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FBS.com - Daily/Weekly Analysis / Market News


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#41
internationallove

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"MIG Bank: US dollar risks falling to 0.90 francs" (2010-12-17)

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Currency strategists at MIG Bank claim that the pair USD/CHF finds itself under renewed pressure and their previous idea that the rate has set a base at 0.9462 doesn’t seem as certain as before.

According to the specialists, the greenback has to climb above 0.9738 and then 0.9851 or it could slump breaking the record minimum at 0.9462 hit on October 14 on its way down to 0.90.

USD/CHF renewed 6-week minimum at 0.9558 and is currently trading in area.


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Chart. H4 USD/CHF


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#42
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"CredBMO: dollar will be trading at 83-86 yen in 2011" (2010-12-28)


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Analysts at BMO Capital Markets believe that the pair USD/JPY will be trading in 2011 within a relatively narrow range between the year’s minimums at 83.00 and maximum at 86.00 that will be reached in the fourth quarter.

During the first half of the year the greenback is thought to remain in the 83.00 area. In the third quarter US currency is expected to rise to 84.00 before climbing to 85.00 by the end of the year.


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Chart. Daily USD/JPY


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#43
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"Europeans gained on investing in the US" (2010-12-28)


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Despite all the losses that threaten Europeans this year, euro zone’s investors who purchased American stocks are getting the best returns in the last 10 years as the single currency weakened.

According to data from Bloomberg, the Standard & Poor’s 500 Index that brought Americans 13% benefit translated to euro gained 23%. In addition, European investors who bought Nikkei 225 Stock Average in Tokyo made 20% profit, while yen holders lost 2.5%.

Debt crisis in the euro region made the European currency fall by 8.4% in 2010. Although US deficit advanced to the record maximum in February while the unemployment rose in November to the 7-month maximum at 9.8%, investments in the United States are regarded as one of the safest ones.

As a result, the profits of investors converting dollar-denominated investments back in euro have significantly surged. The analysts expect that the market’s concerns about the further problems in the euro zone and declines in euro will encourage more overseas investment in 2011.

The volume of US stocks purchases rose this year by $146 billion, that’s the biggest annual increase since 2007. In September Europeans bought a net $18.3 billion of US stocks, the most since May 2007 when credit markets started freezing.


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Chart. Daily EUR/USD


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#44
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"Morgan Stanley: euro will fall to $1.18 in 2011" (2010-12-28)

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Analysts at Morgan Stanley believe that the single currency may fall versus the greenback from $1.31 at the end of last week to $1.18 by the third quarter of 2011. The specialists think that the concerns about the worsening of euro zone’s debt crisis will continue to provoke the negative dynamics of euro.

Morgan Stanley advised investors to buy dollars and sell euro as the European governments, in their opinion, aren’t interested in the strong currency.

According to 46 analysts surveyed by Bloomberg, euro will finish 2011 little changed from the last week’s level. Currency strategists at Nordea note that the European currency may find support if the region’s governments present a “sensible” strategy of their budget deficits reduction.


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Chart. H4 EUR/USD


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#45
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"Mizuho: EUR/USD will be trading neutrally" (2010-12-28)

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Technical analysts at Mizuho Corporate Bank note that the single currency remains steady above the 50% Fibonacci retracement support level. According to them, if the pair EUR/USD closes the month between 1.2600 and 1.3600, the outlook won’t change and the single currency will continue to trade neutrally.

The specialists underline that futures volume in 2010 got higher in 8 times in comparison with the levels before May 2003 (record month with trade volume almost ten times above the 2000-2003 average).


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Chart. H4 EUR/USD


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#46
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"US home prices are expected to decline" (2010-12-28)


According to the S&P/Case-Shiller index and the National Association of Realtors US home prices capped last year. S&P/Case-Shiller index shows that home prices in 20 American cities lost almost 32% from their 2006 peak before reaching minimum in May 2009. Economists surveyed by Bloomberg believe that the September indicator that will be released today at 3:00 p.m. GMT will turn out to be negative for the first time since January.

Economists at Zillow Inc. expect US home prices to fall 5-7% more before reaching a bottom at the end of the next year. The specialists underline that the inventory of properties for sale is increasing as the backlog of homes in foreclosure is swelling. The property supply will enlarge more as there are more properties to be foreclosed. As a result, the buyers are unwilling to enter the market as they are afraid that prices will fall further.

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#47
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"Commodities will gain in 2011" (2010-12-28)


Commodities have beaten stocks and bonds for the second year in a row. The benchmark Standard & Poor’s GSCI gauge gained 20% outperforming the 9.1% advance of the MSCI World Index of stocks and 5.3% return on a Bank of America Merrill Lynch index of Treasuries. Last year S&P GSCI Index added 50%, MSCI World Index rose by 27%, while US Treasuries declined by 3.7%.

The survey of more than 100 analysts, traders and investors conducted by Bloomberg shows that silver, that has a wide industrial implication, will lead the gains in commodities jumping by 37% next year. Zinc, this year’s worst-performing metal, is expected to appreciate by 21%.

According to Bloomberg data, global stocks are still about $11 trillion below the record $62.6 trillion of market capitalization reached in October 2007. Over the same period, commodity assets under management gained about 80% to $354 billion. Barclays’ strategists expect that these assets will attract a total of $60 billion in new money this year, the second most after 2009.

Specialists at Goldman Sachs Group Inc. suppose that commodities which China lacks will gain the most – that are oil, copper, cotton, soybeans and platinum. On December 13 the bank forecasted 18% advance in raw materials in a year, led by a 28% gain in precious metals.

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#48
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"UBS: dollar renewed minimum versus franc" (2010-12-29)

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Analysts at UBS note that the greenback fell sharply versus Swiss franc and renewed the record minimum at 0.9434. The previous one at 0.9463 was hit on October 14.

