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"Westpac: NZD/USD will soon resume growing"(2011-04-28) The Reserve Bank of New Zealand decided today to leave the key interest rate at the record minimum of 2.5% to help the national economy recover from the most devastating earthquake in 80 years. The central bank underlined that the economic outlook for the country is very uncertain. According to RBNZ, higher oil prices and the elevated level of the New Zealand dollar will affect the nation’s economy. Such announcement made NZD ease down from the maximums against its US counterparts. Kiwi has been trading at high levels so far due to the rate differential between New Zealand and the US in favor of the former. Strategists at ANZ National Bank, however, say that kiwi will keep strengthening due to strong Aussie and general weakness of US dollar. Analysts at Westpac claim that support for the pair NZD/USD is situated at 0.8000, while the initial resistance is found at 0.8100. The specialists think that New Zealand’s currency may pause for some time but then resume its advance in the next few days breaking above the post-float maximum at 0.8213. Chart. H4 NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7168

"St. George Bank: AUD/USD will climb to $1.15"(2011-04-28) Australian dollar rose today above $1.09 as investors think that the Reserve Bank of Australia will lift up interest rates before the Fed does so. Such belief strengthened after yesterday’s FOMC announcement and Ben Bernanke’s press conference (http://www.fbs.com/analytics/news_markets/view/7160). The likelihood of RBA hike, on the contrary, increased as Australian CPI added 1.6% in the first 3 months of 2011 from the previous quarter making the biggest advance since 2006. The yield spread between Australia’s 2-year government notes and similar US papers rose to 4.35 percentage points on April 18, the widest since February 9. Analysts at St. George Bank raised their forecast for the pair AUD/USD from $1.11 to $1.15 in the first half of the year. In their view, Aussie will be driven by stronger growth and improving terms of trade. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7166

"Commerzbank: euro will rise to $1.5150"(2011-04-28) Technical analysts at Commerzbank note that the single currency managed to overcome the 4-month resistance line at 1.4720 trading versus the greenback. The pair EUR/USD renewed 16-month maximums in the 1.4880 area. The specialists believe that in the next few weeks euro will reach 1.5000 and then the 1.5145/50 zone (2009 maximum and 78.6% Fibonacci retracement of the decline from 2008 maximum). If EUR/USD breaks hire here, it will be able to advance to 1.6040. According to the bank, the pair remains under bullish pressure as long as it’s trading above the minimum of the middle of April at 1.4156. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7162

"The Fed keeps monetary stimulus"(2011-04-28) As it was expected, yesterday the FOMC left borrowing costs at the record low levels of 0-0.25% (since December 2008) and indicated that the $600-billion bond purchasing program will be finished as planned in June. The Fed has also cut the forecast for US 2011 economic growth from 3.4-3.9% (January estimate) to 3.1-3.3%. The weakest spot is the housing industry, said the central bank. US monetary authorities noted that the country’s economy is recovering at moderate pace and the situation at the labor market is gradually improving. Payrolls added 149,000 a month on average during the part half of the year, while the unemployment rate fell by 1% since November to the 2-year minimum of 8.8%. The Fed’s Chairman Ben Bernanke underlined that the central bank will maintain record stimulus until job growth accelerates and the recovery is robust enough to withstand tighter credit. In his view, the increase in inflation is temporary, caused by the transitory surge in commodity prices – such position differs from the hawkish comments of the Fed regional bank presidents (Richard Fisher of Dallas and Philadelphia’s Charles Plosser) we’ve heard during the last several weeks. Analysts at UBS expect US economic to improve, so that in few months the Fed will have to start gradually tightening. The specialists reminded that the central bank takes into account core inflation which doesn’t include such volatile components as food and energy prices. This indicator is rising, though isn’t high enough yet to lift up the rates. Economists at Mizuho note that the market took Fed’s statement as very dovish. According to the bank, investors’ risk sentiment improved and the demand for dollar and yen declined. The dollar index (DXY) hit the minimal levels since June 2008, while the pair EUR/USD renewed maximums climbing to $1.4880. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7160

"Commerzbank: German exporters expect euro to fall"(2011-04-27) According to Commerzbank’s monthly survey of German exporters, the majority of respondents still think that the single currency will soon drop. The sentiment of German companies about euro has worsened this month in comparison with March: 66% of participants now expect EUR/USD to fall during a year, while last month this figure accounted for 46%. As a result, the bank says that if the current uptrend for the pair doesn’t reverse in the coming months, some firms may record significant losses. Respondents also expect the single currency to fall versus Swiss franc, pound, Polish zloty and Russian ruble. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7156

