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"Japan: monetary policy, economy, yen’s rate"(2011-11-16) The Bank of Japan left its benchmark rate unchanged at the minimal levels of 0-0.1% and the asset-buying fund at 20 trillion yen ($260 billion) after increasing it by 5 trillion yen in October. As Japan’s economy strongly depends on the external demand for Japanese goods, deepening European debt crisis, the flood in Thailand and the risk of global economic slowdown will have a serious negative impact on the nation’s growth prospects. Analysts at Nomura claim that the central bank may augment monetary stimulus if the national currency which is regarded as a refuge keeps strengthening and once again approaches record maximums against its US counterpart. According to Japan Automobile Manufacturers Association, in the first half of 2011yen’s appreciation slashed Japanese carmakers’ profit by 330 billion yen. Japanese GDP rose by 6% in the third quarter on the year-to-year basis as the nation’s economy recovered from the March earthquake. However, during the first 20 days of October exports slashed by 1.6%. Credit Suisse believe Japan’s economy is losing upside momentum since August and that the readings of its indicators will soon start to deteriorate. As for Japan’s intervention policy, analysts at UBS don’t expect any changes. In their view, the nation’s monetary authorities will keep intervening only in case yen’s sharp bounces. As the European debt crisis escalates, Japanese investors trim their overseas assets – primarily euro zone sovereign debt holdings – and repatriate their money making demand for yen increase. That means that yen’s appreciation is caused not only by the speculative inflows, but also by the Japanese real money accounts. In such circumstances Japan will be forced to act, so USD/JPY’s decline will be likely limited. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11146

"Wells Fargo: negative forecast for EUR/USD"(2011-11-16) Analysts at Wells Fargo are bearish on the prospects of the single currency versus the greenback during the next 12 months. The specialists believe that euro will be affected by the increasing borrowing costs for the peripheral euro area nations and the risk of recession in the region. According to the bank, EUR/USD will fall to $1.3000 in 3 months, to $1.2800 in 6 months and to $1.2600 in 9 months and hit $1.2400 in November 2012. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11144

"On RBA rates and Aussie’s prospects"(2011-11-16) News about new technocratic governments in Italy and Greece brought only short-term relief to the market. Yesterday’s surge of euro zone bond yields threw investors into the risk-averse mode that affected such risk-sensitive pair as AUD/USD. Analysts at RBC Capital Markets believe that Australian dollar’s dynamics versus the greenback will remain extremely volatile as Aussie is closely correlated with the equity markets which are seized by uncertainty. In their view, the risks for AUD/USD are to the downside. Dow Jones reports that the interest rate swaps market is currently pricing in a 100% chance of a rate cut by the RBA in December, though the surveyed economists expect the RBA to keep the rates unchanged. This month RBA lowered its benchmark rate by 25 basis points to 4.5% citing the projected slowing inflation and the risks posed by the euro zone debt crisis. The central bank gave no hints on further rate cuts in its meeting minutes released yesterday. According to the document, the policymakers have also discussed the possibility of staying on hold. The RBA underlined that the mining industry could become the driver of the nation’s economic growth that would require more tight monetary policy in the medium term. Analysts at Westpac, however, claim that the mentioning of the risks connected with Europe means that the RBA left the door open for further easing, and look forward to 75 basis points of rate cuts starting in February. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11142

"Euro area: sovereign bond yields are surging"(2011-11-15) The single currency got today under negative pressure. The pair EUR/USD dropped from the levels in the $1.3800 area where it started the week to the $1.3500 zone. The pair EUR/JPY hit 1-month minimum at 100.93 yen. European bond yields surged increasing concerns about the region’s debt crisis. Italy’s 10-year yield approached the critical level of 7%. The yield spreads between 10-year debt of Spain, France, Austria and Belgium and similar German bunds all widened to the maximal level since the euro was adopted in 1999. The economic data were also discouraging: German ZEW Economic Sentiment index declined this month to the lowest since October 2008 of minus 55.2. Strategists at Nordea warn that if euro falls below last week's minimum at $1.3480, the number of bears will sharply increase. Analysts at Bank of Tokyo Mitsubishi UFJ believe that the fate of the currency union is still vague as the European nations may move closer to fiscal integration or break apart. In their view, EUR/USD will drop to $1.25 during the next 6 months. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11139

