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"Commerzbank: German exporters expect euro to fall"(2011-04-27)

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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.

 

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Chart. Daily EUR/USD

 

 

 

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"The Fed keeps monetary stimulus"(2011-04-28)

 

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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.

 

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Chart. Daily EUR/USD

 

 

 

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"Commerzbank: euro will rise to $1.5150"(2011-04-28)

 

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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.

 

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Chart. H4 EUR/USD

 

 

 

 

 

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"St. George Bank: AUD/USD will climb to $1.15"(2011-04-28)

 

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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.

 

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Chart. Daily AUD/USD

 

 

 

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"Westpac: NZD/USD will soon resume growing"(2011-04-28)

 

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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.

 

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Chart. H4 NZD/USD

 

 

 

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"BofT Mitsubishi: BOJ May meeting will be important"(2011-04-28)

 

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As it was expected, the Bank of Japan left the benchmark rate at 0-0.1%. At the same time today’s meeting didn’t pass without surprise: deputy governor Kiyohiko Nishimura proposed expanding the BOJ's pool of funds for asset buying and market operations by 5 trillion yen ($61 billion) to 45 trillion yen. However, all other 8 members of the central bank’s policy board rejected this idea.

 

Yen, however, wasn’t affected much by this news. The pair USD/JPY fell today erasing yesterday’s advance due to the broad weakness of US currency.

 

Strategists at Bank of Tokyo Mitsubishi UFJ say that such situation was totally unexpected. The specialists note that it’s a very rare case in the BOJ history when the views of the governor and deputy governors diverge. Nishimura probably regards the medium- and long-term risks from the quake as bigger than the other board members do.

 

According to Bank of Tokyo, after today’s events the BOJ May meeting will be watched very closely.

 

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Chart. Daily USD/JPY

 

 

 

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"HSBC: RBA will raise rates in July or August"(2011-04-29)

 

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Economists at HSBC claim that the surging inflation will force Reserve Bank of Australia to raise interest rates in July or possibly in August. The analysts note that inflation is accelerating due to rising rents and electricity prices even though Australian dollar’s rate is strong. Consumer prices in Australia added 1.6% in last quarter from the previous three months showing the biggest advance since 2006.

 

The specialists project that while increasing the borrowing costs the country’s officials count on further strong employment growth and rising business confidence.

 

Australia’s Treasurer Wayne Swan said that the currency’s strength reflect the improving economy and the situation on the labor market, strong public finances and higher commodity prices.

 

Australian dollar was also encouraged by the poor US GDP growth reading that added only 1.8% in the first quarter (forecast – up 1.9% and the previous growth – 3.1%). It’s thought that the RBA will raise interest rates before the Fed.

 

The pair AUD/USD had added 1.5% this week and 5.5% this month. Yesterday Aussie reached the maximal levels since being freely floated in 1983 at $1.0948. Today Australia’s currency eased down from as MSCI Asia Pacific Excluding Japan Index lost 0.6% and investors’ sentiment a bit worsened.

 

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Chart. Daily AUD/USD

 

 

 

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"Commerzbank: comments on EUR/USD"(2011-04-29)

 

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Technical analysts at Commerzbank believe that the further advance of the pair EUR/USD will be limited by the recent maximums in the 1.4845/82 area (September 2008 and 2009 maximums, yesterday’s high).

 

According to the specialists, the single currency may dip to the support levels at 1.4733 (4-month support line) and 1.4720 (December 2008 maximum).

 

If euro manages to overcome 1.4845/82 levels, it will get chance to climb next week to 1.4956/1.5000.

 

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Chart. Daily EUR/USD

 

 

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"J.P.Morgan: US dollar may decline more"(2011-04-29)

 

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Analysts at J.P. Morgan believe that though it may seem that the greenback has become too cheap, structural changes in the global economy and, primarily, in emerging-market and commodity-producing countries may pull dollar even lower. The mentioned changes will influence such variables as terms of trade, inflation and interest rates and, as a result, lower US currency’s long-term fair value.

