FBS.com - Daily/Weekly Analysis / Market News

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"Moody's: France’s rating outlook may deteriorate"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

 

 

 

Moody's Investors Service repeated its October warning announcing that the outlook for France’s Aaa may be changed to negative. The risks to the nation’s rating come from the sustained rise in its debt yields combined with weakening economic growth.

 

According to Agence France Tresor, France's average medium- and long-term financing costs for the first 11 months of the year accounted only for 2.78% – the second lowest level since the creation of the single currency. However, last week the nation’s 10-year bond yields surged to 3.7% and the spread over German bunds exceeded 200 basis points rising too the maximal level since France adopted euro.

 

Moody's warned that if the increase in yields by 100 basis points means the increase of funding costs by 3 billion euro a year. Taking into account the fact that French government projects 1% GDP growth in 2012, higher interest burden will make achieving targeted fiscal deficit reduction more difficult.

 

Many analysts believe that the only way to save the region from escalating borrowing costs and the potential recession is the bond buying at the secondary market by the ECB or the EFSF.

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11204

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"UBS: forecasts for British pound"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

 

 

In the short term the specialists see British pound under pressure versus the greenback as the Bank of England went through additional QE last month.

 

In the medium term, however, UBS expects demand for sterling increase as the UK will act to reduce its budget shortfall and the declining inflation will make the real rates in Britain higher.

 

The bank lifted up its 3- and 6-month forecasts for GBP/USD from $1.48 to $1.52 and from $1.62 to $1.65 respectively. The estimates of EUR/GBP future rate were lowered from 0.88 to 0.85 in 3 months and from 0.83 to 0.81 in half a year.

 

Chart. Daily GBP/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11206

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"Commerzbank: comments on AUD/USD"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

 

 

 

Technical analysts at Commerzbank note that Australian dollar breached yesterday support versus its US counterpart in the $0.9929/10 area (August minimum, Fibonacci level).

 

The specialists expect AUD/USD to fall to $0.9688 (78.6% Fibonacci retracement) and plan to take profit at this point. If the bears keep pulling the market, the next downside target will lie at $0.9388 (October 4 minimum).

 

According to the bank, resistance levels are situated at $1.0127 (resistance line), $1.0340 (November 14 maximum) and $1.0445.

 

 

Chart. Daily AUD/USD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11208

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"Rating agencies affirmed US credit rating"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

 

 

The greenback managed to recover a bit higher versus Japanese yen at the beginning of today’s Asian session as the major rating agencies affirmed US credit grades:

 

- Standard & Poor’s: America will retain AA+ rating even if the Supercommittee fails to reach agreement on reducing the nation’s budget deficit by Thursday (US lost its top grade by S&P on August 5);

 

- Moody’s Investors Service kept US rating at the top Aaa level with negative outlook;

 

- Fitch Ratings repeated that there will likely be a downside revision to US rating outlook in case of the Supercommittee’s failure.

 

Risk sentiment has slightly improved. The pair USD/JPY managed to get above 77 yen. However, there hasn’t been enough positive news to detain yen’s appreciation and the pair soon resumed decline drifting lower.

 

Support levels for American currency are found at 76.75 (November 21 minimum) and 76.55 (November 18 minimum). Resistance levels for US dollar lie at 77.35 (today’s maximum), 77.50 (November 15 maximum) and 77.90 (November 9 maximum).

 

It’s also necessary to note that investors are closing positions ahead of Japan’s holiday tomorrow and US one on November 24.

 

 

Chart. H4 USD/JPY

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11210

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"World Bank: East Asian economic prospects"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

China: the economists expect soft landing – the nation’s GDP growth will ease down from 9.1% on 2011 to 8.4% in 2012. The nation’s inflation rate will decline from 5.3% this year to 4.1% the next year.

 

Asia: economic growth of developing East Asia (without Japan, Hong Kong, Taiwan, South Korea, Singapore and India) will slow down from 8.2% in 2011 to 7.8% the next year.

 

According to the World Bank, Asia will be able to withstand the negative effects coming from the euro zone’s debt crisis with help of their high reserves and current account surpluses.