"Euro area: political situation"(2011-11-15) Italy New Italian Prime Minister-designate Mario struggles to get political parties to agree to take part in his technocratic Cabinet as it would be hard for the government without political representation to pass unpopular laws through the government. Monti has to convince investors that the nation is able to reduce its 1.9 trillion debt ($2.6 trillion) and stimulate economic growth which was below euro area average during the last decade. Greece New Greek Prime Minister Lucas Papademos underlined that the country’s future is in the euro area. According to Papademos, the membership in the currency union guarantees Greece “monetary stability and creates the right conditions for sustainable growth”, reports Bloomberg. The new government formed on November 11 has to implement budget measures necessary to obtain the second bailout package of 130 billion euro ($177 billion) adopted on October 26 and conduct a voluntary debt swap by the end of February. For now the main goal is to secure the payment of an 8 billion-euro tranche of the first bailout program. In order to avoid default Greece needs this money before the middle of December. The EU waits for all Greek parties to give written commitment to structural reforms and austerity measures. So far opposition leader Samaras has been declining to do that. Germany German Finance Minister Wolfgang Schaeuble said that Merkel’s government wants Greece to remain a member of the European Monetary Union. At the same time, Christian Democratic Union party led by the Chancellor voted to allow euro states to quit the currency area. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11137

"BarCap: trading in the situation of uncertainty"(2011-11-15) Risk aversion is expected to dominate the markets concerned about European debt crisis and weak economic data. Currency strategists at Barclays Capital see several ways to secure oneself against the elevated uncertainty. One of the strategies preferred by the bank is buying the greenback versus Swiss franc. According to BarCap, if the situation in the euro area deteriorates, the SNB will be forced to defend EUR/CHF floor selling franc. Such actions of the central bank will lift USD/CHF. In case of some positive surprises in Europe, demand for franc as a refuge will ease and USD/CHF will also rise. So, the specialists advise traders to open longs at USD/CHF stopping below 0.8920 and targeting 0.9300. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/11133

"Commerzbank: comments on EUR/USD"(2011-11-15) Technical analysts at Commerzbank keep regarding the outlook for the single currency versus the greenback as negative. In their view, EUR/USD is likely to decline to $1.3380/60 (78.6% Fibonacci retracement of the October advance and September minimums) and then to $1.3145 (October 4 minimum). According to the bank, in the longer term the pair is poised down to $1.2000. The specialists say that bearish pressure on euro will ease if it manages to rise above $1.3870/80. If euro succeeds, it will be able to return up to the 55- and 200-day MA at $1.4013/1.4104. The major resistance is set at $1.4250/55. График. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11135

"ANZ: negative outlook for NZD/USD"(2011-11-15) Technical analysts at ANZ Bank claim that there us a “dead cross” on the NZD/USD chart formed in October by 50-day and the 100-day MAs – the former went below the latter – and that the figure is still in place. The specialists underline that this is a bearish signal that means that kiwi may weaken to $0.7335, the level representing 38.2% Fibonacci retracement from the pair’s advance from March 2009 minimum to August 2011 maximum. According to the bank, support levels for New Zealand’s currency are situated at $0.7550 and $0.7470 (October 4 minimum). Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11131

"UBS lowered forecast for EUR/USD"(2011-11-15) Analysts at UBS reduced forecasts for the single currency versus the greenback due to the escalating crisis in the euro area. Apart from deepening concerns that the European policymakers won’t be able to find the way out of the debt turmoil, euro will be affected by the region’s economic slowdown and ECB rate cuts. The strategists underline that even though the United States and Japan also have severe debt issues, the situation in the euro zone seems to be much worse, so the demand for dollar and yen will be higher. The specialists expect EUR/USD to drop to $1.35 in a month, $1.30 in 3 months, $1.25 in a year. At the beginning of November the analysts thought that the pair will end the year at $1.40. It’s also necessary to note that, according to the bank, the Swiss National Bank will lift the floor for EUR/CHF from 1.20 to 1.25 as it regards franc as still extremely overvalued. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11129

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"Morgan Stanley, UBS: sell EUR/USD"(2011-11-14) The political situation in the euro area has stabilized a bit: Greece and Italy got new governments. Never the less, there are still severe doubts that these nations will be able to resolve the debt issues. Analysts at Morgan Stanley are bearish on the single currency versus the greenback. In their view, the pair EUR/USD will drop to $1.30 by the end of the year. Currency strategists at ING and UBS advise to sell euro on its attempts to rise to $1.40. UBS expects US economy add 2.3% in 2012, while the euro zone’s one is seen growing only by 0.2%. As a result, the bank thinks that the Federal Reserve is unlikely to engage in QE3, while the ECB will keep cutting interest rates. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11121

