Comments and forex-analytics from FBS Brokerage Company

[FallenDC]

Commerzbank: comments on GBP/USD

Analysts at Commerzbank claim that British pound may rise higher versus the greenback testing 200-day MA at $1.5919.

The specialists note, however, that sterling’s advance will be limited, if not by this level, then by the next resistance at $1.5967 and $1.6016 (55-week MA).

According to the bank, support for the pair GBP/USD lies at $1.5603/1.5580 (55-day MA and 50% Fibonacci retracement).

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[FallenDC]

Euro strengthened on Greek bailout news

The single currency went up versus the greenback erasing earlier decline and reached 3-month maximum against Japanese yen as the euro-zone finance ministers agreed on a second bailout package for Greece saving the nation from default in March.

The package includes a 53.5% write-down for Greek bondholders – it’s a bigger trade-off from the nation’s private creditors than initially expected. Debt-swap bonds will have a coupon of 2% in 2014, 3% in 2015-2020 and 4.3% after that. The ECB President Mario Draghi expressed his approval of the deal.

Euro shorts are covered now. The pair EUR/USD opened around $1.3250 and started sliding lower as the press conference was constantly delayed. The market players were pretty sure that there would be an agreement and there were enough longs on an intraday basis and these longs kept getting squeezed out, the longer the decision was delayed. After the announcement euro made 70-pip spike up. Currently the pair came close to the opening levels as stop-losses were all done.

Analysts at Credit Suisse claim that euro will likely be capped as although “short-covering is supporting the euro, this much was within expectations”. In addition, EUR/USD will get under pressure due to improving US economy. The specialists think that the pair will trade in range between $1.3150 and $1.3350 for the rest of the global day and between $1.3050 and $1.3350 during the coming week.

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[FallenDC]

UBS: dollar’s long-term advance against euro will go on

Analysts at UBS claimed that the single currency will continue declining versus the greenback in the longer term from the record maximum at $1.6038 reached in July 2008.

The specialists think that US dollar will break its negative relationship with oil prices as the United States become more independent of foreign energy supply due to the development of shale-gas deposits and an increase in domestic oil production.

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[FallenDC]

More comments about euro’s outlook

ING: the Greek deal might have bought a couple of months' worth of stability to the euro-zone sovereign-debt markets. The pair EUR/USD may go up to test 2012 maximum at $1.3320 and rise to $1.3430/50.

Barclays Capital: the risk of Greece’s disorderly default reduced for at least a few quarters. Never the less, there still are the implementation risks. In addition, there are near-term risks associated with early elections and rise of political opposition.

Commerzbank: the skepticism about the euro is justified even after euro area’s finance ministers agreed to provide Greece with the second bailout. That isn’t positive for euro. The large majority of market players are finding it hard to believe that Greece will get through to 2020 without a further default.

BNP Paribas: Greek agreement won't support euro much. Many traders would like to sell euro on the rallies. All the same, if the agreement really does remove the risk of a Greek default markets will be looking to fund riskier bets with a suitable currency such as euro. As a result, the European currency is doomed to remain under pressure.

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[FallenDC]

Deutsche Bank, UBS: forecasts for USD/JPY

Analysts at Deutsche Bank think that the greenback may resume its decline versus Japanese yen. In their view, the effects of the latest round of easing conducted by the Bank of Japan will fade. Last week the Bank of Japan added 10 trillion to it's now 65 trillion yen quantitative easing program leaving the benchmark interest rate at the record low of 0.1%.

The specialists claim that USD/JPY may decline from the current maximums in the above 79.50 back to 75 yen area. According to the bank, Japan’s external investment position is large and growing, so its current-account balance will support yen’s strength for some time. Currency effects from Japan's shifting trade dynamics are being overplayed and the country will probably return to a trade surplus this year. The only way to prevent such outcome is additional stimulus from Japan’s monetary authorities.

Analysts at UBS, however, don’t share the view of Deutsche Bank. The specialists reduced their 1- and 3-month forecasts for Japanese yen from 77 yen per dollar to 80 and 85 yen per dollar. As the reason for the downward revision the specialists cited easing conducted by the BOJ.

