FBS

Dec. 27: Asian session Most Asian stocks went up after big gains at Wall Street where Dow Jones made a record high close. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.25%. Chinese shares rose as money rates eased and China set its yuan at an historic high. USD/JPY tested briefly levels 105.00 today and EUR/JPY – 144.00. Yen hit 5-year lows versus the greenback and euro. Japanese data showed that the nation’s manufacturing activity is expanding at the fastest clip in more than 7 years, while Japanese firms added workers at the quickest pace in over 6 years. Japan’s core consumer price inflation in November rose to a 5-year high. This means that the country’s making progress in its fight against deflation. Australian and New Zealand dollars have both strengthened in the late Asian session. AUD/USD has recovered above the $0.8900 mark. However, the Monday bearish gap still remains open. NZD/USD rose to $0.8170. The pair is supported by the 200-day moving average. EUR/USD rose to $1.3745. GBP/USD went up to $1.6447.

Credit Agricole: Q1 GBP forecasts GBP/USD GBP/USD to weaken to $1.6200 in the stronger USD environment. Britain's officials will try to talk the pound down in Q1 2014. Chart. Weekly GBP/USD EUR/GBP As for EUR/GBP, the pair is expected to fall towards 0.8200 by end-March. Pound will gain some ground vs. the euro on a wave of EUR sales. Chart. Weekly EUR/GBP

Nomura: trajectory for USD/JPY Analysts at Nomura have outlines a scenario for USD/JPY using Elliott waves. The specialists expect the pair to trade sideways in the 102.50/104.50 during the next month in the wave (4) and then rally to 106.00 in the wave (5).

EUR/USD: how do the banks trade? There’s a choice among various shorts. BoA/Merrill: Short at $1.3764 with stop at $1.3834 and take profit at $1.3479 Credit Agricole: Short at $1.3780 with stop at $1.4160 and take profit at $1.3300 Credit Suisse: Short at $1.3800 with stop at $1.3860 and take profit at $1.3415 Commerzbank: Short at $1.3750 with stop at $1.3815 and take profit at $1.3405 Commerzbank: Short at $1.3665 with stop at $1.3815 Morgan Stanley: Short at $1.3600 with stop at $1.3750 and take profit at $1.2700

Dec. 24: Asian session Asian stocks rose boosted by the gains in the American session as the upbeat US spending data showed that US economic recovery gaining momentum. In addition, China’s central bank moved to ease a cash crunch by making its first market-wide money injection in three weeks. Japan’s Nikkei went up by about 0.8% to 6-year high above 16,000 after Tokyo markets opened after a holiday.USD/JPY rose to 104.41. AUD/USD declined to $0.8907 after peaking to $0.8960 yesterday. NZD/USD edged down to $0.8176. Golddipped below the $1,200 level yesterday and is heading for its biggest annual loss in three decades. EUR/USD slid to $1.3675 after it tested $1.3716 on Monday. GBP/USD is consolidating around $1.6345.

FX BAZOOKA: technicals (Dec. 23) AUD/USD As expected, USD/CAD corrected down to 1.0635. The pair is supported at the current level (100-period MA, Ichimoku Cloud top). 200-period MA is still going up, so the medium-term uptrend continues. 55-period MA is horizontal though and below the 100-period one. MACD is going down and approaching 0 from. RSI (14) declined to 45. The bullish Ichimoku Cloud stopped expanding. Tenkan-sen turned down. The loss of 1.0660 allows downside scope for 1.0600, the lower Bollinger band. Support: 1.0635, 1.0615, 1.0600, 1.0560 Resistance: 1.0685, 1.0700, 1.0725, 1.0745 Chart. H4 USD/CAD Upcoming events USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending CAD - 13:30 GMT - GDP USD - 14:55 GMT - Revised UoM Consumer Sentiment

FX BAZOOKA: technicals (Dec. 23) AUD/USD AUD/USD recovered to $0.8950. The pair returned to the upper Bollinger band and approached 55-period MA. All MAs keep declining that indicates that a medium-term downtrend is well in place. The prices are below the bearish Ichimoku Cloud. However, the Cloud stopped expanding, while Tenkan and Kijun formed a golden cross, weak as it is below the Cloud. Still these lines provide support ($0.8900). MACD has reached the 0 area on its way up. RSI rose almost to 60. There will be no news from Australia to help Aussie extend upward correction. Resistance: $0.8970, $.8990/9000, $0.9040 Support: $0.8900, $0.8820, $0.8800, $0.8755 Chart. H4 AUD/USD Upcoming events USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending USD - 14:55 GMT - Revised UoM Consumer Sentiment