 

The economists note that if US huge debt and deficits aren’t decreased, this will affect capital flows to the country in the longer term. In addition, J.P.Morgan claims that as the American authorities didn’t express much concern about slowly weakening dollar, they may regard the currency’s decline as comfortable and helping to encourage exports and reduce deflation risks.

 

American economy remains the largest in the world (according to J.P. Morgan’s data, it accounted for 27% of global GDP in 2009), while US dollar is still the most traded currency (according to BIS latest survey, USD was used in nearly 87% of all currency transactions as of 2010).

 

 

 

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"Phoenix Capital: QE3 in the US is inevitable"(2011-04-29)

 

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Analysts at Phoenix Capital, the independent investment bank, think that the third round of the quantitative easing in the United States is inevitable. In their view, taking into account the potential threats associated with the euro zone’s debt problems, tensions in the Middle East and Japan nuclear disaster, the removal of Federal Reserve’s liquidity would trigger the massive systemic crisis.

 

According to the specialists, the Fed won’t tempt the fate taking such risks. In addition, US central bank can’t withdraw support from the key TBTF banks (too big to fail), who are the Primary Dealers. These top 18 banks are too well-known: Bank of America, Barclays Capital, BNP Paribas Securities, Cantor Fitzgerald & Co., Citigroup Global Markets, Credit Suisse Securities (USA), Daiwa Securities America, Deutsche Bank Securities, Goldman Sachs, HSBC Securities (USA) Inc., J. P. Morgan Securities, Jefferies & Company, Mizuho Securities USA, Morgan Stanley, Nomura Securities International, RBC Capital Markets, RBS Securities, UBS Securities.

 

Phoenix Capital analysts note that these banks are in charge of handling US Treasuries auctions, so they have unprecedented access to US debt both in terms of pricing and monetary control. In their view, these banks, not Fed’s Chairman Bernanke, have the real power of decision making. The main authority is in hands of 4 banks: J.P. Morgan, Bank of America, Citibank и Goldman Sachs, which control 95% of the derivatives registered on US banks’ balance sheets.

 

During the financial crisis in 2008 the Fed not only protected the banks mentioned above, but also let them become more powerful though the series of takeovers, says Phoenix Capital. The economists think that the main goal of the Fed’s policy approach during the last 2 years was to support these 4 banks. Explaining why US monetary authorities need QE instead of simple funds distribution, Phoenix Capital says that the latter would cause strong political criticism.

 

 

 

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"USD/CHF has renewed the record maximum"(2011-04-29)

 

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US dollar fell to the record minimum versus Swiss franc at 0.8644 on the hawkish comments of Swiss National Bank president Philipp Hildebrand.

 

The SNB’s head said that rising oil and commodity prices begin generating inflationary risks. According to the policymaker, Swiss economy was growing more vigorously than expected even despite the strength of the franc. Switzerland's leading growth barometer, the KOF, unexpectedly rose from 2.25 in March to the maximal level since August 2006 at 2.29 in April, while the economists were looking forward to weaker 2.20 reading.

 

Analysts at UBS, however, say that although it’s possible to expect some rate hike in June Hildebrand is rather cautious as he wants to keep the options of leaving the rates on hold if export weakens or franc remains very strong.

 

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Chart, Daily USD/CHF

 

 

 

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"Ichimoku. Weekly forecast. GBP/USD"(2011-05-02)

 

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Weekly GBP/USD

 

On the weekly chart GBP/USD we see an uptrend (1, 2, 3 and 4). All lines of the Indicator are directed upwards. The “golden cross” formed by Tenkan and Kijun (5) above Kumo is still in place.

 

The bulls remain strong. The Turning line will act as support.

 

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Chart. Weekly GBP/USD

 

Daily GBP/USD

 

On the daily chart the short-term Tenkan-sen and Senkou Span “A” are directed upwards (1, 2), while the longer term Kijun-sen and Senkou Span “B” go horizontally.

