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Credit Agricole: euro will fall to $1.3100 in 6 months Analysts at Credit Agricole expect that the European currency will remain under pressure during the major part of 2011. In their view, any rebound of the pair EUR/USD won’t last long. The specialists claim that the absence of resolution to peripheral debt concerns will remain the main negative factor for euro in the coming months. According to Credit Agricole, the actions of the European policymakers aren’t likely to become more convincing and uncertainty won’t leave the markets, while the growth differential in the euro region’s going to further widen. The strategists forecast that in 3 months the pair EUR/USD will trade at 1.3700 and in 6 months it may fall to 1.3100. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5723

"Westpac: RBA won’t raise rates until the second half of the year" (2011-01-19 Australian consumer confidence fell in January to a 7-month minimum of 104.6 from 111 in December due to the concerns that flood damage will weaken the nation’s economy. According to the estimates of Australia & New Zealand Banking Group Ltd. economists, the reconstruction of affected region may cost A$20 billion ($19.9 billion) or about 1.5% of GDP. Reserve Bank of Australia left the overnight cash rate target at 4.75% last month, after 7 increases since October 2009 naming its policy “mildly restrictive.” Analysts at Westpac claim that even before the advent of the floods they didn’t expect another rate increase until the second quarter of 2011. Now the next rate increase may be put off to the second half of the year. The specialists are sure that the rates will remain unchanged on the February 1 meeting. Chart. H1 AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/5721

"Saxo bank: analysis euro of dynamics" (2011-01-19) Analysts at Saxo bank note that even though the European policymakers didn’t decide on any increase in the European crisis fund, discussions to give the rescue fund more flexibility were enough support the single currency and make it gain a little more. Yesterday stronger European data had given euro an early boost, letting the single currency return above 1.34 versus the greenback and reach the levels just above last Friday’s maximum. Loose chatter that Portugal may skip next week’s auction due to the fact they currently have enough cash helped the final push higher, while Russia intimating that they may also support the EFSF lent further support. However, not everything went so well, with the Dutch finance minister rejecting the idea of expanding the emergency fund while the European Central Bank claimed it expects more banks to fail stress tests this year than in 2010. In addition, pound was more attractive for investors as UK inflation remained persistently high (CPI rose 1.0% m/m and 3.7% y/y), well above the BOE’s target level and fueled talk of imminent rate hikes. As for today’s data, in Europe the market’s attention will concentrate on euro zone’s current account and construction output along with Britain’s unemployment. For the US session, focus switches to Canada’s manufacturing sales and the BOC’s monetary policy report while the US sees building permits and housing starts. Chart. H1 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5719

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British pound managed to overcome resistance at 1.5911 and 1.6013 to advance to the 8-week maximum at 1.6058. Analysts at MIG Bank note that if the pair GBP/USD managed to close the week above 1.6013, it will get enough strength to revisit the last major maximum at 1.6299 and then November high at 1.6878 and the August high at 1.7043. If sterling fails to do that, its rate will cap and drop to 1.5665 and 1.5345. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/5699

"Euro’s strengthening ahead of EU decisions" (2011-01-18) "Euro’s strengthening ahead of EU decisions" (2011-01-18) The European currency went up versus the greenback for the sixth time during the past week due to the expectations that the European policy makers will take steps to stem debt crisis in the region. Yesterday euro-area finance ministers pledged to strengthen the euro area’s safety net but made no firm decision about possible additional crisis measures. The attention is now focused on the Ecofin meeting of European Union finance ministers due to be held later today. Economists at Bank of New York Mellon called euro zone’s crisis-management policies reasonably effective. In their view, the relatively healthy Spanish bond sale indicates that the confidence in the euro zone increased. Spain’s borrowing costs fell at today’s sale of 5.5 billion euro in short-term bills. ZEW Economic Sentiment index for Germany climbed from 4.3 points in December to 15.4 points in January, while the indicator for the euro area rose from 15.5 to 25.4 points. Russia's Finance Minister Alexei Kudrin claimed that the country may be interested in buying bonds from the euro zone's European Financial Stability Facility (EFSF). Kudrin's comments turned out to be positive for euro in the short-term, as they come just weeks after China and Japan both promised to invest in euro zone and peripheral debt, claim the analysts at HSBC. The specialists, however, aren’t sure if euro’s able to test the recent maximums taking into account uncertainty surrounding talks on the euro zone safety fund. Chart. H1 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5697

