Comments and forex-analytics from FBS Brokerage Company - page 154
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
USD/CAD broke resistance, but may still be capped
The greenback closed yesterday above 200-day MA versus its Canadian counterpart rising to the maximum since the end of January at 1.0130.
USD/CAD is still rather closely correlated with global risk sentiment. Taking into account continuing uncertainty in the euro area, the pair’s advance looks natural.
At the same time, analysts at UBS still favor loonie among other commodity currencies citing “less dovish bent of the Bank of Canada evident in last month's policy statement”. Scotiabank note that Canada’s economy remains relatively strong: “business investment surveys continue to signal strong capital investment intentions in the year ahead, supported by heightened competitive pressures, solid corporate balance sheets and favorable financing conditions.” The specialists expect USD/CAD to drift down to 0.97 in a year from now.
What interests us now, is technical picture. According to MIG Bank, if the bulls by chance manage to overcome resistance at $1.0160 (January 20, 23 maximums), USD/CAD will rise to $1.0250 (middle of the triangle seen in autumn) and go up towards 1.0424 (December 14 maximum). However, we already see a kind of pullback on the H1 chart. Expect support at 1.0065 (May 9 maximum), 1.0040 (200-hour MA), 1.0015 (support line) and around 1.0000.
All in all, if USD/CAD manages to close the day above 200-day MA, the outlook may be regarded as significantly improved. Don’t miss US data releases later today.
Chart. H1 USD/CAD
Chart. Daily USD/CAD
Ireland: another threat for EUR?
On May 31 Ireland holds a referendum on the Europe’s fiscal treaty which presumes automatic sanctions in case the European nation’s budget deficit exceeds 3% of GDP. The opinion polls still show the “yes” side ahead; however, the results of Greek and French elections, where people rejected the pro-austerity politicians, make the Irish vote questionable.
Ireland’s government has already introduced 24 billion euros ($31 billion) of budget cuts since the economy went into a recession in 2008, and the austerity has already become a pain in the neck for the voters.
Irish business leaders believe the “no” vote will force the country to leave the euro zone and create a new wave of panic on currency markets. А «yes » vote is very important to guarantee stability and business confidence.
Photo: AP
Have a profitable trading day with FBS!
If you have any questions to our analysts, you’re welcome to ask or comments for this article!
Key options expiring today
Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).
Here are the key options expiring today:
EUR/USD: $1.2625, $1.2700, $1.2750, $1.2800, $1.2850, $1.2900, $1.2925, $1.2930, $1.2950 and $1.3000;
GBP/USD: $1.6050 and $1.6100;
AUD/USD: $0.9850, $0.9950, $1.0000 (large), $1.0020 and $1.0100;
USD/JPY: 79.50, 79.55, 79.60, 79.75, 79.80, 80.00 (large), and 80.50.
Photo from Reuters
RBS: don’t rush into EUR/USD shorts
Analyst at RBS recommend investors (especially those who currently don’t have position at this market) to take a “wait & see” approach trading EUR/USD.
In their view, it’s now too late to rush in the current bearish trend – better to wait until euro tests $1.2624 (2012 minimum, target from the “head and shoulders” pattern) and see whether it holds or gets broken. If the support is breached, the single currency will be vulnerable for a decline to $1.2329 (2008 minimum).
As for resistance, it’ situated, according to the bank, at $1.2774, $1.2933, $1.3004 (2 previous monthly lows and the pattern break down area) and $1.3092.
Chart. Daily EUR/USD
BoA: pressure on GBP may strengthen
Analysts at Bank of America believe that pound’s decline versus the greenback can make futures traders reduce their bullish bets on sterling.
Data from Commodity Futures Trading Commission (CFTC) shows that GBP/USD longs increased in the week to May 8 to 25K contracts, the maximal level in a year. Now the pair slumped to the levels around $1.5920, and the speculators will have to trim their bullish bets. As a result, negative pressure on British currency will increase driving it down to 200-day MA which now finds itself 100 pips below the current rate.
“People have gotten longer and longer. That just makes it vulnerable,” warned the specialists.
Chart. Daily GBP/USD
Hard job for the Bank of England
On Wednesday sterling fell to a four-week low after the BoE inflation report showed the prospects for UK GDP growth are “unusually uncertain”.
According to BoE, the economy may grow by about 0.8% this year vs. previously expected 1.2%. The inflation is likely to stay above the 2% target at least in the next year. Weak growth and high inflation make the choice of monetary instruments difficult for the MPC.
The euro zone’s debt crisis threatens expansion despite the loose monetary policy is supporting the economy. The BoE governor Mervyn King said the euro area “is tearing itself apart without any obvious solution”. According to King, if the situation in Europe deteriorates, the bank will "react in many ways" (both QE and asset purchases remain on the table).
