Comments and forex-analytics from FBS Brokerage Company - page 140
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Barclays Capital: bullish view on AUD/USD
Analysts at Barclays Capital expect Australian dollar to strengthen versus its New Zealand’s counterpart.
The specialists draw investors’ attention to relative commodity price performance in recent weeks and the fact that Australia will benefit more from growth in the US and China.
In addition, BarCap thinks that the market is already pricing in a 90% probability of a 25-bp RBA rate cut on 1 May and an aggressive 80bp of cuts by year-end.
From the technical point of view, Aussie’s advance above $1.2670 will make the pair AUD/NZD rise to $1.2725 and $1.2765/70 on the short squeeze.
USD/CAD plummets after BoC statement
The USD/CAD reached a 2-week low after the Bank of Canada announced the overnight rate remains at 1.0%, but said in its statement that easy monetary policy may be coming to an end. The central bank expects the Canada’s economy to grow by 2.4% in both 2012 and 2013.
"In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate," the BoC said.
USD/CAD plummeted to C$0.9889, with the support at C$0.9867 (low Mar.20) and C$0.9859 (low Mar.19). The resistance lies at C$0.9958 (prior intraday support), C$1.0031 (high Apr.16) and C$1.0051 (high Apr.11).
Yen’s declining: reasons and technical comments
Japanese yen eased down versus its main counterparts. The pair USD/JPY rose from Monday’s minimum at 80.28 to 81.40 today.
Among the reasons of such move we may cite:
- Risk appetite improved due to positive news seen yesterday: high earning from companies such as Coca-Cola, Spain's successful debt auction and unexpectedly strong German investor confidence;
- The IMF raised yesterday 2012 and 2013 forecast of global economic growth from 3.3% and 4% to 3.5% and 4.1%.
- S&P 500 gained 1.5% and MSCI Asia Pacific Index of shares added 1.2%,
- US jobless claims may have declined from 380K to 370K (data released tomorrow at 12:30 GMT);
- Nikkei newspaper: the Bank of Japan may increase its 2012 core inflation forecasts from 0.1% to 0-0.5%. The BOJ is expected to announce additional monetary on April 27, while the Fed may refrain from the hints on more easing.
- Japan’s trade balance (released on Thursday) may have switched to deficit in March after a small surplus in February.
RBS thinks that there will be “some strength in a range of currencies against the yen.” Union Bank NA warns, however, that “if nothing is announced, USD/JPY is more likely to drop below 80.”
Wells Fargo claims that the technical outlook for the pair is bullish (20-day MA above 50-day MA). Resistance is found at 83.30 yen (April maximum) and 84.18 yen (March maximum).
GBP: watch MPC Meeting Minutes
On Wednesday the Bank of England will publish the minutes of MPC meeting, held on April, 5, when the policymakers agreed to leave its QE program 325 billion pounds. The previous minutes released on March 21 showed two policymakers still think additional QE is required.
The March consumer price index (CPI) rose in line with expectations by 3.5% after increasing 3.4% the previous month, reducing concerns on further QE.
BNP Paribas: The surprisingly dovish minutes put the GBP in harm’s way. The April minutes may highlight a different tune.
Societe Generale: As UK economic data have been a bit less worrying of late, the need for further QE may have lessened. Any low vote in favor of further QE would be GBP-positive versus AUD.
Bank of America: The pound needs to climb above $1.5986 (the right shoulder of the so-called head-and-shoulders pattern) to invalidate further weakness.
Analysts at BMO Capital believe that if today’s data come out more dovish, the sterling will weaken. In this case analysts recommend selling the cable with a stop at $1.6025 and a target of $1.5650.
Today also watch out for important labor market data: the claimant count (forecast 6.6K in March vs. 7.2K in Feb.) and the unemployment rate (expected to remain at 8.4%).
RBS reduced forecasts for AUD/USD
Analysts at RBS reduced forecasts for Australian dollar versus the greenback for Q2, Q3 and Q4 from $1.05 to $1.02, from $1.08 to $1.05 and from $1.10 to $1.08.
