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September/08/2011- Comments and forex-analytics from FBS

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September/08/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Sep 08, 2011 1:02 pm

Unicredit: euro zone needs more austerity

Analysts at Unicredit say that the current euro zone crisis will force European leaders to ponder over whether the single currency is worth keeping. In their view, the debt problems are the test for the currency bloc.

The specialists think that the indebted nations have to conduct more sizeable budget cuts in order to free up more resources. In particular, Unicredit claims that Italy has more potential to bring down its budget deficit by putting more assets on the market for privatization.

According to the bank, the policymakers have to show more visionary and strong approach. The economists underline that it’s not up to the European Central Bank to support the problem nations by buying their sovereign debt.

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Mizuho: USD/JPY downtrend will resume

Technical analysts at Mizuho Corporate Bank believe that the greenback’s longer-term downtrend versus Japanese yen will resume.

The specialists underline that triangle consolidation in May and June led to the decline of USD/JPY and think that so will do another triangle formed in August. In addition, all elements of the weekly Ichimoku Cloud give bearish signals.

According to the bank, the pair is poised down to 74.50 and 73.50.

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Re: September/08/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Sep 08, 2011 4:10 pm

Nomura lowered EUR/USD forecast

Currency strategists at Nomura revised down their forecasts for the single currency versus the greenback in the fourth quarter from $1.40 to $1.30. The bank left the 3 quarter target unchanged at $1.40.

The reason for EUR/USD estimate’s reduction is the deteriorating debt situation in the euro zone. Even though the specialists think that Greece will avoid disorderly default, size constraints on the European Financial Stability Fund (EFSF) will add fuel to the flames. As a result, Nomura expects euro to stay under pressure.

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Obama and Bernanke are to speak today

US President Barack Obama will address a joint session of Congress on proposals to speed job creation that may inject more than $300 billion into the economy next year.

Almost half the stimulus may come from tax cuts, including an extension of a 2-percentage-point reduction in the payroll tax paid by workers due to expire December 31 and a new decrease in the portion of the tax paid by employers.

In August US job growth stagnated, while the unemployment remained high at 9.1%.

As a result, it has become less likely that Federal Reserve will also engage in easing its policy. Analysts at BNZ remind that the Fed’s Chairman Ban Bernanke was calling for fiscal measures to help the nation’s economic growth, so once such steps are taken the need for the central bank to take further action will reduce. That, in its turn, would be positive for the greenback.

Bernanke will speak today at 5:30 pm GMT and Obama makes a speech at 11:00 pm GMT.
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Re: September/08/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Thu Sep 08, 2011 6:32 pm

Goldman Sachs: more BoE’s QE in November

British pound rose today versus the greenback and the single currency as the Bank of England left the borrowing costs unchanged at 0.5% and didn’t extend the 200-billion-pound asset-purchase program.

Asset purchases or quantitative easing increased the monetary supply and weakens the national currency, so the decision not to boost the program was sterling-positive.

The pair GBP/USD rose from almost 2-month minimum at $1.5911 to the levels above $1.6000.

In Monetary Policy Committee last month only Adam Posen called for additional QE, while Spencer Dale and Martin Weale stopped voting for the rate hike.

Economists at Goldman Sachs believe that British central bank will resume bond purchases in November. In their view, the amount of QE will be 100 billion pounds during 2 quarters.

Recent economic data

National Institute of Economic and Social Research: UK economic growth slowed from 0.6% in 3 months through July to 0.2% in 3 months through August.

Inflation rate: 4.4% (July), more than twice above the BoE target.

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UBS lowered Switzerland’s growth forecast

Analysts at UBS lowered Switzerland’s economic growth forecast from 2.7% to 2% in 2011 and from 2.2% to 1.3% in 2012.

The reason of the downward revision is strong Swiss franc that is affecting the nation’s exports.

The specialists note that all in all they remain optimistic due to Switzerland’s advantages: sound private household finances and firm public sector.

According to the bank, the Swiss national bank will keep conducting loose monetary policy at least until the end of 2012.

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