 (May 21 maximum) and 1.2610 (55-day MA).

If the pair manages to start strengthening, the specialists advise to look forward to 1.2908, 1.3000 and 1.3031 (mid-July maximum) levels for a minor bounce.

JPMorgan: yen will rise to 79 yen per dollar this year

Analysts at JPMorgan Chase & Co. expect that by the end of this year Japanese currency may advance to 79 yen per dollar. The precious forecast of the specialists was that yen will finish 2010 at 93 versus the US currency.

Next month yen’s forecast was lifted up from 90 to 80 per greenback. Yen’s anticipated value per euro was also raised from 116 99 be the end of 2010.

Yen’s currently trading at 85.80 area per US dollar. It managed to strengthen to the maximal level since post-World War II maximum at 79.75 per dollar set in April 1995.

Sakakibara: yen will rise to the record maximum

Eisuke Sakakibara, former Japan’s top currency official, believes that Japanese currency that has already added 7.9% against the greenback may climb further to the all-time maximum versus dollar.

According to the economist, the slump of the pair USD/JPY isn’t the result of yen’s strengthening but the one of dollar’s weakness as US currency’s rate is affected by the lack of confidence in American economic growth prospects.

Japanese monetary authorities didn’t make up a strategy how to hold the climbing of the national currency. Sakakibara expects that the companies will feel the negative impact of yen’s appreciation and stock market’s decline around the end of this year. Japan’s Prime Minister Naoto Kan and Bank of Japan’s Governor Masaaki Shirakawa will meet this week to discuss the situation.

Survey by Gaitame.com Research Institute Ltd. demonstrated that more than a third of Japan’s margin traders think policy makers will intervene to weaken the yen if it strengthens past the 15-year maximum.

The last time when Japan intervened to the currency market was in March 2004 when the yen was around 109 per dollar.

Chinese second quarter GDP is higher than Japan’s one

China’s economy outperformed Japanese one becoming world’s second-largest economy according to the second quarter results. Analysts at Goldman Sachs Group Inc. forecast that China will outrun the United States that occupies currently the first place in the world with annual GDP of about $14 trillion by 2027.

Japan’s nominal second quarter GDP was equal to $1.288 trillion, while China reported $1.337 trillion figure. All in all, in the first half of 2010 Japan kept its higher place.
It’s necessary to note that in 2009 China surpassed US as the biggest automobile market and Germany as the largest exporter. The nation is the world’s primary buyer of iron ore and copper and the second-biggest importer of crude oil. All of this means that China’s influence on the global economy’s surging.

Kenneth Rogoff, a Harvard University professor and former chief economist of the IMF, however, underlines that China’s property market is beginning to collapse that will hit the nation’s banking system. In addition, China’s output was also larger than Japanese in the fourth quarter of 2009, but was again lower in the first 3 months of 2010. The specialists also claim that it’s necessary to pay attention to the seasonal factor that may be different for the nations.

Economists at Mizuho Securities Asia Ltd. claim that taking into account the fact that Chinese growth pace in the second quarter was equal to 10.3%, while Japanese accounts for only 2%, it’s possible to make out that Japan won’t retake its position and China’s lead will be only increasing.
 
BNP Paribas: euro will rise to $1.32

Technical analysts at BNP Paribas SA in New York believe that the single currency that lost in August 1.6% versus the greenback will be rising during rather long period of time targeting at $1.32.

Yesterday the European currency hit minimum at $1.2734 ending its 5-day decrease. The specialists note that euro managed to hold above two strong medium-term support levels – July 21 minimum at $1.2733 and June uptrend line.

According to BNP Paribas, if the pair EUR/USD gets above $1.2905, it will be able to advance to $1.3105 and then possibly to $1.32. The strategists set initial resistance for the common currency at $1.2875.

RBA monetary policy meeting minutes

Reserve Bank of Australia (RBA) released today its monetary policy meeting minutes. According to the report, Australia’s monetary authorities seem to be more uncertain about global outlook than earlier in the year.

The country’s central bank forecasts that the pace of national GDP growth in 2011 and 2012 will be above-average driven by expansion in resources sector. Inflation is expected to be equal to 2.75% during the next year, 3% in 2012.