FX BAZOOKA: technicals (Dec. 23) USD/CHF USD/CHF is correcting lower after hitting the 0.9000 mark (38.2% Fibo) on Friday. We believe the last week’s break above the 0.8975 resistance opened the way to 0.9050. The pair remains supported by the wide bearish Ichimoku, the 100-period MA and the middle Bollinger (0.8970/45 area); H4 MACD histogram is declining and is below the signal line. Support: 0.8930/20, 0.8900/8890 Resistance: 0.9000, 0.9030, 0.9050 Chart. H4 USD/CHF Upcoming events: USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending USD - 14:55 GMT - Revised UoM Consumer Sentiment

FX BAZOOKA: technicals (Dec. 23) USDJPY USD/JPY is retracing a little lower from 104.60 (5-year high 104.60). Our next target for the pair lies at 105.55. USD/JPY holds above the bullish H4 Ichimoku. The Kijun line lies above the Tenkan line, but both lines are flat. The pair remains supported by the 55-day MA (102.85) and the 100-period MA (102.50); H4 MACD histogram is declining and is below the signal line (bearish signal); 104.00/103.75 is the key area of support for now. Support: 104.00/103.90, 103.75, 103.40 Resistance: 104.60, 105.00, 105.55 Chart. H4 USD/JPY Upcoming events: USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending USD - 14:55 GMT - Revised UoM Consumer Sentiment

FX BAZOOKA: technicals (Dec. 23) GBPUSD GBP bulls have given some ground after a quick test of the $1.6485 high last week. Cable has been consolidating in a narrow descending channel since then. However, the pair remains supported at $1.6320 (23.6% Fibo) for now. H4 MACD histogram is declining and is below the signal line (bearish signal); Cable slipped below the 100- and 55-period MAs. Support: $1.6320, $1.6300 (channel support), $1.6230 (38.2% Fibo) Resistance: $1.6360, $1.6400,$1.6430 Chart. H4 GBP/USD Upcoming events: USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending USD - 14:55 GMT - Revised UoM Consumer Sentiment

FX BAZOOKA: technicals (Dec. 23) EURUSD EUR/USD managed to rise from support at $1.3625 and test $1.3710. 55-period MA is starting to slope down. The prices returned inside the Ichimoku Cloud. Tenkan-sen (red line at $1.3667) is providing some support. The Cloud turned bearish, but isn’t widening. MACD remains in the negative territory, but above the signal line. RSI (14) went from oversold to the neutral state (46). Above $1.3667 there’s scope for increase to $1.3718/33. Upper Bollinger band is at $1.3760. Below this level we’ll be selling. Resistance: $1.3690, $1.3705, $1.3740/50, $1.3790 Support: $1.3667, $1.3625, $1.3613, $1.3600 and $1.3575 (200-period MA) Chart. H4 EUR/USD Upcoming events: USD - 13:30 GMT - Core PCE Price Index USD - 13:30 GMT - Personal Spending EUR - 14:00 GMT - Belgian NBB Business Climate USD - 14:55 GMT - Revised UoM Consumer Sentiment

Key currency options (Dec. 23) Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). Here are the key options expiring today: EUR/USD: $1.3600, $1.3650, $1.3660, $1.3700, $1.3750; USD/JPY: 103.00, 104.00, 105.00 (large); USD/CHF: 0.8900; AUD/USD: 0.8900 (large) 0.9100 (large); USD/CAD: 1.0650 1.0675.

