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August 25nd- Comments and forex-analytics from FBS

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August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 8:46 am

BBH and UBS regard QE3 as unlikely

Analysts at Brown Brothers Harriman believe that the although investors’ sentiment has worsened during the last several weeks, the markets will get disappointed as the Fed, in their view, won’t announce the third round of quantitative easing in the current circumstances. According to the specialists, the markets will remain in the risk-off mode and the demand for safe haven currencies will continue being high.

Strategists at UBS also don’t expect the QE3. The bank thinks that the Fed will try to reassure investors by outlining the central additional monetary policy tools against the nation’s economic weakness without committing to use them. As a result, that might disappoint dollar bears.

The Federal Reserve’s Chairman Ben Bernanke will speak tomorrow at 6:00 pm (GMT+4) in Jackson Hole, Wyoming.


Capital Economics: USD/JPY forecast

Currency strategists at Capital Economics still think that he greenback will be able to rise to 85.00 versus Japanese yen by the end of 2011. Such forecast is based on the assumption that the Bank of Japan will continue easing its monetary policy and that Japan will become less attractive as a refuge.

The specialists underline that if the Federal Reserve doesn’t start new round of QE, while the BOJ continues expanding its asset purchase program that will be sufficient to drive yen down. In addition, investors may start worrying about the economic and fiscal position of Japan itself.

Yesterday Moody’s Investors Service reduced Japan’s credit rating by one step to Aa3 – not very surprising event taking into account the fact that Japanese monetary authorities have made no efforts to reduce the nation’s dent.

It’s necessary to note, however, that if the Swiss Central Bank will do more easing measures to weaken franc, demand for yen may rise, says Capital Economics. In this case the pair USD/JPY may drop to 70 yen and even lower.

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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:02 pm

J.P.Morgan recommends avoiding loonie

Currency strategists at J.P.Morgan claim that once one is bullish on oil, all he needs is to choose which currencies of oil-producing nations to trade.

The specialists warn that it’s necessary to be very cautious with Canadian dollar as its dynamics is strongly correlated with the moves of S&P 500 Index. So does Mexico's peso and Russian ruble.

As a result, the best choice for such traders is Norwegian krone.

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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:06 pm

UBS: forecast for USD/JPY

Analysts at UBS claim that Japanese monetary authorities have to wait until the Federal Reserve’s intentions about the QE become clear before conducting any forex interventions.

In their view, if the Fed doesn’t signal additional QE, there’s no need to step in the currency market. Otherwise, it may be necessary to wait until US dollar drops lower where it would be easier to make a big push.

The specialists left their 1-month forecast for USD/JPY at 77 yen.

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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:09 pm

Feldstein on weak US dollar

According to the data released today, initial jobless claims in US rose to 417,000 during the week ended on August 20 from 412,000 a week ago, while the economists were looking forward to the decline to 403,000.

Nouriel Roubini, professor of economics at New York University famous for predicting 2008 global crisis, says that Non-Farm Payrolls may be in August zero or even negative, while in July the number of jobs in the United States rose by 117,000. The NFP data is releases on Friday, September 2, at 4:30 pm (GMT+4).
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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:13 pm

Standard Chartered cut euro area's GDP growth forecast

Analysts at Standard Chartered lowered euro zone’s economic growth forecast from 2% to 1.8% in 2011 and from 2.2% to 1.5% in 2012.

Among the reason of the downward revision of their projections the specialists named weak GDP growth in the region’s core economies and worsening European consumer and business sentiment. In their view, these factors have aggravated the situation that has already been quite complicated. The serious obstacles come from the fiscal and monetary tightening, weaker global growth and continued weak bank lending.

At the same time, the strategists note that the 2Q GDP numbers may be exaggerated to the downside, while the burden of higher commodity prices and Japan's supply-chain disruptions might no longer affect growth in the third quarter.
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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:16 pm

Feldstein on weak US dollar

Martin Feldstein, well-known economics professor in Harvard University, thinks that weak dollar is a really positive factor for US economy as it’s encouraging the nation’s exports and increase domestic demand for the goods produced in America as the import prices rise.