As for the external outlook, RBA specialists regard the prospects of Asian economy in the medium term as optimistic and don’t think that Chinese economic growth will turn out to be lower than expected. Australian policymakers note that although growth in Europe is stronger than expected, the situation in 2011 will be still very difficult.

UBS: euro will fall to 1.2800 versus franc

Strategists at UBS AG in Singapore advise investors to sell the single currency versus Swiss franc. The specialists give such recommendation as they expect euro to decline to 1.2800 against Switzerland’s currency.

The specialists worry that the Swiss National Bank will be in the hawkish mood on its next month meeting. This plus concerns about growing bond spreads inside of the euro region won’t let euro appreciate.

In addition, UBS analysts recommended quitting yesterday’s trade of selling New Zealand’s dollar versus franc for a decrease to 0.7200 as the pair has fallen more than expected and approached the target level.

Commerzbank: USD/JPY will again test 84.72 level

The greenback rebounded from the long-term minimum versus Japanese yen at 84.72 to 86.35 on Friday where it failed to show further gain and was pulled back to 85.00 area.

Technical analysts at Commerzbank believe that the pair USD/JPY will go down to 85.07 to (15-year uptrend line) and 84.72 (current August minimum) during the next few days. The specialists claim that these level provide strong support for US dollar.

If the down move keeps on, American currency may hit 83.01 (2008-2010 support line) and 80.00 (psychological region) levels that would as well act as strong support together with 1995 minimum at 79.92.

Capital Management: USD/CAD will fall to 1.0300/10

After the pair USD/CAD capped at 3-week maximum at 1.0490, all moves down were limited by 1.0350/70 area during the last 2 days. As a result, it’s possible to make out that here was formed the strong support.

Today loonie started active gains making US currency break through 1.0400 level to set intra-day minimum at 1.0394. The pair’s currently trading at 1.0400/5 area.
Technical analysts at Capital Management Ltd claim that the greenback survives volatile downside correction after its advance from 1.0100 to 1.0490. According to the specialists, it will fall to 1.0300/10 zone close to 50% Fibonacci retracement from the mentioned growth. At these levels USD/CAD is likely to rebound and begin climbing to 1.0675.

USD/JPY is fluctuating near 15-year minimum

The greenback’s fluctuating near the 15-year minimum versus Japanese yen. American currency is affected by decline in US Treasury yields to 17-month minimum at 2.563%.
The market keeps being concerned about whether Japan will intervene to the currency market or not. That limits yen appreciation as investors are cautious and don’t want to push yen’s rate up. Such sentiment dominated especially as Japan’s Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa are expected to meet next Monday to discuss excessive growth of the national currency.

Traders believe that it’s unlikely that Japanese monetary authorities will act directly selling yen unless the key index Nikkei 225 falls below 9,000 or the pace of yen’s advance becomes higher. It’s more possible that the Bank of Japan will use some form of monetary easing, believe the market’s participants.

Economics Minister Satoshi Arai claimed recently that the sole verbal intervention may be not enough to prevent yen from gaining, while the former Japanese currency policy chief Hiroshi Watanabe noted that the country may intervene, possibly on its own, if the yen climbs about 3 yen against the dollar a day.

EUR/USD: comments

The single currency rebounded from yesterday’s minimum at 1.2730 and managed to overcome resistance in 1.2870 at the beginning of the European trade. Then it went a bit down affected by discouraging German economic confidence data before the new advance and break-up of 1.2900 level. The recent maximum was set at 1.2915.

German ZEW Economic Sentiment index dropped from 21.2 points in July to 14 points in August, while the economists expected smaller decline to 20.6.

If the pair EUR/USD keeps rising, resistance levels will be found at 1.2905/15 (August 13 maximum/session maximum), 1.2935 (August 12 maximum) and 1.2980/90 (intraday level). If European currency declines, support levels will be at 1.2800/05 (session minimums), 1.2770 (intraday level) and 1.2735 (July 21 minimum).

Sakakibara: USD/JPY will fall to 79.75 yen in September

Eisuke Sakakibara, formerly Japan’s top currency official, claimed that the United States won’t support Japan’s possible intervention to the currency market in order to reduce yen’s rate versus the greenback as weaker dollar’s helping American exports.
Sakakibara thinks that intervention performed by Japanese monetary authorities on their own without help from the US won’t be effective. In addition, the policymaker noted that the Bank of Japan’s further monetary easing won’t be able to halt yen as well as Japanese monetary policy is already quite loose and additional measures won’t have much impact on the exchange rate.