Dec. 23: Asian session Asian stocks went cautiously higher on Monday encouraged by record highs on Wall Street due to the upbeat data on American economic growth and the resilience of stocks to the Fed’s decision to start QE tapering. However, growth in shares wasn’t strong as China’s benchmark short-term money rates swung to 9.8% fueling the fears of a credit squeeze. USD/JPY is little changed in the 104.00 area, below Friday’s peak at 104.63. Trading is quiet as Japanese banks are closed today in observance of the Emperor’s Birthday. Australian and New Zealand dollars are trading a little higher on Monday. AUD/USD extends the upside, strengthening to $0.8950. Last week the pair has formed a “hammer” candle. NZD/USD keeps consolidating in the $0.8190/8220 range. Gold price is consolidating around $1200.0 – slightly above the June 3-year low of $1180.0. EUR/USD edged up to $1.3695 and GBP/USD – up to $1.6360.

FX BAZOOKA: technicals (20.12) Part 1 EUR/USD EUR/USD keeps drifting down. Euro has slid to support at $1.3525. Euro may slide to consolidation area of $1.3620/3520. Data released in Germany was mixed (see the economic calendar). 55-period MA is starting to slope down. The prices dropped below the Ichimoku Cloud ($1.3666) – a bearish sign. Tenkan-sen (red line) went almost vertically down. MACD extended down in the negative territory. RSI, however, is currently signaling oversold (below the 30 level). Support: $1.3625, $1.3613, $1.3600 and $1.3575 (200-period MA) Resistance: $1.3666, $1.3705, $1.3740/50, $1.3790 Upcoming events: EUR - All Day - EU Economic Summit EUR - 10:00 GMT - Italian retail sales USD - 13:30 GMT - Final GDP USD - Tentative - Fed Chairman Nomination Vote GBP/USD Cable remains in a narrow $1.6335 /1.63875 range for a second day in a row. There are now clear signals on the pair for now. However, we still remain bullish for the pair with a medium-term target of $1.6600 as long as it holds above $1.6320. The cable consolidates above the bearish channel; H4 MACD histogram remains in a positive territory, but stopped its rise; Cable is supported by the 100- and 55- period MAs; Ichimoku: Kidjun-sen is about to cross Tenkan-sen to the downside (that could become a bearish signal). Support: $1.6340, $1.6320, $1.6300, $1.6230 (38.2% Fibo) Resistance: $1.6435, $1.6465, $1.6500 Upcoming events: GBP - 9:30 GMT - Final Q3 GDP, Current Account, Public Sector Net Borrowing USD - 13:30 GMT - Final GDP q/q USD - Tentative - Fed Chairman Nomination Vote USD/JPY USD/JPY extended the upside on Friday, hitting a fresh 5-year high of 104.60. Our next target for the pair lies at 105.55. USD/JPY holds above the bullish H4 Ichimoku with Kijun-sen crossing the Tenkan-sen to the upside; Supported by the 55-day MA (102.85) and the 100-period MA (102.50); MACD keeps on rising (bullish sign); Sentiment remains clearly bullish as long as the 103.75 support holds. Support: 104.00, 103.75, 103.40, 102.50 Resistance: 105.00, 105.55 Upcoming events: USD - 13:30 GMT - Final GDP q/q USD - Tentative - Fed Chairman Nomination Vote

USD/JPY: Ichimoku analysis (Dec. 20) Daily. USD/JPY continues setting new yearly highs. Although the greenback is strongly overbought, the currency pair is trading above 104.00, in the 104.50 area. All the indicator lines on the daily timeframe are directed upwards, which indicates strong activity of the buyers. The bullish rally may pause around the weekly levels at 105.20 and 106.00. Chart. Daily USD/JPY H4. The pair was supported by the Ichimoku Cloud top, and after a brief consolidation above 102.70 US dollar resumed recovery. In general, technical picture is completely in favor of the bulls. Tenkan and Kijun formed a new Golden Cross above the Cloud. The Cloud continues to rise, which also has a positive impact on the long-term market sentiment. Only the fact that the pair is overbought can hinder further growth. Chart. H4 USD/JPY

USD/CHF: Ichimoku analysis (Dec. 20) Daily. Last week currency pair found support in the 0.8850 area. A"double bottom" was formed on the daily chart and the bulls used it to turn the greenback up. Note the pair was oversold and this contributed to the bullish sentiment. Despite the bearish character of the indicator, the bulls tested resistance of Kijun-sen (KS). A short-term recoil down from here towards the Tenkan-sen in the 0.8915 region looks possible. Chart. Daily USD/CHF H4. At H4 the pair broke into the Cloud after some consolidation under the lower border of the Ichimoku Cloud. This breakthrough was rapid and by the end of the week the currency pair reached 0.9000. This is actually bad for the bulls. A sharp increase has led to an overbought market. Also, just above the 0.9000 figure there is a strong resistance level, formed by the upper boundary of the cloud. Consequently, in the near future we expect the pair to turn down from these levels. Chart. H4 USD/CHF

