FBS.com - Daily/Weekly Analysis / Market News

[internationallove]

"Gaitame.com: NZD will fall by 5%"(2012-01-20)

 

 

 

 

 

 

 

 

 

 

 

 

 

Technical analysts at to Gaitame.com Research Institute believe that New Zealand’s dollar may fall versus the greenback by almost 5%.

 

The specialists note that NZD/USD didn’t manage to hold above 200-day MA and is now going to survive downward correction. In addition, the RSI (relative strength index) returned below 70 signaling that kiwi may reverse direction.

 

According to the specialists, NZD/USD may go down to $0.7876 (20-day MA) in January and then probably to $0.7640. Analysts surveyed by Bloomberg News expect the pair to drop to 0.7500 by the end of March.

 

 

Chart. Daily NZD/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-20/16452-gaitamecom-nzd-will-fall-5

[internationallove]

"Why BoE may decide to wait with QE?"(2012-01-20)

 

 

 

 

 

 

 

 

 

 

 

While the market’s expecting to see more quantitative easing from the British central bank in February, Ben Broadbent, external member of the Bank of England’s Monetary Policy Committee (MPC), says that the central bank probably won’t be so quick to act.

 

The economist justifies this assumption be several points. To begin with, during the past half a year the downside risks for British economy have slightly subsided. The odds are that UK economic growth picks up in the second half of the year and the household income growth improves.

 

Moreover, UK will gain from the positive effects of loose ECB policy. Broadbent underlines that the quarterly pace of economic growth in 2012 is likely to be volatile. Such events as the Olympics in the third quarter will contribute to growth volatility.

 

“I would say very, very near term (output looks) slightly weaker. In the slightly less near term Q1 is marginally stronger. Over six months, the downside risks have been lessened slightly - partly because of what the ECB has done, partly because of QE itself and you can see that in risk asset markets - quite clearly”, claims the policymaker. Broadbent adds that the decline in headline CPI inflation from 4.8% in November to 4.2% in December should help to maintain inflation expectations.

 

The BoE meeting will take place on February 9.

 

 

Chart. Daily GBP/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-20/16453-why-boe-may-decide-wait-qe

[internationallove]

"Westpac recommends selling EUR/NZD"(2012-01-20)

 

 

 

 

 

 

 

 

 

 

 

 

 

The single currency has managed to strengthen versus the greenback this week. Euro was supported by the successful bond auctions in Spain and France and positive US labor market data. The number of people seeking unemployment benefits plummeted last week to 352,000, the fewest since April 2008.

 

However, analysts at Westpac see the advance as EUR/USD only as the selling opportunity. In their view, liquidity in the market “is supporting risk seeking”, which should lead investors out of currencies like the euro and into things like commodity currencies.

 

As a result, the bank recommends going short on EUR/NZD around $1.6000 stopping at $1.6180 and targeting $1.5650.

 

Westpac notes that the Reserve bank of New Zealand is one of the few which is unlikely to cut borrowing costs. Low inflation data creates an attractive entry point for the trade: New Zealand’s CPI declined by 0.3% in the fourth quarter (q/q).

 

 

 

Comment here http://www.fbs.com/analytics/2012-01-20/16455-westpac-recommends-selling-eurnzd

[internationallove]

"SocGen: buy CAD/JPY"(2012-01-20)

 

 

 

 

 

 

 

 

 

 

Analysts at Societe Generale believe that US economy will keep outperforming the European one. Never the less, they think it would be wise to protect oneself from the deterioration of the risk sentiment. To do that the bank recommends buying Canadian dollar versus Japanese yen at 76.00 targeting 79.00 and stopping at 75.00.

 

The specialists have studied the dynamics of Canadian dollar and other more volatile currencies like Mexican peso and Australian dollar against key stock and volatility indexes and found out that the correlation with CAD/JPY is close to zero.

 

As a result, those who choose this pair will enjoy the profits of bullish trade on the positive economic data, while if the situation deteriorates the decline of CAD/JPY won’t be as strong as the drop of other risky crosses, so one will be able to minimize losses.

