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"Ichimoku. Weekly forecast. GBP/USD"(2011-08-01) Weekly GBP/USD Last week the prices have consolidated their advance above the Standard line (2) that is together with the Standard line (1) acting as a resistance for the pair. Although Tenkan-sen and Kijun-sen still hold the “dead cross” in place, this didn’t have much impact on the market as it’s situated above the Ichimoku Cloud. The cloud itself has narrowed that means that the bulls are not as strong as they used to be, but it remains rising and provided significant support for pound’s rate. Chart. Weekly GBP/USD Daily GBP/USD On the daily chart we witness the upward reversal of the short-term down trend. The prices have successfully overcome the Ichimoku Cloud (3), which switched upwards (4). The Turning line (2) went up supporting the pound. Even the Standard line (1) is deviating higher. Sterling is once again getting support from the fundamental factors – Barack Obama has announced that the Democrats and Republicans have reached compromise about increasing the debt limit. For now it’s possible to expect that the pair GBP/USD will keep moving upward in case investors’ risk sentiment remains positive. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/8190

Ramadan Mubarik from entire FBS team! Dear clients! Today is the first day of Ramadan month. FBS would like to wish all the Muslim FBS clients out there Happy Fasting Month and very happy Ramadan. May this Ramadan bring you and your families prosperity and harmony!

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"BarCap: comments on the situation in the US"(2011-07-29) Analysts at Barclays Capital note that situation at the FX market is going to be more complicated than the one at the stock market. While in case of the worst outcome in the US equities just pick up the bad news, the currency markets will face 2 impacts: the big negative shock to the US in particular and the global risk shock. The former to some extent offsets the latter when it comes to the overall influence on US dollar. The bank still thinks that the liquidity of American market and the dollar’s safe haven status will play its role. The specialists believe that US authorities will reach a short-term deal before August 2 as it’s impossible to find long-term solutions ahead of that. The long-term deal is very important though, firstly, because of the potential S&P downgrade and, secondly, as this is a very serious issue and if US doesn’t get its fiscal house in order, the global economy will suffer. BarCap says that further out on the time horizon, fiscal tightening will weigh on growth and weaken US currency as the Fed’s monetary policy will remain looser for longer than the market is currently expecting. According to the bank, Barack Obama and the Congress speaker John Boehner aren’t willing to compromise now putting the decision off to the last moments as each of them hopes that the other will back down fist. The economists believe that it’s not the time to get too risky and adventurous at the forex market. Barclays Capital says that at the moment the most attractive currency is yen as it allows enjoying the classic risk-off trade. Comment here http://www.fbs.com/analytics/news_markets/view/8180

"Lloyds: USD/JPY may test 76.00 yen"(2011-07-29) Japanese yen keep strengthening versus the greenback and the single currency. The pair USD/JPY is under negative pressure as it seems that Japan’s monetary authorities won’t intervene before the uncertainty associated with US debt debates clears up. The deadline on the matter scheduled on August 2 is approaching. Dollar fell to 77.45 yen, the lowest level since March 17 when it hit the postwar minimum at 76.25 yen. Strategists at Ueda Harlow say that there seems to be no end of the debt ceiling discussion in America. In their view, the risk sentiment will keep worsening, so it’s necessary to buy Swiss franc and Japanese yen. Analysts at Lloyds believe that yen is likely to gain more and even test 76.00 yen per dollar. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8178

"Reuters: Japanese authorities on stronger yen"(2011-07-29) As yen keeps appreciating versus its American counterpart and the markets are speculation on the potential intervention of Japanese monetary authorities, here are the key statements of the nation’s top officials as they are cited by Reuters. Yoshihiko Noda, Finance Minister: - “I am aware of various calls from the business sector and the severe situation Japanese companies face. We hope to take appropriate action with the cooperation of the Bank of Japan.” - “We will take decisive action against excessive exchange rate volatility. I'd like to carefully examine how long we can leave current (exchange-rate) moves unattended.” - “Movements have been one-sided. I think intervention has a certain effect temporarily. We should respond to excessive volatility and disorderly movements but it's not about (currency) levels.” Kaoru Yosano, Economics Minister: - “The yen's rise is not driven by domestic factors but by changes in global money flows ... The changes are occurring for a limited time period until August 2 so I hope the yen's rise will prove temporary...” - “The government could counter a strong yen mainly by extending financial support to subcontractors and other firms suffering from the yen's rise... We have never thought about manipulating currency levels.” - “Friday's economic data overall indicates the economy remains on a recovery trend, although employment is in a severe condition.” Conclusion: if yen’s slump accelerates the intervention will come but it may happen at lower levels and after August 2. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8177

