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August/30/2011- Comments and forex-analytics from FBS

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August/30/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Aug 30, 2011 10:00 am

Commerzbank: technical comments on EUR/CHF

Technical analysts at Commerzbank note that the single currency has broken above 4-month downtrend resistance line at 1.1772 and tested the levels above the 32.8% Fibonacci retracement of the decline from 2010 to 2011.

In their view, this means that the pair EUR/CHF has potential for an advance to 1.2346/1.2400 (December 2010 and March 2011 minimums and June 2011 peak). The long-term target for euro is set at 1.2708 (55-week MA).

However, in the short run the bank expects the European currency to stall below the psychological resistance at 1.20. In their view, support for the pair is found at 1.1809 (June minimum) and 1.1557 (August 17 maximum).

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Citigroup is bullish on USD/CHF and EUR/CHF

Technical analysts at Citigroup believe that as the pair USD/CHF managed to close yesterday above the 55-day MA at 0.8089, it will be able to rise to the 200-day MA at 0.8921 climbing to the levels last seen in May.

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Chart. Daily USD/CHF

The specialists also think that the pair EUR/CHF will reach 1.24 after on August 26 it closed above the 55-day MA at 1.1529.

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ING: USD/JPY will trade in the 75/85 yen area for 6 months

Currency strategists at ING Commercial Banking believe that Japan has so far elaborated a more interventionist approach concerning the appreciation of its national currency.

The specialists refer to the steps taken by Japanese authorities – the creation of a credit facility which encourages Japanese corporations to invest overseas and monitoring of open positions at the commercial banks.

According to ING, Japan is now more likely to intervene if USD/JPY approaches 75 yen. As US currency remains weak, the analysts expect the pair to trade during the next 6 months between 75 and 80 yen.

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Re: August/30/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Aug 30, 2011 2:10 pm

Wells Fargo, Citigroup: US dollar-positive factors

Bloomberg says that US dollar has added 1.2% in August versus a of the developed world’s nine most-traded exchange rates after losing 14% from this time last year through July.

Currency strategists at Wells Fargo advise investors to buy the greenback versus Japanese yen and Swiss franc through the end of the third quarter as yen and franc are already very expensive and the Swiss National Bank and the Bank of Japan intervene to stem their gains.

At the same time, analysts at Citigroup claim that the currencies of commodity-producing nations such as Australia, New Zealand and Canada lose some of their attractiveness due to the global economic slowdown. In their view, if the commodities and equities keep suffering, one should buy US currency in the short term.

According to the data from the Organization for Economic Cooperation and Development, the greenback is undervalued by 47% versus CHF and by 31% against JPY. The OECD also says that USD is 37% below fair value against AUD and 20% versus CAD.

Never the less, economists at Royal Bank of Scotland believe that until dollar can demonstrate some independent strength, in particular, until it is supported by stronger economic data, it won’t show much of advance. The bank forecasts the greenback to end the third quarter at $1.45 versus euro and at $1.06 versus Aussie.

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Chart. Daily USD/CHF

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Michael Spence: 50% possibility of global recession

Nobel Prize winner Michael Spence sees the 50% chance of global economic recession.

In his view, the main risks come from Europe and the United States – the combined contraction of their GDPs will affect China’s exports and growth hitting other emerging economies.

Spence thinks that though after the 2008 crisis China managed to cushion the blow with a stimulus program, this time it wouldn’t be able to solve the problem that easily: with inflation that has reached 6.5% it would be insane for the nation’s authorities to encourage further credit growth.
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Re: August/30/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Aug 30, 2011 2:14 pm

BMO Capital: trading on hurricanes

The Atlantic hurricane season is traditionally lasting from June 1 to November 30, so even though Irene that kept US under a strain last week has passed, there may be other storms.

Currency strategists at BMO Capital note that it’s possible to gain on the hurricanes which are likely to go through the Gulf and disrupt oil production.

In their view, it’s necessary to catch the moment when the storm begins to build off Africa and start buying the currencies of oil-exporting countries like Canada and Norway.

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Commerzbank: ECB may stop hiking rates

According to the data from the European Commission, economic sentiment in the euro area fell from 103 in July to 98.3 in August, while the economists were looking forward to the decline only to 100.5. European quarterly GDP growth went down from 0.8% in the first 3 months of the year to 0.2% in the second quarter.

The ECB President Jean-Claude Trichet claimed yesterday that as the euro zone’s economic growth slows down, the central bank is reviewing its assessment of inflation risks – the results will be released in September.

It seems that Trichet’s views have changed: at the beginning of August 2 he said that risks to the inflation outlook were on the upside, while now the situation is quite the opposite. Analysts at Commerzbank note that this may mean that the European Central Bank’s rate hiking cycle is over.

As a result, the single currency fell versus the greenback. The pair EUR/USD dropped from yesterday’s maximum at $1.4550 to the levels in the $1.4400 area.

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