"Citi: euro will return to $1.30" (2011-01-18) Currency strategists at Citi claim that, according to the information provided by the European monetary authorities during the recent days, it’s possible to conclude that that they just don't feel the same sense of urgency to conduct additional measures counter the debt crisis that the market does. The specialists believe that euro’s rate will tend to decline. In their view, the single currency will retreat to $1.30 in coming weeks. Resistance for the pair EUR/USD is found in the near term at the 100-day moving average in the $1.3423 area. As the single currency didn’t manage to break above its mid-December peak of $1.3500, it may remain trapped in range between 1.3500 and 1.2860. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5696

"Kshitij: GBP/USD may rise this week to $1.62" (2011-01-18) Analysts at Indian firm Kshitij Consultancy Services Team note that the British currency managed to recover from the minimum versus the greenback at 1.5405 hit on January 7 and erase December's losses rising above 1.5950. The specialists expect sterling to keep climbing this week towards 1.6200. According to them, key support levels are found in the 1.5820/00 area that’s not likely to be ruined in the near term. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/5692

"Citigroup: USD/JPY will break support at 82.30" (2011-01-18) Analysts at Citigroup note that the pair USD/JPY finds itself under pressure affected by investors’ selling of EUR/JPY. The specialists note that Japanese exporters are lowering offers in USD/JPY as they didn’t manage to sell the greenback above 84.00. In their view, US currency will eventually break through stops at the 82.30 area representing the base of the Ichimoku Cloud. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/5690

"Mizuho: EUR/JPY may fall to 2010 low" (2011-01-18) Technical analysts at Mizuho Corporate Bank believe that the single currency may fall to 2010 minimum versus yen as it didn’t manage to break through the Ichimoku Cloud. As it may be seen on the daily Ichimoku chart, the first leading-span line, which forms the lower part of the Сloud, has limited the advance of euro since the end of November. As a result, the pair EUR/JPY may fall to last year’s minimum at 105.44 yen if it gets down below the so-called base line at 109.51 yen. The specialists note that the euro’s bearish trend isn’t over yet, although the markets might have thought it will continue to rise after last week’s 3.4% rally, the biggest advance since 5 days ended September 17. Chart. Daily EUR/JPY Comment here http://www.fbs.com/analytics/news_markets/view/5688

"Barclays Capital: pound may return to $1.57" (2011-01-17) Analysts at Barclays Capital note that the British currency went above 1.59 versus the greenback breaking up through the daily Ichimoku Cloud resistance. According to the specialists, pound’s going up towards 1.60. At the same time, the specialists warn that daily momentum studies point at pending bullish exhaustion that may mean that the pair GBP/USD is likely to cap above 1.59 and retreat to 1.57. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/5680

The Swiss National Bank announced that it may have suffered a record loss in 2010 as the fall of the European currency reduced the value of its currency reserves by almost 21 billion Swiss francs ($21.8 billion) or 4% of Switzerland’s GDP. According to Switzerland’s central bank 26 billion exchange-rate-related losses were a bit compensated by 6 billion francs gold reserves value gain. In the first half of 2010 the SNB purchased foreign currencies at an unprecedented pace in order to stop the excessive appreciation of its national currency. Such policy threatened to hurt the recovery and spark deflation, so in June Swiss policy makers ended their interventions. At the same time by the end of the year the situation in the euro area worsened and the pair EUR/CHF fell on December 30 to the record minimum at 1.2400. Chart. Daily EUR/CHF Comment here http://www.fbs.com/analytics/news_markets/view/5678

"Commerzbank: dollar won’t go down below 82.00 yen" (2011-01-17) Currency strategists at Commerzbank claim that after US dollar weakened last week versus Japanese yen further declines of the pair USD/JPY will be limited by the 82.34/82.00 zone. The specialists note that there’s a small channel resistance line at 83.25. After overcoming it the pair may advance to 83.70 on its way to November and December maximums at 84.41 and 84.51 respectively. Analysts at Credit Suisse think that in 2011 the greenback will trade at 80-86 yen. The specialists note that there are 90% chances that US currency will be able stay at the levels above 70 yen. In their view, Japanese companies have shown that they can manage at 80 yen per dollar. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/5677