According to the economist, Japanese currency may climb to post-war maximum at 79.75, reached in April 1995, already at the end of September.

Sakakibara also underlined that the real rate is much weaker than the current levels. If we compare yen in 1995 and yen today, we’ll see that 80 yen that time equals to 60 or 70 yen today, noted the specialist. In his view, the fact that the performance of Japanese economy is relatively better than that of the US one means a lot as well and investors shouldn’t worry about 80-85 levels.
 
Barclays: pound won't be able to hold gains

Technical analysts at Barclays Plc believe that any advance of the British currency made this week may be erased.

According to the specialists, bearish weekly engulfing candle would mean that the pair GBP/USD won’t be able to hold any growth. The strategists believe that pound may rise this week to $1.6010 and then reverse. As a result, the bank recommends investors to sell sterling when it approaches $1.5825.

Last week British currency lost 2.2% after reaching the maximum since February. GBP/USD is currently trading in 1.5525 area.

Loonie strengthens on purchase offer for Potash Corp.

Canadian currency advanced versus all of its major competitors helped by the world’s stock markets’ growth and $39 billion purchase offer from BHP Billiton Ltd. to Potash Corp. of Saskatchewan Inc, claims Bank of Nova Scotia’s Scotia Capital.

The specialists note that Canada’s Potash, the world’s largest fertilizer producer, rejected takeover proposal from Australian BHP Billiton as too low and, consequently, provoked speculation about a higher bid.

Analysts at Citigroup Inc. note that successful price given for Potash will increase investors’ demand for loonie. In their view, such offer for Canadian company means that the country’s resource sector remains attractive for investors even in the current conditions when the market sentiment seems to be pessimistic. Strategists at Royal Bank of Canada underline that loonie has become nowadays a powerful petro-currency.

The pair USD/CAD dropped from yesterday’s maximum at 1.0437 and is trading currently in 1.0320 area.

RBC: Canada’s CPI will be above forecast

Strategists at Royal Bank of Canada believe that the release of Canada’s CPI scheduled on Friday, August 20, will be important for USD/CAD future dynamics.

Economists surveyed by Bloomberg expect that in July Canada’s annual inflation rate gained pace. According to them, the country’s CPI added 1.9% from the previous year, while the increase in June was equal only to 1%.

RBC specialists believe that it’s very likely that the reported figure will turn out to be above the market’s expectations.

Commerzbank: pound may fall to 1.5201 versus dollar

British currency lost 200 pips falling from 1.5700 yesterday session’s minimum at 1.5500 today. Technical analysts at Commerzbank note that GBP/USD broke down through the uptrend channel support line at 1.5610 and test support area at 1.5526/02.

The specialists believe that if sterling gets below 1.5502 (200-day MA), it will survive further decline to 1.5304/1.5274 area (38.2%/50% Fibonacci cluster) and then to 1.5201 (55-day MA).

If pound manages to rebound, resistance levels will be found at 1.5709 and between 1.5750 and 1.5820 (August 5 minimum). According to Commerzbank, the outlook remains bearish while the pair’s trading below 1.60 level.

Yen’s up on demand from Japan

Japanese currency was up today stimulated by demand for yen provided by Japan’s investors and exporters.

Specialists at Shinkin Asset Management note that the pair USD/JPY keeps trading within downtrend. The specialists claim that there’s speculation at the market that there are a lot of dollar offers above 86.50 yen level that makes the players think that it’s useless to chase the greenback above 86.00 yen.

Moreover, there was information received from Japanese bank’s manager that the country’s exporters were placing dollar offers from around 86.50 yen to 89.00 yen, while their previous selling levels were found at 90 yen area.

According to Tokyo Financial Exchange data, Japanese margin traders' net long positions in USD/JPY were still high on Tuesday at 146,095 contracts and about $1.46 billion in value, although below maximum at 182,966 contracts reached on August 6. Such margin traders who bet on American currency will benefit when it climbs. Such trade will limit the currency’s growth. In case the greenback plummets, Japanese retail margin traders will have to reduce long dollar positions strengthening dollar’s decline.

