Comments and forex-analytics from FBS Brokerage Company - page 169
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
Commerzbank: comments on USD/CAD
Technical analysts at Commerzbank note that the greenback has eased down from June maximum in the 1.0450 area versus its Canadian counterpart consolidating above 1.0200.
The specialists claim that if USD/CAD breached the support mentioned above, it will slide to 1.0124 (50% retracement of the May advance) and then to at 1.0105 (200-day MA).
However, the bank’s baseline scenario is positive for US currency: US dollar may recoil up from 1.0200 and travel upwards during the next few weeks. The targets on the upside above 1.0450 are 1.0523 (November maximum) and 1.0583 (200-week MA).
Chart. Daily USD/CAD
Thursday, June 14: economy and currencies
The euro strengthens for the third day against the greenback ahead of CPI data release (if it shows the inflation declines, the chances for the new monetary easing will grow). The U.S. retail sales keep slowing dowm for the second month. The Fed is holding its next policy meeting on June, 19. According to Ben Bernanke, the Fed is ready to take any actions to support and protect the U.S. financial system and economy.
Another reason for the euro’s strength comes from Greece: there is a speculation that Greek may modify its austerity program in order to remain in the currency bloc. According to recent surveys, 26.1% of the population supports the pro-bailout New Democracy party, while 23.6 % - leftish Syriza. Moody’s agency has cut Spain’s rating Cyprus’s bond rating yesterday.
NZD/USD gains after the Reserve Bank of New Zealand, as widely expected, left its official cash rate at 2.5% today. The bank officials underlined that the national economic outlook has worsened since March. The aussie and the loonie strengthen against the greenback.
Events to watch today:
Switzerland: The Swiss Libor rate is expected to remain unchanged at 0-0.25%. The announcement is to be accompanied by the central bank’s quarterly monetary policy statement and followed by a press conference. The SNB is also to publish its financial stability report on Thursday.
Euro zone: The ECB is to issue its monthly bulletin, which reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision, and provides detailed analysis of current and future economic conditions. The regional CPI growth in May is forecasted remain at 2.4%, while core CPI – at 1.6%. Italy holds a bond auction.
Canada: Housing price index, a key indicator of the housing industry’s health, may increase by 0.5% in April after a 0.3% growth in March.
U.S.: Core CPI is predicted to gain 0.2% in May, while CPI is expected to decline by 0.2%. A slight rise of unemployment claims to 378,000 is expected. In the previous week the number of people applying for unemployment benefits dropped to 377,000 from 389,000, while economists expected claims to reach 381,000. U.S. holds a 30-year bond auction.
Great Britain: The Bank of England Governor Mervyn King is to speak.
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!
Friday, June 15: economy and currencies
On Friday the yen strengthens against its major counterparts after the Bank of Japan left its monetary policy unchanged. On June 21, however, Japan may elect two dovish policy council members, what may influence the regulator’s policy.
EUR/USD is consolidating around the $1.26 area, supported by the speculation that the Fed may ease the policy on a next meeting. According to yesterday’s release, the number of unemployment claims increased to 386K, while CPI fell by 0.3% on the back of the decline in energy prices.
The sterling declined after the BoE Governor Mervyn King said additional stimulus in the U.K becomes more and more likely. In addition to looser policy, the regulator may activate a sterling liquidity facility to aid banks, and plans to have a form of credit easing operating within weeks to boost lending in the economy.
The MSCI Asia Pacific Index (MXAP) of stocks added 0.6% today. The Aussie and the loonie weaken, while the kiwi moves upward, though for now the daily change is small.
Events to watch:
Euro zone: The ECB President Mario Draghi speaks.
Canada: Manufacturing sales, a leading indicator of economic health, are expected to go up by 2.2% in April after a 1.9% growth in March.
Great Britain: Britain’s trade deficit is expected to decline slightly to 8.5B.
U.S.: Empire State Manufacturing Index in June is to decline to 14.1 from the previous 17.1 print, while the industrial production in May is likely to increase by 0.1% vs. a 1.1% growth in April. Capacity utilization rate, a leading indicator of consumer inflation, is expected to remain at 79.2%. Economists forecast the preliminary UoM consumer sentiment index to decline to 77.5 in June. In May the key indicator of the consumer spending reached its highest level in four years (79.3), what is a good sign for the U.S. economy.
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!
Сapital flows out of the euro area
According to analysts at Nomura Securities, in recent months there is an evident capital flight from the euro zone. If the trend continues, the single currency will trade much lower as it was a traditional emerging market currency crisis.
Specialists believe that on this matter the Europe’s debt crisis may be divided on three phases. In their view, during the first phase (April 2010-June 2011) investors sold assets from peripheral countries and tied up capital in the safe countries. In the second phase (July 2011-January 2012) the investors concerns on Spain and Italy started to grow. However, according to analysts, big amounts of money were still repatriated back to the euro zone.
These days the economy is in the third phase, when huge amounts of money are draining abroad. Meanwhile, Switzerland and Denmark are making efforts to retain control on their strong national currencies.
