[COLOR="Green"]02/09/10
Standard Life: Japanese exporters in danger[/COLOR]
Specialists at Standard Life Investments in Edinburgh claim that Japanese monetary authorities have to act in the near future in order to stem the appreciation of the national currency versus the greenback. According to the specialists, strong yen reduces competitiveness of the country’s exporters in comparison with their South Korean rivals.
Annual pace of Japan’s economic growth in the second quarter was equal only to 0.4% compared to 7.2% in South Korea. Yen becomes more and more expensive. Since the beginning of the year it gained 12% versus won.
The Bank of Japan added 10 trillion yen ($119 billion) in liquidity injections on August 31, while Finance Minister Yoshihiko Noda announced that the government is ready to conduct decisive measures if necessary.
[COLOR="green"]Societe Generale: ECB will continue monetary easing[/COLOR]
Economists expect that the outcome of today’s ECB meeting will the decision to stay loyal to the policy of monetary easing.
Analysts at Bank of Tokyo-Mitsubishi UFJ note that Deutsche Bundesbank President Axel Weber claimed on August 19 that ECB policy should remain loose until next year and the President Jean-Claude Trichet may speak in the same way at today’s press conference that will take place at 12:30 GMT after the rate meeting.
Euro zone’s central bank may announce that it will stay alarmed as US recession may affect the rebound of European economy.
Economists at Nomura International Plc in London point out that the situation in Europe and US seems to be quite opposite. European data is surprisingly positive, while American indicators keep discouraging investors. In their view, the ECB will raise its 2010 growth forecast to 1.4%. In the second quarter the region’s economy added 1% just as it was anticipated.
Strategists at Societe Generale SA in London suppose that in such conditions of uncertainty about the growth outlook the central bank will continue emergency lending measures for banks till 2011. In addition, economists surveyed by Bloomberg News forecast that the ECB will leave its key interest rate at 1%.
[COLOR="green"]RBS: the most beneficial trading strategies[/COLOR]
According to Royal Bank of Scotland Group Plc indexes, following the trend is the best trading strategy this year with the return of 7.3%. The most profits were gained by investors on 11% decline of the single currency and yen’s appreciation versus the greenback. The most unsuccessful choice to make was volatility strategy that brought only 5.9%.
Trend-followers are capturing momentum in several big currency moves. Specialists at Altegris Investments note that in the current situation of high uncertainty currency markets and interest rates move creating volatility that makes these investors benefit.
Analysts at JPMorgan Chase & Co. note that volatility strategy that is more effective when fast fluctuations in rates decline won’t help traders win anytime soon as volatility seems to keep being high this year. The economists reinforce their arguments pointing out that even the Fed’s key interest rate changes in rate between 0 and 0.25%
The carry style of investing when traders borrow in lower yield currencies and invest in countries with higher returning assets has lost 4.4% this year, while valuation style of trade returned 4.5%.
[COLOR="green"]UBS: franc’s role in Europe will grow[/COLOR]
Switzerland’s GBP added 0.9% in the second quarter that was above expectations of 0.8% increase. On the annual basis it rose by 3.4%.
Analysts at UBS AG expect that Swiss currency will be regarded as the successor of the German mark as the country’s economic data is strong and is likely to remain so in the coming years. The specialists also note that Switzerland has large foreign exchange reserves and franc is regarded as a refuge currency.
Strategists at ACM Advanced Currency Markets note that as deflation threat disappeared won’t intervene to prevent national currency from appreciation. In their view, Swiss franc will reach the parity with European currency in the near term.
[COLOR="green"]03/09/10
RBC: EUR/GBP will rise to 85.32[/COLOR]
Technical analysts at RBC Capital Markets in Toronto claim that the single currency may rise to the 3-month maximum versus British pound. Such forecast is based on the fact that the last euro sell-off didn’t make its rate hit new minimum for the first time since February.
In August the pair EUR/GBP fell to 81.42 pence staying above June minimum at 80.68 pence. RBC strategists note that as European currency closed yesterday above 83.20 pence that means that the trend reversed upwards.
According to the bank, euro’s rate will be moving towards 84.82 pence level representing 38.2% Fibonacci retracement of its slump from March to June. There’s a possibility of the pair’s advance to July maximum at 85.32 pence, the highest level since May 28, believe the specialists.