GBP/USD: Ichimoku analysis (Dec. 20) Daily. The pair is apparently finishing consolidation. On the daily chart the prices spend a brief time inside the Tenkan-Kijun channel, and by the the end of the week sterling managed to get to positive territory. The prices haven’t even touched Kijun-sen (KS), which shows the weakness of the bears. Note that the indicator is still positive: golden cross © is still in place and the Cloud expands upwards. Chart. Daily GBP/USD H4. The pair was trading within the Ichimoku Cloud and the market was in the sideways state. Nevertheless, in the second half of the week the pair rebounded from the lower border of the Cloud. If the prices fix above the horizontal Kijun-sen at $1.6350, this can lead to the further strengthening of sterling. Otherwise, the market will have to find support at the $1.6300 handle. Chart. H4 GBP/USD

EUR/USD: Ichimoku analysis (Dec. 20) Daily. Last week the pair once again failed to overcome the $1.3800 figure, which led to a corrective decline to the Tenkan-Kijun channel. Pay attention to Chinkou Span, which at that point was in the overbought area. This was an additional incentive for the short-term trend reversal. Now the prices may test support formed by Kijun-sen (KS) just above $1.3600. After that the bulls may once again take the lead as the indicator’s readings are all in all rather positive. Chart. Daily EUR/USD H4. At H4 the pair fell inside the Cloud. The short-term trend became bearish: Tenkan and Kijun are now pointing down ©. However, the Cloud is still bullish. Therefore, after testing the lower boundary ($1.3600), euro can start recovering. Chart. H4 EUR/USD

Key currency options (Dec. 20) Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). Here are the key options expiring today: EUR/USD: $1.3600 (large), $1.3645, $1.3650, $1.3770, $1.3775; GBP/USD: $1.6200, $1.6300, $1.6350; USD/JPY: 103.00, 103.50, 104.00 (large), 104.25, 104.50, 105.00 (large); USD/CHF: 0.8875, 0.9020; AUD/USD: 0.8850 (large), 0.8875 (large), 0.8900 (large), 0.9000, 0.9020, 0.9075, 0.9100; NZD/USD: 0.8195; USD/CAD: 1.0700, 1.0775, 1.0800 (large); EUR/JPY: 142.75; EUR/GBP: 0.8405; EURCHF: 1.2220 1.2275.

Dec. 20: Asian session Asian stocks fell, led by Chinese shares amid concern funding costs for the nation’s lenders will remain high even after the central bank injected cash into the financial system. Japanese Nikkei 225 edged down as investors booked profits before the long weekend in Japan. USD/JPY rose to 104.45. Yen declined after the Bank of Japan kept monetary policy steady and voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion yen ($576 billion) to 70 trillion yen. But the BOJ slightly tweaked its view on the outlook to signal that it was mindful of the potential pain on the economy from an increase in the national sales tax in April next year. Investors are now waiting for Governor Kuroda’s comments on how the Fed’s tapering could affect the BOJ's decision on if and when it might next expand stimulus. AUD/USD tested $0.8889, but then returned to $0.8870. NZD/USD tested $0.8712, but then returned by 20 pips lower. EUR/USD slid to $1.3631. GBP/USD is trading a bit on the downside, in the $1.6360 area.