"Ichimoku. Weekly forecast. USD/CHF"(2011-11-14) Weekly USD/CHF As it was expected, the bulls are very persistent in trying to move higher and overcome resistance of Kumo. USD/CHF once again approached the Ichimoku Cloud. The Turning line supporting the prices goes sharply up (2), Tenkan-sen (2) and Kijun-sen (1) hold though weak, but still “golden cross” (3). In addition, the descending Kumo (4) has become extremely narrow – the bulls have all chances to make it change direction and reverse the trend upwards. Chart. Weekly USD/CHF Daily USD/CHF On the daily chart everything also goes quite well for the bulls. The prices managed to overcome the Standard line (blue line on the chart). Tenkan-sen and Kijun-sen formed the “golden cross” (1) – strong signal as the lines intersected above Kumo. In addition, the rising Ichimoku Cloud once again began widening (2, 3). It would be worth paying attention to the lagging Chinkou Span: if it manages to break above the price chart while the prices remain above the Cloud, this will be a good signal to buy US dollar. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/11119

"Ichimoku. Weekly forecast. USD/JPY"(2011-11-14) Weekly USD/JPY As it was expected, Japan’s currency intervention at the last day of October, failed to improve the situation at USD/JPY market: yen continues slowly but surely appreciating as investors crave the refuge. The pair USD/JPY lost support of the Turning line (1) which is now providing resistance for the prices as well as the Standard line (2). Tenkan-sen (1) and Kijun-sen (2) are directed horizontally, holding the strong “bearish cross” (5), while the descending Ichimoku Cloud keeps US currency under negative pressure. Chart. Weekly USD/JPY Daily USD/JPY On the daily chart the prices entered the bearish Ichimoku Cloud and reached during the past week its lower border – Senkou Span A – breaching on their way support of the Standard line (1). The Turning line (2) separated from the Standard line trying to get higher but soon it reversed and went sharply down. The market is still in the state of uncertainty: Kijun-sen, which characterizes the longer-term trend, remains horizontal, while the thin Cloud (3) shows that neither bulls, nor bears control the situation. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11118

"Ichimoku. Weekly forecast. GBP/USD"(2011-11-14) Weekly GBP/USD British currency, as expected, consolidated in the upper part of the Ichimoku Cloud. The lines Kijun-sen (1) and Tenkan-sen (2) act as support as well as the lower border of Kumo – Senkou Span B, while resistance is provided by Senkou Span A (3). The Standard line (1) and the Turning line (2) are horizontal that means that sideways trend is likely to continue on the weekly chart. The bearish Cloud indicates that bears are stronger than bulls. Chart. Weekly GBP/USD Daily GBP/USD Last week pound was trading around the Turning line (1) sometimes getting lower, sometimes rising above it. Now Tenkan-sen (1) together with Senkou Span B (3) supports British currency. The Ichimoku Cloud, which has so far turned upwards, widened (4) – bulls have become more confident. The Standard line (2) turned sharply higher that gives the bulls hope for breakthrough in the longer-term. One shouldn’t forget, however, about resistance in the $1.6100 area – at the line connecting September and November maximums. At the same time, if GBP/USD overcomes this zone, the pair will be likely poised for growth. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/11117

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"The odds for euro area’s breakup increased"(2011-11-11) Last week European leaders for the first time raised the possibility of Greece leaving the currency union if it keeps violating its commitments. That triggered the speculation that German policymakers are already preparing to exclude the peripheral nations out of the euro area. Even though Germany and France denied the reports that they had discussed a possible breakup of the euro zone, the option has become real. As a result, it will likely become much harder for indebted members to convince investors in their ability to get their finances in order and for Merkel, Sarkozy and ECB President Mario Draghi to defend the single currency. The questions concerning currency bloc’s future will be discussed at the EU summit on December 9. Some experts say that the European leaders will probably talk about introducing an exit clause. Analysts at Brown Brothers Harriman still think that European authorities will do anything to save the monetary union. In particular the specialists see the way out in increasing integration. Strategists at HSBC warn that the euro zone’s breakup would cause something similar to the Great Depression. The quitting country will face collapse of the banking system, capital outflow and the surge of inflation. Deutsche Bank says that if one nation exits, investors will expect other problem states to do the same. Comment here http://www.fbs.com/analytics/news_markets/view/9112