"Commerzbank: comments on GBP/USD"(2011-07-29) Technical analysts at Commerzbank note that this week for GBP/USD was quite volatile due to the high uncertainty at the market. British pound didn’t manage to rise above $1.6380 and then eased down versus the greenback to the levels slightly above $1.6300. The bank thinks that the pair’s consolidating above June 22 maximum at $1.6260. The specialists say that as long as sterling is trading above this level, it has chance to recover to the 78.6% Fibonacci retracement of the decline from April and May maximums in the $1.6540/47 zone. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/8176

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"Nomura: US dollar is losing its safe haven status"(2011-07-28) Strategists at Nomura Securities warn that US dollar may lose its safe haven status if the nation’s credit rating is cut from the top AAA level. The specialists note that during 4 of the last 5 the greenback was moving down in line with the S&P500 index, while normally it does so for 1 day out of 3. That means that American currency wasn’t really supported by the rising risk aversion. Nomura also underlines that dollar has a habit of strengthening with the growth of US Treasury yields and the decline of their price. However, so far the opposite has been happening. This may be regarded as another indication that US dollar is no longer perceived as a refuge as investors stopped using it against falling Treasuries. As a result, if dollar no more trades as a safe haven and US interest rates are well below those of most riskier currencies with top credit rating the demand for it will slump. As a result, the analysts advise to buy AAA-rated Canadian and Australian dollars, Swiss franc and Scandinavian currencies in case of US downgrade. At the same time, it’s better to stay away from US currency before the uncertainty fades away. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8170

"Deutsche Bank: 4 scenarios of US debt debates outcome"(2011-07-28) Unites States has been enjoying the top AAA credit rating from the very moment debt ratings were introduced, so it’s difficult to get used to the thought that the odds of the nation’s downgrade are high enough. Analysts at Deutsche Bank believe that there are 4 possible outcomes of US debt problems: 1.The White house and Congress will come up with a deal that will rule out the possibility of any rating cut. 2.The deal that will help the nation to avoid default though won’t be able to prevent 1-notch downgrade. 3.The deal will fail to solve the debt issues and US rating will be cut by several notches. 4.Default. According to the specialists, the second variant seems to the most likely. Even in such case the greenback will get under negative pressure. Even though the markets seem to accept the possibility of rating’s reduction, the actual downgrade will still be a shock and dollar may lose 2% more versus the basket of currencies. In case of the third scenario investors’ risk aversion will become very strong. In the short term this may be dollar-positive, but the economists don’t believe that US currency will be encouraged by the sustainable advance. Comment here http://www.fbs.com/analytics/news_markets/view/8168

"Commerzbank about the prospects of Japanese intervention"(2011-07-28) Economists at Commerzbank also think that the current gradual appreciation of Japanese currency is much different from its March surge when it bounced by 4% in one day making G7 nations intervene at the currency market. In their opinion, the key level of USD/JPY watched by Japanese monetary authorities is seen at 76.00 yen. The specialists note, however, that the risk of intervention will rise if the pace of yen’s growth increases. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8166

"HSBC: USD/JPY may decline to 70 yen"(2011-07-28) Currency strategists at HSBC believe that no matter how develops the situation in the US, investors will benefit from buying yen. In other words, the specialists expect Japanese currency to gain versus its American counterpart in both cases: if the market’s risk aversion keeps escalating and if the debt ceiling is finally lifted. In their view, it isn’t clear is the current environment negative only for the greenback or we see the general risk sentiment deterioration. HSBC underlines that yen has added only 4.5% this year and is likely to start catching up better performing G10 currencies. According to the analysts, the pair USD/JPY may fall to 72 and probably to 70 yen. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8165

"Citigroup: comments on EUR/USD"(2011-07-28) Analysts at Citigroup claim that the euro bears didn’t manage to trigger stops below $1.4320 and EUR/USD experienced a short-covering rally to the levels around $1.4360. The specialists think that if the pair breaks down below $1.4320, it will find support in the $1.4310 area where 55-day and 100-day MA converge and a base of the Ichimoku Cloud is found. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8159