Morgan Stanley: “The increased magnitude of the euro crisis will likely hit the pound via economic second round effects. While the pound should still maintain its medium-term advantage against the euro, there is increasing evidence that the pound has topped against the US dollar.”
BoE Inflation Report (May 2012)
Photo: Guardian
Have a profitable trading day with FBS!
If you have any questions to our analysts, you’re welcome to ask or comments for this article!
French & German auctions: yeilds declined
German bond yields fell to 1.47% from previous 1.77% at today’s auction as the Greek problems increase demand on safe assets. However, Germany fell short of the targeted amount (4.1 billion euro vs. expected 5 billion).
On a French bond auction yields eased to 1.72% from 1.83% a month ago, showing the markets feel increasingly comfortable with growth-oriented policy of Francois Hollande. France managed to sell 7.9 billion euros out of 7-8 billion expected.
On Wednesday EUR/USD has reached a four-month low. However, the cross is trading in the green ahead of the FOMC meeting minutes. Resistance for EUR/USD lies at $1.2747 (May 16 maximum), $1.2800, $1.2822 (Lower Bollinger) and $1.2870 (May 15 maximum), while support – at $1.2648 (Jan.17 minimum), $1.2624 (Jan.13 minimum), $1.2600 and $1.2588 (Aug. 2010 minimum).
Chart. Daily EUR/USD
Have a profitable trading day with FBS!
If you have any questions to our analysts, you’re welcome to ask or comments for this article!
May 17: economic background
According to FOMC meeting minutes, released on Wednesday, several Fed policymakers said the additional QE may be needed if the economy falls back. In April the central bank said interest rates will stay near zero till late 2014 in order to support the economy. Analysts at CBA claim that the greenback may now “start to stabilize rather than continue to rocket higher”.
In Greece Panagiotis Pikrammenos, head of Greece’s Council of State, the highest administrative court, was sworn in as head of the caretaker administration. The date of new elections will be announced after the parliament formed according to May 6 election results is sworn in today and then dissolved.
EUR/USD recovered from the 4-month minimum at $1.2680 hit yesterday to the levels around $1.2745. Risk sentiment was slightly better this morning. Australian and New Zealand’s dollars edged higher versus its US counterpart.
Japan’s preliminary GDP expanded by 1.0% in Q1 close to forecasts, following a flat reading in Q4. Figures reveal that domestic consumption and government outlays for reconstruction are boosting the economy. Gradual growth is expected to continue; however, the further deterioration of the situation in Europe may affect the export-dependent Japan.
Also today:
• Euro zone: Banks in France, Germany and Switzerland will be closed because of the national holidays. Spain holds a 10-year bond auction
.• US: The number of unemployment claims fixed last week may grow by 368K vs. the previous print 367K. Philly Fed Manufacturing Index is forecasted to rise to 10.6 in May. Philadelphia region manufacturers' index declined more than expected in April reaching 8.5 from 12.5 in March, demonstrating the biggest drop in 6 months. However, most analysts believe that improved consumer spending will provide further growth to the manufacturing sector.
Have a profitable trading day with FBS!
If you have any questions to our analysts, you’re welcome to ask or comments for this article!
What to expect from the next BOJ meeting?
It seems that the USD/JPY market has no idea where to go – upwards or downwards? The central bank may be hoping to refrain from easing this month in order to have enough firepower in case the euro area goes really bad. Such assumption looks sensible due to the positive data released today: Japan’s preliminary GDP expanded by 1.0% in Q1 after staying unchanged in the final 3 months of 2011.
Dai-ichi Life Research Institute underlines, however, that “the timing of further monetary easing would depend more on (global) financial market movements than on the real (Japanese) economy.” So, everything is about how Japanese monetary authorities estimate the European risks.
At the same time, with all the talk about further monetary stimulus a remarkable thing happened yesterday: the BOJ failed to meet its target for bond buying for the first time since the asset-buying program was launched in 2010. That means that the central bank’s powers aren’t infinite after all. If that happened again the BOJ will have to widen the range of securities which it’s buying under APP adding bonds with longer maturity.
So, next week we’ll likely hear more reassuring comments from the BOJ officials about the central bank’s readiness, but in reality monetary authorities will be careful. The key interest rate will stay unchanged at 0.1%. The BOJ may ease in July when it conducts a quarterly review of its economic and price projections as it may acknowledge that deflation threat is subsiding too slowly.
Chart. Daily USD/JPY
Key options expiring today
Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).
Here are the key options expiring today:
EUR/USD: $1.2790, $1.2800, $1.2850, $1.2900, $1.3000;
GBP/USD: $1.5850, $1.6100, $1.6200;
EUR/GBP: $0.8085, $0.8060, $0.8085;
USD/JPY: 79.50, 79.75;
USD/CHF: 0.9350;
AUD/USD: $1.0100.
Image from How to make money on ebay without selling anything