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September/20/2011- Comments and forex-analytics from FBS

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September/20/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Sep 20, 2011 11:55 am

Commerzbank: bearish EUR/USD forecast

Technical analysts at Commerzbank note that the single currency found itself under severe negative pressure versus the greenback yesterday.

The specialists underline that EUR/USD has so far closed below the major support represented by the 2010-2011 uptrend, the 55-week MA, the July minimum, the 200-week MA and the 200-day MA.

In their view, the pair is poised down to $1.3428/10 (February minimum and 50% retracement of the advance made in 2010-2011) and then to $1.2860 (2010 minimum).

As for the longer term, the bank keeps its target at $1.2000.

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Forecast Pte expects GBP/USD to decline

Technical analysts at Forecast Pte claim that British pound may fall versus the greenback to more than 8-month minimum at $1.5489, last seen on January 10.

This level represents 50% Fibonacci retracement of sterling’s advance from May 20, 2010, minimum at $1.4231 to the maximum of April 28, 2011, at $1.6747.

The specialists are bearish on GBP/USD as the pair has breached its 200-day MA. The MACD (moving average convergence/divergence) is still negative (at -0.0158, below the signal line at -0.012) that’s also a bearish signal.

According to the strategists, resistance is found at September 13 maximum of $1.5870. In their view, the downtrend is strong and any attempts of the bulls to push pound higher would result in nothing more than a correction.

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Re: September/20/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Sep 20, 2011 11:57 am

S&P cut Italian credit rating

The concerns about the euro zone’s future have strengthened as Standard & Poor’s lowered Italy’s credit rating from A+ to A.

The agency said that the nation having the second biggest debt burden in Europe after Greece will face a lot of obstacles in trying to reduce it. Among these difficulties the agency cited weakening economic growth, precarious position of Italian government and rising borrowing costs. S&P lowered Italian average annual economic growth forecast for 2011-2014 from 1.3% to 0.7%.

This month Silvio Berlusconi’s government has passed a 54 billion-euro ($74 billion) austerity package aiming to balance the budget in 2013. That allowed the ECB to buy Italian debt easing down the pressure on the nation.

The yield on Italy’s 10-year bonds rose to 5.619% that is 385 basis points more than similar German debt. Rising borrowing costs make it extremely hard for the country to sell more debt – Italy needs to sell more than 50 billion euro of bonds this year. There are 3 auctions set for next week starting on September 27.

Another major rating firm, Moody’s Investors Service, will decide next month whether to cut ratings on Italy and Spain.

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BoA, Citigroup: Fed's decisions won’t affect the greenback

The Federal Reserve’s 2-day meeting begins today. Tomorrow at 10:15 pm (GMT+4) the FOMC releases its statement and the Federal Funds Rate.

Investors expect American monetary authorities to announce Operation Twist – increasing the duration of the central bank’s bond portfolio in order to lower the long-term interest rates.

Analysts at Bank of America Merrill Lynch think that the news won’t make any significant impact on the greenback’s rate as they are already largely priced in by the market. The specialists underline that since such option as Operation Twist was mentioned in August the dollar index has added 4.2%, so its implementation will lead to neutral effect.

Currency strategists at Citigroup share this opinion. The bank leaves room for some short-term effects, but thinks that the market’s attention will be focused on the euro zone’s debt crisis and even on the concerns about Asian economic growth.
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Re: September/20/2011- Comments and forex-analytics from FBS

Postby vanvirtue » Tue Sep 20, 2011 12:00 pm

Barclays Capital: survey on euro’s prospects

Analysts at Barclays Capital conducted survey among more than 500 institutional investors on the prospects of the single currency.

The majority of respondents (56%) believe that the European Central Bank will undertake large-scale buying of sovereign debt from troubled countries like Italy and Spain. Some of the interviewed think that the currency bloc will ultimately turn into the fiscal union. Barclays note that many investors think that some form of quantitative easing is likely in Europe.

However, almost 25% of the surveyed expect the euro area to break up. In the bank's second-quarter survey, only 1% expected sovereign-debt restructuring in many countries, leading to a euro-zone breakup in 2012. The number of respondents expecting some adverse spillover onto emerging markets almost doubled to 30% compared with the previous quarter.

Nearly 70% of foreign-exchange investors surveyed think that the markets will be focused on euro zone's issues in the next 3 months. 60% of equities investors regard the European banking crisis as the biggest risk to global stock markets. The pair EUR/USD is now seen trading below $1.35 during the next half a year.

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MIG Bank: bearish view on USD/CHF

The greenback rose versus Swiss franc from last week’s minimum at 0.8645 hit on September 15 but its advance was limited by the resistance around 0.8875.

Technical analysts at MIG Bank think that USD/CHF may return down to 0.8645 and then drop to 0.8400 and 0.8250. In their view, the pair remains vulnerable to the potential declines as long as it’s trading below 0.8929.

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