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11211

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"Credit Suisse: the climax for euro area is approaching"(2011-11-22)

 

 

 

 

 

 

 

 

 

 

 

 

Analysts at Credit Suisse believe that in order to save the single currency European leaders –primarily, France and Germany – will have to reach by the middle of January “a momentous deal” to increase the degree of integration and transform the monetary bloc into the fiscal and political union.

 

The specialists expect that in this case the ECB will agree to cut its benchmark rate and provide banks with longer-term funds and do all it can to prevent euro’s collapse.

 

In their view, during the most critical moment the Italian and Spanish 10-year bond yields may surge above 9% and French yields may bounce above 5%.

 

Bloomberg reports that for the hints on the euro zone’s future one should pay attention to the European Commission’s recommendations on euro-area debt which are to be published this week and by the French President Nicolas Sarkozy’s speech next month on the 20th anniversary of the Maastricht Treaty.

 

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11213

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"MIG Bank, KBC Bank: euro’s gaining versus pound"(2011-11-22)

 

 

 

 

 

 

 

 

 

The single currency is gaining versus British pound for the third day in a row as the market expects the Bank of England’s November meeting minutes (released tomorrow at 9:30 GMT) to show that the policymakers are inclining to more monetary stimulus to encourage the nation’s weak economic growth – UK Prime Minister David Cameron claimed yesterday that the growth figures are unsatisfactory.

 

As a result, investors’ pound-negative sentiment didn’t fade even as the Office for National Statistics reported that the country’s net excluding support for banks contracted from 7.7 billion pounds a year earlier to 6.5 billion pounds in October.

 

Analysts at MIG Bank note that the outlook for the pair EUR/GBP will turn bullish if manages to hold above 0.8652.

 

Strategists at KBC Bank claim that support for the single currency lies at 0.8595, 0.8553 (this week’s minimum) and 0.8518 (November 15 minimum), while resistance is seen at 0.8665 (50-day MA).

 

 

Chart. Daily EUR/GBP

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11215

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"Deutsche Bank: 2012 forecast for GBP/USD"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

 

 

Analysts at Deutsche Bank expect British pound to lose versus the greenback in the first half of the next year. At the same time, the specialists underline that sterling’s decline will be contained by $1.5100.

 

According to the bank, the pair GBP/USD will slide to $1.5300 in the first 3 months of 2012, and then fall to $1.5100 in the second quarter before rebounding to $1.5700 by the year-end.

 

 

Chart. Daily GBP/USD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11219

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"Deutsche Bank: 2012 forecast for EUR/USD"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

 

 

Analysts at Deutsche Bank believe that the single currency will keep declining versus the greenback in the first half of 2012 as the European Central Bank will be under pressure to ease its monetary policy to help the region combat the debt crisis.

 

The specialists think that EUR/USD will go down to $1.3000 in the first quarter of the next year, then hit $1.2500 by the middle of the year and recover to $1.3500 by the year-end.

 

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11221

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"Consensus Economics: seasonal effect on euro"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

Consensus Economics, a macroeconomic survey firm, notes the demand for the single currency tends to pick up in December. It happens because portfolio managers buy euro as the riskier asset trying to get more profit to make their holdings look better ahead of the year-end.

 

According to the data processed by the company, the European currency usually gains about 0.4% and US dollar retains its value, while Canadian dollar and British pound weaken.

 

Strategists at BMO Capital Markets, however, underline that the euro zone’s debt crisis may change the situation and doubt that in the current circumstances euro will be able to get a lift from the seasonal effect.

 

Some experts say that taking into account everything mentioned above, the market’s pressure on the ECB to ease policy will play the role of euro's rate determinant.

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11223

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"Societe Generale: commodity currencies are to decline"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

Analysts at Societe Generale warn that the failure of US Congressional supercommittee to agree on the debt-reduction measures will heavily weight on American economy affecting the rest of the world.