"S&P's lowered outlook for Japanese debt"(2011-04-27) Japanese yen weakened today versus the greenback – the USD/JPY recovered today from 81.26 getting above 82 yen per dollar. It happened as the Standard & Poor’s changed the outlook for Japan’s AA- local-currency credit rating from stable to negative. The agency explained such more by the increased risks associated with the consequences of the March earthquake and tsunami. However, economists don’t think that S&P’s decision will have strong or long-lasting impact on the market. Analysts at Citi remind that the major part of Japanese government securities is held by domestic banks, so it’s unlikely that the news cause the nation’s debt sell-off by foreigners. In addition, when Moody's said on February 22 that Japan's Aa2 rating may be reduced yen didn’t lose much. Analysts at Societe Generale claim that S&P’s action will force Japanese authorities to look for the ways of increasing revenue. Strategists at RBS Securities Tokyo say that taking into account the scope of the earthquake, it’s clear that the government spending will be huge. According to S&P estimates, the reconstruction after last month’s disaster will cost the country’s economy 50 trillion yen ($613 billion). Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/7150

"Zuercher Kantonalbank: negative outlook for USD/CHF"(2011-04-27) The greenback hit today the absolute minimum versus Swiss franc at 0.8671. Technical analysts at Zuercher Kantonalbank claim that there’s no sign that USD/CHF downtrend is going to reverse. On the contrary, the specialists underline that it will be very difficult for the bulls to break above strong resistance at 0.8765 and 0.8810. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/7148

"Analysts increase forecasts for Aussie"(2011-04-27) Australian dollar reached today the record maximum at 1.0852 as the CPI data showed that inflation rate increased by 1.6% in the final 3 months of 2010 from the previous quarter, making the biggest advance since 2006. As a result, the expectations of the Reserve Bank of Australia’s rate hike have strengthened. In addition, Aussie benefited from the speculation that US FOMC will keep the interest rates at the minimal 0%-0.25% levels. Analysts at Bank of America Merrill Lynch think that Aussie may add more in the short term. In their view, the market doesn’t have much rate rises priced in at least for the next few months. Specialists at Ueda Harlow think that the pair AUD/USD may strengthen to $1.10. Economists at Commonwealth Bank of Australia raised their forecast for the Australian dollar. The analysts now expect Aussie to climb to $1.12 by the end of September, before declining to $1.04 at year-end. Earlier the bank projected that the pair will decline to 0.9400 by the end of September. According to the Credit Suisse Group AG index based on swaps, the RBA will lift up the borrowing by 26 basis points in the next 12 months. Chart. H4 AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7146

"Sumitomo: US dollar will keep declining"(2011-04-27) Currency strategists at Sumitomo Mitsui Bank expect the greenback to remain weak for some time due to the results of the FOMC meeting announced today at 8:30 pm (GMT + 04:00) and Ben Bernanke’s press conference scheduled at 10:15 pm (GMT + 04:00). The specialists say that if the comments of Fed’s Chairman are neither dovish nor hawkish, US currency will keep gradually moving down during the next week corresponding to the possible decline in US market interest rates. According to the bank, support for the pair USD/JPY is situated at 80.50 yen, while EUR/USD may advance to 1.4750. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/7144

"Barclays Capital: Canadian dollar forecast"(2011-04-27) Canadian dollar added 11.8% versus the greenback since the end of June reaching $0.9453 on April 21, the maximal level since November 2007. Analysts at Barclays Capital think that loonie may climb even higher. In their view, Canada’s currency will show the best results among the commodity currencies such as Australian and New Zealand’s dollars as those nations more depend on China the growth of which may slow. In addition, Canadian economic growth is gaining pace and the specialists expect the bank of Canada to conduct 2 rate hikes this year. Barclays warns, however, that later sluggish productivity growth and troubling current account deficit will come into focus. There’s also the evidence that loonie's strength is affecting exports of some goods to the United States. As a result, in the longer term USD/CAD may reverse its downtrend. It’s also necessary to note that, according to The Economist's Big Mac Index based on the purchasing power parity Canadian dollar may be overvalued by at least 12%. Chart. Daily USD/CAD Comment here http://www.fbs.com/analytics/news_markets/view/7142