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[FallenDC]

BoE minutes coming: watch the pound

Today the market’s looking forward to the release of the Bank of England’s February meeting minutes (9:30 a.m. GMT). The minutes will unveil how the central bank’s 9-member Monetary Policy Committee votes on the expansion of asset purchase program by 50 billion pounds ($79 billion) to 325 billion pounds this month.

The consensus forecast is that the decision was unanimous. The experts, however, don’t rule out the possibility of 1-2 dissenting votes from the hawks against more QE.

The BoE decided to conduct additional quantitative easing in order to help weak UK economy: Britain’s revived Q4 GDP figures which are released on Friday will likely confirm that the nation’s economy contracted by 0.2% in the final 3 months of 2012 (q/q).
BoE Deputy Governor Charlie Bean claimed that despite the news that Greece will get the second bailout, serious risks remain and the debt crisis won’t be over. Such situation will hurt Britain hitting its exports and finance and affecting its consumer and business confidence. The official was also worried about the fate of other peripheral European economies.

On the one hand, it’s necessary to note that some positive consumption and housing data have been released so far, so the BoE may improve its fundamental outlook for the UK economy. In this case pound will be poised to strengthen. On the other hand, cautious tone may signal that the door is open to expand the central bank’s asset purchase program beyond 325 billion pounds – such outcome would increase bearish pressure on sterling.

Since the beginning of the year the pair GBP/USD consolidated between $1.5680 and $1.5930. Analysts at Lloyds say that sterling won’t be able to rise above $1.6000 versus the greenback in the near term. Specialists at Commerzbank think that the pair may test 200-day MA and then slide back to $1.5645.

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[FallenDC]

Nomura: USD/JPY forecast revised up

Analysts at Nomura revised up their forecast for USD/JPY from 75 to 79 yen by the end of the first quarter of 2012. The forecasts for the end of Q2 and the year-end were left unchanged at 80 and 81 yen consequently.

The specialists claim that odds that the greenback will resume its decline decreased due to the Bank of Japan’s additional quantitative easing, better US macroeconomic data and easing tensions in the euro area.

Nomura draws investors’ attention to the fact that Japanese central bank decided to increase investment in the government bonds with maturity of 1-2 years. This would cap the possibility of 2-year yield growth. As a result, the yield differential between 2-year US and Japanese securities will increase encouraging USD/JPY. In addition, internal capital flows also point at yen’s gradual depreciation.

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[FallenDC]

Barclays Capital expects USD/JPY to consolidate

Analysts at Barclays Capital claim that the greenback will consolidate between 78.50 and 80.50 yen ahead of the US February jobs report which is released on March 9.

The specialists think that after the pair USD/JPY has made such an impressive progress this month rising from 76 to 80.50 yen it currently lacks strong indicators for further advance, so the market will likely stand still ahead of the labor market data. According to the bank, the risk of the Federal Reserve announcing another round of quantitative easing is low.

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[FallenDC]

USD/JPY again renewed maximums

The greenback made a spike higher today spiking to almost 4-month maximum at 81.67 yen due to improved US economic data and the increased possibility that the crisis in the euro area will be contained. After reaching the new high dollar backed down correcting after a rapid advance.

Analysts at Ueda Harlow claim that investors aren’t afraid to sell yen anymore as they believe that the worst case scenario for global economy will be avoided. The G-20 is making efforts to solve the debt crisis, note the specialists.

Strategists at UBS think that the pair USD/JPY is now trending upwards. In their view, the Bank of Japan has finally shown its determination to use aggressive approach combating yen’s appreciation.

Analysts at Westpac claim that US currency is currently overbought and will return to 79 yen and then resume growth. According to the bank, USD/JPY will meet resistance at 82 yen. If the pair breaks above this level, it will be able to rise to 85.60 yen.

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[FallenDC]

Commerzbank: comments on USD/CHF

Technical analysts at Commerzbank believe that the greenback may fall versus Swiss franc to 0.8788/71 (78.6% Fibonacci retracement and 200-day MA).

According to the bank, key support for USD/CHF is situated at 0.8568 (October minimum).

The specialists are bearish on US currency as it dropped below 0.8960 (61.8% Fibonacci retracement of the pair’s advance from October to January). In their view, the short-term outlook remains bearish as long as US dollar trades below resistance in the 0.9066/88 area.

In the medium term Commerzbank expects USD/CHF to return to the levels around 0.9595 (January maximum).

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