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"Commerzbank: EUR/USD will keep correcting upwards"(2011-05-31) The single currency went up from 1.4000 versus the greenback last week overcoming the key resistance in the 1.4340/65 area. Technical analysts at Commerzbank claim that such move of euro means that its upward correction is likely to deepen. In their view, the pair EUR/USD is poised up towards 1.4568/1.4730 (61.8% and 78.6% Fibonacci retracements). According to the bank, support levels are situated at 1.4300/1.4240. While the European currency is trading higher, the market will remain bullish. If euro breached this area, it will head down to test 1.4003/1.3969 (200-week MA and the recent minimum). Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7471

"Juncker: EU will decide on further Greece’s funding by the end of June"(2011-05-31) Jean-Claude Juncker who’s leading of Eurogroup said that the European Union leaders will decide on additional aid for Greece by the end of June. In coming days the EU, IMF and ECB are finishing the review of Greece’s in meeting the terms of last year’s 110 billion-euro ($157 billion) bailout. According to the results of this examination, the EU will come up with plan for further aid to the country. Under the terms of the rescue package, Greece was to return to financial markets and sell about 30 billion euro of bonds next year. As 10-year bond yields reached 16.4% that exceeds those of the time of the bailout in more than 2 times, Greece isn’t able to finance itself on its own and will need more aid. ECB Executive Board member Lorenzo Bini Smaghi thinks that the EU and IMF will have to put up another 30 billion euro in loans to tide Greece over next year with the rest of its 2012-2013 financing needs covered by revenue from asset sales and other measures, reports Financial Times. Greek Prime Minister George Papandreou has announced an additional 6 billion euro of budget cuts for this year to meet the bailout goal of cutting the deficit to 7.5% of GDP. The government also pledged to speed 50 billion euro of state asset sales to repay part of its debt, which is set to reach almost 160% of GDP this year. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7467

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"BCC revised forecast for UK GDP and BoE rate hikes"(2011-05-30) The British Chambers of Commerce lowered the country’s economic growth forecasts and pushed back its forecast for the Bank of England’s rate hike. The organization reduced Britain’s GDP growth forecast from 1.4% to 1.3% in 2011 and from 2.3% to 2.2% in 2012. This year growth will be slower as in the first quarter the national economy expanded less than it was expected. In 2012 GDP advance will be limited by higher inflation rate and a faster pace of rate increases. According to BCC, UK central bank will lift up its benchmark rate from the current levels of 0.5% to 0.75% in August (in March the specialists said it would happen in May). The BoE key rate is thought to climb to 1% this year and to 2.75% by the end of 2012. Economists at BCC think that it would be much better if the BoE increased the rates later – in the fourth quarter. However, the organization believes that British businesses will manage to deal with small increases of the borrowing costs. In any case, UK policymakers have to act with great caution and mustn’t be too aggressive in monetary tightening, underlined BCC. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/7464

"RBC: NZD/USD once again renewed maximum"(2011-05-30) New Zealand’s dollar rose today’s morning to $0.8215, the highest level versus its US counterpart since its free float began in 1985. Kiwi was encouraged by the release of the nation’s trade data that showed that trade surplus in April reached the record maximum of 1.113 billion exceeding the 603-million estimate in more than 2 times. Currency strategists at RBC Capital Markets note that after hitting the maximal level, the pair NZD/USD eased down to the levels in the 0.8170 zone. The specialists note that euro is coming under a little bit of pressure that’s weighting on New Zealand’s currency. In their view, NZD/USD will remain supported as the country’s Prime Minister Key confirmed that China expresses interest in buying New Zealand’s bonds. According to RBC, support for the pair is found at 0.8125, while resistance is situated at 0.8220. As for the greenback, analysts at ANZ National Bank think it will keep weakening. The specialists advise to watch US economic data tomorrow that they expect to be quite unfavorable: S&P/Case-Shiller index of property values in 20 cities (released at 1:00 pm GMT) and Institute for Supply Management-Chicago PMI (due at 1:45 pm GMT). Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7460

"Commerzbank: GBP/USD upward correction has finished"(2011-05-30) British pound went up versus the greenback from last week’s minimums in the 1.6060 area (50% Fibonacci retracement of sterling’s advance this year) rising above 1.6500 on Friday. Technical analysts at Commerzbank think that the pair GBP/USD has reached the target of its upward correction and will reverse downwards in the 1.6480/6520 area (May 11 maximum). According to the bank, below these levels British currency will be poised to 1.5935 and 1.5733 (55-day MA). Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/7458

