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"Societe Generale, Lloyds, BarCap about the prospects of EU summit"(2011-07-21) Analysts at Societe Generale believe that the European leaders will manage to make a deal. The question is if it will be credible enough to improve the market’s sentiment at least for some time. All in all, the specialists think that despite the potential skepticism euro will find some support. Strategists at Commerzbank think that the situation has gone too far and become too dangerous for the EU could skip an agreement. If Greece gets the second bailout, euro will resume its recovery, at least in the short term. Economists at Lloyds expect a lot of announcements and commitments from today’s summit. According to them, there may be some additional plan for Greece along with a broadening of scope of the EFSF, for example the purchase of bonds on the secondary market. It’s necessary to understand that all issues of the euro area won’t be cured today. Never the less, commitment to establish a viable systemic framework of support may be enough to encourage investors’ risk appetite. Specialists at Barclays Capital say that any discussions around a consolidated EU fiscal framework or common euro-bonds issuance may provide a signal for a more sustained advance of the single currency. Without that, any improvement in sentiment and tightening in spreads will likely provoke profit taking maintaining a highly volatile environment. Comment here http://www.fbs.com/analytics/news_markets/view/8060

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"EU summit: political background"(2011-07-21) During the whole week investors were looking forward to the EU emergency summit taking place today in Brussels hoping that the deals on the second bailout for Greece will be made. German Chancellor Angela Merkel warned that it’s not possible to solve the crisis in “one spectacular step”, while the Greek Prime Minister George Papandreou, on the other hand, said that the summit will be very important either leading to a breakthrough or being a total failure. Merkel and French President Nicolas Sarkozy have reached some agreement on the matter during their private negotiations. European Central Bank President Jean- Claude Trichet and European Union President Herman van Rompuy have also participated in the discussion. Analysts at Barclays Bank note that Germany and France made some coordinated efforts preparing for the summit that may be very helpful for some decision to be made today. Strategists at Mizuho Corporate Bank point out, however, that even if the European authorities manage to persuade the private sector to do a voluntary rollover, the reaction of the rating agencies is going to hit euro. The specialists say that the pair EUR/USD is likely to drop below $1.40. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8058

"BMO Capital: loonie may be used as a refuge"(2011-07-21) Currency strategists at BMO Capital believe that though Canadian dollar tends to follow the dynamics of oil process and strengthen when the market’s risk appetite is up it may be used now as s safe haven against the euro zone’s and US debt issued. According to the specialists, loonie has all needed to attract investors: Canada enjoys economic growth and has strong financial system. In addition, the Bank of Canada is likely to raise rates sooner than the other major central banks. Analysts at BMO think that Canadian currency has much more upward potential than the classic refuge – Swiss franc – as it may gain on the oil price’s advance. As a result, the bank proposes to sell USD/CAD at the current levels. Chart. Daily USD/CAD Comment here http://www.fbs.com/analytics/news_markets/view/8056

"Commerzbank, Citi: comments on EUR/USD"(2011-07-21) The single currency keeps going up this week from Monday’s minimum at $1.4014. Technical analysts at Commerzbank, however, keep giving bearish forecasts for EUR/USD. In their view, the pair’s advance will be limited by the 55-day MA at $1.4307. The specialists say that the outlook for euro will remain negative as long as it’s trading below the downtrend line at $1.4471. Strategists at Citi note that plenty of positive news is already priced in, so investors should buy carefully. Resistance is situated in the $1.43 area where the 100- and the 55-day MA are meeting each other, while support is found at $1.4240, $1.4210 and $1.4180. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8054

"Taylor expects severe global economic recession"(2011-07-21) John Taylor, the founder of the world’s biggest currency hedge fund FX Concepts, expects the euro area debt crisis to ease during the next 3 months. The specialist thinks that the improvement of the market’s risk sentiment will help gold price surge to $1,900 by October. Taylor is also quite bullish on commodity currencies, in particular, on Australian and Canadian dollars. Never the less, the economist thinks that the rally won’t last long. After reaching the record high gold may fall to $1,100 as the global economy gets into recession worse than the one in 2008. According to Taylor, the United States will run out of means to prevent the economic slump. European economy is also likely to get into the declining path, says the analyst. In his view, the pair EUR/USD will drop to $1.15 hitting the parity level next year. Chart. Weekly EUR/USD Comment here Taylor expects severe global economic recession

