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"USD/CAD: comments from Credit Agricole, TD "(2012-07-26)

USD/CAD: comments from Credit Agricole, TD



Credit Agricole: in the near term USD/CAD will keep trading sideways between 1.0250 and 1.0065 given the Bank of Canada’s tightening bias on the one hand and no clear resolution on the euro zone crisis and slower growth in the US on the other.

TD Securities: USD/CAD failed to deliver on the bull flag formation. The pair may still be consolidating after advance in May/June. As a result, the move higher may eventually resume: the bulls need to break above the channel resistance around 1.0270.

Chart. Daily USD/CAD








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July 30: forex news
(2012-07-30)

July 30: forex news







The market was rather quiet during today’s Asian session; the major pairs were going through consolidation.

Investors’ attention will be focused on peripheral euro zone nations: Spanish flash Q2 GDP is released at 07:00 GMT (prev.: -0.3%, cons.: -0.4%). Later in the day Italy plans to sell 5.5 billion euro in long-term debt, including 10-year bonds. Current Italian 10-year bond yield is below 6% at 5.96%. Bloomberg reports that the European Commission will publish today household sentiment which may have dropped in July to almost 3-year minimum. In addition, euro is under pressure before data tomorrow may show that the region’s unemployment increased to a new record of 11.2% in June.

The ECB President Mario Draghi meets US Treasury Secretary Timothy Geithner today, though no press conference will follow. Moody’s Investors Service warned that the ECB can’t resolve the debt crisis alone.

EUR/USD is trading in the $1.2292 area, about 100 pips below Friday’s peak. US dollar edged up against higher-yielding currencies, though demand for it is limited before the Fed’s 2-day meeting which starts on Tuesday. USD/JPY returned to 78.35 after testing the levels above 78.60 at the end of last week.

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CFTC trader positioning data
(2012-07-30)

CFTC trader positioning data






The latest Commitments of Traders (COT) report, released on Friday, July 20 by the Commodity Futures Trading Commission (CFTC), showed that on a week ended July 24:

Net long US dollar positions decreased to $19.8 billion (-23%), while net long yen positions surged to $4 billion (+128%) on the back of negative US data. The value of the euro net short positions declined to $ 23.4 billion. (-9%). The single currency fell to its lowest level since June 2010 but then bounced back as the euro shorts shrank. Investors expect the Swiss franc to deppreciate: net short positions rose to $3.3 billion (+10%). On the previous week the Aussie and the kiwi net longs increased. Net short positions on the loonie moved up, while on the pound - declined.

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.

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AUD/USD: technical comments
(2012-07-30)

AUD/USD: technical comments





On Monday AUD/USD slid from a four-month high as the risk appetite worsened ahead of the euro zone’s reports on consumer confidence and unemployment. The pair rose confidently for three consecutive days and managed to test a strong resistance at $1.0475, completely offsetting the May decline. AUD/USD remains in a bullish channel since June. On the H4 chart the pair trades above the up-directed 200-, 100- and 50-period MAs.

In our view, a medium-term uptrend looks rather resilient: if the bulls manage to fix above $1.0475, a further advance to $1.0855 will become possible. On a downside, a break below the 200-day MA ($1.0280) will pave the ground for a further decline to $1.0176 (July 25 minimum) and to $1.0100 (July 12 minimum).

Resistance: $1.0473 (April maximum); $1.0557 (March 27 maximum); $1.0635 (March 19 maximum); $1.0750/60 (Sep. and Oct. 2011 maximums); $1.0855 (2012 maximum)

Support: $1.0348 (50-period MA on the H4 chart); $1.0280 (200-day MA); $1.0283 (100-period MA on the H4 chart); $1.0200 (200-period MA on the H4 chart); $1.0191 (100-day MA); $1.0100 (July 12 minimum); $1.0083 (50-day MA); $0.9968 (June 22 minimum); $0.9579 (June 1 minimum)

Chart. Daily AUD/USD

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JPMorgan: bullish on NZD/USD
(2012-07-31)

JPMorgan: bullish on NZD/USD





On Tuesday NZD/USD trades close to $0.8100, staying above the upper boundary of the sideway channel the pair left on Friday. The pair traded sideways after an uptrend early June.

According to analysts at JP Morgan, NZD/USD is likely to reach $0.8240 (the highest since April 30). Specialists believe the recent kiwi’s rally suggests there is potential for the pro-risk sentiment to push the pair higher. On a downside, nearest support for the pair lies at $0.7960 (crossing of the 100- and 200-day MAs).

Chart. Daily NZD/USD








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Staff changes in the SNB
(2012-07-31)

Staff changes in the SNB
Fritz Zurbruegg will join the 3-person governing board of the Swiss National Bank and work together with Chairman Thomas Jordan and Vice Chairman Jean-Pierre Danthine. Zurbruegg, 52, used to be the head of the federal budget office. His work at the SNB starts on August 1. As you probably remember, Philipp Hildebrand, the former chief of the Swiss central bank resigned after a currency trading scandal in January. Zurbruegg will now be tasked, along with Mr. Jordan and Mr. Danthine, with maintaining the currency cap and managing forex reserves so as to keep the Swiss franc pegged to the euro at 1.20 euro per franc.

"He's a very good and experienced economist, who had excellent international contacts due to his many years in Washington," said Aymo Brunetti, former head of the government's economics secretariat (SECO) and now head of a research institute at the University of Berne, who worked closely with Zurbruegg during the financial crisis. "He can stand his own ground in the global arena, and from my point of view this quality is at the current time a particular asset for the central bank."

