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September/16/2011- Comments and forex-analytics from FBS

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September/16/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 16, 2011 11:41 am

Commerzbank: comments on EUR/USD

Technical analysts at Commerzbank note that euro’s upward correction versus the greenback from $1.3595 was greater when they have expected. In their view, EUR/USD faces resistance ahead of $1.4022/35 (the 200-week and the 200-day MAs) and won’t be able to overcome it.

The specialists reiterate that the longer-term outlook for the single currency is negative: the pair is seen falling to $1.3428/10 (February minimum and 50% retracement of the advance from 2010 to 2011) and then $1.20.

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The ECB will provide euro zone banks will dollar liquidity

The single currency rose this week versus the greenback after the European Central Bank announced that it will lend US dollars to euro-zone banks in a series of three-month loans.

The ECB is going to join efforts with the Federal Reserve and other central banks to conduct three separate dollar liquidity operations on October 12, November 9 and December 7 to ensure lenders have enough of the currency through the end of the year. This would add to the central bank’s regular 7-day dollar offerings and will be fixed-rate tenders with full allotment.

Analysts at Australia & New Zealand Banking Group think that European banks are lacking liquidity because people don’t trust the economic policy structure in Europe. In their view, the dollar-swap will help to improve the situation, but still won’t be enough.

Today is the meeting of the EU finance ministers in Poland. US Treasury Secretary Timothy Geithner will also be attending the event. The ECB President Jean-Claude Trichet urged euro-area governments to act to stop the crisis.

The pair EUR/USD rose from 7-month minimum at $1.3495 hit on September 12 to the levels above $1.3800. At the same time many experts say that it would be hard for euro to get back to $1.40.

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Re: September/16/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 16, 2011 11:43 am

FX Concepts about the situation in the euro area

John Taylor, the head of the world’s largest currency hedge fund FX Concepts, believes that the single currency has to be restructured as the euro zone nations seem unable to coordinate their policy, while the continuous coherent action is what is needed to overcome the region’s debt crisis.

In his view, the ECB liquidity plan won’t solve any of the European major problems.

Taylor claims that there’s a mixture of a very unpleasant things in the euro area – a “horrific cocktail” – that consists of monetary restraint, tightness and fiscal austerity.

The specialist says that Greece ought not to leave the monetary union. In his opinion the nation is getting pushed out of the currency bloc but the policymakers do nothing to stop that process.

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Credit Agricole reduced USD/JPY forecast

Analysts at Credit Agricole lowered their forecast for the greenback versus Japanese yen by the end of the year from 90 to 80 yen and from 102 to 85 yen by the end of 2012.

The specialists note that there are 2 factors strengthening yen: firstly, its status of the safe haven and, secondly, US yield advantage over Japan has narrowed during the recent months. Credit Agricole underlines that the Swiss National Bank’s decision to peg franc to euro increases the attractiveness of Japanese currency. According to the bank, there is little chance that significant easing in risk aversion and/or better US economic data.

The pair USD/JPY keeps trading in the narrow range between 76 and 77.85 yen staying close to the record minimum at 75.94 yen.

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Re: September/16/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 16, 2011 11:47 am

Credit Agricole corrected EUR/USD forecasts

Analysts at Credit Agricole continue being bearish on the prospects of the single currency versus the greenback.

Never the less, the specialists revised their forecast for EUR/USD by the end of the year a bit higher from $1.3000 to $1.3700. Such change of the outlook reflects the expectations that the period of US economic weakness will last longer than it was thought before and that the Federal Reserve will further loosen its policy, though not in the form of the third round of quantitative easing.

The bank has cut 2012 euro zone’s growth forecast as well from 1.6% to 1.1%, while the growth in the second half of this year is seen as minimal. The ECB is likely pause its tightening cycle.

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RBC: forecasts for USD/CAD

Currency strategists at RBC Capital Markets believe that the greenback’s upward potential versus its Canadian counterpart in the medium term is limited as there’s no great demand for US currency.

The specialists note that loonie seem to be attractive for investors on the back of European debt crisis and easing policies conducted by the most of the developed nations’ central banks. In their view, in the current circumstances Canadian dollar is perceived as the hard currency that is widely traded all over the world and may serve as a good store of value.

The bank underlines that loonie was one of the worst performers June 2010 showing better results only against US dollar, so this may eventually help CAD strengthen versus other G10 currencies.

According to the bank, the pair will finish 2011 at 1.01, the first quarter of the next year at 1.00 and end 2012 at 0.98.

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Re: September/16/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Fri Sep 16, 2011 11:50 am

Nomura: euro will rise to $1.40

Despite the deepening crisis in the euro area strategists at Nomura Securities see some light for the single currency. In their view, in the short term euro may strengthen versus the greenback.

The specialists underline that the central banks will likely buy euro to rebalance their portfolios for the end of the quarter. Nomura says that Greece may soon receive financial aid.

In addition, the Federal Reserve is expected to sound dovish on its meeting that is taking place next week on September 20-21 – dollar-negative factor.

According to Nomura, EUR/USD will reach $1.40 in the near term. However, the analysts are still bearish on the pair in the medium term – in the fourth quarter they see it drop to $1.30. As a result, the economists advise traders to use euro’s advance to sell it.

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