 

 

Comment here http://www.fbs.com/analytics/2012-01-20/16457-socgen-buy-cadjpy

[internationallove]

"Commerzbank: comments on EUR/USD"(2012-01-23)

 

 

 

 

 

 

 

 

 

 

 

 

The single currency opened earlier today, but then managed to reach Friday’s close rising to $1.2940.

 

Technical analysts at Commerzbank claim that the short-term outlook for EUR/USD is positive as long as it’s trading above $1.2800. In their view, euro may rise to resistance in the $1.3077/3145 area or even to $1.3245.

 

If the pair drops below $1.28, it will likely decline towards August 2010 minimum in the $1.2588/30 zone.

 

Later today:

• German and French debt auctions;

• Euro zone finance ministers meeting;

• EU foreign ministers also assemble, with possible further sanctions against Iran’s nuclear program on the agenda.

 

 

Chart Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-23/16460-commerzbank-comments-eurusd

[internationallove]

"Commerzbank: negative longer-term outlook for euro"(2012-01-24)

 

 

 

 

 

 

 

 

 

 

 

Technical analysts at Commerzbank claim that as the single currency managed to consolidate in the $1.3000 area, it may rise to $1.3077/3145 versus the greenback this week. In that area, however, EUR/USD will face strong resistance which will cap the pair’s rate.

 

The specialists note that euro is vulnerable to any unexpected shift in the talks between the IIF and Greece indicating a stall in the negotiations or disappointing data from the euro zone. In their view, the longer-term outlook for EUR/USD is bearish: the pair will decline to the downtrend line in the $1.2083 region.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-24/16465-commerzbank-negative-longer-term-outlook-euro

[internationallove]

"Morgan Stanley: recommendations for USD/CHF"(2012-01-24)

 

 

 

 

 

 

 

 

 

 

 

Strategists at Morgan Stanley recommend buying the greenback versus Swiss franc in the 0.9280 area stopping at 0.9180 and targeting 0.9770.

 

The specialists note that even after Philipp Hildebrand’s resignation the Swiss National bank will maintain the floor for EUR/CHF. In addition, Swiss franc will be used as a funding currency due to Switzerland’s unfavorable growth outlook and SNB’s policy.

 

 

Chart. Daily USD/CHF

 

 

Comment here http://www.fbs.com/analytics/2012-01-24/16467-morgan-stanley-recommendations-usdchf

[internationallove]

"Euro has become a funding currency"(2012-01-24)

 

 

 

 

 

 

 

 

 

 

 

Analysts at UBS claim that the European Central Bank will cut interest rates twice more by 25 bps each in March and April. As a result, the bank maintains bearish longer-term forecast on EUR/USD.

 

Economists at Citigroup think that the ECB will reduce the borrowing costs in the second quarter, while strategists at Bank of Nova Scotia say that the central bank will cut rates to 0.5% by the end of the first quarter.

 

Analysts at Morgan Stanley see a very clear breakdown in the correlation between the euro and risky assets. Euro is increasingly becoming a funding currency – one may significantly benefit from borrowing in euro and investing in Australia’s dollar, Brazil’s real, Mexico’s peso, South Africa’s rand and South Korea’s won.

 

Specialists at Australia & New Zealand Banking Group claim that other currencies which have effectively low or 0 rates, such as the dollar and yen, are facing a slightly better growth profile.

 

According to the World Bank, euro zone’s economy will contract by 0.3% in 2012, while the global economy will add 2.5%.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-24/16469-euro-has-become-funding-currency

[internationallove]

"BarCap: GBP/USD will reverse down"(2012-01-24)

 

 

 

 

 

 

 

 

 

 

 

Analysts at Barclays Capital note that the upward correction of British pound versus the greenback will likely be over within the next 24-48 hours.

 

In their view, the end of the bullish squeeze will confirm if GBP/USD goes down below $1.5515.

 

The specialists recommend selling sterling on any further advance stopping above $1.57.