"Juergen Stark: it’s vital to avoid debt restructuring in euro zone"(2011-04-26) European Central Bank Chief Economist Juergen Stark claimed in the interview to German TV station ZDF that debt restructuring euro area member state may lead to more severe consequences than those of the Lehman Brothers bankruptcy that market 2008 crisis. In his view, such move would result in new banking crisis failing to solve the budget and structural problems in individual nations. According to Stark, the county that restructures its debt risks being thrown out of capital markets and foreign financing for an unforeseeable time. The economist is sure that the only way out for the indebted European economies is to conduct fiscal reforms and fully repay their debts. Comment here http://www.fbs.com/analytics/news_markets/view/7138

"Greece’s deficit rose above the forecast"(2011-04-26) According to the EU data released today, the actual Greece’s 2010 budget deficit exceeded the forecast level. Greek shortfall rose to 10.5% of GDP, while the European Commission was looking forward only to 9.6% figure. The nation’s debt surged to 142.8% of GDP that’s above 140.2% estimate. Despite the fact that a year ago the EU and the IMF provided Greece with 110 billion euro ($160 billion) bailout, the country keeps struggling to raise its revenue as its economy’s contracting. Greek bond yields remain at the maximal levels – 2-year yields reached at 21.87%, while 10-year hit 15.18%. Most economists think that the country will eventually have to restructure its debt either by extending the maturity or even by lowering the total amount of obligations. Analysts at BNP Paribas think that Greece will need either a new loan from the EU/IMF or primary market bond purchases by the EFSF. The specialists are sure that the country won’t be able to fund itself in the markets in first quarter of 2012. Comment here http://www.fbs.com/analytics/news_markets/view/7134

"Switzerland’s trade surplus decreased"(2011-04-26) According to the data released today, Switzerland’s trade surplus narrowed from 2.38 billion in February to 1.09 billion in March. Analysts at Credit Suisse claim that though last month the nation’s exports weakened, demand for Swiss goods is still high. The matter is that the country’s exporters were forced to reduce prices because stronger national currency made their products less competitive. If franc keeps appreciating, this will certainly affect Switzerland’s export sector. As a result, the specialists don’t think that the Swiss National Bank will conduct any rapid tightening measures. Economists at Zuercher Kantonalbank also note that the sales of Swiss goods abroad remain robust. In their view, it seems that Swiss exporters accept profit squeeze in order to maintain or expand their market share. The analysts say that Swiss companies have shown that they can leave with the strong franc. If Swiss currency weakens versus euro in coming months, then there probably won't be any significant decline in export growth levels. Chart. Daily EUR/CHF Comment here http://www.fbs.com/analytics/news_markets/view/7132

"Trichet: ECB has to stem inflation expectations’ growth"(2011-04-26) ECB President Jean-Claude Trichet said in an interview to the Finnish press that it’s necessary to act counter any increase in inflation expectations. The policymaker warned that there’s the risk of second-round effects. In other words, rising consumer prices may start triggering bigger wage growth that, in its turn, will accelerate inflation. According to Trichet, in the current situation of high uncertainty at the markets, monetary authorities make all the efforts to constrain inflation expectations. The ECB chief repeated that the central bank’s non-standard measures such as purchases of government bonds from the secondary market are temporary. The official underlined that decisions on these measures are independent from interest rate decisions, which are based on the central bank’s views on price stability. Comment here http://www.fbs.com/analytics/news_markets/view/7130

"Commerzbank: euro on its way up to $1.5145/50"(2011-04-26) Technical analysts at Commerzbank note that the single currency has advanced last week versus the greenback overcoming the key resistance of the 1995 maximum in the 1.4535 area. In their view, the medium-term outlook for euro has become positive. The specialists think that the pair EUR/USD is now poised up to 1.5145/50. According to the bank, support levels for the pair are situated at 1.4535/00, 1.4445 and 1.4370. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7129

"Comments on AUD/USD"(2011-04-26) Australian dollar eased down versus its US counterpart from the 29-year maximum at $1.0775 reached yesterday. The currency was affected by the fall in commodity prices. It’s also necessary to note that the trading volumes are very low as Australia’s markets are closed for a holiday. Support for the pair AUD/USD is situated at $1.0677, while resistance levels are found at $1.0775 and $1.0800. Important data for Aussie is first quarter inflation rate due on Wednesday. According to economists’ forecasts, US consumer prices growth accelerated by 1.2% in the first 3 months of the year after gaining 0.4% in the final quarter of 2010. Chart. H4 AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7126

