[COLOR="Green"]Negative forecasts for EUR/USD[/COLOR]
According to Commodity Futures Trading Commission’s data, hedge funds and other large speculators increased bets on euro’s decline against its American counterpart.
Analysts at TD Securities Inc. and Bank of America Corp. believe that the single currency will weaken versus the greenback even as the pace of US economic recovery declines. The specialists note that $950 billion European bailout program won’t be sufficient to restore the market’s confidence as investors’ concerns are strengthened by Portugal’s and Ireland’s summer credit rating reductions the yields on government debt of which reached the record high compared with German ones. It’s also necessary to mention that the cost of insurance against losses on Greek and Spanish bonds rose to 3-week maximum. In addition, the leading European Germany’s economy starts to show discouraging dynamics with unexpected 1.5% decline in exports in July.
Strategists at Bank of Tokyo-Mitsubishi UFJ Ltd. underline that although both European and American currencies are weak, euro area’s problems are much more severe than US ones and this fact will certainly affect euro’s rate. Specialists at Royal Bank of Canada Europe Ltd. in London note that euro’s decline will accelerate due to the effects of austerity measures on the region’s economy.
Economists surveyed by Bloomberg expect that the common currency will trade at $1.25 by the end of 2010 decreasing to $1.22 in 2011.
[COLOR="green"]Barclays: USD/JPY may rise to 85 yen[/COLOR]
Tomorrow on Japan the election of Democratic Party’s leader will take place. The current Prime Minister Naoto Kan is opposed by Ichiro Ozawa, one of the key party’s figures proposing immediate intervention to the currency market. Strategists at Barclays Bank Plc in Tokyo claim that the pair USD/JPY may appreciate to 85 yen in case the country’s political situation stabilize.
The specialists also note that the fact medium- and long-term yield differentials between the United States and Japan increased, speaks in favor of the greenback. The extra yield of 10-year Treasuries over Japanese government bonds with similar duration added today 1.68 percentage points rising from 1.64 points on September 10.
[COLOR="green"]Mizuho: EUR/USD inside 4-week channel[/COLOR]
Technical analysts at Mizuho Corporate Bank note that the single currency is trading within its range of the last 4 weeks versus the greenback. The pair EUR/USD is attempting to form temporary base at 50% Fibonacci retracement support level.
According to Mizuho, neither euro, nor dollar is oversold, while weekly MAs have become bullish. The bank specialists advise investors to try buying European currency at 1.2795 stopping below 1.2575. First target 1.2850, then 1.2900.
[COLOR="green"]Commerzbank: euro may rise to 1.2910[/COLOR]
The single currency managed to show a strong rebound during the Asian trade and rose above 1.2800.
Technical analysts at Commerzbank believe that if the pair EUR/USD overcomes 1.2805/21 resistance area, it may become able to advance to 1.2910 zone (maximum of early September). On the contrary, below these levels euro will remain under pressure.
The specialists note that the interim minimum was confirmed at August low of 1.2588. Below this level support will be found in 1.2523/1.2490 zone.
[COLOR="green"]UBS ended recommendation on GBP/CHF decline[/COLOR]
Currency strategists at UBS AG in Singapore advise investors to stop betting on the appreciation of Swiss franc versus British pound. Such recommendation was given as the trade started at 1.5580 on September 1 led to 1.6% loss.
Never the less, the specialists still believe that franc will advance helped by the improvement of Switzerland’s economy. At the same time, sterling is thought to decline as it will be affected by UK government’s fiscal austerity program beginning on October 20.
As a result, UBS analysts confess that they are considering the possibility of re-entering this trade at a more favorable level.
[COLOR="green"]China’s economic growth drives Aussie up [/COLOR]
Analysts at KMJ Capital note that forex investors will prefer the currencies of countries having close connection to China demonstrating strong economic growth.
China’s industrial production added 13.9% in August from its 2009 level. The country’s retail sales rose last month by 18.4%, while consumer prices gained 3.5%. Imports climbed by in August reassuring investors that the demand for goods at Chinese market keeps being strong.
Australia exports raw materials to China and that's what's driving the growth of Australian dollar helping, consequently New Zealand’s dollar as well.
Strategists at Credit Suisse in New York believe that one more positive data cycle is needed to confirm US-based recovery. If 2010 GDP growth is expected to be equal to 2.9% in the United States and 1.6% in the euro area, Chinese annual growth pace is estimated by 8-10%.
[COLOR="green"]Danske Bank: GBP/CHF may rise to 1.5785-1.5850[/COLOR]
British pound was showing a downtrend versus Swiss franc. It lowered from double top at 1.80-1.8110 area formed in the second half of 2009 to trade last week only slightly above 1.54.
The pair GBP/CHF is currently in 1.5670 zone. Analysts at Danske Bank claim that sterling may rise to 1.5785-1.5850 to cap there.
In the longer term the outlook, according to the specialists, keeps being negative below 1.6760. As a result, the bank recommends selling British currency expecting that its rate will drop to the record minimum at 1.5125 hit last time in December 2008.
[COLOR="green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets [/COLOR]