 

 

Chart. Daily GBP/USD

 

Comment here http://www.fbs.com/analytics/2012-01-24/16472-barcap-gbpusd-will-reverse-down

[internationallove]

"Fed will release federal funds rate forecast"(2012-01-25)

 

 

 

 

 

 

 

 

 

 

 

Tomorrow the Federal Open Market Committee (FOMC) for the first time ever release its interest rate forecast extending to 2016 including individual rate expectations of the committee members'.

 

The FOMC is trying to make its policy more transparent. In longer term, this new mechanism will provide the Fed with a potentially important tool to influence expectations, and therefore the course of the economy. Economists at Danske Bank think that the Fed might forecast its first hike at the end of 2013.

 

Analysts at Nomura called the coming meeting “historic”. In their view, the market will get “an historic amount of new information to digest”.

 

Although the recent economic data was positive and aroused investors’ optimism, US still faces serious challenges, such as high unemployment and the difficult situation at the housing market.

 

The rate and the Fed’s statement will be published on Wednesday, January 25, at 7:15 p.m. GMT. The Fed’s chairman Ben Bernanke will hold press conference.

 

The Fed funds rate is expected to stay between zero and 0.25% where it has been since December 2008. The majority of the experts don’t think that American central bank will launch another round of bond purchases, QE3.

 

Comment here http://www.fbs.com/analytics/2012-01-24/16477-fed-will-release-federal-funds-rate-forecast

[internationallove]

"Japan posted trade deficit in 2011"(2012-01-25)

 

 

 

 

 

 

 

 

 

 

 

US dollar strengthened versus Japanese yen as according to the data released today, Japan posted bigger than expected trade deficit in December: the trade shortfall accounted for 0.57 trillion versus the forecast of 0.36 trillion. As this was the third monthly deficit in a row, Japan got annual shortfall for the first time since 1980 equal to of 2.49 trillion yen ($32 billion).

 

Such figures may be explained by the surge of Japan’s energy import after the March 11 earthquake and by a shift of manufacturing overseas, for example, to lower-cost Thailand.

 

As a result, Japan may lose the status as the world’s largest creditor which makes it a safe haven for investment. Though yen will weaken in this case letting the nation’s exporters breathe, it would become much more difficult for Japanese authorities to manage the largest debt in the world. As Japan’s population shrinks, the county, which has been for a long time considered a refuge, may be forced to depend on foreign investors to buy its bonds with the yields rising on the fiscal concerns.

 

Economists at JPMorgan Securities expect the deficit to increase in the coming years. Specialists at Merrill Lynch think that even if the economy picks up, the balance will never return to the days of a 6 or 7 trillion yen surplus. According to the bank, imports of liquid gas from the emerging countries will keep growing and the balance will hover near 0 in the next couple years.

 

However, analysts at Goldman Sachs think that that the situation of deficit is only temporary and that Japan's trade balance will likely return to monthly surpluses in the second half of 2012. In their view, the impact of last year’s disaster will likely fade out gradually, while the global economic cycle is expected to slowly recover. The specialists also claim that strong yen doesn’t have extraordinary impact on the nation’s exports as the latter are not declining more than global economic momentum even with the yen's continued rise. Japan's decline in overall competitiveness will be gradual due to its high-tech firms.

 

The pair USD/JPY went up from the levels in the 77 yen area where it began yesterday’s trade testing the levels in the 78 yen zone. Analysts at MIG Bank think that the greenback may rise to 78.40, 79.55, 82.00 and then 83.30 yen.

 

 

Chart. Daily USD/JPY

 

 

Comment here http://www.fbs.com/analytics/2012-01-25/16479-japan-posted-trade-deficit-2011

[internationallove]

"Westpac: market’s risk sentiment improved"(2012-01-27)

 

 

 

 

 

 

 

 

 

 

 

Analysts at Westpac Institutional Bank claim that as the Federal Reserve announced that it plans to keep interest rates at the record low minimum until the end of 2014, one may trade on the risk-on sentiment.