"HSBC, Westpac: comments on NZD/USD"(2011-04-26) Analysts at HSBC note that the New Zealand’s dollar is trapped in the 0.7970/0.8040 area versus the greenback. The specialists underline that investors are waiting for the results of the 2-day FOMC meeting due to be announced tomorrow. It’s also necessary to watch the Reserve Bank of New Zealand’s rate decision on Thursday. Official Cash Rate is currently at 2.50%. According to the consensus forecast, the central bank will start raising rates at the beginning of 2012. On Monday the pair NZD/USD reached the 3-year maximum at $0.8037. Kiwi has been up so far despite the nation’s weak economic fundamentals and technical barriers. Currency strategists at Westpac say that if New Zealand’s currency fails to break higher during the next few days, it will correct downwards at least to $0.7800. On the other hand, if kiwi succeeds, it will manage to climb to the post-float maximum at $0.8215. The specialists also say that the broad US dollar weakness is likely to provide New Zealand’s dollar some support in the near term. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/7124

"Commerzbank: ECB rates forecast"(2011-04-26) Strategists at Commerzbank think that the ECB will lift up the rates 2 times more – in September and in December. In addition, by the middle of the year the European policymakers may also change the allotment modes that may also be regarded as a tightening move. The specialists think that the peripheral nations won’t be affected much by the rate increase, at least in the long term. According to the bank, looking at Portuguese or Spanish sovereign 5- or 10-year bond yields it’s possible to see that the real ECB interest rate expectations component of these yields is rather small as they are determined primarily by the sovereign credit risk. However, the economists expect that in the longer term divergence trend in the euro area will intensify. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7122

"Hans Tietmeyer about the euro area and the ECB policy"(2011-04-26) Former Bundesbank President Hans Tietmeyer says that European Commission should have determined the criteria of joining the euro area more strictly. In his view, the currency union now faces the consequences of its development during the last 10 years. Tietmeyer claims that Greece has a chance to get out of the crisis without restructuring. In his view, that depends on how competent the actions of the country’s policymakers will be. The indebted countries have to address their problems and take all necessary measures to restore their competitiveness in the euro area and worldwide, Tietmeyer says. The economist thinks that the ECB was right to raise the interest rates. Comment here http://www.fbs.com/analytics/news_markets/view/7120

"Citigroup, UBS about the potential intervention in Japan"(2011-04-25) The pair USD/JPY is trading at the lower border of the large “triangle”. Last week US dollar eased down to 81.60. The greenback is still very weak and investors once again began speculating about the potential Japan’s currency intervention. Analysts at Citigroup and UBS think that the level watched by the country’s authorities is situated at 80 yen. On March 18 G7 nations intervened selling yen at 78.83 yen that helped to push dollar higher to 82 yen. According to the specialists, some other countries such as Canada and Australia are also worried about the appreciation of their national currencies expressing dissatisfaction with US monetary policy. Some economists think that the maximal acceptable EUR/USD rate for the euro area is situated at $1.50. Chart. Daily EUR/USD Comment here Citigroup, UBS about the potential intervention in Japan

"Financial Times: too early to restructure Greece's debt"(2011-04-25) Analysts at Financial Times doubt that the euro zone will be able to get out of the crisis without suffering much, as they have thought before. The economists changed their opinion as the tensions within the monetary union have significantly strengthened during the past week. Let’s name the 2 main events here. Firstly, the elections in Finland showed that the 2 parties, which propose a partial Portuguese debt default as a condition for the bailout, have gained much weight among the nation’s population. This propelled the market’s concerns making the bond spreads widen to the record highs. Secondly, German Chancellor Angela Merkel may lose her majority over the domestic legislation of the European Stability Mechanism (ESM), the permanent mechanism to provide help for problem European states. The vote on the matter has already been put off until autumn. To make the domestic audience change attitude towards ESM, German officials talked about the inevitable Greek restructuring. This lead to the boom of rumors and ended with an investigation counter Citigroup conducted by Greek authorities. The FT economists, however, warn that Greece’s premature default may have very dangerous consequences for the euro area. According to the newspaper, voluntary restructuring won’t save the country’s debt problems. Greece faces no short-term liquidity squeeze as it’s supported by the EU and the IMF, so there’s no urgent need for the restructuring. Moreover, the specialists believe that Greek banking sector won’t survive large and involuntary haircut. The ECB would face a haircut on its direct investments of Greek government bonds, and, more importantly, much of the collateral posted by Greek banks would vanish. Greek default will cost German taxpayers alone at least €40bn ($58bn), including recapitalization of the ECB estimates FT – that’s much more expensive than the bailout. If Greece defaults, the EU and Portugal probably won’t be able to agree on a rescue package in time, the EU’s dispute with Ireland over corporate taxes may escalate, German, Finnish or Dutch parliaments may fail with the ratification of the ESM, and Greek parliament may refuse the new austerity measures and many other disasters may happen. FT analysts also think that there is the downgrade threat for French sovereign bonds. If it happens, the logic of the European financial EFSF will be destroyed as it is built on guarantees of the AAA countries. Comment here http://www.fbs.com/analytics/news_markets/view/7115