The market keeps being concerned about the possible intervention of the Bank of Japan. As the speculation of some steps of the central bank to prevent the national currency from appreciation may help dollar to recover versus yen in the near-term, US currency will drop to 83 yen if there will be no measures taken.

The release of BoE MPC meeting minutes

The minutes of Bank of England Monetary Policy Committee’s meeting released today showed that the MPC members voted again 8-1 with Andrew Sentence who keeps proposing to increase the key interest rate by 0.25%.

Among the arguments for easing there were the credit conditions in the country, weak demand and austerity measures aimed to cut the budget. The main reasons for lifting up the rates included the fact that economy’s getting better as surveys indicate the strength of manufacturing in the third quarter and risk of CPI growth marked by surging cost of agricultural commodities.

Westpac: Aussie declined versus yen

Australia's currency lost to the majority of its main competitors as the number of skilled vacancies in August decreased by 0.3% in August from July and the pace of wage growth went down in the second quarter. As a result, investors became surer that the country’s central bank will leave the key interest rates unchanged at 4.5%.

Strategists Commonwealth Bank of Australia note that Aussie depreciated versus yen affected by the speculation that Japanese monetary authorities won’t intervene to the currency market in order to prevent the national currency from excessive strengthening. Specialists at Westpac Banking Corp. in Sydney advise investors to sell Australian dollar against yen as there’s a lot of uncertainty at the market and investors will prefer Japanese currency.

AUD/JPY dropped from yesterday’s maximum at 77.68 to current levels in 76.90 area.

China doubled KTB holdings

China increased South Korean bond holdings (KTB) more than twice during the first half of this year to 3.99 trillion won ($3.4 billion). China’s holdings of Treasuries decreased, consequently, by 6% and became equal to $843.7 billion.

The specialists from Beijing’s University of International Business and Economics note that the global financial crisis and European debt crisis reduced the significance of both the dollar and euro, while role of some emerging-market currencies rose. As a result, economists believe that it’s reasonable for China to allocate some reserves to financial assets in major Asian economies.

China’s monetary authorities chose KTB due to their attractiveness and high liquidity and in order to differentiate foreign exchange reserves.

Specialists at Societe Generale SA in Tokio claim that China may buy about 4 trillion won of KTB by the end of 2010. Such move’s likely to create strong demand-supply imbalance in the Korean debt securities making the yields slump.
 
UBS: euro will rise to $1.328 before declining to $1.15

Analysts at UBS AG believe that the single currency may gain 3.2% climbing to August 9 maximum at $1.328 and then reverse and drop to the 7-year minimum against the greenback at $1.15 in 3 months.

The specialists note that although they bet on EUR/USD decline in the medium term, it’s important to point out that in the shorter term there are much chances of euro’s strengthening. In case quantitative easing remains and market gets confident that the Federal Reserve manages not to let the double dip, demand for riskier assets will rise and dollar may find itself under pressure, supposes UBS.

Yesterday the Fed purchased outright $2.551 billion of Treasuries for the first time since October. Earlier, on August 10 the central bank announced about its decision to invest payments of its holdings of mortgage bonds in debt securities.

In addition, the strategists note that one more positive factor for the European currency is that positive surprises in euro zone countries’ growth leave behind the American ones. Moreover, concerns about easing help to narrow spreads between bonds issued by major and peripheral European nations.

Commerzbank: EUR/USD is testing 1.2787/32 support

European currency failed at 1.2900/20 resistance area and fell to the minimal level at 1.2780.

Technical analysts at Commerzbank note that the pair EUR/USD is testing June-August support line and Jul 21 minimums at 1.2787/32. According to the specialists, only these levels can trigger euro’s advance to 1.3000 zone if the common currency manages to get above Tuesday’s maximum at 1.2918.

If the pair goes down below 1.2732, it will likely drop to 1.2673 (May 21 maximum). The next support level will be found at 1.2642 (55-day MA).

Okasan Securities: euro’s again under pressure

European currency fell for the second consecutive day versus the greenback as concerns about euro area’s economic recovery strengthened again.

German magazine Der Spiegel reported today that Greek austerity measures have a very negative impact on the country’s economy citing the figures that show that unemployment rate in some areas climbed to 70% increasing social tensions.