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"Commerzbank: comments on GBP/USD"(2011-07-28) Yesterday British pound went down from the 6-week maximums in the $1.6440 area to stay in the $1.6330 zone. Technical analysts at Commerzbank note that GBP/USD has ruined its accelerated uptrend. In their view, in the near term the pair is going to consolidate and then drop to June 22 maximum at $1.6260. The specialists say that as long as sterling remains above this level it has chance to strengthen to the 78.6% retracement of the decline from April and May maximums in the $1.6540/47 zone. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/8155

"Commerzbank: Aussie is becoming the save haven"(2011-07-28) Australian dollar, one of the riskier currencies, has strengthened so far versus the greenback as investors have been using it as a refuge from US and European debt problems together with traditional safe havens such as Swiss franc and Japanese yen bought during the periods of risk aversion. Strategists at Morgan Stanley claim that the market’s differentiating between currencies looking into the country-specific factors. Strategists at Commerzbank claim that AUD is increasingly becoming an Asian safe-haven currency. This process is encouraged by the fact that Asian central banks sell US dollars versus Australian to stem the gains in their national currencies. Among the factors that make Australian currency attractive for investors there are the nation’s top AAA credit rating by both Moody's Investors Service and Standard & Poor's and higher yields. Australia's CPI rose by 3.6% in the second quarter bring back the speculation about the Reserve bank of Australia’s potential rate hike. It seems that Aussie’s highly sensitive correlation to investor risk sentiment has broken down and it’s returning to being driven by fundamentals. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8152

"HSBC: RBNZ will raise rates twice this year"(2011-07-28) The Reserve Bank of New Zealand decided today to keep the interest rates at the current 2.5% level. Analysts at HSBC note that the central bank has signaled that the borrowing costs will be increased soon. In their view, it will happen in September and then once more in the fourth quarter. The specialists say that the RBNZ benchmark rate will be raised by 175 basis points by end of 2012. According to HSBC, the central bank doesn’t tighten monetary policy because of the high uncertainty caused by the problems in other nations. The economists point out that the RBNZ admits that the 50-basis-points cut in March was a kind of insurance against economic weakness, noting that the cost of it may be that the Reserve Bank will have to lift up rates more and faster to get inflation expectations under control. The strategists claim that the headline inflation at 5.30% may require action, rather than words. Analysts at Western Union think that support for the pair NZD/USD lies at $0.8680, with resistance is situated at $0.8765. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8151

"Credit Agricole: US problems and EUR/USD dynamics"(2011-07-27) Analysts at Credit Agricole believe that the risks that the US will lose its top credit rating are high given the current impasse in the negotiations about the debt ceiling increase. If the United States is downgraded, equity markets will fall and the bearish pressure on US dollar will strengthen, while the gold prices will rise. The bank thinks that shock to the American economy in case of the rating cut could lower the next quarter's real GDP growth close to zero, though 4Q growth is likely to show some rebound after a possible resolution to the budget standoff. According to Credit Agricole, EUR/USD should remain supported for some time by the widening of yield spread between US and German government bonds. The specialists warn, however, that as investors’ demand for safe havens increases, Treasury yields may actually get lower. In addition, the strategists underline that the August 2 deadline isn’t ultimate as the White house will have 1-2 weeks more before it runs out of cash. As a result, the panic seen so far seems to be exaggerated. The analysts say thus that euro’s advance is going to be limited. Strategists at Societe Generale agree. In their view, the pair can't hold above $1.45. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8149

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"Fund managers look forward to US downgrade"(2011-07-27) The largest fund managers such as BlackRock, Loomis Sayles and Franklin Templeton Investments expect United States to be downgraded. Analysts at BlackRock note that when the policymakers face the deadline, the debt ceiling will be raised. Never the less, the nation will be still likely to lose its top credit rating. Specialists at Loomis Sayles Bond Fund doubt that the White house and the Congress will manage to reach an agreement and expect that at least one agency will reduce US debt rating. At the same time, the AAA or AA rating doesn’t exactly matter for US debt as the Treasuries will continue to be a large and liquid market, says the fund. Strategists at BNP Paribas, however, do think that the credibility of US bonds is declining. Yields indicate investors are favoring bank or company debt over Treasuries. 10-year Treasury yield hit 2.97% level today, though it’s still below the decade’s average of 4.05%. Economists at Franklin Templeton Investments say that the lack of long-term solution of American debt issues will cast doubt on the risk-free status of US Treasuries. Comment here http://www.fbs.com/analytics/news_markets/view/8143