Moreover, another positive moment is that the declining dollar isn’t increasing the national debt. In addition, the greenback’s slump didn’t propel the pace of CPI growth.

It’s necessary to note, however, that although Feldstein forecasts further declines in dollar’s rate, he says that he isn’t calling for the currency’s depreciation. The thing is that declining dollar affects personal incomes as the households to pay more for imported items.

The economist warns that the Fed is running out of monetary tools to stimulate the US economy. Feldstein says that another round of asset purchases accelerate dollar’s fall.

According to the data from Bloomberg, the greenback has lost 6.3% this year being the worst performer among the 10 major currencies. USD contracted by 49% since the record maximum in 1985. American exports have climbed 16% this year through June compared with a year ago. The nation’s annual economic growth slowed down from 3.9% at the beginning of 2010 to 1.3% in the second quarter of 2011.
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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:18 pm

Commerzbank: GBP/USD technical levels

British pound didn’t manage to get yesterday above resistance in the $1.6539/47 area and pulled down below the 50% Fibonacci retracement level of the decline from April to July at $1.6370.

Technical analysts at Commerzbank believe that GBP/USD is poised down to July 21 maximum at $1.6330. If the pair breaks even lower than this level, it will drop to the channel support and the 50% Fibonacci retracement at $1.6264 and 55-day MA at $1.6224.

The specialists claim that if sterling closes today above the 3-month maximum at $1.6617 reached last week, it will once again get chance to climb to $1.6687/1.6745 (200-week MA and April maximum).

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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:21 pm

Wells Fargo: Friday release of US GDP

US second quarter GDP is released for the second time on Friday at 4:30 pm (GMT+4). Consensus forecast is that the initial reading will be revised down from of 1.3% to 1.1%.

Analysts at Wells Fargo point out that since the last publication of the Q2 growth figures some new data has been released.

On the one hand, inventories and net exports were weaker than the government’s initial estimates, so their contribution to GDP will be revised down. On the other hand, the negative effect will likely be offset upward revision in the construction and consumer spending.
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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:30 pm

Bernanke's won’t signal more QE

The majority of experts think that the Federal Reserve’s chairman Ben Bernanke won’t announce the resumption of the quantitative easing program. The main arguments against more QE are increasing inflation and the fact that the US is currently in no recession.

It’s widely thought that Bernanke will talk about the options for further stimulus and clarify how much the Fed’s reduction in its outlook this month stems from long-term obstacles to growth.

The economists point out that it’s necessary to realize that the current situation is different from what was seen a year ago when QE2 was launched. The core CPI index that doesn’t include volatile food and energy prices added 1.8% during a year through July, while during the 12 months up to July 2010 it gained only 0.9%. The S&P 500 Index is still above 12% of the on the eve of Bernanke’s speech last year.

Bernanke will speak tomorrow at 6:00 pm (GMT+4) in Jackson Hole, Wyoming. His speech is entitled “Near- and Long-Term Prospects for the US Economy”.
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Re: August 25nd- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Aug 25, 2011 3:35 pm

Citigroup: world’s economic growth forecast reduced

Analysts at Citigroup reduced its global economic growth forecast from 3.4% to 3.1% in 2011 and from 3.7% to 3.2% in 2012.

The specialists think that the growth of the developed nations will likely remain sluggish at least until the end of 2012, while the unemployment will keep rising. The situation is aggravated by the abrupt tightening in financial conditions and doubts over scope for monetary and fiscal stimulus needed to help the economies rebound. At the same time, the major economies aren’t, in their view, in the treat of recession.

The United States, the euro area, Japan, and the United Kingdom are expected to go through a long period of extremely low interest rates.
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