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Westpac: comments on NZD/USD Currency strategists at Westpac say that the pair NZD/USD dynamic is following the one of EUR/USD. According to the specialists, the markets are driven mainly by the improving risk appetite. Asian equity markets got a bit higher and US stock index futures are also in positive territory. Support for New Zealand’s dollar lies at 0.7500, while resistance is found at 0.7560. Chart. H1 NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/6212

Aussie under the impact of contradictory factors Australian dollar fell below the parity with the greenback ahead of the Bank of England’s inflation report that will be released at 1030 GMT and may stimulate moves toward interest rate hike in the UK. The outlook for Aussie seems to be mixed as the impact dovish comments heard yesterday from the Reserve Bank of Australia is confronted by the influence of rising commodity prices. As a result, the pair AUD/USD is likely to stay in its current range. Chart. H4 AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/6208

Credit Agricole, BoT-Mitsubishi: comments on USD/JPY Analysts at Credit Agricole claim that the pair USD/JPY may rise next week to 84.50. The specialists say that the demand for greenback remained high despite some yen’s buying due to yesterday’s US Treasuries redemption. If US currency manages to rise above 84.50 (December 15 maximum), it will be poised up to 86.00. Other forex strategists note dollar will be moving gradually up, though in the near term it will be affected by Japanese exporters repatriating profits as fiscal year finishes at the end of March and selling USD/JPY above 84.00. Economists at Bank of Tokyo-Mitsubishi UFJ believe that US dollar will gain versus yen if US economic data released later today indicate that American economy is steady recovering. In their view, it’s necessary to pay attention to US January housing starts data due at 1330 GMT and January industrial production data due at 1415 GMT. The specialists note that investors are willing to buy dollars. US currency remained rather firm even despite yesterday’s weaker-than-expected US retail sales. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/6206

Technical levels of GBP/USD British pound rose from the day’s minimum at 1.6005 to the week’s maximum at 1.6170. The pair GBP/USD has started to correct downwards at the beginning of the US session but is likely to hold above 1.6100. Support levels are found at 1.6120, 1.6060 and 1.6010. Resistance levels are situated at 1.6185, 1.6220 and 1.6260. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/6197

Demand for US assets fell in December According to the US Treasury Department, in December global demand for American stocks, bonds and other financial assets has decreased. Net buying of long-term declined from $85.1 billion in November to $65.9 billion in December. Including short-term securities such as bills and stock swaps, foreigners purchased a net $48.2 billion compared with net buying of $35.6 billion in the previous month. Total foreign purchases of Treasury notes and bonds were $54.6 billion in December compared with purchases of $61.7 billion in November. China, the biggest foreign holder of US Treasuries, reduces its investments in the US debt from $895.6 billion in November to $891.6 billion in December. Comment here http://www.fbs.com/analytics/news_markets/view/6195

Credit Agricole: major currencies outlook Currency strategists in Credit Agricole outline the prospects for the major currencies in 2011. JPY The specialists say that Japanese economy seems to be doing reasonably well and will show growth above trend – that’s not a lot because trend growth for Japan is only around 1%. There’s a lot of pressure on the Bank of Japan to end deflation and the deflationary problem is going to persist throughout the whole year. That will mean more aggressive policy steps of the central bank. Perhaps, the BOJ will have to increase JTB buying unsterilized or even set an inflation target. The measures counter deflation may also require weaker Japanese yen. Euro According to Credit Agricole, although there is some support for euro at the beginning of the year on the more significant buying of the euro zone’s debt from the ECB, the overall 2011 outlook for the single currency is negative. The pair EUR/USD will end the year at $1.25 or even lower as the euro zone’s tensions will keep worrying the markets. The analysts draw investors’ attention to the still high growth diversion between Northern Europe and Germany, on the one side, and the southern countries, on the other side. Debt problems and fiscal austerity measures are going to weaken the growth even further, claims the bank. USD US economy will be rebounding and Credit Agricole looks forward to 3% growth. The big problem is still the labor market and high unemployment. Core inflation will continue to be very benign and there’s still the risk of QE3. All in all, the economists expect that the greenback will strengthen against many of its counterparts on higher US yields. Comment here http://www.fbs.com/analytics/news_markets/view/6188

Commerzbank: comments on EUR/USD Technical analysts at Commerzbank say that the European currency will remain under pressure versus US dollar as long as it’s trading below resistance in the 1.3570/1.3629 region. The specialists expect the pair EUR/USD to fall to 55-day MA at 1.3364. Then euro may bounce back, but if it fails and gets below this level it will be poised to drop to the 200-day MA at 1.3106. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6186

Mizuho: comments on EUR/USD Technical analysts at Mizuho Corporate Bank note that the single currency went down from last week's maximum versus the greenback at 1.3745 and consolidated below the neckline of a potential small “head and shoulders” pattern. According to the specialists, the mentioned model means that the pair EUR/USD may fall inside a fairly large daily Ichimoku Cloud getting down at least to 1.3300. Never the less, Mizuho underlines that the technical picture seems to be mixed as euro’s still trading above the 26-day MA that points at long positions. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6184