In addition, Stoxx Europe 600 Index was down for the second day in a row losing 0.3%.
Currency strategists at Commerzbank AG in Frankfurt note that fiscal measures conducted in Europe will be affecting the region’s growth during the coming years. The specialists believe that the single currency will stay in range between $1.27 and $1.30 in case there will be no negative data shocks.

Analysts at Okasan Securities Co. in Tokyo recommend selling euro as there’s no real improvement in euro area’s macroeconomic fundamentals.

Economists at NTT SmartTrade Inc., the unit of Nippon Telegraph & Telephone Corp., underline that the pressure on European currency strengthened as Japanese margin traders placed automatic orders to sell the currency if it declined to a $1.2850 level.

Dollar’s down after capping at 85.95 yen

The greenback began the day advancing versus yen on the speculation that the Bank of Japan will hold an emergency policy meeting. The pair USD/JPY went up from Wednesday’s minimum at 85.20 to cap at 85.95 where US dollar reversed and retreated downwards. American currency is trading currently above today’s opening price in 85.50/60 area.

Japanese currency weakened as the country’s Ministry of Finance reported that Japanese investors bought a net 2.18 trillion yen ($25.6 billion) of foreign debt in the week of August 8-14 that is the highest purchase volume since January 2005.

The Sankei newspaper reported today that the Bank of Japan began analyzing what monetary easing steps may be used to support the country's economy. The most likely variant is that the central bank will either expand the fund supply volume from 20 to 30 trillion yen ($352 billion) or extend the duration of cheap, fixed-rate loans to banks from 3 to 6 months. Never the less, analysts at Barclays note that these measures will be implemented later than the market expected.

The majority of traders don’t believe that Japan’s monetary authorities will conduct direct intervention to lower the rate of national currency unless yen approached 80 level.

Mitsubishi UFJ: positive data for GBP/USD

British currency fell from yesterday’s maximum at 1.5685 and bottomed today at 1.5510. Then pound jumped to session’s maximum at 1.5665 as retail sales added 1.1% in July while the economists were looking forward only to 0.4% increase.

In addition, government’s net borrowing decreased last month to 3.17 billion pounds ($5 billion) from 5.52 billion pounds the previous year.

Strategists at Bank of Tokyo Mitsubishi UFJ Ltd. in London that such positive data will be supporting pound in the near term.

If the pair GBP/USD keep rising, resistance levels will be found at 1.5690/00 (August 16/17/18 maximums), 1.5750 (50% retracement of decline from August 8 to August 18) and 1.5820 (August 11 maximum). If sterling declines, support levels will lie at 1.5500 (August 18 minimum), 1.5470 (July 15 maximum) and 1.5380/90 (161.8% Fibonacci extension of decline from August 16 to August 18).

If cable manages to overcome 1.5700 level, it will gain upward momentum, claim technical analysts. If pound gets down below 1.5497, it may fall to 1.5473/40.

Minezaki: yen’s growth weights on exporters

Japanese vice Finance Minister Naoki Minezaki claimed today that he’s concerned that European and American attempt to depreciate their currencies in order to support national exports. As a result, yen added 6.9% versus the greenback and 4% versus the single currency.

The policymaker thinks that the nations shouldn’t try to benefit at the expense of other states. According to him, the current situation strongly affects Japan’s exporters.
Minezaki said monetary easing won’t help to solve Japan’s deflation as it, in his view, can’t be defeated with more liquidity.

Franc rose on strong trade balance data

Swiss franc strengthened today versus 15 of its 16 major competitors helped by the positive macroeconomic data from Switzerland.

The country’s trade surplus climbed in July to a record level 2.89 billion francs ($2.77 billion) from 1.77 billion francs the previous month strengthening the expectations that the Swiss National Bank (SNB) will lift up its benchmark interest rate.

Analysts at Danske Bank A/S in Copenhagen claim that the recovery in the external demand is important factors to keep Switzerland’s rebound going and for the SNB to move toward a less expansionary policy.

Switzerland’s central bank changed its approach to franc’s appreciation at its meeting on June 17. The SNB noted that it’s not possible to hold the interest rates at the minimal 0.25% level in the medium term because that will lift up inflation. As for deflation risks, they have almost disappeared.
 
