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"MIG Bank, KBC Bank: euro’s gaining versus pound"(2011-11-22) The single currency is gaining versus British pound for the third day in a row as the market expects the Bank of England’s November meeting minutes (released tomorrow at 9:30 GMT) to show that the policymakers are inclining to more monetary stimulus to encourage the nation’s weak economic growth – UK Prime Minister David Cameron claimed yesterday that the growth figures are unsatisfactory. As a result, investors’ pound-negative sentiment didn’t fade even as the Office for National Statistics reported that the country’s net excluding support for banks contracted from 7.7 billion pounds a year earlier to 6.5 billion pounds in October. Analysts at MIG Bank note that the outlook for the pair EUR/GBP will turn bullish if manages to hold above 0.8652. Strategists at KBC Bank claim that support for the single currency lies at 0.8595, 0.8553 (this week’s minimum) and 0.8518 (November 15 minimum), while resistance is seen at 0.8665 (50-day MA). Chart. Daily EUR/GBP Comment here http://www.fbs.com/analytics/news_markets/view/11215

"Credit Suisse: the climax for euro area is approaching"(2011-11-22) Analysts at Credit Suisse believe that in order to save the single currency European leaders –primarily, France and Germany – will have to reach by the middle of January “a momentous deal” to increase the degree of integration and transform the monetary bloc into the fiscal and political union. The specialists expect that in this case the ECB will agree to cut its benchmark rate and provide banks with longer-term funds and do all it can to prevent euro’s collapse. In their view, during the most critical moment the Italian and Spanish 10-year bond yields may surge above 9% and French yields may bounce above 5%. Bloomberg reports that for the hints on the euro zone’s future one should pay attention to the European Commission’s recommendations on euro-area debt which are to be published this week and by the French President Nicolas Sarkozy’s speech next month on the 20th anniversary of the Maastricht Treaty. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11213

"World Bank: East Asian economic prospects"(2011-11-22) China: the economists expect soft landing – the nation’s GDP growth will ease down from 9.1% on 2011 to 8.4% in 2012. The nation’s inflation rate will decline from 5.3% this year to 4.1% the next year. Asia: economic growth of developing East Asia (without Japan, Hong Kong, Taiwan, South Korea, Singapore and India) will slow down from 8.2% in 2011 to 7.8% the next year. According to the World Bank, Asia will be able to withstand the negative effects coming from the euro zone’s debt crisis with help of their high reserves and current account surpluses. Comment here http://www.fbs.com/analytics/news_markets/view/11211

"Rating agencies affirmed US credit rating"(2011-11-22) The greenback managed to recover a bit higher versus Japanese yen at the beginning of today’s Asian session as the major rating agencies affirmed US credit grades: - Standard & Poor’s: America will retain AA+ rating even if the Supercommittee fails to reach agreement on reducing the nation’s budget deficit by Thursday (US lost its top grade by S&P on August 5); - Moody’s Investors Service kept US rating at the top Aaa level with negative outlook; - Fitch Ratings repeated that there will likely be a downside revision to US rating outlook in case of the Supercommittee’s failure. Risk sentiment has slightly improved. The pair USD/JPY managed to get above 77 yen. However, there hasn’t been enough positive news to detain yen’s appreciation and the pair soon resumed decline drifting lower. Support levels for American currency are found at 76.75 (November 21 minimum) and 76.55 (November 18 minimum). Resistance levels for US dollar lie at 77.35 (today’s maximum), 77.50 (November 15 maximum) and 77.90 (November 9 maximum). It’s also necessary to note that investors are closing positions ahead of Japan’s holiday tomorrow and US one on November 24. Chart. H4 USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11210

"Commerzbank: comments on AUD/USD"(2011-11-22) Technical analysts at Commerzbank note that Australian dollar breached yesterday support versus its US counterpart in the $0.9929/10 area (August minimum, Fibonacci level). The specialists expect AUD/USD to fall to $0.9688 (78.6% Fibonacci retracement) and plan to take profit at this point. If the bears keep pulling the market, the next downside target will lie at $0.9388 (October 4 minimum). According to the bank, resistance levels are situated at $1.0127 (resistance line), $1.0340 (November 14 maximum) and $1.0445. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11208

"UBS: forecasts for British pound"(2011-11-22) In the short term the specialists see British pound under pressure versus the greenback as the Bank of England went through additional QE last month. In the medium term, however, UBS expects demand for sterling increase as the UK will act to reduce its budget shortfall and the declining inflation will make the real rates in Britain higher. The bank lifted up its 3- and 6-month forecasts for GBP/USD from $1.48 to $1.52 and from $1.62 to $1.65 respectively. The estimates of EUR/GBP future rate were lowered from 0.88 to 0.85 in 3 months and from 0.83 to 0.81 in half a year. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/11206

