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October/07/2011- Comments and forex-analytics from FBS

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October/07/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Oct 07, 2011 1:59 pm

The market’s looking forward to NFP release

The main piece of data for today is the US September Non-Farm Payrolls figure released at 12:30 GMT.

Economists surveyed by Bloomberg News believe that the number of jobs increased last month by 55,000. The unemployment rate is expected to stay at 9.1% for the third month in a row. In August the number of employed remained unchanged versus the forecast of 68,000 increase.

The current situation of uncertainly about the global economic prospects and the concerns about European and US debt ruins American consumer and business confidence that, in its turn, affects spending and hiring. Analysts at Goldman Sachs estimate the chance of recession in the United States during the next year by 40%.

Specialists at TD Securities say that for the jobless rate to decline by 1 percentage point over a year payrolls should rise by 200,000 a month. During the 18-month recession that ended in June 2009 the nation’s economy lost 8.75 million jobs – only 1.9 million of them was recovered through August. US President Barack Obama proposed a $447-billion plan in September aimed to maintain growth and pushing down the unemployment rate next year.

As the market thinks that the number of jobs added last month in the US won’t be enough to curb unemployment, the mood is far from optimistic that supports demand for the greenback as the safe haven.

ECB announced the measures to support euro area banks

The European Central Bank announced new liquidity measures yesterday – 12- and 13-month loans in October and December, giving banks access to unlimited cash through January 2013, and the resumption of 40-billion euro covered bonds purchases aimed to encourage lending.

Strategists at UBS say that the measures should bolster the prospects of renewed net inflows to the euro zone. The specialists also point out that the ECB President Jean-Claude Trichet didn’t hint at a rate cut, so both the single currency and stocks will get support.

In addition, the European Commission is pushing for a coordinated capital injection into banks, while German chancellor Angela Merkel claimed that Germany would not hesitate to recapitalize banks. On Sunday, October 9, Merkel is meeting French President Nicolas Sarkozy. The process of EFSF bill ratification is continuing: there are only 2 member nations left – Slovakia and Malta – who still haven’t made the decision.

The pair EUR/USD rose from the 8-month minimum at $1.3145 hit on October 4 to the levels above $1.3400. Analysts at Brown Brothers Harriman believe that euro will be able to climb to $1.36/1.37, but then the demand for it weakens again and it will start falling again to end 2011 at $1.29.

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Re: October/07/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Oct 07, 2011 2:08 pm

Reuters’ poll: GBP/JPY prospects

British pound declined versus Japanese yen from 2011 maximums in the 140.00 area to the levels below 117.00.

The survey conducted by Reuters among more than 60 banks and currency analysts shows that the specialists expect GBP/JPY to bottom out at the current levels and then start rising.

According to their median estimate, the pair will be gradually moving up during the next 12 months to trade 118.60 in a month and then reach 123.20 in 6 months and 128.6 in September 2012.

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RBS: Aussie may return to the parity versus the greenback

Currency strategists at RBS note that though commodity currencies have been weakening so far (Australian, New Zealand’s and Canadian dollars all lost 8-10% in the third quarter) the situation is likely to change.

The specialists who have developed “economic surprise index” believe that the markets’ sentiment in the fourth quarter is going to improve as the flood of the negative news will abate, even though the Europe will keep facing serious debt issues.

In their view, the worst for AUD, NZD and CAD might be over, though they don’t completely rule out the risk that these currencies retest their Q3 minimums.

Aussie seems to be especially attractive as Australia has the biggest interest rates that lure investors with yield and if the Reserve Bank of Australia doesn’t cut the borrowing costs, the nation’s currency would get additional driver.

According to RBS, the pair AUD/USD will return to the parity versus the greenback by the end of 2011. As for the single currency, the strategists see further depreciation, but don’t expect the currency union to collapse.

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