 

The specialists believe that the forced automatic spending cuts of $1.2 trillion will result in the fiscal drag of 1.5%. In other words, if US GDP growth is projected to be 1%, then the nation will face economic contraction. This combined with the European crisis will have a very negative impact on the global economy. As a result, the bank expects that commodity currencies which depend on the economic growth will get under pressure, while the greenback will restore its safe haven status.

 

Societe Generale is bearish on Canadian dollar as Canada’s economy is closely tied to the US one and Australian dollar which will suffer as the situation in the US and China deteriorates.

 

The strategists advise selling AUD/JPY being cautious about the Bank of Japan’s intervention risk. In their view, one may also open shorts AUD/USD and longs on USD/CAD.

 

 

Chart. Daily AUD/USD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11225

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"Commerzbank: comments on GBP/USD"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

Technical analysts at Commerzbank note that British pound fell versus the greenback below the $1.5615 level representing 61.8% Fibonacci retracement of its October advance. In their view, the outlook for GBP/USD is bearish.

 

The specialists believe that the pair’s on its way down to $1.5463 (78.6% Fibonacci retracement) and $1.5271 (October 6 minimum). In the longer term, the downside target will be found at the uptrend line from 2009 to 2011 at $1.5050. This support level will likely hold the initial attack of the bears.

 

According to the bank, resistance levels are situated at $1.5888 (November 18 maximum) and $1.6026 (downtrend line).

 

 

Chart. Daily GBP/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11227

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"Barclays Capital: survey about euro zone’s future"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

 

Analysts at Barclays Capital conducted survey among 1,000 of its clients asking their opinion about the euro area’s future.

 

The survey showed that the number of investors expecting at least one country to leave the currency bloc increased in 2 times since September: almost 50% of the respondents now think that this will happen the next year.

 

The majority of the surveyed believe that if some nation quits it would be Greece. 5% of the bank’s clients say that all 5 troubled peripheral nations – Greece, Portugal, Ireland, Italy and Spain – will desert the monetary union.

 

The region’s economic prospects are perceived as pessimistic: 70% of the respondents claim that Europe will fall into recession.

 

Barclays underlined that investors don’t think that Greece’s leaving will stop the debt crisis. The bank’s clients expect the European Central Bank to act helping euro zone’s economy with additional stimulus.

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11229

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"European currency is again under pressure"(2011-11-23)

 

 

 

 

 

 

 

 

 

 

 

 

The single currency declined today versus the greenback falling below $1.3400 and renewing more than 1-month minimum.

 

Belgian newspaper De Standaard reported citing no sources that Belgium and France were renegotiating the distribution of the costs of the rescue deal for bank Dexia. That made the markets fear that France’s share in the bailout may increase that, in its turn, could affect the nation’s credit rating.

 

Concerns about the euro area rose due to the unfavorable economic data. According to Markit Economics, financial survey company, the region’s composite manufacturing and services PMI rose from 46.5 in October to 47.2 in November, but remained below the 50.0 level that means that the European economy is expected to contract in the final quarter of the year. Economists at Markit note that the figures mean that the negative effects have spread from the peripheral economies to the core ones. Specialists at Capital Economics think that the euro zone will likely fall into deep and protracted recession.

 

In addition, new industrial orders fell by 6.4% in September compared with August level showing the biggest decline since December 2008 when the index was hit by the global financial crisis.

 

Analysts at Wells Fargo believe that EUR/USD will keep trading in a very volatile manner. In their view, low trading volumes this week due to the US holiday tomorrow will make the market moves even greater and sharper.

 

Support levels are situates at $1.3370, $1.3315 and $1.3260, while resistance lies at $1.3410, $1.3475 and $1.3570.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11233

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"BoA: Aussie will fall against the greenback"(2011-11-24)

 

 

 

 

 

 

 

 

 

 

 

 

Technical analysts at Bank of America believe that Australian dollar may fall to more than 1-year minimum versus the greenback.

 

The specialists note that bears got more powerful after AUD/USD breached support of 2008 maximums in the $0.9927/0.9850 area. In addition, Aussie will likely be affected by the market’s risk aversion.

 

According to the bank, the pair is now on its way down to $0.9330. If it fails to hold at this point, it will be poised for a decline to $0.9000.