"UBS: the odds of QE in the UK declined"(2011-07-20) British pound rose today versus the single currency and US dollar after the minutes from the Bank of England’s MPC meeting showed that the number of QE advocates has reduced. The policymakers voted 7-2 to keep the benchmark interest rate unchanged this month as the majority of them said that the recent data shows that the near-term tightening isn’t necessary. In contrast to the June meeting, there was no mention of other the MPC members calling for more bond purchases this month. Right after the release of the minutes GBP/USD fell to the daily minimum of $1.6067, but soon recovered getting up to the $1.6130 area. Currency strategists at UBS claim that the outlook for the pair will become bullish if it manages to overcome resistance at $1.6194. Support for sterling is situated at $1.6006. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/8050

"JPMorgan: EUR/GBP is trapped in the narrow range"(2011-07-20) Analysts at JPMorgan believe that EUR/GBP is trapped at the current levels as in the short term both the euro zone and the UK faces serious risks that are affecting their currencies. While in Europe the main threat comes from the debt crisis, Britain is in danger of economic recession. The specialists expect euro to remain in a very tight trading range versus its British counterpart during the coming months between 0.8550 and 0.9100. In their view, the trade’s volatility has heightened due to the unexpected crisis of confidence to Italy seen so far and the pat situation in America where the policymakers are trying to reach compromise on the debt ceiling. According to the bank, when the pair EUR/GBP finally comes out of this range it will break it on the upside. Chart, Daily EUR/GBP Comment here http://www.fbs.com/analytics/news_markets/view/8048

"ZKB, Commerzbank: comments on EUR/CHF"(2011-07-20) Technical analysts at Commerzbank believe that as the single currency managed to break above resistance at 1.1556 trading versus Swiss franc, it may strengthen to 1.1770. Never the less, as long as EUR/CHF is staying below June minimum at 1.1808, the general outlook for euro will remain bearish. Strategists at ZKB doubt that the pair will manage to rise above 1.1700. In their view, even if it does that euro’s advance will be likely contained by 1.1750. The specialists note that the EU summit that will take place tomorrow may disappoint the market. Chart. H4 EUR/CHF Comment here http://www.fbs.com/analytics/news_markets/view/8046

"AllianceBernstein: all major currencies have weaknesses"(2011-07-20) Strategists at the fund AllianceBernstein revoked their bets versus the greenback changing the outlook to neutral as the euro area debt crisis escalates. It’s necessary to note that though the fund managers’ sentiment towards US dollar has improved they didn’t become positive on dollar taking into account high indebtedness of the United States and its budget problems. In addition, the economists don’t think that the economic growth will slow down making dollar popular safe haven. AllianceBernstein expects slow and uncertain economic recovery and is cautiously bullish on the market. The specialists are now bearish on the single currency and British pound and bullish on Scandinavian currencies and Swiss franc. According to them, the downside pressure on euro is stronger due to the ECB policy that is keener on targeting inflation while some economies of the currency bloc are too weak to bear tighter monetary policy. Analysis conducted by the OECD on the basis of the purchasing power parity shows that US dollar is 8.3% undervalued versus euro. American currency lost 5.8% this year versus the European one. The situation has a bit improved as it managed to gain 2.3% in July. All in all, the specialists say that it’s not the time for long-term trade and investments as all major currencies – dollar, yen and the European currencies – have their drawbacks, so it’s necessary to adjust to the changing conditions. Comment here http://www.fbs.com/analytics/news_markets/view/8044

"Commerzbank, Citi: comments on USD/JPY"(2011-07-20) Technical analysts at Commerzbank are bearish on USD/JPY. Never the less, the specialists think that Fibonacci support at 78.23 will manage to hold the initial attack of the bears. The bank places resistance for the greenback at 79.57, 79.88 and the psychologically important level of 80.00. Strategists at Citi believe that the Bank of Japan will conduct currency intervention if US dollar drops to 76 yen. In their view, the pair will move higher in a month as the market’s sentiment will probably improve and the uncertainty connected with the European and American debt issues eases. The analysts warn, however, that now it’s too early to start the trade as USD/JPY is likely to slide lower before bouncing on the BOJ intervention. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8042

"Westpac, Citi about the prospects of AUD/USD this year"(2011-07-20) Australian dollar has made significant advance versus its US counterpart gaining 21% this year due to the strong commodity prices and relatively high interest rates. Apart from other Australian banks analysts at Westpac expect that the Reserve bank of Australia will reduce interest rates that will put Aussie under pressure for the rest of this year. In addition, the specialists express concerns about the euro area’s crisis having a negative impact on Australian consumer confidence. Currency strategists at Citi, on the other hand, tend to be bullish on AUD/USD. In their view, the massive investments in the metals and the LNG space will provide solid support for Australian dollar during the next 5 years. The bank believes that the RBA rates will stay unchanged this year. The economists underline that the mining industry keeps performing quite well, while housing prices are still very high, so there’s no need for the central bank to cut rates. As a result, building the trading strategy on AUD/USD one has to decide whether to focus on the miners or the consumers and be ready to adjust quickly. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8040