 

In addition, the bank expects the ECB to cut rates at the beginning of February and then conduct 3-year liquidity option later that month. This would also contribute to the market’s risk appetite.

 

Moreover, Westpac says that there is potential for more quantitative easing in the UK where GDP contracted in the fourth quarter more than expected.

 

The specialists advise investors to focus on the commodity currencies. In particular, the bank recommends selling British pound versus New Zealand’s dollar in the 1.9200 area, looking forward to the pair’s decline to 1.8700 and stopping at 1.9400.

 

 

Comment here http://www.fbs.com/analytics/2012-01-27/16489-westpac-markets-risk-sentiment-improved

[internationallove]

"Kiwi keeps rising versus the greenback"(2012-01-27)

 

 

 

 

 

 

 

 

 

 

 

 

New Zealand’s dollar keeps rising versus its US counterpart continuing its 6-week advance: kiwi has already strengthened from December 15 minimum at $0.7460 to the levels above $0.8200.

 

The Reserve bank of New Zealand decided this week to leave the rates unchanged at 2.50%, while the Federal Reserve pledged to keep borrowing costs at the record low between 0 and 0.25% until late 2014.

 

New Zealand posted today its first trade surplus in 5 months: the nation’s exports exceeded imports by NZ$338 million ($278 million) in December, while the economists predicted a NZ$50 million deficit.

 

Specialists at Commonwealth Bank of Australia underline that they are seeing ongoing offshore demand for kiwi dollars. In their opinion, New Zealand’s economy is going OK, and certainly some of the individual sectors of the country are doing quite well.

 

Analysts at Westpac believe that NZD/USD may reach $0.8300 in the near term on positive global risk phase. However, the specialists underline that in the longer term they aren’t yet ready to abandon the view that NZD hits $0.7000’s this year.

 

Strategists at Barclays Capital don’t see any signs of the top, so the pair, in their view, may retest $0.8345. According to the bank, support is situated at $0.8120.

 

Never the less, it’s necessary to note that 14-day RSI is in the 76 zone, over the 70 level that signals an asset’s price may have risen too quickly. As a result, analysts at Standard Chartered think it’s natural to assume that there will be a period of consolidation. Strategists at Deutsche Bank also think that New Zealand’s dollar is now a bit overvalued and that its fair value lies at $0.7600.

 

Specialists at Forecast Pte recommend selling Aussie and kiwi on the rallies reminding about the ongoing concerns over Greece.

 

 

Chart. Daily NZD/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-27/16491-kiwi-keeps-rising-versus-greenback

[internationallove]

"Deutsche Bank: SNB may intervene any day"(2012-01-27)

 

 

 

 

 

 

 

 

 

 

 

Analysts at Deutsche Bank claim that in the near term the Swiss National Bank may start aggressive sell-off of Swiss franc versus the single currency trying to protect the floor for EUR/CHF.

 

The specialists warn that the SNB’s intervention may occur any day. In their view, if Swiss monetary authorities act aggressively, investors will seek to sell franc in anticipation of central bank intervention.

 

The pair EUR/CHF is trading within a very narrow range just below 1.2100 down from December maximums in the 1.2445 zone.

 

 

Chart. Daily EUR/CHF

 

 

Comment here http://www.fbs.com/analytics/2012-01-27/16495-deutsche-bank-snb-may-intervene-any-day

[internationallove]

"Euro’s rebound stalled"(2012-01-27)

 

 

 

 

 

 

 

 

 

 

 

 

The EUR/USD is currently trading in the $1.3100 area, down from this year’s maximum at $1.3184.

 

The negotiations between Greece and its private creditors continue. The nation needs to make massive debt repayments in March, so it needs to make a deal soon. According to Olli Rehn, EU economic and monetary affairs commissioner, the deal will be likely at last reached at the weekend.

 

Today euro’s advance stalled on the concerns about another European economy – Portugal. The markets worry that the country may follow Greece and seek another bailout. Yields on Portuguese government bonds renewed historical maximums – the 10-year yield passed yesterday above 15% level (today the yield is just below this mark).

