Thread: FBS.com - Daily/Weekly Analysis
10-11-2011, 09:14 AM #1
FBS.com - Daily/Weekly Analysis
FBS Daily/Weekly Analysis
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10-11-2011, 10:22 AM #2
"EUR/USD: fundamental factors"(2011-10-11)
The single currency approached the 3-week maximum versus the greenback as it’s testing the levels in the $1.3700 area.
It happened as the risk sentiment improved after Chinese state-run fund announced that it had started buying the shares of the nation’s biggest banks (Industrial & Commercial Bank of China (1398), China Construction Bank, Agricultural Bank of China and Bank of China). The fund intends to continue such practices without unveiling any details about the amount of investments.
Analysts at Nomura note that Chinese government regards the equities of the domestic banks as cheap and its demand will encourage the entire Asian stock market. The specialists claim that the market in the risk-on mode, so one should stay away from the refuges such as US dollar and Japanese yen and move to the higher-yielding ones. The MSCI Asia Pacific index of shares added 2.1%.
Yesterday the leaders of Germany and France pledged to come up with a plan to recapitalize the region’s banks by the G20 Meeting on November 3. At the same time, strategists at RBS doubt that European authorities manage to resolve all key issues by the end of the month.
The negative factor is that Slovakia’s coalition hasn’t managed yet to come to agreement on the nation’s participation in EFSF. Slovakia is the only member of the currency union that hasn’t ratified the measure (Malta did so yesterday). Today the nation’s lawmakers vote again. Analysts at National Australia Bank warn that euro may slump in case Slovakia’s parliament votes against ratification.
Chart. Daily EUR/USD
Comment here http://www.fbs.com/analytics/news_markets/view/8899
10-11-2011, 11:12 AM #3
"Analysts about EUR/USD future"(2011-10-11)
Many leading currency experts believe that the Federal Reserve will launch the third round of quantitative easing in order to encourage the national economy and that the greenback will stop strengthening.
Analysts at JPMorgan Chase reduced their average forecasts for the greenback in the fourth quarter from $1.3387 to $1.34 per euro and from 77.06 to 76.6 yen. In their view, the Fed may begin discussing QE3 by the end of 2011 and begin asset purchases at the beginning of the next year. The specialists expect EUR/USD to end the year at $1.38 and the USD/JPY Ė at 75 yen.
Strategists at Westpac think that the bears wonít be able to push EUR/USD below $1.30. In their view, the pair will trade at $1.31 at the year-end.
All in all forecasters surveyed by Bloomberg project euro to appreciate to $1.40 by the end of 2012. Never the less, there still are those who prefer US currency.
Economists at Credit Agricole think that the risk of recession is exaggerated. In their view, in the medium term the greenback would benefit from the fact that US economy is in the better condition than the other major economies. According to the bank, EUR/USD will end the year at $1.33 and then drop to $1.26 by the end of 2012.
Analysts at Wells Fargo say dollar will end the year at $1.32 per euro pointing out that they are more optimistic on dollarís future than on euroís prospects.
Chart. Daily EUR/USD
Comment here http://www.fbs.com/analytics/news_markets/view/8901
10-11-2011, 03:22 PM #4
"Trichet warns of systemic crisis"(2011-10-11)
European Central Bank President Jean-Claude Trichet claimed that the euro zone financial crisis has become systemic and called for decisive political action.
ęThe high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond,Ľ claimed Trichet cited by Reuters.
Comment here http://www.fbs.com/analytics/news_markets/view/8903
10-11-2011, 03:43 PM #5
"Mizuho: poundís under pressure due to the weak data"(2011-10-11)
UK economic data surprised to the downside: manufacturing contracted in August for the third month in a row declining by 0.3% versus the expected contraction of 0.1% confirming that Britainís economic recoveryís under threat. In the second quarter the nationís GDP expended only by 0.1% (q/q).
Last week the Bank of England raised the ceiling for bond purchases from 200 to 275 billion pounds billion pounds. According to the British Chambers of Commerce, additional monetary easing may not be enough to prevent recession, so thereís the need for more radical measures.
The pair GBP/USD dropped from 1-week minimum at $1.5688 to the levels in the $1.5630 area. If pound closes below 1.5500, it will slide to the key support at $1.5330.
Analysts at Mizuho Corporate Bank believe that by the end of 2011 sterling will fall below $1.50 versus the greenback and lower than 0.85 per euro.