"Credit Agricole: negative outlook for EUR/USD"(2011-05-30) Analysts at Credit Agricole claim that the outlook for the single currency versus the greenback this week seems to be negative. As the main reason for the bearish forecast the specialists cited the lingering concerns about woes of euro zone’s periphery. According to the bank, last week the pair EUR/USD managed to recover a bit, though investors still lack confidence in the region. The strategists underlined that there were no positive news to drive euro higher, just the absence of new bad events. Even though there are some factors that may encourage the European currency, investors are to be very cautious, warns Credit Agricole. The analysts expect the tough rhetoric calling on Greece to implement more austerity measures will continue ahead of the disbursement of the next tranche of aid from EU and IMF. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7456

"Ichimoku. Weekly forecast. USD/CHF"(2011-05-30) Weekly USD/CHF The general trend for the pair USD/CHF remains strongly bearish. Last week the prices renewed the record minimum at 0.8511. The lines of the Indicator are bending down (1, 2, 3 and 4). The bearish Cloud is wide. Chart. Weekly USD/CHF Daily USD/CHF Tenkan-sen (2) and Kijun-sen (1) formed the “dead cross”. The Ichimoku Cloud is still creating pressure for the pair (3) limiting the advance of the rate. At the same time the prices may find support at the trend support line and move a little higher. Technical picture for the pair remains negative. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/7448

"Ichimoku. Weekly forecast. USD/JPY"(2011-05-30) Weekly USD/JPY Last week the prices went down erasing the advance made a week ago and returned to the Standard line that’s once again acting as a support (2). Tenkan-sen went horizontally and is now acting as a resistance (1). The descending Ichimoku Cloud (3) has narrowed, though the bears are still dominating the market. Chart. Weekly USD/JPY Daily USD/JPY At the beginning of the week the prices managed to move a little bit higher, though on Thursday and Friday the rate significantly fell and, as a result, pound lowered to Senkou Span “B” (1). The bullish Ichimoku Cloud is narrowing (2). At the same time, Tenkan-sen and Kijun-sen, as it was expected, formed the “golden cross” inside of Kumo that increases the chances for consolidation inside of the Cloud taking into account the support provided by its lower border. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/7447

"Ichimoku. Weekly forecast. GBP/USD"(2011-05-30) Weekly GBP/USD Last week British pound managed to rise versus the greenback adding more than 150 pips. The Standard line acted as a support (1) and the prices went up breaking though the Turning line (2). The “golden cross” formed by Tenkan and Kijun above Kumo is still in place (3). Chinkou Span has bounced up from the price chart (4) – still a bullish signal. The rising Ichimoku Cloud remains wide (5) that means that the bulls are still rather strong. At the same time, all lines of the Indicator are horizontal (1, 2, Senkou Span “A” and “B”). Trend for the pair GBP/USD still remains neutral. The rate is likely to consolidate in the 1.62/1.65 area. Chart. Weekly GBP/USD Daily GBP/USD Although at the beginning of the last week the prices dipped below a very thin Ichimoku Cloud, the bulls quickly managed to regain control: pound was able to rise above the Turning line (1) and then the Standard line (2). Never the less, the Cloud reversed down (4) that that in the short term the powers of bulls have gone out, though the bears haven’t come in power yet. Tenkan-sen and Kijun-sen still keep the “dead cross” (3) – the signal isn’t very strong as the figure was formed above Kumo. It’s possible to expect downward correction and consolidation of the rate. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/7446

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"Deutsche Bank: EUR/USD will decline to support at $1.3500"(2011-05-27) So, EUR/USD went down from the maximums in the 1.5000 area reached at the beginning of May to the 1.4000 zone earlier this week moving within the downtrend. Analysts at Deutsche Bank expect the single currency to lose 5 or 6 big figures more trading versus the greenback. At the same time the specialists underline that euro’s decline will be limited by the 1.3500 level where it’s likely to find firm support that will hold during the weeks ahead. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7441

"Otmar Issing: euro area could have avoided the crisis"(2011-05-27) Former European Central Bank Chief Economist Otmar Issing, who worked in the ECB from 1999 till 2006, came up today with rather tough comments about Greece. According to him, the nation managed to enter the euro zone using deception. Issing says that the current crisis occurred due to the lack of monitoring and the absence of adequate sanctions for the violation of the currency union’s rules. In his view, the euro area could have avoided the turmoil if the required efforts were made. The economist thinks that Greece won’t be able to repay its debts on its own even after the country approved an accelerated asset-sale plan and a package of budget cuts necessary to draw a fifth tranche of its bailout. As a result, Issing forecasts that the single currency will survive the crisis, but some nation may have to leave the euro area. Comment here http://www.fbs.com/analytics/news_markets/view/7438