"Moody's: France’s rating outlook may deteriorate"(2011-11-22) Moody's Investors Service repeated its October warning announcing that the outlook for France’s Aaa may be changed to negative. The risks to the nation’s rating come from the sustained rise in its debt yields combined with weakening economic growth. According to Agence France Tresor, France's average medium- and long-term financing costs for the first 11 months of the year accounted only for 2.78% – the second lowest level since the creation of the single currency. However, last week the nation’s 10-year bond yields surged to 3.7% and the spread over German bunds exceeded 200 basis points rising too the maximal level since France adopted euro. Moody's warned that if the increase in yields by 100 basis points means the increase of funding costs by 3 billion euro a year. Taking into account the fact that French government projects 1% GDP growth in 2012, higher interest burden will make achieving targeted fiscal deficit reduction more difficult. Many analysts believe that the only way to save the region from escalating borrowing costs and the potential recession is the bond buying at the secondary market by the ECB or the EFSF. Comment here http://www.fbs.com/analytics/news_markets/view/11204

"BMO: trading ahead of Supercommittee"(2011-11-22) Here is another trading strategy on the approaching deadline for US Congressional deficit Supercommittee. Analysts at BMO Capital are pessimistic about the committee’s ability to come up with the budget solution. The specialists note that there are 3 possible outcomes: Democrats and Republicans will reach a deal on reducing shortfall by more than $2 trillion, by just the required amount of $1.2 trillion or they’ll fail to find a compromise and the nation will face automatic cuts. In their view, the latter variant is the most likely one. BMO advises traders to sell NZD/USD at current levels stopping above $0.7650 and targeting $0.7175. Chart. Daily NZD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11202

"J.P. Morgan: buy Aussie versus US dollar"(2011-11-21) Analysts at J.P. Morgan claim that as the situation in the euro area is worsening and the risks of contagion are mounting the possibility that the European Central Bank will have to step in increases. The specialists underline that if the ECB acts, the easing will most likely be conducted in the form of the rate cuts. In such case the yield for the euro gets less attractive. If the central bank decides to undertake bond buying, this will make investors concerned about inflation and weight on the single currency. At the same time, if ECB succeeded, this would be positive for euro. So, the economists expect the risk sentiment to keep deteriorating to the critical point where the ECB will be forced to save the currency union and then revive. The bank thinks that one shouldn’t lose trading opportunity here. According to J.P. Morgan, it’s necessary to open longs on AUD/USD in the $0.9500 area stopping below $0.9100. The economists expect the pair to rebound to $1.0500. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11192

"J.P.Morgan: comments on GBP/USD"(2011-11-21) The Bank of England’s November meeting minutes are released on Wednesday, November 23 at 9:30 a.m. GMT. Analysts at J.P. Morgan believe that British Monetary Policy Committee will sound extremely dovish. The specialists also think that US Congressional deficit supercommittee won’t come up with the debt reduction steps. As a result, the market’s risk aversion, in their view, will remain very strong. Negative risk sentiment, in its turn, will make sterling decline versus the greenback. According to the bank, it’s necessary to sell GBP/USD in the $1.5785 zone stopping above $1.6000 and expecting the pair to drop to $1.5385. Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/11190

"Commerzbank: comments on EUR/USD"(2011-11-21) Technical analysts at Commerzbank note that euro’s decline versus the greenback paused ahead of support provided by the level of 78.6% Fibonacci retracement in the $1.3380/60 area. The specialists think that EUR/USD will correct upwards rising to $1.3835/80. Then the bank expects the pair to resume decline moving down to $1.3270 (support line) and $1.3145 (October 4 minimum). Resistance is seen in the $1.4250/85 zone. The long-term target remains at $1.20. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11189

"Ichimoku. Weekly forecast. USD/CHF"(2011-11-21) Weekly USD/CHF The bullish attempts to enter the Ichimoku Cloud finally succeeded: the pair managed to overcome resistance of Senkou Span A (3) and got inside Kumo. The descending Cloud (4) is very narrow – the bulls have all chances to make it change direction and reverse the trend upwards. The prices are supported by the Turning line (1). Tenkan-sen (1), Kijun-sen (2) hold though weak, but still “golden cross”. At the same time, Tenkan and Kijun are horizontal that may hold the pair from growth. Chart. Weekly USD/CHF Daily USD/CHF On the daily chart Tenkan-sen and Kijun-sen, which have so far formed the “golden cross” – the strong bullish signal as the lines intersected above Kumo, are directed horizontally supporting the greenback. The lagging Chinkou Span broke above the price chart while the prices remained above the Cloud, so the outlook is bullish. However, the bullish Ichimoku Cloud has become very thin (3). The bulls will have to make another effort getting above October maximum to in order to turn the overall neutral trend to the positive one. Chart. Daily USD/CHF Comment here http://www.fbs.com/analytics/news_markets/view/11186

