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Short-term outlook for euro: analysts’ comments
Analysts at Morgan Stanley are bearish on the single currency. In their view, the pace of euro’s decline will be determined by whether Greece can meet the restructuring and austerity claims laid out by the Troika. So far, many of the major political forces in Greece have rejected demands to reduce minimum wages down to Portugal's levels, fearing that the economy would move further into recession, notes the bank.
Strategists at Commerzbank also think that EUR/USD will likely weaken as Greek situation remains unresolved. In their view, the area below $1.3050 could become critical as it could increase worries that the 10-day trading range between $1.3030 and $1.3230 will break on the downside.
Specialists at ING claim that the pair may test support at $1.3000. According to the bank, Greece will be eventually reach solution, but only after the stressful period of uncertainty. Euro will likely test the downside levels, says ING. However, the analysts warn that there’s the risk of a short-squeeze to the $1.3300 area.
Bank of England may announce additional QE
On Thursday at 12:00 p.m. GMT the Bank of England’s Monetary Policy Committee announces its decision.
According to the consensus forecast, the BoE will increase its asset purchase program by 50 billion pounds to 325 billion in order to avoid recession. The central bank is expected to hold the key interest rate at the record minimum of 0.5%.
UK GDP contracted by 0.2% in the fourth quarter of 2011. Recession is defined as 2 successive quarters of falls.
Although we’ve seen some inspiring data in January (positive PMI from the manufacturing and services sector released last week), it’s too early to speak about recovery. British economy is strongly connected with the euro area and the problems of the latter are still unresolved.
As Britain’s economic outlook looks rather grim, the possibility that inflation will undershoot the 2% target in the medium term seems rather high. As a result, this will allow the nation’s central bank to conduct additional monetary stimulus.
Analysts at UBS “expect the MPC will agree to buy another 50 billion pounds of government bonds. The PMI releases are only one month's data and fiscal austerity is likely to keep holding back UK growth. Thus we continue to see GBP/USD being over-extended at current levels of $1.58.”
John Taylor is bearish on US dollar
John Taylor, the founder of FX Concepts, the world’s largest currency hedge fund, is bearish on US dollar after the Fed extended their pledge to keep interest rates close to 0 until late 2014 and signaled that it’s prepared for additional quantitative easing on January 25.
The specialist is more bearish on US currency than on the European one. “Everybody in the market is sure that whenever the dollar looks strong, Bernanke will come up with another idea to make it weak”, says Taylor. In his view, EUR/USD will end the year at the parity level.
The economist also expects the greenback to depreciate versus Japanese yen even if it is temporarily boosted by the bank of Japan’s dollar purchases. Taylor agrees that Japanese central bank is likely to intervene in 75 yen area, but thinks that traders will wait until USD/JPY is pushed up by the interventions and then start selling the pair again.
Je sais pas, d'après vous? Avez vous regarde les interventions passes? Avez vous pense à comment la BNS fait monter la paire?
http://www.avafx.com/fr/Stocks/ ]comment acheter des actions?
Ce n'est que de la logique, soyez curieux, faites des recherches, je ne suis pas eternel.
Rentrez dans un processus de recherche et de travail, pas d'asservissement de votre loyal serviteur.
RBA left the rates unchanged
Australian dollar surged to the 6-month maximum versus the greenback at $1.0809 as the Reserve bank of Australia surprisingly decided to keep the rates unchanged at 4.25%, while the market was looking forward to a cut. For now the pair AUD/USD has returned back to the levels in the $1.0780 area.
The RBA Governor Glenn Stevens noted that “with growth expected to be close to trend and inflation close to target, the board judged that the setting of monetary policy was appropriate for the moment.”
Analysts at RBC claim that the central bank “has left the door open for a rate cut going forward, but the onus is going to be on the data.” Economists at ANZ think that the RBA is showing no signs of any immediate policy easing. According to the specialists, the policy statement was neutral, while the RBA made little mention of bank funding costs and won't incline to easing unless the global outlook seriously changes.
The RBA lowered costs both in November and December by 25 basis points. The majority of the economists expected the central bank to lower the borrowing costs.