 

Analysts at ING warn that Portugal may trigger euro’s decline in February. The troika will be reviewing Portugal's adherence to its bailout package, while bond investors are already pricing in Portuguese debt’s restructuring. The specialists recommend selling euro at $1.3130/50 expecting it to break of channel support at $1.3020.

 

Another blow for single currency dropped after US advance GDP disappointed the market: American economy grew at a 2.8% annualized rate in the fourth quarter below the expectations of 3%-growth.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-27/16496-euros-rebound-stalled

[internationallove]

"Euro’s on the downside ahead of EU summit"(2012-01-30)

 

 

 

 

 

 

 

 

 

 

 

The single currency declined versus the greenback ahead of EU summit later today. The European leaders meet in Brussels to make the final amendments to the deficit-control treaty and endorse the statutes of a 500 billion-euro ($659 billion) rescue fund to be set up this year.

 

According to Financial Times, Greece’s finance minister Evangelos Venizelos rejected a German plan for the euro zone to impose to create a European Union “budget commissioner” with the power to veto Greek tax and spending decisions, saying it would improperly force his country to choose between “financial assistance” and “national dignity”.

 

At the same time, euro found some support on the speculation Greece and its private-sector creditors will reach an agreement on a debt-swap plan this week.

 

AUD/USD fell as Fitch Ratings placed Australia's four biggest banks on credit watch with negative outlook, though it’s necessary to note that the move only brought Fitch in-line with other major ratings agencies.

 

In addition, many experts expected the People’s Bank of China to reduce reserve requirement ratio this weekend at the end of the New Year holiday but Chinese monetary authorities didn’t loosen monetary policy. If the PBOC cut RRR, this would encourage spending and boost demand for commodities.

 

Important events today:

 

• EU Economic Summit;

• Italian will sell debt maturing in 2016, 2017, 2021 and 2022. On January 27 Fitch ratings lowered the ratings of Italy, Spain, Belgium, Slovenia and Cyprus, saying they lack financing flexibility in the face of the regional debt crisis.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-30/16498-euros-downside-ahead-summit

[internationallove]

"UBS: US dollar won’t decline much"(2012-01-30)

 

 

 

 

 

 

 

 

 

 

 

Analysts at UBS note that last week we saw an improvement of the market’s risk sentiment due to stronger-than-expected readings of some key euro zone’s indicators promises of the deal between Greece and the private creditors, successful bonds and T-bill auctions in peripheral euro zone debt markets (except worried about Portugal). In addition, the Fed decided to leave the interest rates at “exceptionally low” levels until late 2014 and indicated that further quantitative easing is possible if US economic fundamentals worsen.

 

All that had negative impact on the greenback. Analysts at UBS, however, claim that as US GBP gained 2.8% in the fourth quarter on the annual basis after adding 1.8% in the previous 3 months (revised down), QE3 seems unlikely. As a result, the specialists think that the dovish stance of the Fed may be already priced in the greenback’s rate, so one shouldn’t become bearish on American currency.

 

The specialists advise investors to pay attention to Ben Bernanke’s testimony to Congress on February 2.

 

 

Comment here http://www.fbs.com/analytics/2012-01-30/16504-ubs-us-dollar-wont-decline-much

[internationallove]

EU summit: Europe’s stuck in tensions"(2012-01-31)

 

 

 

 

 

 

 

 

 

 

European leaders met in Brussels on Monday to discuss the region’s debt crisis and other issues.

 

Analysts at UBS claim that the lack of positive surprises at yesterday’s EU summit may lead to further disappointment of the market. In their view, “the positive news flow markets have enjoyed since the beginning of the year is proving hard to sustain and there will be far bigger challenges up ahead”.

 

Euro zone’s future actually seems quite challenging: Britain’s Prime Minister David Cameron and French President Nicolas Sarkozy disagree on everything from the new treaty on tighter fiscal rules – which only Britain and the Czech Republic of the EU's 27 countries won't join – to a financial transactions tax and single EU patent and industrial policy, reports Reuters.