"Ichimoku. Weekly forecast. USD/JPY"(2011-11-21) Weekly USD/JPY Japanese currency keeps gradually appreciating versus its US counterpart because investors regard yen as a refuge. This week the confidence in US dollar will be especially weak as it’s expected that the Democrats and the Republicans in the Supercommittee will fail to reach a deal on reduction of US budget deficit by $1.2 trillion. The pair USD/JPY doesn’t have any solid support except for the record minimums hit before the last intervention, while the resistance for prices is provided by the Turning line (1), the Standard line (2) and the descending Ichimoku Cloud (3, 4). In addition, Tenkan-sen (1) and Kijun-sen (2) still hold strong “dead cross” in place. Chart. Weekly USD/JPY Daily USD/JPY On the daily Ichimoku chart the pair’s condition keeps worsening: the bears are pulling the greenback systematically lower so that it got below Kumo (4). The lines Tenkan and Kijun formed the “dead cross”. The lagging Chinkou Span crossed down the price chart while the prices themselves were on the lower edge of the Cloud. Resistance for the pair is provided by the Turning line (1), the Standard line (2) and Senkou Span A (4). The market is still in the state of uncertainty: Kijun-sen, which characterizes the longer-term trend, remains horizontal, while the thin Cloud (3) shows that neither bulls, nor bears have any advantage. Chart. Daily USD/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11185

"Ichimoku. Weekly forecast. GBP/USD"(2011-11-21) Weekly GBP/USD British currency keeps trading within the Ichimoku Cloud. The bears managed to lower pound to the Turning line (2) breaching the Standard line (1). As a result, sterling is currently supported only by Tenkan-sen (2) and the lower border of Kumo – Senkou Span B (4), while resistance for pound is provided by Kijun-sen (1) and Senkou Span A (3). The bearish Cloud retains its size (5). Kijun and Tenkan are horizontal. Chart. Weekly GBP/USD Daily GBP/USD As we’ve expected, last week the bulls gave up to resistance in the $1.6100 area. At first there was a sharp decline, but by Thursday the bulls managed to stop the decline and make the pair consolidate. The prices went down breaking the Turning line and then the Standard line. Tenkan-sen and Kijun-sen approached each other preparing to form the “bearish cross” (1). The bullish Ichimoku Cloud (3) retained its size. Pound is likely to dip this week at least to Senkou Span A (2). Chart. Daily GBP/USD Comment here http://www.fbs.com/analytics/news_markets/view/11184

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"Citigroup: scenarios for US dollar after the Supercommittee"(2011-11-18) Analysts at Citigroup believe that investors’ attention that so far has been focused on the situation in the euro zone will turn next week to the United States where the so-called Supercommittee which consists of Democrats and Republicans is trying to reach a deal on deficit reduction. The specialists note that according to the survey they have conducted among investors, fewer than 20% of the respondents expect the committee to reach agreement on how to proceed with the cuts. It will be recalled that if the parties fail to agree, the nation will face automatic cuts. Citigroup economists are more optimistic. In their view, approaching election will urge the lawmakers to compromise. If these projections come true, Australian dollar will be able to make significant advance. Talking into account the fact that trading volumes will likely be small ahead of the Thanksgiving holiday on November 24, the bank thinks that AUD/USD could add 2-3% on the positive outcome. At the same time, the strategists warn that the odds are that the Supercommittee fails to come up with an agreement are rather high. In such case the greenback will get a 1-2% lift as a safe haven. The biggest gains of US currency will be seen versus euro and Canadian dollar. Specialists at RBC Capital Markets, however, don’t agree with the latter, they think that in the latter case US dollar will weaken as it did in July and August. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11178

"Commerzbank: euro’s recovery will soon be over"(2011-11-18) The single currency is recovering versus the greenback: EUR/USD has managed to rise from the 5-week minimums in the $1.3420 area to the levels above $1.3500. Never the less, technical analysts at Commerzbank expect euro’s recovery to be short-lived. In their view, risk aversion will remain strong and the bears will use the opportunity to sell the European currency on its advance against its US counterpart. As a result, the bank recommends selling the pair in the $1.3650 zone. According to the specialists, resistance in the $1.3870/1.3900 area will cap EUR/USD for a long time from now. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11176