"Standard Life: dollar will gain versus euro in the first quarter" (2011-01-17) Analysts at Standard Life Investment claim that the greenback will advance versus the single currency in the first quarter of the year as investors are lured by the superior returns available in the United States. According to the specialists, the greenback will be supported by higher Treasury yields relative to bunds encouraging investors to come to the US. Euro, in its turn, is going to find itself under negative pressure until Europe’s monetary authorities manage to restore market’s confidence by increasing the size of European Financial Stability Facility and issuing joint euro-region bonds to support indebted nations. Standard Life also claims that it may happen that the next time sovereign debt crisis may involve a rather larger economy than the ones that have suffered so far. The pair EUR/USD lost 7% in 2010 as Greece and Ireland applied to the EU and the IMF for bail out. As a result, market’s risk aversion increased and the demand for safer US assets has gone up. In addition, the currency strategists recommend investors buying British pounds and selling Japanese yen. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5675

"Commerzbank: bearish pressure on euro will ease only above $1.3500" (2011-01-17) Analysts at Commerzbank note that the single currency added about 600 pips last week and managed to ease the near-term downside pressure failing although to remove it completely. The specialists say that the current bearish trend will end in case euro reaches 1.3500 and the pair EUR/USD will be able to rise to 1.3739/86 and then to 1.3978/1.4000. Never the less, the bank supposes that the most likely outcome is that the European currency will fail on its way to 1.3500 and drop to 1.2795 level representing the 61.8% retracement of the move seen in the second half of 2010. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5673

"Commerzbank: 1.5932 – resistance for GBP/USD" (2011-01-17) Technical analysts at Commerzbank claim that the key resistance for the pair GBP/USD lies at 1.5932. In their view, this level will be able to hold sterling’s advance. If the British currency falls below 1.5680, the upside momentum will disappear and pound will risk falling down to 1.5580 and 1.5540. In case pound rises above 1.5932, the uptrend will extend to the August maximum of 1.60 and possibly even to 1.6090. Chart. H4 GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/5671

"JPMorgan: Ireland’s funding rate should be reduced" (2011-01-14) Analysts at JPMorgan Chase & Co think that the EU has to reduce the 5.8% average interest rate on 85 billion-euro ($113 billion) emergency aid to Ireland by 50% or 250 basis points. Otherwise, the indebted country won’t be able to get out of the crisis without debt restructuring. The borrowing rate is critical given that economic growth will be very weak for some time due to severe fiscal tightening. Specialists at Barclays Capital share the opinion that the funding costs for Ireland are to be lowered by 200-300 basis points. According to the IMF forecast, Irish economy will add less than 1% this year and below 2% in 2012. EU estimates that the ratio of Irish debt to GDP will reach 114% next year, while in 2007 it was equal only to 25%. The difference in yield between 10-year Irish debt and benchmark German bonds staying above 500 basis points, compared with an average of about 60 during the past decade. Comment here http://www.fbs.com/analytics/news_markets/view/5661

"Mizuho: EUR/USD will climb to 1.35" (2011-01-14) Technical analysts at Mizuho Corporate Bank note that the single currency is showing the biggest daily advances versus the greenback during several months. The specialists claim that euro’s rally this week from Monday’s minimum at 1.2873 repeats last week down move like a mirror. In their view, such dynamics of the pair EUR/USD can be explained by the low trade volume at the markets. According to Mizuho, if euro closes the week above 1.3400, bullish momentum will significantly strengthen. The analysts advise investors opening small longs on a drop to 1.3315 but only if prepared to add to 1.3200. Stops should be placed below 1.3100. EUR/USD may rise to 1.3500, where another short-covering round is likely. Chart. H4 EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/5659