"Commerzbank: GBP/USD will face resistance"(2011-07-20) The greenback went up from Monday´s minimum in the $1.6000 area to yesterday’s maximum of $1.6177. Technical analysts at Commerzbank claim, however, that though the near-term outlook has become neutral, the 3-month downtrend is still in place. As a result, the pair GBP/USD will face resistance at $1.6220 strengthened by the 55-day MA at $1.6213 that is pointing lower. The specialists expect sterling to fall to $1.5778. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/8038

"Credit Agricole: the prospects of China’s interest rates"(2011-07-19) Currency strategists at Credit Agricole believe that the People’s bank of China will pause its monetary tightening cycle in the second half of the year as the nation’s economic growth and inflation pace is slowing down. The specialists note that Chinese monetary authorities are content with the current state on the country’s economy – so called “soft landing” as this was exactly the goal they pursued by raising borrowing costs and reserve requirements rate. Credit Agricole notes that China now needs to finish policy tightening before the economic growth declines more sharply. The specialists believe that the PBOC will conduct no more deposit and credit rate hikes until the next year when the economy will once again starts gaining pace. Credit Agricole thinks, however, that the bank will keep sterilizing its currency interventions by increasing required reserve ratio. The bank is looking forward to 2 such hikes until the end of 2011. China’s second quarter GDP growth was in line with the forecasts gaining 9.5% after 9.7% advance during the first 3 months of the year. Comment here http://www.fbs.com/analytics/news_markets/view/8036

"Barclays Capital: outlook for EUR/CHF and USD/CHF"(2011-07-19) Technical analysts at Barclays Capital believe that in order to reverse July's downtrend versus Swiss franc the single currency has to overcome 1.1650. In such case, EUR/CHF will be able to rise to 1.1810 and possibly to 1.20. Until that happens, the pair’s prospects will remain bearish and euro will be poised down to 1.1250. Chart. H4 EUR/CHF As for the pair USD/CHF, the bank changed the outlook from bearish to neutral noting, however, that taking into account the major downtrend the greenback’s advance will be limited by resistance in the 0.8275/0.8330 area. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/8033

"TD Securities: RBNZ is ready to lift up the interest rates"(2011-07-19) Analysts at TD Securities believe that the Reserve Bank of New Zealand may increase the interest rates from the record minimum of 2.5% at its next meeting that is taking place on Thursday, July 28. In their view, it may happen as the inflation rate in the second quarter and the first quarter GDP turned out to be higher than expected. New Zealand’s economy gained 0.8% in the first 3 months of the year while the central bank was projecting only 0.3% growth. The nation’s CPI added 1% in the second quarter versus 0.8% forecast. According to TD Securities, RBNZ may increase the borrowing costs next week by 50 basis points compensation the cut made on March 10 or at least prepare the markets for such move on September 15. In the near term New Zealand’s dollar, however, will likely remain under pressure ahead of EU summit in Brussels scheduled on July 21, warns Ueda Harlow. Chart. H4 NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8030

"Credit Agricole, Westpac: pessimistic view on Aussie"(2011-07-19) The minutes of the Reserve Bank of Australia’s last meeting released today made the odds of its interest rate hike lower. Analysts at Credit Agricole note that the RBA didn’t mention the necessity to tighten monetary policy at some stage and believe that Aussie will remain under negative pressure. Strategists at Barclays Capital expect that the central bank will stay on hold in the near future, though they think that the nation’s monetary authorities are inclining more towards lifting up the borrowing costs than to reducing them. The RBA is keeping its benchmark interest rate at 4.75% since November. Strategists at Westpac note that the pair AUD/USD, which has been staying between 1.0400 and 1.0800 since May, may breach the lower border of this range in the next few weeks. In their view, Australian dollar can slide to 1.0200 and then maybe even to the parity level with its American counterpart. As the reason for Aussie’s weakening the specialists cite the debt problems in the euro area and the United States. It’s also necessary to note that Goldman Sachs that recommended buying AUD/JPY at the end of June revokes this advice. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/8028