 

The “golden cross” is holding, while the trend is not as clear as on the weekly chart and the Ichimoku Cloud is thinner: the bulls are less confident here.

 

The general outlook is in favor of the bulls.

 

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Chart. Daily GBP/USD

 

 

 

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"Ichimoku. Weekly forecast. USD/JPY"(2011-05-02)

 

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Weekly USD/JPY

 

Last week the pair’s decline continued. The prices approached the Standard line that may provide support for the pair. All lines of the Indicator go sideways that points at the flat.

 

It’s necessary to note that Tenkan-sen and Kijun-sen have merged together (1) in the horizontal state that means that the horizontal move is very powerful. The prices will likely move sideways between the Standard line and the Ichimoku Cloud (2).

 

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Chart Weekly USD/JPY

 

Daily USD/JPY

 

As it was expected, Tenkan-sen and Kijun-sen (1, 3) formed the “dead cross”. At the same time, this happened above the Ichimoku Cloud, so the bearish signal isn’t very strong.

 

The Cloud remains positive and one shouldn’t shrug off the bulls. Senkou Span “A” is declining, while the lower border of Kumo keeps moving horizontally. The Standard line is poised upwards.

 

Taking into account the situation on the mentioned timeframes, it’s possible to assume that the rate will consolidate and those who bet on dollar’s growth nay manage to improve a bit their positions.

 

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Chart. Daily USD/JPY

 

 

 

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"Ichimoku. Weekly forecast. USD/CHF"(2011-05-02)

 

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Weekly USD/CHF

 

On the weekly chart everything is in favor of bears. All lines of the indicator are falling (1, 2, 3 and 4) at rather sharp angle that means that the downtrend is still strong. The bearish Cloud is still wide.

 

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Chart. Weekly USD/CHF

 

Daily USD/CHF

 

On the daily chart all the lines are also declining (1, 2, 3 and 4).

 

Tenkan-sen, the Turning line, and the Standard line Kijun-sen still hold the “dead cross” in place – the powerful bearish signal as it’s formed below the Cloud. Note how sharp the slope of Senkou Span “B” is.

 

The technical picture for the pair USD/CHF remains negative.

 

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Chart. Daily USD/CHF

 

 

 

 

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"Ichimoku. Weekly forecast. USD/JPY"(2011-05-09)

 

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Weekly USD/JPY

 

The pair USD/JPY kept declining. The prices broke down through the Standard line losing substantial support – the bearish sigh (1). In addition, Senkou Span B went down, while the Chinkou Span has come close to the price chart (2) from the upside. One should also not forget about the wide negative Ichimoku Cloud pressuring the pair (3) that means that the bears’ position remains strong.

 

It’s necessary to note that the lines Tenkan-sen and Kijun-sen keep moving horizontally merged together (1) that points at the strong sideways trend, so the rate may consolidate.

 

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Chart. Weekly USD/JPY

 

Daily USD/JPY

 

On the daily chart all lines of the Indicator turned horizontal, while Tenkan-sen (1) and Kijun-sen (2) are still in the position of the “dead cross”. Chinkou Span is found below the price chart (3). However, the “dead cross” was formed above the Cloud that reduces the strength of this signal.

 

On Friday the prices closed inside the rising Ichimoku Cloud (4), so they are going to get some support from the Senkou Span B. The prices are likely to stay inside the Cloud.

 

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Chart. Daily USD/JPY

 

 

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"Ichimoku. Weekly forecast. USD/CHF"(2011-05-09)

 

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Weekly USD/CHF

 

On the weekly chart the bulls managed to get a little higher, but all in all the state of things remained the same. All lines of the Indicator are declining at rather sharp angle (1, 2, 3 and 4) that means that the downtrend is still strong. The bearish Ichimoku Cloud remains wide.