"All attention to Bernanke’s Wednesday press conference"(2011-04-25) The first regularly scheduled press conference of the Fed’s Chairman Ben Bernanke will take place on Wednesday when the head of US central bank will answer the journalists’ questions. Among the questions that interest investors most of all are if the recent spikes in consumer prices are regarded only as temporary and whether quantitative easing in the US will finish as scheduled at the end of June. If Bernanke shows any signs of concern about inflation, the market will interpret this as a signal that the rates will be lifted up rather sooner than later. Annual inflation pace in the US rose form 2,1% in February to 2,7% in March, while the economists were looking forward only to the advance to 2,6%. Analysts at Daiwa Capital Markets think that Bernanke will say that the US economy hasn’t reached yet the Fed’s targets of both inflation and employment, so the approach of the monetary authorities has to be loose. The Fed’s chief is likely to indicate that the central bank is aware of risks of such policy and is closely monitoring the situation being ready to act when necessary. Strategists at RBS Securities are going to watch the reaction of risk asset prices. In their view, stock and commodity indexes are likely to rise on more dovish comments. On the other hand, if the Fed hints at the exit strategy risk assets will lose. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/7110

"US economic data to watch this week"(2011-04-25) Analysts surveyed by Bloomberg believe that the pace of US economic recovery declined in the first 3 months of the year as the 18%-surge in gasoline prices affected consumer spending. According to the median estimate, American GDP growth slowed down from 3.1% in the final quarter of 2010 to 1.9% in the first quarter of this year. The data are released on April 28. On April 26 see the S&P/Case-Shiller index (forecast down 3.3% in February). Pending home sales are reported on April 28 (forecast: up 1.7% in March after gaining 2.1% in February). While the manufacturing sector is doing quite well (durable goods orders are projected up by 2% in March after February decline by 0.6%; data are published on April 27), while the households are under pressure from rising prices – household purchases’ advance pace is expected to fall from 4% in QIV to 2.1% in the first quarter. The Conference Board confidence index due on April 26 may increase from 63.4 in March to 64.5 in April. It’s also necessary to note that investors’ attention will be focused on the FOMC police meeting on April 26-27 and the following press conference of the Fed’s Chairman Ben Bernanke. The sentiment is the head of US central bank will sound rather dovish. Comment here http://www.fbs.com/analytics/news_markets/view/7106

"Yen weakened ahead of BOJ meeting"(2011-04-25) Japanese yen began the week from declining versus its main counterparts as it’s expected that the Bank of Japan will stay loyal to the extremely loose monetary policy while other major central banks tend to hike rates. The BOJ will announce overnight call rate on Thursday, April 28. Economists surveyed by Bloomberg are sure that the central bank will leave the borrowing costs at 0-0.1%. It’s also thought that the BOJ officials may reduce forecast for real growth in fiscal 2011 from 1.6% to 0.8% taking into account the potential slowdown due to the March 11 earthquake. Analysts at Gaitame.com Research Institute expect the greenback and yen to remain weak as the US and Japan won’t be able to follow other nations on the tightening path. Yen will be also under pressure due to the gradual global economic recovery. Resistance levels for the pair USD/JPY are found at 82.20 and 82.50, while support levels are situated at 81.60, 81.35 and 81.10. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/7105

"Ichimoku. Weekly forecast. USD/CHF"(2011-04-25) Weekly USD/CHF On the weekly chart everything speaks in favor of bears. All lines of the Indicator are falling (1, 2, 3, 4), while the bearish Cloud remains wide. At the same time, it’s necessary to remember that the pair has already made a significant slump renewing the minimums in the 0.8780 area, so it’s possible to expect some profit taking of the franc’s buyers. Chart. Weekly USD/CHF Daily USD/CHF On the daily chart the long-term trend has once again turned sideways: the Standard line and Senkou Span “B” went sideways (2, 4). Tenkan-sen, the Turning line, and Kijun-sen still hold in place the “dead cross” (2) – strong bearish signal as it was formed below the Cloud. We expect the prices to consolidate below the Ichimoku Cloud. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/7097