"Commerzbank: euro’s advance is a correction"(2011-05-27) The single currency has recovered from Monday’s minimum at 1.3970 to the levels above 1.4200 trading versus the greenback. Technical analysts at Commerzbank regard the upward move of the pair EUR/USD as correction, though they expect euro to climb a little higher before failing at 1.4340/65 or 1.4570 representing 38.2% and 61/8% Fibonacci retracement. According to the bank, the general outlook remains bearish. The European currency is poised down to 1.3770 (38.2% retracement of the pair’s advance from 2010 to 2011) and then 1.3463/1.3390 (55-week MA and the 11-month support line). Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7436

"UBS, BoT-Mitsubishi: US dollar will strengthen"(2011-05-27) US dollar bears are reducing their short positions on American currency ahead of the end of the Fed’s QE2 in June, reports Financial Times. The Federal Reserve’s bond purchases flooded the county’s financial system with the excessive amount of the national currency. The greenback has weakened becoming widely used as a funding currency in carry trades. The stock of money in the US has tripled from $844 billion in August 2008 before the Fed’s first round of quantitative easing began to more than $2,390 billion. Economists at Standard & Poor’s think that the expiration of QE2 will ease the fundamental pressure on dollar seen during the recent years. In their view, there may be a wave of short covering as investors buy back dollars that they sold earlier and this could mean that the USD downtrend’s over. According to CME data, during the week before May 17 speculators cut the value of their US dollar shorts by $8 billion to $25.5 billion, the minimal level since January. Specialists at UBS note that pension funds have also been reducing bearish bets on American currency so far. According to the bank, dollar will be able to get higher as the Fed’s decision to finish QE will reduce the usage of dollar in carry trades and improve the confidence of Asian central banks and reserve managers in the US currency. Strategists at Bank of Tokyo-Mitsubishi UFJ pointed out that investors are worried about the inability of US Parliament to push through the legislation that would increase US debt ceiling. As the risk sentiment deteriorates due to this matter and also because of the euro zone’s debt crisis, the demand for safe havens such as Swiss franc, Japanese yen and also US dollar is going to increase in the coming months. However, one should remember that if US debt limit isn’t lifted by the beginning of August, the United States will face the danger of default. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7434

"BNZ: NZD/USD may rise to $0.8213"(2011-05-27) Analysts at BNZ claim that New Zealand’s dollar is currently one of the most demanded currency in the world: it surged versus its US counterpart from $0.7990 yesterday approaching today the $0.8200 area. The specialists note that kiwi is helped by the reports that China Investment Corp., Chinese sovereign wealth fund, has planned to invest 1.5% of its foreign-exchange reserves to in New Zealand’s assets. According to BNZ, NZD/USD is poised up to the post-float maximum at $0.8213 hit in February 2008. The strategists think, however, that as there are too many bulls on kiwi right now, the pair may pause for some time. The bank says that resistance for New Zealand’s currency is found at $0.8214, while support lies at $0.8110. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7432

"Hawk Andrew Sentance is leaving the Bank of England"(2011-05-26) The outlook for British pound depends on how the uncertainty about the Bank of England’s MPC decisions will resolve. Here there’s a significant change in the state of things: Andrew Sentance is leaving British central bank next week after a year of calling for the rate hike. During this year Sentance managed to convince 2 other MPC members – Spenser Dale and Martin Weal – that it’s necessary to raise the borrowing costs in UK in order to stem rising inflation that reached in April the maximal level since 2008 of 4.5%. According to the BoE forecast, in May this figure will iclimb to 5%. The main argument against increasing rates is the weakness of Britain’s economy: data released yesterday showed that consumer spending and investment survived in the first quarter the biggest slump in 2 years. How the MPC will vote on the next meeting that will take place on June 9 depends on the newcomer former Goldman Sachs economist Ben Broadbent who will succeed Sentance as a policy maker. On May 17 Broadbent said that there are strong arguments both for lifting up the rates and staying on hold. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/7429

"Commerzbank: comments on EUR/CHF"(2011-05-26) Technical analysts at Commerzbank claim that euro managed to find support at 1.2270 trading versus Swiss franc after its fall from Friday’s maximum of 1.2646. The specialists think that the pair EUR/CHF will be able to recover not higher than to 1.2644 or 1.2469/85. In their view, the mentioned resistance levels will constrain further advance of the sing currency. Chart. H4 EUR/CHF Comment here http://www.fbs.com/analytics/news_markets/view/7427