"Options market expects euro’s slump"(2011-11-18) Wall Street Journal reports that 1-month risk-reversal indicator, which measures the weight of the bearish options bets on the single currency on the bullish ones, surged to 4 volatility points overcoming the level of 3.5 volatility points where it was seen at the peak of the financial crisis in 2008. That means that investors expect a sharp fall in EUR/USD during the next month. Analysts at ING underline that rising yields on European bonds stirs up the market’s concerns. Specialists at Brown Brothers Harriman think that euro will react to the growing concerns about France, Belgium, Austria and other core countries that threaten to take the sovereign debt crisis to a new level. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11174

Euro area: comments from the policymakers"(2011-11-18) AAA-rated European nations are beginning to express openly that they are against expanding rescue measures for the most indebted members of the currency union. Jyrki Katainen, Finnish Prime Minister thinks that the euro area is running out of options to solve the debt crisis. Italy and Greece should act on their own to convince the markets that they are able to reduce the debt burden. Katainen says that the second bailout deal for Greece adopted on October 26 didn’t manage to calm investors: since that time Italian 2-year bond yields surged by 150 basis points. Germany and Finland both oppose the creation of common euro bonds. France has openly called for the ECB to get more involved by issuing the European Financial Stability Facility (EFSF) a banking license that would allow it to refinance itself with the ECB liquidity operations. German Chancellor Angela Merkel criticized the proposition that the ECB has to become a lender of last resort. Reuters cites European and IMF officials who claim that the authorities discuss the possibility of the ECB lending money to the IMF, rather than any euro zone government that would help to get round the government restrictions. The IMF refused to release the next portion of its loan to Greece until the nation’s Prime Minister Lucas Papademos wins broad political support for austerity measures. Mario Monti, Italian Prime Minister pledged additional cuts to those targeted by Silvio Berlusconi. World Bank President Robert Zoellick claimed that the nations from China to the United Stets may be willing to support Europe through the IMF if the euro zone’s policy makers agree on a plan to stem their debt crisis. Chart. Daily EUR/USD Comment here http://www.fbs.com/analytics/news_markets/view/11172

"Westpac: AUD/USD trading recommendations"(2011-11-18) Technical analysts at Westpac expect AUD/USD to bounce to $1.0200. The specialists recommend selling Aussie on the rallies expecting the pair to drop to $0.9700. In their view, support at $0.9910 won’t be able to hold the bears. Chart. Daily AUD/USD Comment here http://www.fbs.com/analytics/news_markets/view/11171

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"HSBC, Rabobank on the factors influencing EUR/USD"(2011-11-16) Analysts at HSBC claim that the fair value of the European currency is in the $1.20/$1.30 area. However, even despite the escalating crisis euro keeps trading above these levels. The specialists see 2 reasons for that. Firstly, euro is supported by monetary inflows even though some of them are the result of European banks bringing capital home in an effort to defend themselves against possible losses on their holdings of euro-zone bonds. The current account of the euro area as a whole is almost balanced and there are positive portfolio and merger and acquisition inflows. Secondly, as the consequences of the currency union’s break up are expected to be terrible, investors are betting that the policy makers will find a way to save the bloc. In addition, there is also a chance that the member nations will move to closer fiscal coordination. Analysts at Rabobank add that much may be explained by the weakness of US dollar which showed the worst performance among the other major this year but has regained some safe haven status because of the European turmoil. At the same time, there are pairs with much stronger downtrend for the common currency: EUR/JPY fell from April maximum at 123.32 yen to the levels in the 103 yen area. Chart. Daily EUR/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11152

"Societe Generale: comments on EUR/JPY"(2011-11-16) Analysts at Societe Generale warn that the single currency may keep declining versus Japanese yen and fall to October 4 minimum at 100.75 yen. The specialists underline that EUR/JPY has eroded support in the 104.90/104.75 zone. According to the bank, bearish pressure will ease only if the pair returns above 104.75. In such case euro will get chance to rise to October 31 maximum at 111.60 yen. Chart. Daily EUR/JPY Comment here http://www.fbs.com/analytics/news_markets/view/11150

"Feldstein: Greece will have to leave the euro zone"(2011-11-16) Martin Feldstein, professor at Harvard University, who has foreseen in 1998 that the euro zone will end up with the necessity of bailing out its members, claims now that the currency union will survive, even though Greece will leave the bloc within a year. According to Feldstein, if Greece doesn’t default and devalue its currency, it will face constant economic slump. The specialists underline that even if the nation’s debt was wiped out Greece would have an unbearable a current-account imbalance which could be eliminated only by abandoning euro and devaluation. According to the European Commission, Greece’s debt will reach 163% of GDP this year. Feldstein claims that Italy is in better situation than Greece due to the stronger economy and budget and smaller current-account deficit. It’s also necessary to note that the economist advises the European Central Bank to resist pressure and avoid increasing purchases of Italian bonds as this would distort financial markets and reduce the urgency for the government to restore fiscal order. Comment here http://www.fbs.com/analytics/news_markets/view/11148