Comments and forex-analytics from FBS Brokerage Company - page 215
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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: $1.2400, $1.2410, $1.2415, $1.2500, $1.2520, $1.2550;
USD/JPY: 78.50, 78.70, 80.00;
USD/CHF: 0.9600;
AUD/USD: $1.0250, $1.0350, $1.0400;
NZD/USD: 0.8100.
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Nomura: Beige Book and Jackson Hole
The Fed released the Beige Book yesterday – the assessment of current economic conditions. According to the central bank, US economy continued to expand “gradually” in July and early August as improvement in housing and retail sales helped outweigh weakness in manufacturing.
Nomura: “The Beige Book suggests the anemic pace of growth in the economy continued into the third quarter, an assessment that does not seem to qualify as the sort of ‘substantial and sustainable strengthening’ needed to dissuade many FOMC members that ‘additional monetary accommodation’ would be needed. It does not alter expectation for the Chairman’s remarks at Friday’s Jackson Hole Summit, nor does it alter our judgment that the FOMC will eventually embark on QE3 in response to persistently high unemployment and greater downside risks in H2 2012. We expect the chairman's remarks to reinforce the key themes from the minutes of the last FOMC meeting, which include absent a significant improvement in the outlook further easing will be warranted, and large-scale asset purchases remain the most effective tool available to the FOMC.”
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RBS: EUR may slide vs. AUD, CAD
The markets are stirred ahead of Bernanke’s speech tomorrow and the ECB meeting next Thursday. Analysts at RBS, however, say that there’s “no reason to take the gambles and run large risk over the events.” In their view, it’s necessary to “wait and see, have the events out of the way.”
In the medium term, RBS still favors selling euro versus commodity currencies such as Australian and Canadian dollars. The specialists are worried about the “ever ballooning” ECB balance sheet, and he thinks more liquidity will help the commodity currencies.
RBS thinks that EUR/AUD could fall to the 1.1200 range in the next couple of months adding that euro may experience “similar moves against the Canadian dollar.”
Chart. Weekly EUR/AUD
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IFR: the chance to buy AUD/NZD
Analysts at IFR Markets underline that AUD/NZD has visited trend line support so far and recoiled up managing to close yesterday above 50/200-day MAs around 1.2890. Today the pair revisited yesterday minimums.
The specialists recommend buying Aussie at the current levels. According to IFR, the pair has completed the 3-wave correction from July maximums and is now to resume its advance and break above 1.3050.
Chart. Daily AUD/NZD
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GBP/USD: technical & fundamental
British pound is moving up versus the greenback. GBP/USD has left the daily Ichimoku Cloud last week and crossed 200- and 100-day MAs bottom-up – now these lines and the top of consolidation range around $1.5750 play the role of support for sterling.
For the last 2 days the pair is trading in a narrow range of $1.5840/10 ahead of the Fed’s meeting in Jackson Hole. Any hints from Ben Bernanke on further stimulus would hit US dollar pushing GBP/USD to 3-month maximum at 1.5912 reached last week.
Analysts at Morgan Stanley expect GBP/USD to strengthen in the near-term to $1.6050. The specialists, however, claim that the medium-term outlook is negative due to concerns about UK economic weakness. Britain is still in recession, so the Bank of England may do more QE later in the year.
There’s strong resistance for sterling around $1.6000 (top of the weekly Ichimoku Cloud, downtrend resistance line connecting highs of 2011 and 2012). In addition, investors may be selling sterling versus euro ahead of the ECB meeting next week.
Chart. Daily GBP/USD
Chart. H1 GBP/USD
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EUR/USD: failure is a matter of time
EUR/USD keeps moving sideways in the $1.2575/20 area. At the same time, such calm won’t obviously last long. The closest support is provided by the 100-hour MA at $1.2528, while the closest resistance is created by the very short-term resistance line around $1.2568. There’s more resistance at $1.2587 (100-day MA), $1.2592 (23.2% Fibo retracement of 2012 decline). Support also lies at $1.2500, $1.2475, $1.2435, $1.2385 (50-day MA).
