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Thread: FBS: Finance. Freedom. Success.

  1. #31

    box - einstein 250x250
    BMO: trading on FOMC meeting

    Analysts at BMO Capital recommend investors selling the single currency versus the greenback ahead the FOMC meeting later today. In their view, one should open EUR/USD shorts at $1.3170 stopping at $1.3275 and targeting $1.2875.

    The specialists think that the Fed’s Chairman Ben Bernanke will discourage the expectations of QE3 due to the recent favorable economic data, especially employment figures. This is BMO’s baseline scenario.

    However, the analysts underline that the Federal Reserve is always capable of surprises and if the central bank hints on further quantitative easing, one should try another type of trade like buying Mexican peso against the greenback.

    BMO doesn’t agree with those experts who advise trading emerging market currencies instead of the major ones. The bank points out that the developing nations are aggressively lowering interest rates, so the risk-on, risk-off trading patterns to which traders have got used may be altered.

  2. Under 1st Post -dynamo
  3. #32

    UBS, RBS: EUR/USD forecasts

    UBS: “US payrolls data were again strong in February, with both the headline figure beating expectations and previous months' seeing decent upwards revisions. Continued employment creation at this pace makes it increasingly hard for Federal Reserve doves to keep pushing the case for further quantitative easing, especially in light of the fact that tail risks associated with the possibility of a European meltdown have been cut back materially. The ECB's successful LTRO operations and the positive Greek PSI outcome have helped in this regard.”

    RBS: “Less QE (quantitative easing) in the U.S. is positive for the dollar ... dollar will do better against the yen, euro and sterling. In Europe the weakest data is in the countries with the weakest fiscal position, which is worrying and it's still a case of selling euro on any rallies.” According to the bank, EUR/USD will fall to $1.26 during the next 2-3 months in case U.S. data in the coming weeks is positive.

    Credit Agricole: “There's a risk of EUR/USD sustaining a move below $1.31. There are worries about whether Portugal will follow Greece, whether Greece will need another bailout, whether the underlying issues in the country will be resolved.”

    Deutsche Bank: “U.S. growth forecasts are being scaled back even as the labor market picks up and that will weigh on the U.S. dollar” – American economic growth is expected to slow this quarter from the fourth quarter's 3% growth (y/y) as consumer spending flattened and exports remained sluggish. However, taking into account euro zone’s problems (primarily, uncertainty about Spain and Italy), the bank’s “baseline scenario remains the euro to drop towards $1.25 in coming months.”

  4. #33

    Citigroup: which G20 currencies outperform others

    Analysts at Citigroup claim that while the market players are obsessed with EUR/USD and USD/JPY, a much more profitable trade is to sell G4 majors against other G20 currencies.

    The specialists analyzed the average (unweighted) performance of eighteen currencies – Australian, New Zealand’s, Taiwan’s, Singapore’s and Canadian dollars, South African rand, Norwegian krone, Swedish krona, Mexican, Argentinian and Chilean pesos, Indonesian rupiah, Indian rupee, Russian ruble, Turkish lira, Brazilian real, Chinese yuan, Malaysian ringgit – and measured their performance against the average of US dollar, euro, British pound and Japanese yen.

    According to the bank, “G20 smalls” have the highest return relative to their realized volatility so far this year. It may be explained by the liquidity added to the market by the ECB and the BOJ which encouraged risk appetite and somewhat stabilized the global economy improving prospects for the smaller countries in the G20 and, consequently, their currencies.

    Buying G20 currencies is a way to limit via diversification one’s exposure to risks connected with euro. Such trade is a strong bet on the outperformance of risky assets.

  5. #34

    Loonie may strengthen versus the greenback

    On Monday Canadian dollar declined against its U.S. counterpart as weak Chinese export data hurt commodities. According to the data released on Saturday, China posted its biggest trade deficit in at least a decade in February ($31.5bn), fanning concerns about growth in the world's second largest economy. After that the price of crude oil, Canada’s biggest export, fell by 1.9%.

    Today USD/CAD is trading at 0.9900 after opening at 0.9924. According to analysts, market sentiment towards the Canadian dollar has turned favorable, with weekly CFTC data showing consistent increases in CAD long positions since mid-January.

    Strategists at Scotia Capital say that recent M&A activity, including talk of a takeover of Viterra, Canada's largest grain holder, helps the currency. Typically any large M&A announcement has the psychological impact of reminding market participants that Canada has a lot of interesting assets that can be M&A targets in the future.

    Analysts at UBS are bullish on CAD due to the solid domestic macroeconomic data and the fact that the BOC Governor Carney has accordingly become less dovish in his outlook. In their view, although loonie’s rate has already priced in potential policy tightening, loose monetary policy of other major central banks will make Canadian dollar very attractive.

    Canadian currency is the best performer among 10 developed-nation counterparts over the past week, adding 1%, according to Bloomberg Correlation Weighted Currency Indexes. The U.S. dollar lost 0.1% and the euro gained 0.3%.

    Loonie will trade at parity with its U.S. counterpart by the end of the second quarter, according to the median of 40 forecasts compiled by Bloomberg News.

  6. #35

    Credit Agricole and Commerzbank about AUD/USD

    Analysts at Credit Agricole note that Australian dollar reached critical level versus the greenback. To maintain medium-term uptrend AUD/USD must close today above $1.0505 (March 7 maximum, “bullish hammer” reversal pattern). Otherwise, the sideways range may widen or Aussie will start sliding. The bank recommends buying Australian currency at the current levels stopping below $1.0505 and targeting recent highs in the $1.0800 area.