AUD/USD: prospects for growth
The AUD/USD cross managed to fix above the parity level on Thursday and continues extending its gains on Friday.
Specialists seem to be rather optimistic. Analysts at Westpac believe the pair will surge in case of a clear win of the pro-bailout New Democracy and Pasok parties on Greek elections on Sunday. According to strategists at RBS, the pair has good prospects for growth if it breaks the tough resistance, created by the Fibonacci levels and the 10- and 21-day MAs. Specialists at Commerzbank expect the cross to strengthen to $1.0146 in a short-term.
Support:
0.9397 (October 2011 minimum);
0.9667 (Nov. 2011 minimum);
0.9881 (Dec. 19 minimum).
Resistance:
1.0077 (38.2% Fibonacci retracement from the Oct. 2011 – Nov. 2012 range);
1.0146 (Jan. 2012 minimum)
1.0207 (50% Fibonacci retracement from the Oct. 2011 – Nov. 2012 range).
Chart. Daily AUD/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!
Draghi: ECB ready to rescue banks
The European Central Bank President Mario Draghi said on Friday that the regulator is ready to take all the necessary measures to support the euro zone’s economy in conditions of increased uncertainty.
Draghi told that the ECB will continue providing liquidity to solvent banks. The EU monetary authorities, therefore, leave the door open for the further policy easing. Last week the ECB left its key interest rate at 1.0%, but a few members of the governing council voted for a rate cut. The ECB President also underlined that these days the EU officials are working out proposals on how to resolve the situation with minimal damage and will present the results on the EU summit on June 28-29.
Mario Draghi’s comments are especially important ahead of the Greek parliamentary elections, upcoming on Sunday. The vote is likely to determine the future of Greece in or out of the EU and of the single currency itself. Moreover, on Sunday the second round of the French parliamentary elections takes place.
Photo: The Telegraph
EUR is up on Greek election results
Greek elections finally came and went. The results of the vote give hope that the nation’s policymakers will now be able to act efficiently to get the country out of the crisis.
As almost all votes are counted, the conservative New Democracy party will get 129 seats in the 300-seat parliament and its potential ally socialist Pasok party 33 seats. This is quite enough to ensure a workable majority and form a coalition government which will put all its efforts to keep Greece in the euro area and renegotiate the terms of the bailout. The latter will be vital as the austerity program is pushing the nation deeper in recession. The talks of on forming a government will likely start today.
The left forces opposing the bailout got in the minority with the total 121 seats, including 71 to be occupied by the Radical Left Coalition’s (Syriza) deputies.
Photo Nikolas Giakoumidis/AP
EUR/USD has another week of opening with a gap on the upside at $1.2693, above 38.2% retracement of the May decline.
Barclays Capital: “We continue to think the pressure on euro will be lower as weak growth will imply continued monetary policy easing by the ECB in the future. There has been some knee-jerk buying, which may have more to go. We would prefer to fade the rally than buying into it.”
Westpac: EUR/USD will rise to $1.2825/50 (May 21 maximum), but the potential for further advance isn’t high. The specialists note that Germany won’t easily agree to change the bailout conditions.
Standard Chartered: “The result has probably bought some time for Spain and Italy. But questions over the Spanish banking-sector bailout will persist, with clarification this week on how much will be requested.”
Chart. Daily EUR/USD
All eyes are now on G20 summit in Mexico.
G20 leaders meet in Mexico
A two-day G20 summit started in Los Cabos, Mexico on Monday. It should come as no surprise that the European issues are on the top of the agenda: the stabilization of the global economy and the reinforcement of the financial system.
The pro-bailout choice of Greek voters has brought a sign of relief to the markets. However, the effect is not expected to be long-lasting: Spain and Italy moved into the limelight. The G-20 countries are expected to confirm the IMF's planned $430 billion firewall to help the IMF to protect the indebted countries. The IMF chief Christine Lagarde, however, may insist on extending the firewall straight to $500 billion.
The G20 leaders will also give high priority to the problem of the global food price spikes and to work out mechanisms for their rapid stabilization.
CFTC traders positioning data
The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that during the week to June 12 speculators’ positioning changed the following way:
EUR: the net short positions decreased to 195K contracts from the previous week’s total of 214.4K contracts on June 5th.
GBP: the net short positions increased to 23K contracts following a total of 3K contracts the previous week.
JPY: the net long positions went up to 2.3K contracts following a previous total of 12K contracts.
CHF: the net short positions decreased to 33K contracts following a total of 33.6K contracts the previous week.
Data from CFTC
CFTC traders positioning data part2
The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that during the week to June 12 speculators’ positioning changed the following way:
CAD: the net long positions fell to 9.6K contracts from the previous week’s total of 14.9K contracts.
AUD: the net short positions decreased to 45.5K contracts after falling to 51.2 contracts on June 5th. In the past week, the Aussie's speculative positions were at the lowest level since 2009.
USD: the value of the net long position fell to $38.77 billion in the week ended June 12 from $39.65 billion the previous week.
It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.
Data from CFTC