"BBH advises traders to sell EUR/USD"(2011-11-11) Analysts at Brown Brothers Harriman note that although the European currency is trading with high volatility versus the greenback, it’s closely correlated with the dynamics of S&P500 index – the specialists estimated the correlation by 80%. The bank claims that in the stock markets are likely to decline in the current state of uncertainty and recommends selling EUR/USD in the $1.3650 area stopping above $1.38, expecting the pair to fall to $1.30 by the end of the year. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/9108

"Commerzbank still expects EUR/USD to decline"(2011-11-11) Despite euro’s recovery from 1-month minimum at $1.3483 hit yesterday technical analysts at Commerzbank expect the single currency to fall versus the greenback to $1.3380/60 (78.6% Fibonacci retracement from its October advance and September minimum). The specialists see resistance at $1.3685 and $1.3870. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/9106

"Wells Fargo about USD/JPY prospects"(2011-11-11) Currency strategists at Wells Fargo note that the moves of the pair USD/JPY are no more strongly correlated with the dynamics of stock market. The specialists underline that the greenback is falling, while stocks in the US are rising. In their view, the mentioned relationship had been growing less and less pronounced since 2009 and was finally broken in the past year due to continuous Japan’s interventions and contracting interest rates differential between the US and Japan. As a result, the advance of the equity market won’t help to bring Japanese yen lower. According to the bank, the greenback will be trapped between 78 and 80 yen during the next 6-12 months. Any attempts to weaken yen won’t be effective in the longer term until US economic prospects remain dim and interest rates – extremely low. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/9104

"Goldman Sachs lifted forecast for NZD"(2011-11-11) Analysts at Goldman Sachs increased forecasts for New Zealand’s dollar versus its US counterpart from 0.74 to 0.77 in 3 months, from 0.78 to 0.80 in 6 months and from 0.82 to 0.84 in a year. The specialists point out that kiwi has managed to recover from October minimums in the 0.7470 area, though its dynamic was volatile. In their view, the currency is doing pretty well despite the looming concerns about global economic slowdown and New Zealand’s credit rating downgrade by Standard & Poor's and Fitch at the end of September. According to Goldman, the coming 12 months will be characterized by US dollar’s weakness. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/9102

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"Bank of England left policy unchanged"(2011-11-10) The Bank of England’s meeting passed today in line with the forecasts: as it was expected, the Monetary Policy Committee left its benchmark rate at 0.5% keeping the ceiling for the asset purchases at 275 billion pounds ($437.3 billion). Minutes of the meeting will be released on November 23. The BOE said it will take up to four months to make the additional quantitative easing of 75 billion pound sanctioned in October. The central bank aims to keep the scale of the program under review. Despite the fact that inflation reached 5.2% in September British monetary authorities will decline sharply the next year. Analysts at Nomura International note that the MPC is extremely concerned by the debt crisis in the euro area and potential contagion. In their view, British central bank is very likely to announce more easing until the end of February. According to the European Commission, UK economy risks contracting at least in one of the next few quarters affected by the government’s spending cuts. The pair GBP/USD rose from the weekly minimums in the $1.5890 area to the levels in the $1.5970 zone. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/9095

"Merrill Lynch on US credit rating"(2011-11-10) Analysts at Bank of America Merrill Lynch believe that other major rating agencies – Moody's or Fitch – will lower US top credit rating by the end of the year after Standard & Poor's downgraded the world’s leading economy in August. As the reason for such dim outlook the specialists cited concerns about the nation’s huge budget deficit and debt. In their view, the second downgrade will seriously hit weak American economy. If the so-called supercommittee fails to reach a deal to reduce the US deficit by at least $1.2 trillion by November 23, the rating agencies will make their move at the end of November-beginning of December. Merrill Lynch decreased US economic growth forecasts for 2012 and 2013 to 1.8% and 1.4% respectively. At the same time, it’s necessary to note that the agencies don’t intend to hurry with their judgments. Moody's Investors Service plans to take into account such factors as the results of presidential elections and the expiration of the Bush-era tax cuts late in 2012, but not only the committee. Fitch Ratings still has a stable outlook on its AAA rating on the United States, so before any downgrades it will probably revise outlook to negative. Comment here http://www.fbs.com/analytics/news_markets/view/9093