"RBS: sell dollar versus yen and franc"(2011-07-27) Currency strategists at the Royal Bank of Canada note that US authorities seem to make no progress in the debt deal. In their view, if the market’s sentiment keeps deteriorating, it’s necessary to sell the greenback versus Japanese yen and Swiss franc. The specialists underline that these currencies were steadily appreciating since US debt issues escalated and the policymakers have reached a deadlock in trying to raise the debt ceiling and avoid default. RBS advises to stay away from commodity currencies such as Canadian and Australian dollars as they are vulnerable to the rising risk aversion even despite the fiscal strength of these nations. It’s very difficult to say how low US dollar will fall. However, some analysts think the greenback’s slide in case of the United States downgrade won’t be that strong. Analysts at Well Fargo, for example, have studied other instances when a country has lost its AAA credit rating. The economists came to the conclusion that the impact of the rating cut will be moderate of 3-5%. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8141

"Commerzbank: bullish outlook for EUR/USD"(2011-07-27) The single currency is consolidating in the 1.4500 area versus the greenback. Technical analysts at Commerzbank note that as long as EUR/USD is trading above the short-term uptrend line at 1.4324, the outlook for it will remain bullish. According to the specialists, the pair will be trying to retest 1.4580 (July 4 maximum) and 1.4694/1.4704 (June maximum and 78.6% retracement of the decline from May highs). Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8139

"Western Union: RBNZ may raise the interest rate"(2011-07-27) New Zealand’s dollar renewed today the record maximum versus its American counterpart rising to 0.8763. Resistance for NZD/USD is situated at 0.8800. Analysts at Western Union claim that kiwi managed to strengthen because of US dollar’s weakness, positive domestic business confidence survey and Australian CPI data. The Reserve bank of New Zealand will announce its interest rate decision on Thursday at 1:00 am (GMT+4). Although the consensus forecast is that the central bank will leave the borrowing costs unchanged at 2.5%, Western Union economists regard the chance of the rate hike as rather high. The specialists underline that when the RBNZ cut the interest rates by 50 basis points in March it clearly signaled that this was a temporary measure taken in order to help the national economy overcome the consequences of devastating earthquake that occurred in February. In their view, it’s obvious now that the disaster wasn’t as great as everyone feared. In addition, there’s significant enough inflationary pressure – one more argument to look forward to the monetary tightening. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8137

"UBS: about the potential reduction of US debtt"(2011-07-26) Analysts at UBS think that the United States may lose its top AAA credit rating in August if the White house and Congress agree to limited reductions of the budget deficit, while Standard & Poor’s and Moody’s Investors Service insist that $3-$4 trillion cuts are necessary. According to the bank, the downgrade will certainly affect the prestige of America, but the impact on the greenback probably won’t be very significant as the central banks won’t sell Treasuries as they have to hold foreign-exchange reserves in liquid assets. John Taylor, the head of the world’s largest currency hedge fund, believes that dollar won’t lose its dominance even in case of the nation’s downgrade. Comment here http://www.fbs.com/analytics/news_markets/view/8134

"BMO Capital: how to hedge from US default"(2011-07-26) Analysts at BMO Capital claim that there are 3 scenarios of the debt-ceiling debate: 1.The plan close to the one developed by the “Gang of Six” will be adopted. 2.President Obama will agree to a small extension of the debt limit to prolong the discussion of a major shift of the debt ceiling. 3.The worst case scenario: US will default or/and loses its top credit rating. The specialists note that Standard & Poor's seems to be extremely worried by the dynamics of US debt and deficit, so the agency is likely to downgrade the nation even if the debt ceiling is raised. Fearing the worst, one should sell Australian dollar, the classic riskier currency, versus Swiss franc, the classic safe haven. BMO recommends going short on AUD/CHF at 0.9073 stopping above 0.9203 and targeting 0.8503. Strategists at J.P. Morgan say that selling EUR/CHF may also suit as a strategy. Chart. Daily AUD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/8132