 

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Chart. Weekly USD/CHF

 

Daily USD/CHF

 

On the daily chart there are some signs that bulls’ position slightly improved: the Standard line went horizontally (2), while the prices managed to close last week above the Turning line (1), so it will now act as a support.

 

Never the less, Tenkan-sen and Kijun-sen still hold the “dead cross” in place (3) – strong bearish signal as it was formed below the Cloud (4). The rate may correct upwards, though the trend is still bearish.

 

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Chart. Daily USD/CHF

 

 

 

 

 

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"Deutsche Bank: Greece won’t leave the euro area for a long time"(2011-05-09)

 

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The single currency lost 3.45% versus the greenback during the final 2 days of last week, though even after this slump euro remained 2011 best performer (up 9.7% since January 12 when German Chancellor Angela Merkel pledged to do everything to support the currency).

 

The pair EUR/USD hit $1.4315 on May 6 after reaching the strongest since December 2009 at $1.4940 on May 4.

 

Euro dropped as the ECB signaled that it isn’t in a hurry to raise the rates and Der Spiegel magazine claimed that Greece may leave the euro area.

 

The yield spread between 10-year Greek bonds and the similar German securities expanded from 2.73 percentage points in January 2010 to 12.33 percentage points. The yields on 2-year Greek bonds have exceeded 25%.

 

The European authorities try to convince the market in their eagerness to keep the region together. On May 6 there was an unannounced meeting on which it was decided to ease the terms of the 110 billion-euro ($158 billion) bailout Greece received last year. EU officials think the country will need additional aid as its funding costs are increasing.

 

Currency strategists at Deutsche Bank think that Greece would first try to restructure its debt before thinking about leaving the euro zone. The specialists note that it’s too early to say that the nation may abandon the European currency.

 

Analysts at HSBC Holdings believe that euro may have appreciated too rapidly this year and is now at risk as the Federal Reserve is going to end its $600 billion quantitative easing program in June. In their view, EUR/USD may slide to $1.40.

 

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Chart. Daily EUR/USD

 

 

 

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"Commerzbank: comments on EUR/USD and GBP/USD"(2011-05-09)

 

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Technical analysts at Commerzbank note that on Friday the pair EUR/USD has broken through the key support in the 1.4450/34 area. In their view, euro may fall to the November 2010 maximum at 1.4283 and April 18 minimum at 1.4145. On the upside, the specialists see the resistance for the single currency at 1.4572.

 

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Chart. H4 EUR/USD

 

As for the pair GBP/USD, pound fell from 1-year maximum at 1.6750 getting down below support at 1.6430. The strategists think that sterling is now poised for a decline to the 1-year uptrend line at 1.6025.

 

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Chart. H4 GBP/USD

 

 

 

 

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"Will dollar get growth stimulus after the end of QE2?"(2011-05-09)

 

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Many analysts believe that US currency will get a lot of positive momentum when the Fed’s quantitative easing ands in June. It’s more difficult to foresee, however, how long dollar will enjoy the support.

 

Westpac has been selling the greenback versus riskier currencies and took some profits last week on the Dollar Index. The bank’s analysts note that Treasury yields are still very low that keeps USD under negative pressure.

 

The specialists believe that the market will be extremely nervous when the QE2 expires. In their view, the event will help US dollar only if it will be accompanied by the strong US economic data.

 

Marc Faber, publisher of the Gloom, Boom & Doom report, is almost sure there will be the third round of the quantitative easing. According to his forecast, the United States will be running trillion dollar budget deficits for the next 10 years. As it’s not possible to finance all of this through bond issuance, the Fed will have to at least partially monetize the debt to keep interest rates low.

 

 

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"UBS, RBC: Australia and China posted trade surplus"(2011-05-10)

 

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According to the data released today, China's trade surplus surged from $139 million in March to $11.4 billion in April while the economists were looking forward only to $1.0 billion figure. Economists at UBS Securities expect China show annual trade surplus of $140-$150 billion in 2011. According to UBS, the nation will post monthly trade surpluses for the rest of this year.