24/08/10

Forecast Pte: AUD/USD targets 5-week low

Technical analyst at Forecast Pte said the AUD/USD may drop to 5-week low if the pair closes today below strong support at 88.76.

Analyst claim that Aussie is in a “down move” and could fall past 88.76 cents — 38.2% Fibonacci retracement of the AUD/USD rally from a July 1 low to an Aug. 6 high.

Besides that, daily technical indicators such as the moving average convergence/divergence, or MACD, indicate the potential downtrend for the Aussie versus the greenback.

Technical analyst said that the Aussie needs to breach the level of 88.76 cents. For this week, it’ll consolidate and then continue lower to as weak as 86.34 cents, the July 19 low.

MACD was at 0.0017 today, compared with 0.0051 for the signal line. The drop of the MACD below the signal line suggests the Aussie will weaken.

The MACD is calculated by subtracting the 26-day exponential moving average, or EMA, from the 12-day EMA. A 9-day EMA of the MACD, called the signal line, is plotted on top of the MACD, functioning as a trigger for buy and sell signals.

RBC: GBP/CAD may fall

Royal Bank of Canada said cable may fall against loony if it trip below C$1.6241.

The British pound found resistance at C$1.6328 and C$1.6377. The sell signal for sterling was derive from a trend reversal when the pound fell below C$1.6328.

It may be a short-term selling for a test of initial support at 1.6241. If the GBP/CAD drops below this level, the pair will find support near 1.6179/1.6151.

From the beginning of this year, the British pound has fallen 4.2% against the Canadian currency.


Commerzbank: GBP/USD below 200-day MA

Technical analysts at Commerzbank said the cable fall on Asian session to 1.5400 low, breaking below the 200-day MA at 1.5469, although superficial rebounds are not ruled out.

We cannot see pound rebounds until it trades below the 200-day MA. Only we can notice a near term tepid rebounds, said at Commerzbank.

In case of downside movement, while GBP/USD trades below strong 1.5636 — past week maximum — and 1.5714 — October low — resistance, a decline towards the 38.2% Fibonacci at 1.5322 and 55-day MA at 1.5289 remains in the pipeline.

Danske Bank: the market is testing how far they can take the yen

The Japanese yen move on to the highest level since June 1995 against the US dollar, to the most since 2001 versus euro. The greenback climb to a 6-week high versus the euro as concern the global economy is slowing. The pound slid to a 4-week low after the London-based Times cited Bank of England policy maker Martin Weale as saying the U.K. faces a “real risk” of a second recession.

Data forecast shows the U.S. housing market slowed and German business confidence fell.

Strategiest at Credit Agricole Corporate & Investment Bank in London said the yen and the dollar are doing well because the world is doing badly.

Japan’s currency rose to 106.11 per euro — the maximum since September 24, 2001. The yen advanced to 84.40 per dollar from 85.16, after earlier touching 84.16 — the strongest since June 28, 1995.

The dollar climbed to $1.2603 per euro — the strongest since July 13.

From the beginning of the year, the yen has raised 16%, the euro has fall 9.3%, and the dollar is up 4.3%.

Currency researchers at Danske Bank A/S in Copenhagen said about continuation of the trend in the last few days with increasing fear of a global slowdown. The market is testing how far they can take the yen.

The gains accelerated after automatic orders to sell the currency to limit losses were triggered after its strengthened beyond the July 1995 level.

According to median estimate of economists in Bloomberg News, sales of existing U.S. homes dropped 13% to a 4.65 million annual rate in July. U.S. new home sales held at an annual pace of 330 000 in July, according to another Bloomberg survey before tomorrow’s data.

On-line analytics from FBS always is available on our website www.fbs.com
 
You must log in or register to reply here.

Similar threads

G
Goldman Sachs: bidu to $145 in 6-month
Replies
0
Views
1K
godoftrading
G
kaciara
US Treasury Secretary Says No Bank Would Have Survived 2008 Crisis
Replies
1
Views
2K
james_smart
J
F
EUR/JPY Hits A New 4-Year High - FXNET Daily Market Analysis
Replies
0
Views
2K
FxNet
F
jezza888
Understanding at the core
Replies
8
Views
4K
jezza888
jezza888
BSD
Banking: This Disaster Was Guaranteed
Replies
0
Views
2K
BSD
BSD
Top