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September/09/2011- Comments and forex-analytics from FBS

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September/09/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 09, 2011 11:56 am

Bernanke and Obama speak

Bernanke

Federal Reserve Chairman Bernanke claimed yesterday that quick deficit reduction may affect US economic recovery and said that the central bank will regard the possible measures to spur growth and hiring at its meeting on September 20-21.

Earlier in Jackson Hole Bernanke outlined the tools that the Fed may use. They are quantitative easing and lengthening the duration of securities in its $1.65 trillion Treasury portfolio. Analysts at Barclays Capital believe that this month the Fed will decide to resort to the latter.

The Fed’s head said that Obama and Congress should improve the federal government’s finances in the longer term but be careful not to hurt the economy by the fiscal consolidation in the short term. Bernanke didn’t comment on how the American authorities may reach that goal.

Obama

Another important speech is the one of US President. Barack Obama proposed to Congress the plan to stimulate job’s growth that would inject $447 billion into the economy (nearly 3% of GDP) through infrastructure spending by cutting in half the payroll taxes paid by workers and small-business owners and by providing subsidies to local governments to stem teacher layoffs.

Analysts at Capital Economics note that if Obama’s bill passes the Congress it would certainly influence 2012 GDP growth, which they currently expect to be only 2%. Economists at Goldman Sachs think that if enacted in its entirety, this proposal could shift the fiscal impulse in 2012 from -1.1% of GDP to +0.4% of GDP. However, the specialists have serious doubts that the congressmen will manage to agree on any of the multitude of different measures the bill includes.

G7 may be against Japan’s intervention

Japanese new finance minister Jun Azumi promised to tell his Group of Seven counterparts that Japan is ready to act vigorously in currency markets when necessary.

Yesterday G7 released statement that the officials of the world’s leading developed countries will “closely consult” each other on currencies. Rintaro Tamaki, Japan’s former vice finance minister who currently occupies the post of deputy secretary-general of OECD, thinks that it means that Japanese intervention has to be done in agreement with the G-7 as opposed to unilaterally.

As a result, the specialist claims that Japan may face opposition to further yen sales after acting on its own twice in the past year. Tamaki underlined that one of G7 key principals is that the markets should determine foreign-exchange levels.

Japan’s economy is affected by stronger yen: in the second quarter the nation’s GDP fell by 2.1% in comparison with the previous year level.

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Re: September/09/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 09, 2011 12:02 pm

Commerzbank: comments on USD/CHF

The greenback advanced versus Swiss franc getting above the 50% Fibonacci retracement of the decline since December 2011 at 0.8567.

Technical analysts at Commerzbank say that US currency may climb higher, to the 200-day MA at 0.8858 where traders may take profits.

The specialists claim that resistance for the pair USD/CHF is situated at 0.8850/0.8920 (double Fibonacci retracement and March 2011 minimum), 0.9158 (the 55-week MA) and 0.9340/0.9400 (March 2011 maximums and double Fibonacci retracement). According to the bank, support levels lie at 0.8520/0.8365 (23.6% and 38.2% retracements of US dollar’s September growth).

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UBS: time to buy GBP/USD

British pound fell versus its US counterpart from yesterday’s maximum at $1.6084 to 2-month minimums at $1.5915/20.

However, analysts at UBS think that sterling won’t stay below $1.6000 for long and note that the current levels represent good buying opportunities for GBP/USD. In addition, the bank says that EUR/GBP advance above 0.90 doesn’t seem sustainable and recommends investors to sell the pair.

In the current circumstances when the central banks all over the world are keeping loose policy the specialists expect the Bank of England won’t do more stimulus during the next 1-2 months as it will be watching inflation. That, according to UBS, will likely provide pound with significant support.

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