Economists surveyed by Bloomberg expect that EUR/GBP will rise to 82 pence be the end of 2010.
[COLOR="green"]ECB monetary policy remained loose[/COLOR]
Euro zone’s central bank will stay alarmed during the next year as US recession may affect the rebound of European economy. There are also concerns about the fiscal situations in some indebted euro-region nations.
As it was expected, European Central Bank President Jean-Claude Trichet announced that emergency lending measures for banks will remain up to 2011. The ECB will continue offering commercial banks unlimited one-week and one-month loans until at least January 18. In addition, in October, November and December the institution will propose banks 3-month loans at interest rates linked to the ECB’s average benchmark rate over the maturity of the loan.
Also in line with the forecast the ECB Governing Council decided to leave key interest rate 1% for a 17th month staying loyal to the loose monetary policy in order to help euro zone’s economy rebound.
In addition, euro area’s central bank increased its economic growth forecast from 1% to 1.6% in 2010 and from 1.2% to 1.4% in 2011. European economy will gain due to exports and domestic demand recovery.
Dollar under Nonfarm Payrolls pressure
The greenback may show weekly decline versus the single currency and Japanese yen ahead of economic indicators’ publication.
Economists surveyed by Bloomberg expect that US non-farm payrolls dropped by 105,000 in August after July’s fall by 131,000. The jobless rate is thought to have added 0.1 percentage point rising to 9.6%. The data will be released today at 1:30 pm GMT. As for the euro zone’s data, retail sales may have increased in July by 0.2%.
Strategists at ICAP Australia Ltd. in Sydney note that European performance is now better than the American one. In their view, euro may strengthen, while dollar’s rate will slightly decrease.
[COLOR="green"]Political uncertainty in Japan[/COLOR]
In Japan Ichiro Ozawa from the Democratic Party who opposes prime minister Naoto Kan in September 14 party election for this position claimed that intervention to the currency market in order to prevent national currency from appreciation is quite possible. Many analysts believe that if Ozawa wins, USD/JPY may start unexpectedly climbing.
Specialists at Barclays Capital, on the contrary, bet on yen’s strengthening. According to them, even in case of Kan’s victory high political uncertainty may drive Japanese currency upwards as the probability of intervention declines.
On August 24 yen climbed to the maximal level since June 1995 at 83.60 yen per dollar under the impact of global risk aversion. The last time when Japan intervened at currency market was in March 2004 when the yen traded at about 109 per dollar.
[COLOR="green"]Commerzbank: EUR/USD will gain above 1.2873[/COLOR]
The single currency went up from the weekly minimum versus the greenback at 1.2625 and managed to consolidate above 1.2800.
Technical analysts at Commerzbank believe that EUR/USD may rise to 1.2925/65 and 1.3030/50 in the near term in case euro overcomes 1.2873 level representing 38.2% Fibonacci retracement.
If the pair declines, support levels will be at 1.2750/30, 1.2588 (recent minimum) and in 1.2523/1.2490 area (mid-July minimum and June peak).
[COLOR="green"]Roubini prefers dollar, yen and Swiss franc to gold[/COLOR]
Nouriel Roubini, professor at New York University, believes that it may be more profitable to invest in dollar, yen and Swiss franc in case of the double-dip recession in the global economy.
Although the demand for gold is usually high when risk aversion rises, the currencies mentioned above are able to gain more nowadays due to their greater liquidity than gold.
The economist expects that gold that gained 14% this year will stay in its current trading area. Roubini notes that gold price can change sharply only in case of inflation and the world’s financial meltdown and we observe neither of these things.
In addition, the specialist thinks that the pace of US economic growth will decline in the second half of 2010 pointing out at the weak number of newly created jobs.
[COLOR="green"]Citigroup: sell pounds versus Aussie[/COLOR]
Technical analysts at Citigroup Inc. advise investors to sell British currency versus Australian dollar looking forward to sterling’s decline to 1.63.
The specialists note that pound may go down below support levels formed by 21-, 55- and 200-day Fibonacci MA for the first time since February 2009 when GBP/AUD reversed downwards.
Citigroup strategists recommend selling pound that lost 6% versus Aussie this year at 1.6880 stopping at 1.7050.
[COLOR="green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets [/COLOR]