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AUD/JPY rose to 9-month maximum Australian dollar rose to 9-month maximum versus Japanese yen at 83.86 yen on the surging demand for higher-yielding assets after China’s inflation rate added less than it was expected. In January China’s CPI gained 4.9% from the 2010 level after adding 4.6% in December, while the economists forecasted 5.4% advance. It’s also necessary to take into account that, according to minutes of the Reserve Bank of Australia’s February 1 meeting released today, a bit restrictive monetary policy suits the current situation as the country’s incomes increase due to the rising commodity prices. Credit Suisse AG index based on swaps shows that the RBA will increase its 4.75% benchmark rate over a year by 33 basis points. The specialists at Citigroup advise investors to buy the Aussie on dips. Chart. Daily AUD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/6182

French and German GDP growth is week According to the data released today, French economy gained only 0.3% in the fourth quarter, while the economists were looking forward to 0.6% increase. German GDP also didn’t justify the market’s expectations: it rose by 0.4% versus 0.5% projected, down from 0.7% in the third quarter of 2010. Mizuho Corporate Bank claims the single currency fell to the intraday minimum at 1.3469 after French Finance Minister Lagarde commented that she is not concerned about any sustained return to inflation. These less hawkish remarks hinted that the euro zone authorities see no need for the rate hikes putting bearish pressure on the single currency. Chart. H1 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6180

China’s inflation rate grows below the forecast According to Chinese data released today, the country’s inflation pace grew less than it was expected. In January China’s CPI gained 4.9% from the 2010 level after adding 4.6% in December, while the economists forecasted 5.4% advance. Analysts at Barclays Bank say that the lower inflation figures will ease market concerns about aggressive tightening from the Chinese central bank. The specialists also note that the risk sentiment improved after China’s inflation data release and the demand for safer assets lowered, so Japanese yen’s declining versus the majority of its main counterparts. The pair USD/JPY reached 83.56 approaching the recent maximum at 83.66. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/6178

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Deutsche Bank: euro may get support from euro zone’s GDP Analysts at Deutsche Bank claim that the strong preliminary GDP data in the euro area can make the economists push up their euro zone GDP forecasts that will have positive impact on the European stocks and currency. According to the bank, the region’s economy gained 0.4% in the final quarter of 2010. Trade was the main driver of the growth, while private consumption has possibly weakened and investment spending declined due to the bad weather. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6176

Barclays Capital: AUD and NZD outlook Analysts at Barclays Capital note that it seems that Australian dollar’s currently forming a pennant between 0.9915 and 1.0180 versus its US counterpart. The specialists expect that the pair AUD/USD may trade sideways in this range. If Aussie breaks below 0.9910, its move will look like the bearish “flag” and the pair will risk slipping to 0.9800 and 0.9725. Chart. H4 AUD/USD As for the New Zealand’s currency, it’s still under bearish pressure against the greenback and the pair NZD/USD may fall to this year’s minimum at 0.7525. According to Barclays Capital, if kiwi closes below this level, it may fall to December minimum at 0.7350. The analysts believe that the current downtrend will stabilize only if the pair starts trading above 0.7680. Chart. H4 NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/6171

BNP Paribas: EUR/USD won’t drop much Analysts at BNP Paribas claim that the pair EUR/USD won’t drop much unless the credit market spreads increase too much. Although the general outlook is in favor of the greenback, the specialists note that US economic recovery isn’t strong enough yet, so confirm recent optimism upcoming jobs data should turn out to be very encouraging. As long as the credit markets doesn’t mind, euro will keep receiving support as investors believe that the ECB may increase its benchmark rate by end of 2011, says BNP Paribas. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6169

European currency under bearish pressure The European currency found itself today under bearish pressure versus the greenback and other of its main counterparts as investors worry that the European finance ministers will fail to set up debt-reduction targets on their meeting taking place today and tomorrow. The pair EUR/USD slumped after Reuters claimed that that a rescue plan for WestLB AG, the German state-owned bank bailed out during the financial crisis, may fail. In addition, the market is concerned about the situation in the peripheral euro zone nations: Greece criticized the EU and IMF demands to sell its state assets to raise 50 billion euro by 2015 to pay down debt, while in Ireland the main opposition party said it wants to renegotiate details of the country’s bailout after national elections scheduled on February 25. The yield on Portugal’s 10-year bond stays close to the maximal level since the launch of euro at 7.64% reached on February 10. Analysts at Credit Agricole Corporate and Investment Bank claim that the single currency’s going to weaken. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6167

Citibank, Barclays: comments on USD/JPY Analysts at Citibank Japan claim that the greenback may rise in the near term to 84.50 trading versus Japanese yen. As it may be seen on the daily chart, the pair USD/JPY has gone above the triangle it has formed since November. Citibank believes that US dollar’s strengthening as the long-term yields in the US went up and investors started buying American debt. Never the less, the specialists underline that the pair’s growth will be limited as Japanese exporters are keen on selling dollars above 83.50. According to the bank, up from here the pair will be forming as upside triangle. Currency strategists at Barclays Capital say that taking into account the correlation between US yields and USD/JPY dynamics and the fact that 2-year yields have potential for increasing, it’s possible to assume that the greenback will find support in case of any declines. After consolidating above 82.50, American currency will rise above 83.70 to the maximums at 84.50 and 85.90. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/6165

