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October/04/2011- Comments and forex-analytics from FBS

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October/04/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Oct 04, 2011 4:21 pm

ANZ: the possibility of the RBA rate cut increased

Australian dollar fell to 1-year minimum versus its US counterpart at $1.9413.

It happened as the Reserve bank of Australia reported that the easing inflation pressure may allow it to reduce the borrowing costs in order to encourage economic growth.

The central bank’s Governor Glenn Stevens said that inflation may now be more consistent with the 2-3% target in 2012 and 2013.

The market now expects that the RBA will cut its benchmark interest rate from 4.75% to 4.25% be November and by 50 basis points more by the end of the year, claims ANZ. The specialists point out that it would be necessary to watch Q3 inflation reading as it would be the basis for November decision.

Analysts at Commonwealth Bank of Australia believe that AUD/USD may drop below $0.9000. Technical analysts at Commerzbank think that as long as the pair stays below $0.9580 (23.6% retracement of the entire 2001 — 2011 move), it risks sliding to $0.9407/.9390 (late 2009 and early 2010 maximums).

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Forecast Pte: technical comments on EUR/JPY

Technical analysts at Forecast Pte claim that he single currency may fall below 100 yen.

The specialists point out that euro’s MACD (moving average convergence/divergence) is in the downtrend: the indicator was found today at minus 1.8267 that’s below the signal line of minus 1.6881.

The pair EUR/JPY hit today the 100.74 level, the lowest since June 2001. According to the strategists, euro may slide to 96.84 yen, the level last visited on December 11, 2000.

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Re: October/04/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Oct 04, 2011 4:23 pm

UBS: ECB will cut rates on Thursday

Currency strategists at UBS believe that the European Central Bank will reduce its benchmark rate by 50 basis points to 1.0% on October 6.

According to the specialists, the downside risks for EUR/USD in the near-term come from the potential ECB easing rather than from the possibility of Greece’s default.

The bank underlines that the rates markets have priced in 25-basis-point cut, but the forex markets haven’t. If the ECB loosens its policy, long-term investors – central banks and sovereign wealth funds – will sell the single currency.

As a result, UBS thinks that EUR/USD will move down to $1.20/1.30.

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Deutsche Bank: GBP/USD forecast

Analysts at Deutsche Bank think that sterling’s decline versus 2011 maximums versus the greenback in the $1.6740 area will continue.

In their view, pound will stay under pressure due to high possibility of the second quantitative easing program in UK.

According to the bank, pound will fall to $1.5100 in the fourth quarter of 2011 and then consolidate between $1.4800 and $1.4900 during major part of 2012 before jumping to $1.5600 at the end of next year.

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Re: October/04/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Oct 04, 2011 4:25 pm

UBS: bullish forecast for USD/CAD

The greenback rose versus its Canadian counterpart from July minimums in the 0.9400 zone to the levels above 1.0500.

Currency strategists at UBS are bullish on USD/CAD as the Canadian trade flows worsen and the interest rate support is fading. In their view, the treat for CAD is in the growing reliance on foreign buying of debt denominated in loonie and rising domestic leverage levels.

According to the bank, the pair will reach 1.1000 by the end of the year.

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Goldman Sachs cut forecasts for euro

Analysts at Goldman Sachs reduced their 2012 global economic growth forecast from 4.3% to 3.5%.

Japan’s growth outlook for the fiscal year beginning in April 2012 was decreased from 2.5% to 2.1%, while the estimate of the nation’s GDP growth this fiscal year was lowered from 0.2% to 0.1%.

According to Goldman, the United States will come close to recession at the beginning of 2012 – its economy will add in the first quarter only 0.5%. The nation’s economic forecast for the next year was cut from 2.0% to 1.4%.

The specialists think that during the next several quarters the euro zone’s core nations such as Germany and France will go through mild recession beginning in the fourth quarter, while the peripheral nations of the currency union will suffer much more. European GDP will add in 2012 only 0.1%.

The bank also revised down 3-month forecast for EUR/USD from $1.40 to $1.38 and for EUR/JPY from 108 to 106 yen.

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Re: October/04/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Oct 04, 2011 4:27 pm

Roubini: euro zone needs 2 trillion euro

ouriel Roubini, professor of economics at New York University famous for predicting 2008 global crisis, says that the European bailout fund have to be increased to 2 trillion-euro ($2.7 trillion) before it’s too late. According to the specialist, this is the matter of not months, but weeks.

Roubini underlines that the main risks come from Italy and Spain as these nations are “too big to fail but also too big to save” – these nations have already lost the market’s confidence.

The economist says that the ECB has to ease its policy and cut rates depreciating euro. In his view, it’s also necessary to recapitalize European banks and set an orderly process to allow Greece quit the euro area. Fiscal stimulus at the core members of the currency union is also needed to avoid a recession for all European countries.

Roubini notes that the chance that all these measures will be conducted in a coherent way is low as there are serious political tensions. The specialist warns that the consequences of the European debt crisis will likely be worse than those of the Lehman Brothers collapse.

Mizuho, Nomura: euro remains under pressure

Analysts at Mizuho Securities note that there isn’t much progress in containing the sovereign crisis. In their view, the euro area risks falling into recession. The specialists believe that in these circumstances the single currency will stay under pressure. According to the bank, euro seems oversold and may recover a bit, but this upward correction will be short-lived.

Currency strategists at Nomura Securities think that the single currency may fall to the lowest levels since the beginning of the debt crisis in the $1.1800 area.

European finance ministers considered “technical revisions” to the second bailout package adopted in July during their 2-day meeting. The deal foresaw investors contributing 50 billion euro ($66 billion) to a 159 billion-euro rescue. That “private sector involvement” includes debt swaps and rollovers. According to Luxembourg Prime Minister Jean-Claude Juncker, the revisions may be necessary as the situation has changed since July.

The decision about granting Greece the next tranche of financial aid was postponed to the middle of October. Greek Finance Minister Evangelos Venizelos said that the nation will be able to repay its debts until the middle of November.

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Re: October/04/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Oct 04, 2011 4:30 pm

Mizuho: forecasts for EUR/USD

Analysts at Mizuho believe that the single currency will fall versus the greenback to $1.3100 in a month, then rebound to $1.3400 by the end of 2011 and reach maximum at $1.3600 in 6 months before resuming its decline. The specialists say that the pair EUR/USD will trade at $1.3000 in a year from now.

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