 

Australian currency lost 7.7% versus its US counterpart in November showing the second worst results among the major currencies after New Zealand’s dollar.

 

 

Chart. Daily AUD/USD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11237

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"Deutsche Bank: 2012 forecast for USD/JPY"(2011-11-24)

 

 

 

 

 

 

 

 

 

 

 

Analysts at Deutsche Bank claim that Japanese yen will keep being supported by the concerns about global economic slowdown.

 

In their view, there are many factors pointing at yen’s appreciation, such as Japan’s current account surplus, high relative real yields and the inability of the nation’s policymakers to stem the advance of the national currency.

 

According to the bank, by the middle of the next year the pair USD/JPY will drop to 72 yen and then consolidate in the zone of 75 yen by the end of 2012.

 

 

Chart. Daily USD/JPY

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11239

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"Deutsche Bank: comments on USD/CAD"(2011-11-24)

 

 

 

 

 

 

 

 

 

Analysts at Deutsche Bank underline that Canadian economic figures are as discouraging as the US ones. Never the less, the specialists don’t think that the Bank of Canada will ease its monetary policy, even though the market’s pricing in 25-basis-point rate cut through March 2012.

 

According to the bank, loonie’s rate will as usual depend on the market’s risk sentiment. At the same time, all eyes are now focused on the euro area and the United States is no longer the epicenter of the crisis, while Canadian economy is closely connected with American one.

 

As a result, Deutsche Bank expects USD/CAD to test 2010 maximums in the $1.0800 area. The greenback will be capped by these levels unless we see “hard-landing” in Europe. All in all, the analysts think that the next year the pair will fluctuate around parity.

 

 

Chart. Daily USD/CAD

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11241

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"Commerzbank, Wells Fargo: comments on EUR/USD"(2011-11-24)

 

 

 

 

 

 

 

 

 

 

Technical analysts at Commerzbank note that the outlook for EUR/USD is negative as long as it’s trading below resistance at $1.3526. The specialists say that support for the pair lies at $1.3360 and $1.3281.

 

Currency analysts at Wells Fargo expect the single currency to fall in December to $1.2400 or lower. In their view, the European Central Bank will ease its monetary policy in order to help the region’s economy.

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11243

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"Commerzbank: comments on USD/JPY"(2011-11-24)

 

 

 

 

 

 

 

 

 

 

 

Technical analysts at Commerzbank note that the greenback has managed to break yesterday above the daily Ichimoku Cloud trading versus Japanese yen.

 

The specialists think that even though today USD/JPY has eased down, it will be able to resume the recovery. In their view, the pair will be supported at 76.22 (78.6% Fibonacci retracement) and 75.94 (August 19 minimum).

 

According to the bank, resistance for US currency lies at 79.56 (4-year downtrend line) and 80.37 (55-week MA). If US dollar overcomes these levels, the current trend will reverse.

 

 

Chart. Daily USD/JPY

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11245

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"Ichimoku. Weekly forecast. USD/JPY"(2011-11-28)

 

 

 

 

 

 

 

 

 

 

Weekly USD/JPY

 

Last week Japanese currency managed to close above the Turning line (1) obtaining support.

 

Resistance for the prices is provided by the Standard line (2) and the descending Ichimoku Cloud (3, 4).

 

The prospects of the pair will significantly improve if US currency manages to overcome Kijun-sen.

 

 

Chart. Weekly USD/JPY

 

Daily USD/JPY

 

US dollar has managed to rise above both the Turning line (1) and the Standard line (2) and get above the thin daily Ichimoku Cloud. This may be regarded as an important breakthrough taking into account the pair’s dynamics during the previous months. Tenkan-sen stopped declining (1) and become horizontal.

 

As a result, the bulls’ prospects improved, although the market remains in the situation of uncertainty. The thin Cloud (3) shows that neither bulls nor bears have significant advantage.