 

Analysts at Royal Bank of Canada believe that after this data release US pressure on China for yuan’s appreciation will strengthen. At the same time, Chinese authorities may agree to allow stronger national currency in order to fight inflation. The specialists think that yuan may rise to 6.40 yuan per dollar by the middle of the year and to 6.20 by the end of 2011.

 

Chinese data has the negative impact on Australia’s currency as the possibility of the rate hike in China increased making investors sell Aussie, notes TD Securities. The analysts advise to focus attention on China’s inflation figures due tomorrow.

 

Australia also posted growth of trade surplus that advanced to A$1.74 billion in March from February’s deficit of A$-0.09 billion, while the economists were looking forward only to A$500 million surplus.

 

Australian dollar was supported versus its US counterpart on the news at the beginning of the trading day, though RBC Capital Markets strategists think that the pair AUD/USD will be curbed ahead of Thursday's employment data and the technical picture that’s not encouraging for Aussie. In their view, the employment data should be rather high to make Australia’s currency resume the uptrend.

 

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Chart. H4 AUD/USD

 

 

 

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"Barclays Capital: Greece’s future seems uncertains"(2011-05-10)

 

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Analysts at Barclays Capital claim that the single currency remains affected by the uncertainty connected with how the European authorities are going to act in order to help Greece solve its debt problems. Although the EU officials met over the weekend to discuss the matter there is no official information delivered to the public.

 

Yesterday Standard & Poor's reduced the country’s debt rating from BB- to B. It was Greece’s fourth downgrade by this agency since April 2010. Credit-default swaps on Greek debt bounced to the record maximum of 1,369 yesterday that means that probability of the nation’s default within 5 years is estimated at 69%.

 

The markets speculate about the potential Greek debt restructuring and such outcome is now seen as quite probable. European Central Bank Governing Council member Ewald Nowotny said that Greece was thought to be able to refinance itself via the market next year and now there are more and more signals that it wouldn’t be able to do that.

 

As a result, the single currency may correct downwards. The pair EUR/USD has already dropped to the 6-week minimum at $1.4254.

 

In such circumstances Greece is selling today 182-day Treasury bills of 1.25 billion euro ($1.79 billion).

 

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Chart. H4 EUR/USD

 

 

 

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"UBS: currency forecast for majors"(2011-05-11)

 

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UBS analysts give the following forecasts for the major currency pairs:

 

EUR/USD: Neutral. Resistance is found at 1.4442, support lies at 1.4205 and 1.4158.

 

USD/JPY: Bearish. If the greenback breaks below 80.00, it will be poised down to 79.57 and 78.83. Resistance is at 81.28.

 

GBP/USD: Neutral. As long as resistance at 1.6464 holds, it’s necessary to pay attention to support at 1.6271.

 

USD/CHF: Bearish. US dollar stays under pressure below 0.8893. Support levels are at 0.8677 and 0.8554.

 

AUD/USD: Bullish. If Aussie overcomes 1.0878, it will be able to climb to 1.0953. Support is at 1.0697.

 

USD/CAD: Neutral. Resistance is at 0.9654, support lies at 0.9505.

 

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Chart. H4 EUR/USD

 

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Chart. H4 USD/JPY

 

 

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/7232

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"MIG Bank: comments on USD/JPY"(2011-05-12)

 

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The pair USD/JPY found support in the 79.55 area bouncing up and coming closer to the resistance at 82.00 representing post G7 intervention maximum. Technical analysts at MIG Bank think that the greenback has to overcome this level to gain bullish momentum. The next resistance levels are found at 83.30 (post earthquake shock maximum) and 84.50 (December 16 maximum). If US currency manages to rise above the latter, the pair may resume potential long-term bull cycle.

 

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Chart. Daily USD/JPY

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/7251

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