The specialists explained the revision by the fact that strong Aussie has a negative impact on the nation’s economy causing political and economic uncertainty. Australia may face in the near future declining trade volumes, increasing budget deficit and the possibility of shrinking capital expenses.
The IMF: Australia's in the forefront
According to the International Monetary Fund (IMF), Australia’s economy is the strongest in the world and it is expected to stay the best-performing economy for at least the next two years.
The IMF also forecasts the Australia's unemployment rate to remain low at 5.2% in both 2012 and 2013.
Australia’s economy is expected to grow by 3% this year on the back of easing economic woes in Europe and the U.S. However, the economy may be hurt in case if tensions in the Middle-East lead to new commodity price hikes.
"The IMF's confirmation of Australia's strong economic fundamentals - with solid growth and low unemployment - further underscores the importance of returning the budget to surplus, and giving the Reserve Bank maximum flexibility to cut interest rates if it considers that is necessary," the deputy prime minister of Australia Wayne Swan said.
Sterling’s supported by positive data
So, MPC meeting minutes is releases. The vote to keep the benchmark rate unchanged at 0.5% was, as expected, unanimous.
As for the Asset Purchase program, only David Miles called for its increase from 325 to 350 billion pounds, while Adam Posen who voted for more easing last month has changed his mind.
Also note that British unemployment rate fell from 8.4% in January to 8.3% in February. The claimant count change (change in the number of people claiming unemployment-related benefits) dropped from 4.5 in February to 3.6K in March.
The pair GBP/USD managed to climb to $1.5990 on the news and is now testing resistance in this area. Bulls will also face resistance at $1.6015 (upper Bollinger) and $1.6063 (April 2 maximum). Support lies at $1.5842 (200-day MA). Note that the 55-day MA approached the 200-day one and may cross it bottom-up – positive signal.
Germany sells 2-years with record low yield
Germany sold today 4.206 billion euro in 2-year bonds out of the 5.0 billion euro target. Average yield was at record low of 0.14% from previous 0.31%.
Rabobank: “Investor demand for core paper remains firm with the background threat of crisis tensions ratcheting yet higher underpinning an overriding desire for capital preservation”.
Investors were watching the sale with great attention after the unsuccessful launch of a new 10-year German bond last week.
In secondary markets German yields remain very low as the nation’s debt is still perceived as a refuge.
EUR/CHF: Will the SNB rise the 1.20 floor?
Swiss ZEW economic expectations index released today indicates optimism (2.1 in March vs. 0.0 in Feb.). Due to this month’s unexpected improvement some analysts expect franc to strengthen. Moreover, franc may remain “safe haven” from Europe’s debt woes which have resurfaced: demand for Swiss assets remains high even despite the negative 6-month bill yield. HSBC thinks, for example, that all attempts of the SNB to weaken the Swiss franc won’t work.
On the previous SNB meetings, Swiss policymakers disappointed the market by not raising the EUR/CHF floor from the current boundary of 1.20, provoking a steep appreciation of the franc to this level.
Analysts at UBS claim that if EUR/CHF does test 1.20 again, stronger intervention by the SNB would be welcomed by the investors who remain nervous of a broader decline through the figure. Market expects the floor to be lifted to 1.25 francs at least.
EUR/CHF strengthened today to 1.2029 (above the Ichimoku cloud on the H4 chart).
Watch the release of Swiss trade balance for March on April 24. Trade surplus increased from 1.5 billion francs in January to 2.68 billion francs in February.
Commerzbank: USD/CAD technical
The pair USD/CAD is trading almost unchanged from today’s opening price.
Analysts at Commerzbank think that “Tuesday’s sharp drop to 0.9864 looks to be impulsive, however, thus increasing the odds of support at 0.9841 (March 1 minimum) giving way within the weeks ahead, provided, of course that 1.0052 (April 11 maximum) continues to cap”. The specialists claim that if USD/CAD closes below 0.9842, it will slide to 0.9786 and then 0.9726.
If the pair closes the day above 1.0052, it will be able to start rising to 2011-12 resistance line at 1.0161.