UBS: “There is still scope for upside in the near-term. A break above 1.2595 would open the way to 1.2664/95.”
Commerzbank: The medium term outlook for EUR/USD will remain bearish as long as it’s trading below $1.2740 (June maximums). If euro drops below the uptrend support around $1.2382, its decline will accelerate.
Societe Generale: “Recession and more monetary accommodation isn't a recipe for a turnaround, so further weakness is just a matter of time.”
Chart. Daily EUR/USD
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August 31: forex news
Demand for safe havens flared as Spanish Prime Minister Mariano Rajoy delayed seeking a sovereign bailout for his country. Moody’s Investors Service said its review of Spain’s debt rating (Baa3) will continue through September and reiterated the risk of a possible downgrade.
USD/JPY has tested today support line at 78.38 yen. Yen held its weekly gain even after a report showed that core CPI fell by 0.3% y/y in July, while industrial production unexpectedly declined in the same period increasing the odds of more easing from the BOJ.
AUD/USD closed below 200-day MA at $1.0308 yesterday, so did NZD/USD (0.7986). USD/CAD is trading on the upside around 0.9925. Canada’s GDP is released at 12:30 GMT.
EUR/USD returned to $1.2500 after testing this week resistance around $1.2575 earlier this week. In Europe watch for German retail sales at 06:00 GMT, Italian unemployment 8:00 GMT and flash EU CPI and unemployment rate at 09:00 GMT. Later in the US Chicago PMI is released at 13:45 GMT.
All eyes are focused on Ben Bernanke’s speech titled “Monetary policy since the crisis” at 14:00 GMT at the Fed’s symposium in Jackson Hole. The speculation about whether the Fed’s chief will announce more easing continues; the greenback is supported.
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The Day of Ben or Big Ben Day
This day has finally come. Remember last year when we were also counting days to Jackson Hole and Bernanke neither ruled out further stimulus, nor signaled an impending move? Well, there certainly is the risk that Bernanke will be vague this year as well saying that the Fed is actively considering another round of monetary easing, but stopping short of signaling another bond-buying program is imminent.
Analysts at BNP Paribas and JPMorgan claim that as the last FOMC meeting minutes were dovish – many of the FOMC admitted the need of action in the absence of the substantial and sustainable economic recovery – it would be difficult for Bernanke to sound firmer, because this would be considered as pre-emptive action on his part of the FOMC next meeting on September 12-13.
Stock markets will be disappointed in case of the lack of concrete detail on the likely course of action as they have gained so far on the expectations of intervention from both the Fed and the ECB.
According to Reuters’ poll released yesterday, only 44% of investors surveyed expect the Fed to announce QE3 in September, down from 70% in July.
Photo from topnews.in
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Gaitame: levels for AUD on the downside
Analysts at Gaitame.com Research Institute think that AUD/USD may drop in September to the minimal level since the end of June.
Aussie closed yesterday below the 200-day MA of $1.0315. The specialists say that if the pair slides below $1.0219 (38.2% retracement of the advance from June to August), it will get vulnerable for a slide to $1.0098 (50% retracement).
Chart. Daily AUD/USD
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USD/CHF: technical picture
USD/CHF is consolidating between 0.9260 and 0.9550 after a powerful decline made at the start of last week when the pair’s trading range shifted about 150 pips lower.
If US dollar manages to rise above 0.9635 (this week’s high), it will be able to get to 0.9660 (August 22 maximum, June 29 high). This level and the 50-day MA at 0.9696 will provide a considerable resistance. Only the break above this level will mean that the decline from July highs is over.
Support for the greenback lies at 0.9550/38 (100-day MA, last week’s minimum). Below these levels the descending trend will be confirmed and the pair will be poised for a decline to 0.9460. Area of 0.9420 will likely provide grounds for a correction back to 0.9550. Moreover, there’s a 200-day MA nearby, 0.9388.
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