Commerzbank: USD/CHF will head up after correction Technical analysts at Commerzbank claim that the greenback’s consolidating after it reached the key resistance at 0.9774 trading versus Swiss franc. The specialists expect that after the near-term consolidation is over, the pair USD/CHF may rise to 1.00607 and then to the 200-day MA at 1.0202. Chart. H4 USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/6163

BNP Paribas: sell GBP/USD if pound advances Analysts at BNP Paribas expect that UK CPI will gain in January 4% on the annual basis and the pair GBP/USD may test the top of the recent range at 1.6180/1.6200, claim the specialists. As opposed to their colleagues at Credit Agricole, the bank believes that the Bank of England's Quarterly Inflation Report that is released on Wednesday may show the increase in inflation forecast, while the GDP forecast will be revised downwards. So, the combination of these 2 factors creates negative pressure on sterling in the medium-term. As a result, BNP Paribas says that after the CPI release the growth of the British currency will be limited and advises investors to sell pound on the rate’s advance to the 1.6180/1.6200 zone. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/6161

Credit Agricole: GBP trade will be volatile Analysts at Credit Agricole believe that GBP/USD trading is going to be volatile this week. In their view, UK inflation rate due on Tuesday may exceed expectations. The specialists claim, however, the Bank of England's Quarterly Inflation Report that is released on Wednesday may show that the central bank projects inflation to return to the target level as the country’s economy weakens. According to the bank, it’s necessary to buy British pounds ahead of the CPI release. The pair EUR/GBP may fall to minimum of February 7 at 0.8384. Credit Agricole says investors should stay long on pound in the short-term closing positions ahead of the QIR. Chart. H4 EUR/GBP Comment here http://www.fbs.com/analytics/news_markets/view/6159

Commerzbank: EUR/USD may fall to 1.3108 Technical analysts at Commerzbank note that as last week the single currency didn’t manage to overcome resistance area of 1.3750/85 trading versus US dollar, the negative pressure on the pair EUR/USD increased and it may fall to the 55-day MA at 1.3355. If euro fails at this level, it will be poised to go down to the 200-day MA at 1.3108. The specialists say that bearish pressure may ease if EUR/USD rises above the 20-day MA at 1.3625. In such case the European currency will get chance to rise to 1.3750/85. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/6157

The analysts comment on China’s trade balance According to China customs data, the country’s exports showed in January annual rise of 37.7% after gaining 17.9% in December, while the economists were looking forward only 22.4% increase. China’s imports added 51% compared with the 2010 level after rising by 25.6% in December; the forecast was of 28.6% advance. The trade surplus narrowed from $13.1 billion in December to $6.45 billion in January that is smaller than the median forecast of a $10.7 billion surplus. Economists at ANZ believe that China’s better-than-expected data improve its economic growth outlook and means that the nation’s inflation pace is rising. The surge of imports points at China's strong demand for commodities. The specialists believe that as the residential incomes are expected to rise, imports will keep growing this year. In their view, yuan’s appreciation will have some downside impact to the global commodities prices. Strategists at ING say that China's January trade data show that that its growth rates exceed expectations and indicate acceleration of economic activity in the country. Usually imports decline from December to January, notes ING. The analysts at Bank of America-Merrill Lynch, however, say that China's January exports and imports may have been boosted ahead of the Lunar New Year at the beginning of February. As a result, the specialists think that exports and imports growth rates may fall in February. According to their forecast, this year exports will gain 19%, while imports – 23.2%. Strategists at Goldman Sachs believe that China's January trade data reflect strong underlying economic growth. However, the analysts also warn investors advising them to be very cautious measuring the impact of the Lunar New Year holiday. Comment here http://www.fbs.com/analytics/news_markets/view/6155

Ichimoku. Weekly forecast. USD/CHF Weekly USD/CHF The pair USD/CHF began rebounding after 2 weeks earlier the bears didn’t manage to break below historic minimums in the 0.9320 area. During the last week the trade was positive: the bulls overcame Tenkan-sen and the prices got inside the Tenkan-Kijun channel (3, 4). Never the less, the bulls’ position looks rather vulnerable as both the Turning line (3) and the Standard line (4) indicate the continuing of the downtrend. In addition, Senkou Span A (1) keeps falling and expanding the Cloud down. Chart. Weekly USD/CHF Daily USD/CHF The bullish sentiment that has swept so far over the market made the prices rise despite the severe resistance they were facing. As a result, the pair broke up through the horizontal Kijun-sen from which we expected the prices to bounce down as the end of last week. The Standard line, however, wasn’t able to hold the bulls that made USD/CHF continue rebounding and the pair even broke above the Ichimoku Cloud. The fact that the prices closed above Senkou Span B on Friday will likely have a positive impact on the market, As a result, after a small correction to the Turning line the uptrend may continue this week as well. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/6147