"China will be possibly buying EFSF bonds"(2011-05-26) The single currency made today the biggest advance versus US dollar this month – the pair EUR/USD gained 0.7% rising from $1.4068 to $1.4195. Euro was encouraged by the expectations that China will increase purchases of European bonds that helped to weaken concerns about the crisis. European Financial Stability Facility CEO Klaus Regling claimed yesterday that Asian investors, including China, may buy Portuguese bailout bonds when the EFSF sells them in June. China that is the world’s biggest holder of foreign exchange reserves and the largest overseas investor in US debt with holdings (according to Treasury May data, China holds $1.145 trillion) seems willing to diversify its reserves moving away from US dollar. Analysts at Westpac claim that China’s interest is positive for euro in the short term. However, the specialists warn that the potential restructuring of Greek debt will prevent euro from rising in the longer-term. Economists at Rabobank regard Regling’s statement not as the vote of confidence in the periphery, but as the pooling of the euro zone’s fiscal resources. So, in their view, any reduction of peripheral yields on this news will be short-lived. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7425

"Ferguson: political tensions in the euro area will escalate"(2011-05-26) Naill Ferguson, a history professor at Harvard University, said in his interview to Bloomberg TV that the euro zone has become a kind of government-killing machine: those policymakers who have been in charge during the financial crisis are now being punished. This applies not only to the policymakers of the periphery known as PIGS (Portugal, Ireland, Greece and Spain), but also to the core, particularly, Germany. In his view, this process is going to continue and this is a very troubling situation with the implications for the whole global economy. The professor recalls the experience of the Latin Monetary Union in the late 19th century that died a slow death mainly because of Italian deficits. Ferguson has also expected that it would be Italy to drive the euro zone off the cliff. The Problems have actually begun in Greece, Ireland and Portugal threatening to spread to Spain. Now, however, Italy is in the frame, so the economists say that it’s necessary to talk not about PIGS but about PIIGS in order to make room for Italy alongside Ireland. As the political situation deteriorates, there will be more of True Finn type parties in the core and the North that urge to stop bailing out South and West, while in the periphery people will keep complaining about the masochistic austerity measures which these countries are conducting. According to Ferguson, the dangerous idea of leaving the euro zone is starting to be regarded as politically credible one and the tensions in the region will escalate. Comment here Ferguson: political tensions in the euro area will escalate

"Lloyds: Greek debt has to be restructured"(2011-05-26) Economists at Lloyds TSB Corporate Markets note that to get the EU support Greek authorities promised last year to do fiscal tightening, but they haven’t done it. So, the country’s officials are once again promising to reduce the budget. The question is, given the increasing opposition to the cuts from Greece’s population, if the government is able to push through the austerity measures. The analysts say that Greece doesn’t grow fast enough to generate the tax revenues. As the country needs money there certainly has to be some restructuring – it doesn’t have to be the outright default, though it depends on how you define the notion of “default”. Rating agencies, for instance, say that any sort of “reprofiling” means default, notes Lloyds. The specialists think that in the long run restructuring will help both Greece and euro zone. According to the bank, the quicker the proper mechanism is put in place, the better. The current crisis in Europe is not a matter of confidence to the EMU as some might think, but the problem of relatively small economies, think the strategists. But as these countries still can’t meet their payments unless the debt is written off, the debt restructuring will actually ease the pressure on euro and reduce contagion effects. According to Lloyds, the world’s economy is quite healthy at the moment and if to conduct reforms in the euro area, it’s time to do that now. The European policymakers need to be willing to act toughly dealing with the crisis in 3 countries in particular – Greece, Portugal and Ireland. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7421

"BS: 3 reasons why US dollar downtrend will end"(2011-05-25) Currency strategists at UBS think that the major bearish trend for US dollar will soon be over. In their view, there are several reasons for US currency to strengthen. Firstly, the specialists expect the recovery of American economy to continue in the second half of the year. Then the end of the Federal Reserve second round of quantitative easing in June will provide a lot of fresh air for the greenback that has been under the pressure of the Fed’s $600 billion bond purchasing program during the last 12 months. Finally, dollar will be supported as euro will be under weight of the debt crisis in the region and the uncertainty created by the inability of the European authorities to come up with some decisive steps. UBS analysts think that the pair EUR/USD will fall from the current 1.40/1.50 range to the 1.30/1.40 range in the second half of the year. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7418