The specialists note that risk aversion strengthened after weaker than expected US data released yesterday. S&P Case-Shiller HPI 20 dropped in October by 0.8% from last year’s level. CB Consumer Confidence decreased from 54.3 in November to 52.5 in December, while the economists were looking forward to the advance to 56.2.

As a result, investors increased demand for franc as a safer currency. According to UBS, resistance for the pair USD/CHF is found at 0.9734.


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Chart. Daily USD/CHF


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#49
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"CIBC: pound will rise to $1.6000 be the end of 2011" (2010-12-29)

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Analysts at CIBC World Markets expect that in 2011 British pound will be trading versus US dollar within a relatively narrow range between 1.5300 and 1.6000.

The specialists believe that sterling will hit the year minimum in the 1.5300 area during the first quarter of 2011 and then start gradually rising. By June pound’s rate may rise to 1.5500 increasing to 1.5800 during the third quarter to end the 12-mont period at 1.6000.

According to CIBC, the uptrend will continue in 2012. The pair GBP/USD may advance to 1.6200 in the first quarter of 2012 and then appreciate to 1.6800 by middle of the year.

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Chart. Daily GBP/USD


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#50
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"BNP Paribas: sell euro and pounds" (2010-12-29)

Currency strategists at BNP Paribas advise investors to sell the European currency and British pounds versus Japanese yen, Australian dollars, Swiss francs and Asian currencies at the end of the year.

The specialists point out that’s the currency rates will be likely affected by the window-dressing performed by portfolio managers. The latter are going to increase the weighting of the assets that showed the best results in 2010 and decrease consequently the share of the underperformers such as euro and sterling, lowering the demand for these currencies.

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#51
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"Mizuho: yen will keep appreciating at the beginning of 2011" (2010-12-29)

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Analysts at Mizuho Corporate Bank claim that the greenback risks failing to 78.00 yen by the end of March 2011.

In their view, bond yield spreads between the United States and Japan will keep being small as the Federal Reserve is quite unlikely to start trying to quit its quantitative easing program.

The specialists underline that the Fed’s objective is to minimize unemployment, while the Obama administration has pledged to double exports in 5 years and create 2 million jobs. At the same time Japanese investors are reducing demand for American securities as the country’s exporters have to repatriate profits.

As a result, summing up all these factors, the monetary flow will remain one way with yen being bought and no one to sell it except for the Japanese monetary authorities. Mizuho warns that the pair USD/JPY may test the record minimum at 79.75 in the middle term.


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Chart. Daily USD/JPY


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#52
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"UBS: dollar will advance in January 2011" (2010-12-29)


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Analysts at UBS note that since 1980 US dollar tended to show in January better performance trading versus other major currencies. The average January gain of American currency is estimated as 1.51%, so this month can be regarded as by far the best month historically.

The specialists point out that the prospects of US economy seem to be encouraging, while the other G10 countries are struggling with their own problems. As a result, UBS concludes that January 2011 won’t be an exception and that the greenback is going to outperform its counterparts again.


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Chart. Daily EUR/USD


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#53
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"Analysts expect yen to weaken by the end of 2011" (2010-12-29)

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According to the median estimate of Tokyo-based analysts, the pair USD/JPY may climb to 88 yen by the end of 2011 on the speculation the Federal Reserve will reduce monetary easing due to the recovery of American economy.

Strategists at Credit Suisse Group AG believe that the yield spread between Japanese and US bonds will widen supporting the greenback. In their view, the Fed’s $600 billion of government debt purchases will end as scheduled in June or even earlier and yen will weaken to 90 yen per dollar at the end of next year.

Among 11 specialists surveyed through December 20 by Bloomberg News 8 are looking forward to yen’s decline against its US counterpart from the end of March when fiscal year finishes in Japan to December 31, while no one shares opinion that Japanese currency may go down below 2010 minimum at 94.99 yen per dollar.

5 of the interviewed suppose that yen may temporarily strengthen past its postwar record maximum at 79.75 yen per dollar due to still strong concerns about euro zone’s debt crisis and China’s attempts to fight growing inflation.

Japan’s Finance Minister Yoshihiko Noda announced that he's ready to act decisively action if necessary. Currency strategists at Nomura Securities believe that Japanese monetary authorities will conduct currency intervention the yen overcomes the level of 80 yen per dollar or the record maximum.


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Chart. Daily USD/JPY


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#54
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"ING: SNB won’t raise rates until July 2011" (2010-12-29)

Analysts at ING don’t think that the Swiss National Bank (SNB) will raise interest rates before July 2011. In their view, such assumption is confirmed by Switzerland's KOF Economic Barometer. The indicator decreased from 2.13 in November to 2.10 in December that may mean that the expansion of the country’s economy is going to slow down in coming quarters.

It’s necessary to note, though, that even if Switzerland’s economic performance will turn out to be a bit weaker in the final quarter of 2010, its GDP growth will overcome the central bank’s 2.5% annual GDP growth forecast. However, as the outlook for 2011 is not so bright as we’ve seen before, SNB rate hike is unlikely before the second half of next year, says ING.

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#55
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"EUR/USD: 2011 forecasts" (2010-12-29)

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EUR/USD: 2011 forecasts
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#56
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"GBP/USD: 2011 forecasts" (2010-12-29)

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GBP/USD: 2011 forecasts

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#57
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"USD/JPY: 2011 forecasts" (2010-12-29)

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USD/JPY: 2011 forecasts

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#58
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"USD/CAD: 2011 forecasts" (2010-12-29)

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USD/CAD: 2011 forecasts

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#59
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USD/CHF: 2011 forecasts

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#60
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EUR/JPY: 2011 forecasts

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EUR/JPY: 2011 forecasts

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