 

Among other sources of tension – the dissatisfaction of Poland and other several east European countries which aren’t fully included in euro zone summits (Poland. Hungary, the Czech Republic and Slovakia aren’t the members of the currency union, but they "don't want to see Europe divided" and intend to attend all EU-17 meetings) and concerns of Spain and other peripherals on the negative effects of severe austerity measures they have to conduct (Spain is tasked with reducing its budget deficit from 8% of GDP to 4.4% – the target almost impossible to reach for the stumbling economy).

 

European finance ministers are meeting on February 12-13.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-01-31/16505-eu-summit-europes-stuck-tensions

[internationallove]

"BNP Paribas: comments on EUR/USD"(2012-01-31)

 

 

 

 

 

 

 

 

 

 

 

 

The single currency is trading today on the upside versus the greenback on the hopes for a Greek debt restructuring deal as the nation’s Prime Minister Lucas Papademos said that “significant progress” in talks had been made.

 

Resistance for EUR/USD lies at $1.3244 (38.2% Fibonacci retracement of the euro's decline from October to January). Analysts at BNP Paribas claim that if the pair manages to overcome this level, it will rise towards $1.3500 on the short-covering. The specialists note, however, that such outcome will be possible only if Greece reaches the ultimate agreement with its private creditors.

 

In addition, it’s the end of the month, so the managers may sell UD dollars to adjust their portfolios.

 

At the same time, bear in mind that the Greek debt talks have yet to be resolved and the market seems really worried about Portugal’s future.

 

 

Chart. Daily EUR/USD

 

Comment here http://www.fbs.com/analytics/2012-01-31/16506-bnp-paribas-comments-eurusd

[internationallove]

"USD/CAD: upwards or downwards?"(2012-01-31)

 

 

 

 

 

 

 

 

 

 

At the end of last week the greenback hit the parity level versus its Canadian counterpart for the first time in 3 months.

 

Bearish view

 

Analysts at Morgan Stanley believe that USD/CAD will breach the 200-day MA in the 0.9955 area and become vulnerable for a decline to 0.9835.

 

Bullish view

 

Strategists at Brown Brothers Harriman, however, note that the pair has been declining for 3 consecutive weeks and say that technical indicators show that the downside momentum for the pair has started weakening. In their view, the pair will be able to bounce by 1% to 1.0135 and then probably to 1.0250/80.

 

 

Chart. Daily USD/CAD

 

 

Comment here http://www.fbs.com/analytics/2012-01-31/16510-usdcad-upwards-or-downwards

[internationallove]

"Nomura: forecasts for euro, yen and Aussie"(2012-02-01)

 

 

 

 

 

 

 

 

 

 

 

 

Analysts at Nomura claim that as the US and European macroeconomic data has so far improves reviving global market’s sentiment, negative risks for the euro area subsided. As a result, the bank revised up its currency forecasts.

 

The specialists expect EUR/USD to trade at $1.20 by the end of the second quarter, at $1.23 by the end of the third quarter and finish 2012 at $1.25.

 

In their view, the pair USD/JPY will end Q2 at 80 yen, Q3 as well at 80 yen and Q4 at 81 yen level.

 

Nomura thinks that AUD/USD will reach $1.05 by the end of Q2, $1.07 by the end of Q3 and finish 2012 at $1.08.

 

 

Chart. Daily USD/JPY

 

 

Comment here http://www.fbs.com/analytics/2012-02-01/16519-nomura-forecasts-euro-yen-and-aussie

[internationallove]

"Westpac: sell AUD/NZD"(2012-02-01)

 

 

 

 

 

 

 

 

 

 

 

As Greece is trying to reach agreement with its private creditors, the market became worried about the situation in Portugal.

 

Analysts at Westpac don’t think that Portugal is an immediate concern, though they admit that one has to be cautious about that. In their view, by the middle of the year the discussion about whether this nation will need the second bailout like Greece will be heating up.

