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October/14/2011- Comments and forex-analytics from FBS

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October/14/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Oct 14, 2011 4:34 pm

S&P cut Spain’s credit rating

Agency Standard and Poor’s lowered Spain’s credit rating from AA to AA- with a negative outlook. This is S&P’s third downgrade of the nation since 2009 when the country lost its AAA status. As the reason for the move the specialists cited the elevated risks to Spain’s economic growth prospects, difficult situation on Spanish labor market and the likelihood of further asset deterioration for Spain's banks.

Analysts at Westpac believe the single currency will find itself under negative pressure versus the greenback and fall below $1.3150 in a month. Strategists at BNP Paribas are also bearish. In their view, the pair EUR/USD will return down to $1.35 in the short-term.

It’s also necessary to note that another agency Fitch Ratings cut credit ratings of several major European banks – UBS, Lloyd's Banking and Royal Bank of Scotland – and placed Barclays Bank, BNP Paribas, Credit Suisse, Deutsche Bank and Societe Generale on negative watch.

Euro has so far been supported ahead of EU summit on October 23 and G20 meeting on November 3-4. Today finance ministers and central bankers from the world's 20 biggest economies meet in Paris to discuss the possible solutions of the debt crisis.

Bloomberg reports that, according to the unnamed G20 and IMF officials, the nations will consider the options of increasing the International Monetary Fund’s lending resources.

The pair EUR/USD declined from the 3-week maximum reached on October 12 to the levels in the $1.3750 area.

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Aussie dipped on negative news from Spain

Australian dollar dipped versus the greenback earlier today as the market’s positive risk sentiment was shaken after Standard and Poor's cut Spain’s credit rating from AA to AA- with a negative outlook.

Analysts at CMC Markets note that the downgrade made some higher-yielding currencies like Aussie hurt. The specialists underline that the initial investors’ reaction was kneejerk as traders weren’t sure how much of this downgrade had been already priced in AUD.

Since that AUD/USD stayed in range between $1.0145 and $1.0220. At the same time, it looks like Aussie is eager to continue its uptrend.

It’s necessary to note, that all in all Australia’s currency is heading for the weekly gain against its US counterpart ahead of EU summit on October 23 and G20 meeting on November 3-4. The market seems optimistic hoping that the European authorities will finally come up with the clear strategy of resolving the debt crisis. In addition, strategists Westpac remind that Aussie gets significant support from higher rates in Australia than other developed nations as well as from the favorable Australian economic data.

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Re: October/14/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Oct 14, 2011 4:36 pm

RBC: Aussie will strengthen versus kiwi

Analysts at Royal Bank of Canada advise investors to buy Australian dollar versus its New Zealand’s counterpart.

The specialists underline that the Reserve bank of New Zealand which reduced the benchmark interest rate by 50 basis points to 2.5% in order to help the national economy recover from the Christchurch earthquake won’t raise the borrowing costs until the second half of 2012.

RBC underlines that unlike few years ago most mortgages in New Zealand are now adjustable-rate. That means that the rate hike would have an immediate effect on the households’ finances. In addition, the funding costs of commercial banks are high, so they may raise the interest rates they charge even without the central bank’s monetary tightening. As a result, the RBNZ will have to cautious in increasing rates that is a negative factor for kiwi.

According to the analysts, the situation in Australia is quite opposite as the market has priced in the interest rate cuts, while RBC is sure this won’t happen.

The bank recommends being long on AUD/NZD at the current levels expecting the pair to reach 1.32 by the end of the first quarter of 2012.

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Commerzbank: technical comments on USD/CHF

The greenback went down from the multi-week maximum versus Swiss franc at 0.9315 reached on October 6 to find support in the 0.8927/18 area (September 12 maximum, September 29 minimum).

Technical analysts at Commerzbank believe that dollar’s decline will likely to limited by the 1-month uptrend support line and USD/CHF may return up to 0.9150.

If the bears manage to breach the mentioned support, the pair will be poised down to 0.8783/0.8778 (the 3-month support line and the 200-day moving average).

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Re: October/14/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Oct 14, 2011 4:39 pm

Wells Fargo: forecast for USD/CHF

Analysts at Wells Fargo are bullish on the greenback versus Swiss franc in the coming months.

The specialists underline that the Swiss National Bank has managed to weaken its national currency by keeping EUR/CHF above 1.2000. In addition, the bank expects US dollar to strengthen against euro that, in its turn, may give USD bulls more powers to push up the pair USD/CHF.

According to Wells Fargo, USD/CHF will reach 0.9175 in 3 months, 0.9375 in 6 months, 0.9700 in 9 months and reach the parity in a year from now.

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