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August/31/2011- Comments and forex-analytics from FBS

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August/31/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Wed Aug 31, 2011 8:28 am

UBS: EUR/USD and AUD/USD technical levels

Analysts at UBS are bullish on the single currency and Australian dollar versus the greenback. Here’s their technical forecast.

EUR/USD

Resistance: $1.4578;

Target: $1.4697 (June 7 maximum);

Support: $1.4328, $1.4259.

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AUD/USD

Resistance: $1.0786;

Target: $1.1007 (late July maximums);

Support: $1.0561.

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Commerzbank: comments on EUR/USD

The advance of the single currency versus the greenback stopped at $1.4550 – between July 4 maximum at $1.4577 and July 27 maximum at $1.4535 – and euro eased to $1.4400/50.

Technical analysts at Commerzbank note that EUR/USD may slide lower, to $1.4316. At the same time, the specialists say that in the longer term the outlook for the pair will remain bullish as long as it’s trading above 2-month support line at $1.4272.

If euro breaks down this level, it will be poised down to August minimum at $1.4055

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UBS and Deutsche Bank: comments on EUR/CHF

Аналитики UBS считают, что, несмотря на текущий откат ниже 1.1700, единой валюте удастся продолжить рост по отношению к швейцарскому франку, если она сможет воспользоваться поддержкой в зоне 1.1630. Если пара EUR/CHF отскочит наверх от этих уровней, она сможет подняться к 1.1897, 1.1973, а затем к 1.2172.

Стратеги Deutsche Bank полагают, что евро не сможет уйти выше 1.25 против швейцарского франка. С их точки зрения, факторы, традиционно определявшие динамику EUR/CHF – профицит платежного баланса Швейцарии и долговые проблемы еврозоны – вновь вступят в силу. В банке подчеркивают, что если европейская валюта вновь приблизится к паритету со своим швейцарским конкурентом, то вполне естественным шагом Швейцарского Национального банка станет крупномасштабная валютная интервенция.

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Re: August/31/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Wed Aug 31, 2011 2:21 pm

Standard & Poor's about European economy

Standard & Poor's warned yesterday that the risk of double dip recession in the euro area has increased due to slowdown of the region’s economic growth. The rating agency notes that high unemployment and recent slump of equities may affect spending – S&P is going to watch the dynamics of consumer demand in the coming quarters.

The specialists still think, however, that Europe will be able to avoid the double dip due to such drivers of growth as demand from emerging markets and the recovery, though sluggish, in corporate capital spending.

Euro zone GDP growth slowed from 0.8% in the first 3 months of the year (q/q) to 0.2% in the second quarter casting doubts on the euro area’s prospects over the next 18 months through 2012. In addition, the agency notes that there’s still strong divergence on the European nations’ economic growth.

Standard & Poor's lowered the region’s growth forecast from 1.9% to 1.7% this year and from 1.8% to 1.5% in 2012.

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WSJ: What Greel default would mean for Europe?

Economists at Wall Street Journal note that the yield on Greek 1-year government bills hit 60% yesterday. In their view, the nation’s default seems inevitable and its terms will be extremely brutal for investors with recovery rates possibly even lower than the currently anticipated 50%.

It’s very difficult to foresee the consequences in case of Greek default, but the economists believe that they’ll be beyond expectations.

According to the Bank for International Settlements, European banks have a total exposure of 94 billion euro to the Greek economy (French institutions account for 40 billion euro, while the German ones – for 24 billion euro). The International Accounting Standards Board is worried that European financial institutions have been fudging their exposure to Greece, so the situation may be actually much dimmer.

The IMF Managing Director Christine Lagarde said that European banks need urgent recapitalization. WSJ points out that the banks should seek private resources at first, but then they are to be granted with public funds if necessary. If the banks get no additional capital, there will be a significant credit contraction derailing economic growth of the core nations of the currency union. As a result, the demand for exports of the peripheral countries will fall causing a downward spiral throughout the single-currency region.

The WSJ analysts worry that it may be too late for recapitalization now as investors won’t surely be eager to pump more capital into the banks. In their opinion, such efforts should be taken a year ago.

TD Bank: Canada’s economic forecast

Analysts at TD Bank reduced Canada’s economic growth forecast from 2.8% to 2.3% in 2011 and from 2.5% to 2% in 2012.

According to the specialists, Canadian economy is very tightly connected with the US one, so if American GDP contracts, the same will happen with Canada’s economy.

The bank expects that the United States will avoid recession in the coming quarters, but if it's wrong that would mean serious problems for Canada.

According to the data released today, Canada’s GDP contracted by 0.4% on the annual basis 3.6% advance in the first 3 months of 2011. US annual economic growth pace in Q2 was revised downwards from 1.3% to 1%.

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