Chart. Daily GBP/USD
Comment here http://www.fbs.com/analytics/news_markets/view/8905
10-11-2011, 05:58 PM #6
"Troika authorized sixth bailout tranche for Greece"(2011-10-11)
The so-called Troika Ė the European Union, the International Monetary Fund and the European Central Bank Ė sanctioned providing Greece with the sixth tranche of the bailout package at the beginning of November. Now it depends on the approval of the Eurogroup and the IMF.
According to Troikaís statement, the indebted nation keeps making progress in such areas as fiscal consolidation, privatization, the banking system and structural reforms.
Never the less, Greek economic outlook is considered to be pessimistic: the recession will be deeper than it was seen in June and Greek economy will start recovering only in 2013.
Greece wonít be able to meet its deficit target this year, partly because its GDP keeps contracting. Inspectors claim that the nation will probably have to conduct additional measures.
Chart. Daily EUR/USD
Comment here http://www.fbs.com/analytics/news_markets/view/8908
10-12-2011, 09:02 AM #7
"Slovakia didnít ratify the EFSF"(2011-10-12)
Slovakia didnít ratify the EFSF bill yesterday. The ruling coalition didnít manage to gather enough votes from the Slovak parliament in favor of the measure: there were only 55 votes in favor, while the necessary majority is 76.
The other 16 member nations have already approved the bill, while the EFSF expansion has to be ratified unanimously.
Prime Minister Iveta Radicova was trying to persuade the lawmakers that the whole euro area is now in danger, so itís necessary to unify efforts. As Radikova associated the EFSF vote with the vote of confidence to the government, the coalition collapsed. Still the Prime Minister who is leaving her post proposed a compromise that may allow the parties to reach agreement at the second vote that will take place in a few days.
Richard Sulik, leader of the dissident Freedom and Solidarity party, said that it would be better to allow Greece default rather than waste enormous amounts of money for loans that may never pay back. Sulik said that Slovakiaís participation in the bailout deal isnít in proportion with its small economy and showed his intention to fight for changing that.
Never the less, some experts say that as the debt crisis is continuously deepening the plan might not offer enough support for indebted nations, especially taking into account the fact that the fate of such big economies as Spain and Italy may soon come at stake.
Comment here http://www.fbs.com/analytics/news_markets/view/8911
10-12-2011, 11:26 AM #8
"Societe General: comments on EUR/USD"(2011-10-12)
Technical analysts at Societe General claim that despite the negative event background the single currency keeps gaining versus the greenback.
In their view, the pair EUR/USD may rise to $1.3795 and even to $1.3850. The outlook for euro is positive as long as itís trading above support at $1.3435.
Chart. Daily EUR/USD
Comment here http://www.fbs.com/analytics/news_markets/view/8913
10-12-2011, 11:33 AM #9
"Senate rejected Obama’s job plan"(2011-10-12)
More news from the policymakers: US Senate blocked Barack Obama’s $447-billion plan aimed to promote jobs creation. 2 Democrats joined the Republican minority criticizing stimulus measures for being costly and inefficient and voted against the bill.
The legislation includes the reduction of the payroll taxes for workers and employers and provides new funding for roads, bridges and other infrastructure. Parts of the plan may still be pushed through if Obama finds enough support for specific provisions.
US political parties can’t agree on the measures that could have to decrease the unemployment that stays at 9.1%. Republicans are in favor of permanent tax cuts and deregulation, while the President and congressional Democrats propose more federal spending and short-term tax reductions.
The inability of American lawmakers to reach agreement on the key economic and financial issues increased the uncertainty on the global financial markets making investors worry about the recovery prospects of the world’s biggest economy.
Comment here http://www.fbs.com/analytics/news_markets/view/8915
10-12-2011, 11:45 AM #10
"Deutsche Bank about yen as a refuge"(2011-10-12)
Currency strategists at Deutsche Bank note that Japanese currency has depreciated during the last few weeks.
The pair USD/JPY kept trading sideways, but it seems that investors are no longer tempted to leave everything for yen assets: there have been foreign equity outflows, and foreign bond buying by the Japanese which weren’t of much help to yen so far.
The more important thing is that the declining current account surplus and low interest rates bring the situation in Japan closer to what’s seen in other developed nations.
The bank points out that the number of short positions on yen has increased. In their view, that presents an opportunity to resume buying yen and selling US dollar.
Chart. Daily USD/JPY
Comment here http://www.fbs.com/analytics/news_markets/view/8917
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