Dec. 19: European session EUR/USD is trading in the $1.3680 area after it tested $1.3648 today. Data from the region are generally good, but the market expects news from the region’s leaders. European leaders meet Today is the meeting of the European Council. According to ANZ, there’s “a little bit of event risk tonight in the sense there’s a European leaders summit where they’re supposed to come up with proposals for a banking union. The risk to me is downside in euro for the next 24 hours.” However, German finance minister Schaeuble said that “convincing” agreement is reached on banking union backstop failed banks. Expect more on this topic today. Euro zone’s current account surplus rose Euro zone current account balance in Oct +26.2bln vs. +14.2B forecast Ireland: surprisingly good growth Irish GDP rose by 1.5% in Q3 vs. 0.7% forecast German inflation According to IFW Kiel institute of world economic research, German inflation in 2015 will be 2.5% (higher than the 1.90% forecast). As German policymakers are known for their fear of inflation, they might call ECB for tighter policy (potentially EUR-positive). Greece: unemployment edged down, but remains high Greek unemployment 27.0% in Q3vs. 27.1% prior GBP/USD is consolidating in the $1.6360/6400 range after the yesterday’s post-FOMC jump to $1.6485. UK retail sales rose in line with forecast by 0.3% in November (vs. a 0.9% drop in October).

USD/CAD USD/CAD reached the highest level since 2010 at 1.0725. The medium-term uptrend continues. 100- and 50-period MAs turned a bit up. The lines are melded together. So far 50-period MA hasn’t fallen below the 100-period one. RSI (14) is still in the overbought area above 70. The pair’s above the upper Bollinger band. The prices rose above the Ichimoku Cloud which has turned bullish. The Cloud, however, is thin and the indicator lines went horizontal. Resistance: 1.0725, 1.0745, 1.0800 (38.2% of the decline from 2008 to 2011) Support: 1.0700, 1.0670, 1.0635 Chart. H4 USD/CAD Upcoming events: USD - 13:30 GMT - Unemployment Claims USD - 15:00 GMT - Existing Home Sales USD - 15:00 GMT - Philly Fed Manufacturing Index USD - 15:00 GMT - CB Leading Index

AUD/USD AUD/USD renewed this year’s low by sliding to $0.8821. Aussie was already quite oversold, so here we didn’t see such a big decline as in other pairs. The pair is at the lower Bollinger band and there’s still a small divergence in MACD/RSI, so we expect some correction up. All MAs are declining that indicates that a medium-term downtrend is well in place. The prices are below the bearish Ichimoku Cloud. The indicator lines went horizontal, so we may see some consolidation. Support: $0.8820, $0.8800, $0.8755 Resistance: $0.8880, $0.8900, $0.8970, $0.9000 Chart. H4 AUD/USD Upcoming events: USD - 13:30 GMT - Unemployment Claims USD - 15:00 GMT - Existing Home Sales USD - 15:00 GMT - Philly Fed Manufacturing Index USD - 15:00 GMT - CB Leading Index

USD/CHF Bearish pressure on USD/CHF eased as the pair rose from the 2-year low of 0.8832 to 0.8960. The pair broke into the wide bearish Ichimoku and is trading not far from the Cloud resistance now (0.8975). MACD histogram rose into the positive territory (bullish sign). The price rose above the 55-period MA that acted as a resistance, but met sellers at the 100-period MA Buyers need a break above the 0.8960/75 resistance to move further Support: 0.8930, 0.8920, 0.8900 Resistance: 0.8960/75, 0.9000, 0.9030 Chart. Daily USD/CHF Upcoming events: USD - 13:30 GMT - Unemployment Claims CHF - 14:00 GMT - SNB Quarterly Bulletin USD - 15:00 GMT - Existing Home Sales USD - 15:00 GMT - Philly Fed Manufacturing Index USD - 15:00 GMT - CB Leading Index

USD/JPY Bulls have regained control over the pair: USD/JPY rose by almost 200 pips yesterday, touching a new 5-year high of 104.40.The bullish impulse slowed at these levels, resulting in another wave of bearish correction. • USD/JPY holds above the bullish H4 Ichimoku with Kijun-sen crossing the Tenkan-sen to the upside. • Supported by the 55-day MA (102.85) and the 100-period MA (102.50). • MACD histogram rose into the positive territory (bullish sign). • Sentiment remains bullish as long as the 103.75 support holds. Support: 103.75, 103.40, 102.50 Resistance: 104.40, 105.00, 105.55 Chart. Daily USD/JPY Upcoming events: USD - 13:30 GMT - Unemployment Claims USD - 15:00 GMT - Existing Home Sales USD - 15:00 GMT - Philly Fed Manufacturing Index USD - 15:00 GMT - CB Leading Index