Greece: negotiations seem endless
The single currency is under pressure versus the greenback, unable to resume recovery from January minimum at $1.2625. The pair EUR/USD has so far been consolidating in the $1.3035/1.3225 area. The bias is still bullish. On the upside, if euro rises above $1.3233, it may get to $1.3375 (December 12, 2011, maximum). On the downside, below support at $1.3075, the pair may drift to $1.2856/75 (December 29, 2011, minimum/January 2011 minimum).
Investors are worried that the Greece’s policymakers may fail to reach an agreement on terms for a second aid package, which is a condition for the second bailout. Today Greek Prime Minister Lucas Papademos will resume talks with the heads of 3 political parties in his interim coalition government. In addition, Papademos begins today a second round of negotiations with the Troika – the European Commission, the ECB and the IMF.
Analysts at Westpac think that there will be a lot of problems and shocks before the Greek situation is resolved, so they are bearish in euro. The single currency lost 4.5% during the last 3 months.
UBS on SNB’s policy options
There are 2 things to note about Swiss franc:
1) Hopes that that Swiss National Bank lifts up the floor for EUR/CHF from 1.2000 to 1.25/3000 in order to fight deflation crushed on December 15, when the SNB left the peg unchanged.
2) The market started worrying about the sustainability of the peg after former central bank’s President Hildebrand resigned.
Strategists at UBS claim that although the SNB interim president Tomas Jordan pledged to defend EUR/CHF minimum, the central bank is under pressure due to a lot of stops placed below the threshold: if franc strengthens, it may be very difficult for the SNB to act against the market.
However, the central bank will try to do its best as its credibility is at stake, thinks UBS. The specialists think that the SNB will lift up the floor in the second half of 2012 to 1.3000. The bank recommends watching Switzerland’s CPI figures due on Monday.
Japan conducted stealth intervention in November
Japanese yen declined versus US dollar and the single currency as the government data showed that Japan conducted stealth intervention in November in order to weaken the national currency. Stealth intervention is carried out without any official announcement from the finance ministry.
Japan’s Ministry of Finance reported today that the nation sold 1.02 trillion yen ($13.6 billion) against the dollar in markets on the first four days of November in addition to an 8.07 trillion-yen sale on October 31. Finance Minister Jun Azumi said he won’t rule out any options to curb the currency’s appreciation.
Analysts at Bank of Tokyo-Mitsubishi UFJ claim that yen’s drop reflects the increasing risks that the Japanese authorities may intervene again to make yen depreciate.
Specialists at Commerzbank think, however, that interventions won’t reverse major USD/JPY downtrend as their effect seems to be short-lived.
Jordan: SNB won’t allow franc to strengthen
ТThe Swiss National Bank’s interim president Tomas Jordan said today that the central bank will not tolerate a breakdown of the CHF 1.20 threshold.
According to Jordan, the SNB is more than ever “committed to defending the cap” and can’t allow further appreciation of the national currency as strong franc affects Switzerland’s economy. To do that the central bank is ready to buy unlimited amounts of foreign currencies. The main risks come from further escalations of the euro zone’s debt crisis.
The pair EUR/CHF is trading in the positive zone, right below the daily peak at 1.2087. Resistance for euro is found at 1.2109 (January 25 maximum) and 1.2128 (January 13 maximum). Support for the pair lies at 1.2053 (200-day MA) and 1.2028 (February 1 minimum).
Will the ECB lower rates?
The European Central Bank meets this Thursday. The majority of the economists expect the ECB to keep the borrowing costs unchanged. Some specialists, however, think that the central bank may cut its benchmark rate from the current level of 1%.
The arguments for the ECB’s staying on hold: better-than-expected key economic indicators released so far in the euro zone, successful bond and T-bill auctions in Germany and peripheral nations, positive impact of ECB’s LTRO which helped to increase liquidity.
The arguments for the ECB’s rate cut: austerity measures affecting the European economy and creating the threat of the region’s recession, the expansion of the central bank’s balance sheet as a result of the LTROs, unresolved negotiations in Greece.
Analysts at UBS think that the ECB will reduce interest rates. In their view, EUR/USD will stay under pressure ending 2012 at $1.1500.