 

 

Chart. Daily USD/JPY

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11262

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"Ichimoku. Weekly forecast. USD/CHF"(2011-11-28)

 

 

 

 

 

 

 

 

 

 

Weekly USD/CHF

 

The bulls keep moving the pair’s rate higher, to the upper border of the Ichimoku Cloud. The prices are supported by the Turning line (1) and the Senkou Span A (3).

 

Tenkan-sen (1) and Kijun-sen (2) hold though weak, but still the “golden cross”. Kumo switched to the bullish mode, though it remains very thin.

 

However, Tenkan and Kijun are horizontal that may hold the pair from growth.\

 

 

Chart. Weekly USD/CHF

 

Daily USD/CHF

 

On the daily chart Tenkan-sen (2) and Kijun-sen (1), which have so far formed the “golden cross” (3) – the strong bullish signal as the lines intersected above Kumo, are directed horizontally supporting the greenback.

 

However, the bullish Ichimoku Cloud has become very thin (4). Whether the greenback will be able to continue growth this week depends whether it manages to overcome October maximums.

 

 

Chart. Daily USD/CHF

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11263

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"BBH: European policymakers meet this week"(2011-11-29)

 

 

 

 

 

 

 

 

 

 

 

European finance ministers meet twice this week: today at the Eurogroup meeting and tomorrow at the Ecofin one.

 

Analysts at Brown Brothers Harriman believe that if the policymakers don’t come up with specific proposals of how to deal with the crisis, investors will resume selling euro and stocks.

 

As for the talk that the region’s leaders may be negotiating a new pact, the specialists note that earlier there were many times when the markets were lightened with hope but got disappointed as nothing happened.

 

According to the BBH, it’s also necessary to take into account surging bond yields in Europe and the warnings from the OECD and Moody's Investors Service that the way out of the escalation debt turmoil should be found urgently.

 

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11279

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"Societe Generale: forecast for QE3"(2011-11-29)

 

 

 

 

 

 

 

 

 

 

Currency strategists at Societe Generale believe that the Federal Reserve will decide to conduct the third round of quantitative easing by March 2012.

 

As the reasons for such forecast the specialists cite the projected US weak economic growth in the first quarter of the next year and the slowing inflation in the country.

 

The specialists claim the Fed will buy mainly mortgage-backed securities and QE will be worth about $600 billion over 6-8 months. As a result, the central bank’s securities portfolio will increase by the end of 2012 from $2.65 to $3.25 trillion.

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11281

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"Commerzbank: comments on EUR/USD"(2011-11-29)

 

 

 

 

 

 

 

 

 

 

 

 

 

The single currency managed to recover versus the greenback from more than 1-month minimum at $1.3211 to the levels above $1.3300.

 

Technical analysts at Commerzbank claim that EUR/USD is facing strong resistance at $1.3418 (resistance line) and $1.3457 (23.6% Fibonacci retracement of the recent decline). In their view, the pair won’t be able to get above $1.3615 (November 18 maximum) in the near future remaining in the $1.3457/3615 area.

 

According to the bank, if euro breaks below $1.3145 (October 4 minimum), it will be poised down to $1.2860 (2011 minimum). On the downside the longer term target lies at $1.20.

 

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11283

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"Euro area, China: economic outlook deteriorated"(2011-11-29)

 

 

 

 

 

 

 

 

 

 

 

Analysts at UBS reduced China’s 2012 GDP forecast from 8.3% to 8%. The specialists expect exports growth to slow as the demand for Chinese products weakens due to the euro zone’s debt crisis. In their view, the nation’s exports will stagnate the next year, while earlier they expected 5.5% growth.

 

The outlook for European GDP growth was earlier cut from 0.7% to 0.2%. According to the bank, the currency union has chance to avoid collapse of euro and banking crisis. However, UBS points out that the region’s economy will nevertheless be in recession in 2012.

 

Strategists at Deutsche Bank cut projections for euro area’s economic growth from +0.4% to -0.5%. The specialists underline that as Europe’s economic prospects deteriorate, the European authorities will be more motivated to act.

 

The OECD also lowered 2012 forecast for euro zone’s economic growth from 2.0% to 0.2%.

 

 

Comment here http://www.fbs.com/analytics/news_markets/view/11285