    Strategists at Commerzbank think that AUD/USD has topped at $1.0856 on February 29 and is now going to weaken to $1.0406 (200-day MA) and $1.0382 (December maximum). Below these levels the pair will be poised down to the parity and lower. According to the bank, the outlook for Aussie will remain negative as long as it’s trading below resistance at $1.0670.

  7. #36

    Bank Sarasin: comments on franc and euro

    Economists at Bank Sarasin are strongly convinced that the Swiss National Bank won’t raise the threshold EUR/CHF higher than 1.20 unless recession continues and deflationary threats keep looming in Switzerland. The analysts say if there was no floor set for the pair, the rate could be as low as 1.10.

    Although the franc has strengthened since the start of the year, it has remained above the 1.20 floor, trading at 1.2057 against the euro on March 13. The bank thinks, however, that the threat of further SNB intervention will contain franc’s advance in the near future.

    According to Bank Sarasin’s specialists, European growth is going to resume in the second quarter after the ECB liquidity injection. Perhaps, the liquidity will buy the time that is needed for a recovery, and in a long-term period EUR/USD may climb to $1.38 or $1.40. On the other hand, the economists warn that excessive liquidity always weakens the currency.

  8. #37

    Main economic & market news

    • FOMC meeting results:

    - benchmark rate is left unchanged near zero and it planned to be kept there through at least late 2014;
    - additional easing is still an option;
    - US economic outlook was upgraded from "modest" to "moderate" growth;
    - however, unemployment rate is “elevated” and “significant downside risks” are still in place. Inflation outlook is “subdued.”

    • Australian consumer confidence is down by 5% this month, while housing starts dropped in the fourth quarter by 6.9% versus 3% decline expected (q/q).
    • Japanese business sentiment sharply deteriorated in the first quarter.

    • According to The Telegraph which citing a leaked Troika report, Greek budget deficit will probably fall to 1.5% in 2012 in line with the forecasts but “current projections reveal large fiscal gaps in 2013-2014.”

    • The Fed released US banks stress test results: 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario. The 4 banks which wouldn’t have enough capital if economic situation worsens (13% unemployment) are Ally Financial, Suntrust, MetLife and Citigroup. Analysts at RBC Capital Markets showed that the fact that the majority of the banks succeeded in passing the test shows that US banking system is strong.

    DJIA reached the highest level since 2007. Yields on 10-year Treasuries increased to 2.13%. Specialists at Bank of Tokyo-Mitsubishi UFJ think US yields rise because the nation’s economy strengthens. In their view, the Federal Reserve may be forced to raise the key rate before the end of 2014, probably the next year. American currency generally strengthened.

    Asian stocks rose, EUR/USD went a bit lower to yesterdays’a minimums in the $1.3050 area. The pair opened below 55-day MA. USD/JPY keeps rising.

  9. #38

    Sumitomo Mitsui: euro will rise on the 5th Elliot Wave

    According to Sumitomo Mitsui specialists, EUR/JPY may strengthen to 112.80 by May, its highest level in more than 7 months. Strategists say it makes sense to apply the Elliot Wave Theory to analyze the current euro movements.

    The Elliott Wave Principle, proposed by accountant Ralph Elliott in the 1930’s, is a form of technical analysis based on the theory that investor psychology moves between optimism and pessimism in natural sequences. It seeks to predict prices by dividing trends into 8 waves.

    First wave: Jan. 16-26 (rally from 97.04 to 102.21);
    Second wave: Jan. 27 - Feb.1 (decline from 102.21 to 99.25);
    Third wave: Feb. 2-27 (rebound from 99.25 to 109.93);
    Fourth wave: Feb. 28 - March 6 (drop from 109.93 to 105.65).

    Sumitomo Mitsui: EUR/JPY is now in the middle of the fifth wave of the multi-month upward cycle,” which is projected to end around April. The market swings follow a predictable five-stage structure.

    Today EUR/JPY is trading at 108.47 after having risen more than 11% over the past 2 months.

  10. #39

    Barclays Capital lifted up USD/JPY forecast

    Analysts at Barclays Capital increased forecasts for USD/JPY from 82 to 90 yen in 6 months and from 84 to 90 yen in a year.

    As the reason for such revision the specialists cited Japan’s current-account decline and differences in monetary policy of the 2 nations’ central banks: the Fed’s statement showed a gradual reduction in the central bank’s dovish stance, while the Bank of Japan will likely increase monetary stimulus to achieve 1% inflation goal.

  11. #40

    dynamo - First and lasp post every thread AXITrader aff
    Analysts: Comments on FOMC statements

    On Tuesday FOMC decided to leave the strategic points of its monetary policy unchanged (Federal funds rate and quantitative easing program). However, additional easing is still an option. Specialists were not long in commenting the recent data.

    Wells Fargo Securities: For more stimulus the economy had to weaken again, but FRS is still not slamming the door on more QE.

    International Strategy and Investment Group: The FOMC’s meetings in April and June would be good opportunities for the Fed to do something if policy makers see additional stimulus as needed.

    Capital Economics: The Fed can hardly be accused of acting as a cheerleader for the recovery. Nevertheless, the improvement in the incoming data may persuade the Fed to shelve any plans it had for additional monetary stimulus in the near term.

    Tokyo-Mitsubishi: The Fed's direction will become clearer in late April when policymakers meet next and update their projections for economic growth, inflation, unemployment and interest rates.

    BNP Paribas: Either the economic outlook will continue to improve, or the Fed will take action to inject more liquidity into markets.

    Nomura: Within the next six months $500 billion operation is expected to occur, consisting of purchases of both mortgage backed securities and Treasuries. Asset purchases would be “sterilized” using reverse repos and term loans in order to appease inflation hawks.

    Most analysts agree that growth in the current quarter and throughout the rest of the year will be slower than in last year's fourth quarter.

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