"Westpac recommends selling USD/CAD"(2011-07-19) The Bank of Canada will release its rate statement today at 5:00 pm (GMT+4). The majority of economists agree that the central bank will hold the borrowing costs at the current 1.00% level. Currency strategists at Westpac note that Canadian economy is currently in a very good shape. The specialists reminded about the encouraging June employment report. In addition, Westpac is looking forward to see strong CPI data due on Friday at 3:00 pm (GMT+4). According to the bank, it’s possible to expect that the BOC will sound more hawkish than at the May meeting, so the analysts advise investors to go long on loonie versus its American counterpart. The recommended strategy is selling USD/CAD at 0.9580 stopping above 0.9700 and targeting 0.9350. Сhart. Daily USD/CAD Comment here http://www.fbs.com/analytics/news_markets/view/8026

"Merrill Lynch: USD/JPY will test the record minimum"(2011-07-19) Currency strategists at Bank of America-Merrill Lynch think that the greenback won’t drop below the record minimum versus yen at 76.25 hit on March 17 after Japan was shaken by the severe earthquake. Never the less, the concerns about the debt problems both in the euro area and the United States are likely to keep strengthening risk aversion. As a result, the specialists warn that the slide of the pair USD/JPY may turn out to be surprisingly big. The net short position on Japanese yen that is currently aggregated by the FX margin trade is very large, so the sharp risk aversion may trigger stops provoking unwanted liquidations of investors’ short yen positions making Japanese currency surge. According to BoA-Merrill Lynch, if the pair tests all-time minimum, the Bank of Japan would have to ease policy further, while the nation’s Ministry of finance would probably intervene to stop disorderly appreciation of the national currency. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8024

"Mizuho: technical levels for some majors"(2011-07-19) Mizuho: technical levels for some majors Comment here http://www.fbs.com/analytics/news_markets/view/8021

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"Commerzbank: comments on EUR/USD"(2011-07-19) Technical analysts at Commerzbank note that yesterday the single currency found support in the $1.4000 area versus the greenback and managed to close in the $1.4100 zone posting some gains. The specialists, however, retain their negative view on EUR/USD as long as the pair is trading below the downtrend line at $1.4487. According to the bank, resistance for euro is situated at last Thursday’s maximum of $1.4282 and the 55-day MA at $1.4330. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/8020

"Societe Generale: EUR/JPY may fall to 106.95"(2011-07-19) Technical analysts at Societe Generale believe that the single currency is on its way down to last week's minimums versus Japanese yen in the 109.60 area and then to the downtrend channel support at 109.20. If the pair EUR/JPY breaks even lower, it will slump to the longer-term rising support line at 106.95. According to the bank, on the upside resistance levels are situated at 111.35 and 112.35. Chart. Daily EUR/JPY Comment here http://www.fbs.com/analytics/news_markets/view/8016

"BBH: new rating cuts coming in Europe"(2011-07-18) Ratings agencies have great influence on the markets. On the one hand, Moody's and Standard & Poor's shook traders when last week they’ve warned about the potential US downgrade coming unless the debt ceiling is lifted up. On the other hand, such actions may hurry the nation’s authorities to reach compromise before the time runs out. Strategists at Brown Brothers Harriman note that the agencies have missed their chance in the Asian crisis and during the boom of the dot coms, so they are probably trying to overcompensate that now. Analysts at BMO Capital think, however, that rating agencies play a very important role in Europe. In their view, as the European Bank Authority released on Friday the results of stress test that turned out to be better than expected but very likely inadequate, only the rating agencies can provide insight in the more realistic picture. Anyway, BBH specialists note that there will be further downgrades of Spain, Italy, Portugal and Ireland. Emerging markets, on the contrary, have solid chances for upgrades. The bank proposes investors to use this forecast while developing trading strategists in order to act ahead of the rating agencies. Comment here http://www.fbs.com/analytics/news_markets/view/8014

"Commerzbank, Barclays Capital: comments on EUR/CHF"(2011-07-18) The single currency has renewed today the record minimum versus Swiss franc by opening in the 1.1410 area, but then managed to restore to 1.1478. Technical analysts at Commerzbank are bearish on EUR/CHF as long as it’s trading below June minimum of 1.1957. In their view, the pair will face resistance at 1.1555 and 1.1770. The specialists note that as the European currency reached the base of 1-year downtrend channel at 1.1410, it may consolidate in the near term. However, euro risks dropping to 1.1290 and 1.1000. Currency strategists at Barclays Capital point out that although there’s a chance that today's gap in EUR/CHF is the so-called exhaustion gap that indicates trend reversal, there should be a great number of long positions being opened in the coming sessions to make this come true. Until it happens the bank bets on EUR/CHF decline to 1.1250. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/8011