 

For now, the specialists say that it Greek deal is made and EUR/USD rises to $1.3400, one has to sell the single currency. At the same time, the bank underlines that the uncertainty surrounding the Greek negotiations and the prospect of the Fed’s Chairman Ben Bernanke’s testimony on Thursday makes it hard to trade EUR/USD, so one may better sell Australian dollar versus New Zealand’s dollar at 1.2930 stopping at 1.3115 and a targeting 1.2650.

 

Westpac expects the Reserve bank of Australia to cut interest rates new week. In addition, “there has been renewed interest over the weekend of sovereign wealth funds buying kiwi assets”, say the analysts.

 

 

Chart. Daily AUD/NZD

 

 

Comment here http://www.fbs.com/analytics/2012-02-01/16522-westpac-sell-audnzd

[internationallove]

"Get ready to sell euro"(2012-02-02)

 

 

 

 

 

 

 

 

 

 

 

The negotiations between Greece and its private creditors are still going. On January 31 Greek Prime Minister Lucas Papademos claimed that the nation will try to make the agreement reached by the end of the week.

 

Bloomberg reports that there’s speculation that Athens managed to persuade bondholders agree to lower coupon on the new 30-year securities from 4.25% to 3.6%.

 

The hopes of soon Greek deal allowed the single currency to gain despite all the worries about the euro zone’s future. At the same time, many experts say that when the deal is actually reached, one should sell euro.

 

Analysts at BMO Capital claim that the Greek negotiations could continue into March, when Greece has a big bond payment due. The specialists are also deeply concerned about Portugal’s fate. The yield on the nation’s 10-year bonds is above 15% after Monday’s peak of 17.4%.

 

According to BMO, investors should sell EUR/USD at $1.3185 with stopping at $1.3285 and targeting $1.2885. Those investors who would rather wait for a potential rise on news of a Greek deal can just adjust the trade levels to reflect the same 3:1 ratio of target to stop, says the bank.

 

Analysts at TD Securities point out at the risk of euro’s decline. Bank of New York Mellon thinks the success of the Greek deal is already prices in euro’s rate and there won’t be much of an advance. Westpac keeps expecting move up to $1.3400 to sell there.

 

 

Chart. Daily EUR/USD

 

 

 

Comment here http://www.fbs.com/analytics/2012-02-02/16531-get-ready-sell-euro

[internationallove]

"Morgan Stanley cut EUR/USD forecast"(2012-02-03)

 

 

 

 

 

 

 

 

 

 

 

 

Analysts at Morgan Stanley lowered their forecast for EUR/USD’s minimum this year from $1.20 to $1.15.

 

The specialists note that ECB’s expanded its balance sheet and expect more easing from the central bank.

 

“We believe that the relative performance of money multipliers will be a significant driving force for currency markets in the coming year. We see the ECB liquidity as a negative for the EUR,” said the economists.

 

 

Chart. Daily EUR/USD

 

 

Comment here http://www.fbs.com/analytics/2012-02-03/16535-morgan-stanley-cut-eurusd-forecast

[internationallove]

"Euro’s affected by the Greek uncertainty"(2012-02-03)

 

 

 

 

 

 

 

 

 

 

 

The lack of agreement between Greece and its creditors is weighting on the rate of the single currency. The weekend approaches, but the uncertainty remains strong.

 

Analysts at Mizuho claim that Greek creditors have no incentive to voluntarily agree on a debt write-down, so it would be very difficult for the nation to reach the deal with the bondholders. The specialists say that EUR/USD should fall below $1.20.

 

The single currency may show the weekly decline as it’s trading in the $1.3150 area, below Monday’s opening at $1.3222.

 

Analysts at RBC Capital Markets think that the downtrend will become evident if euro closes the day below $1.3028 (February 1 minimum). That would mean that the pair has topped and will be targeting $1.2875. On the upside, the upward move will be confirmed by the pair’s close above $1.3220. In this case, EUR/USD will head to $1.3291 and then to $1.3469.

 

 

Chart. Daily EUR/USD

 

 

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