"Ueda Harlow: euro will rise to $1.3499" (2011-01-14) Technical analysts at Ueda Harlow Ltd. believe that the single currency will climb to 1-month maximum versus the greenback. The specialists note that yesterday the pair EUR/USD managed to rise above key technical levels. According to the daily Ichimoku chart, euro got above conversion and base lines approaching the Cloud. These lines will likely become support for the rate. If the conversion and base lines create a floor, the Ichimoku Cloud will come down and upward pressure for the European currency will gradually increase. Ueda Harlow projects that EUR/USD may advance to $1.3433 reached on January 4 and December 14 maximum at $1.3499. If euro overcomes these levels, the trend will switch to the upward mode. The lagging Chinkou Span will enter the Cloud and euro should keep advancing, say the analysts. Chart. Daily EUR/USD Comment here Ueda Harlow: euro will rise to $1.3499

"Credit Agricole: Aussie may fall to $0.9752" (2011-01-14) Analysts at Credit Agricole note that Australian dollar wasn’t successful at the beginning of the year trading versus its US counterpart. In their view, Aussie has more difficulties on its way: the currency will find itself under the negative pressure as investors aren’t sure any more that the Reserve Bank of Australia will lift up interest rates, while export income will lower due to the flooding that causes mining disruptions. In addition, the specialists underline that no one can predict what the extent of damage from flooding will be. According to Credit Agricole, there’s the chance that the pair AUD/USD will fall to the technical support at 0.9752 or possibly even lower to the 0.960/70 zone. The analysts, however, underline that any decline of Australia’s dollar will be temporary providing better levels to buy the currency. The strategists expect AUD/USD to finish the first quarter at 1.02. By the end of the year the pair’s rate is likely to reach 1.06, claims Credit Agricole. Chart. H4 AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/5655

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"BNP Paribas and Barclays expect EUR/CHF to rise" (2011-01-13) Analysts at Barclays Capital claim that improving risk sentiment helped the single currency to recover versus the Swiss franc. Never the less, the pair EUR/CHF hasn’t ruined its downtrend from November’s peak. The specialists say that for this to happen euro should close the day above 1.2765, so it will gain momentum to rise towards 1.2940 and 1.30. Currency strategists at BNP Paribas say that the coming events seem to be positive for the cross. These are the hopes the European rescue package will be expanded, SNB Jordan's comments there are signs the Swiss economic dynamic will slow in 2011 and Friday's meeting between the Swiss government and business to discuss concerns about the national currency’s strength. According to BNP Paribas, EUR/CHF will manage to climb to 1.30. Chart. Daily EUR/CHF Comment here http://www.fbs.com/analytics/news_markets/view/5645

"Mizuho: GBP/USD rose to the Ichimoku Cloud" (2011-01-13) Technical analysts at Mizuho Corporate Bank note that sterling not only broke above the 26-day MA due to the rising 9-day MA, but also broke above the channel resistance. As a result, momentum became bullish and British pound’s rate approached the thin daily Ichimoku Cloud. According to the specialists, the pair GBP/USD is likely to struggle at these levels for another 1-2 days. Mizuho recommends trying small long positions if the rate goes down to 1.5700 stopping below 1.5600. The targets for the pair are at 1.5800 and then at 1.6000. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/5643

Technical analysts at Commerzbank note that the European currency went up versus the greenback from the base of the short-term bearish channel at 1.2874. In their view, euro’s target lies in the 1.3179/95 area where the bulls are likely to fail. Then, according to the specialists, the pair EUR/USD will fall back to 1.2860/36. The strategists claim that when markets break down from “symmetrical triangles” the rate frequently returns to point of break down and this is what’s happening now. In case euro overcomes 1.3195, it would become able to advance to the 55-day MA at 1.3384 where the bank once again expects to see a downside reversal. Chart. H4 EUR/USD

"Barclays Capital: EUR/USD may advance to 1.35" (2011-01-13) Currency strategists at Barclays Capital believe that the 1.3130/50 zone will limit further growth of the pair EUR/USD. However, the intraday charts don’t show signs of topping, so there’s some risk of further gains. If the single currency manages to overcome 1.3150, it will have all chances to move higher to 1.3430/1.35 before the signs of topping will reappear. According to the specialists, the outlook for euro will become more bearish only below 1.2960. Chart. H4 EUR/USD