Photo Reuters








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QE3 is possible, but “in reserve for now”
(2012-07-31)

When one thinks about the Fed these days, the most common question which comes to mind is “When?” – When will Bernanke and his colleagues finally announce QE3? It’s been already more than a year since QE2 finished and the talk about the next round has begun. The question is as pressing as it could be as the Federal Reserve announces its policy stance tomorrow. Experts answer: “Later, not tomorrow”.

Rabobank: “The fact that the Committee extended its current asset purchase program, Operation Twist, at its last meeting in June would present a substantial hurdle to launching another asset purchase program (QE3 or sterilized purchases) this week. The Committee may prefer to have some ammunition left to offset the fiscal cliff, which will present itself at the start of 2013. Therefore, we would probably have to see a further deterioration in economic data or at least a prolonged episode of the weak data that we are seeing now, before the Fed makes that decision. However, the Fed does have other options that may offer some support in the meantime.”

NAB: “With little momentum in the economy, a high level of uncertainty about the future pace of growth and both unemployment and inflation below the Fed’s view of their desirable level, additional monetary easing is extremely likely. We suspect this won’t mean an announcement of additional QE following the meeting currently underway, given ‘operation twist’, which is intended to impact on the economy in a similar way to QE, extended in the previous meeting this appears too soon. A more likely intermediate step would be to extend the Fed’s forward guidance on how long the Feds Fund Rate will remain exceptionally low from late 2014 into 2015. However, the Fed Chairman has explicitly identified further QE as one of the measures they would consider if they decided to ease policy further. Therefore, additional QE is possible, although it may be kept in reserve for now.”

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GBP/USD: technical comments
(2012-07-31)

GBP/USD declines for a second consecutive day after on Friday the pair reached a five-week high. Sterling tested the upper boundary of a sideways channel aligned with the 200-day MA, but then slipped back. On the H4 chart GBP/USD trades above the up-headed 200-, 100- and 50-day MAs. The pair has been bouncing in a flat since June after trading in a bearish channel in May.

In our view, GBP/USD is likely to remain in a sideway channel in the nearest future because of the strong resistance levels concentrated in the $1.5743/80 area. A close above $1.5780 could open the way for a further rise to $1.5904. On a downside the next support for the pair out of the bounds of the sideways channel lies at $1.5392 (July 12 minimum) and at $1.5267/33 (June and 2012 minimums).

Chart. Daily GBP/USD







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Roubini: 5 reasons why US growth will slow
(2012-07-31)

Nouriel Roubini is ‘cheering us up’ with another article in which he prophesizes gloomy future fort the US. Well, one can’t write something optimistic after he’s officially dubbed “Dr. Doom”, can he?

Roubini gave 5 reasons why US economic growth will slow further in the second half of 2012 and be even lower in 2013:

1. US GDP growth in the second quarter has decelerated from a mediocre 1.8% in Q1 to 1.5% in Q2, as job creation – averaging 70,000 a month – fell sharply.

2. Expectations of the “fiscal cliff” – automatic tax increases and spending cuts set for the end of this year – and the presidential elections will affect spending and growth.

3. The fiscal cliff would amount to a 4.5%-of-GDP drag on growth in 2013 if all tax cuts and transfer payments were allowed to expire and draconian spending cuts were triggered. Tax increases and spending cuts will be milder, but even if the fiscal cliff turns out to be a mere 0.5% of GDP and annual growth at the end of the year is just 1.5%, as seems likely, the fiscal drag will suffice to slow the economy to stall speed: a growth rate of barely 1%.

4. Growth in disposable income has been sustained since last year by another $1.4 trillion in tax cuts and extended transfer payments. That means US is stealing some growth from the future.

5. Negative external factors: escalating euro zone crisis, an increasingly hard landing for China, a generalized slowdown of emerging-market economies and the risk of higher oil prices in 2013 as the conflict with Iran progresses.

Roubini expects more QE from the Fed, but the economist thinks it won’t be efficient as US interest rates are already extremely low. US dollar will remain strong due to the risk aversion created by Europe and amid easing in other countries. As a result, the policies won’t help and US growth will be weaker. According to Roubini, significant equity-price correction could trigger the contraction of US economy in 2013.

The review is based on Mr. Roubini’s article for Project-Syndicate, 2012

Source: The Australian







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"August 6: forex news"(2012-08-06)

August 6: forex news

EUR/USD is trading about 60 pips below 1-month maximum around $1.2440. Spanish 10-year yields closed on Friday right below the critical 7% mark, while Italian ones closed at 6.08%. Demand for the euro was limited before data tomorrow may show that Germany’s factory orders and Italy’s industrial production fell in June.

The MSCI Asia Pacific Index (MXAP) of shares gained 1.8%, snapping a three-day drop: markets still expect central bankers to stimulate economic growth. Demand for safe currencies, therefore, declined: Japanese yen and US dollar touched the lowest in more than three weeks against the euro. However, risky currencies’ growth is limited and “safe havens” have already started going up ahead of important events scheduled this week. USD/JPY remains flat, demonstrating a decline today.

Risky currencies carefully weaken after Friday’s rally on US NFP release: AUD/USD trades around $1.0560, slightly below a four-month high, while NZD/USD slipped from a three-month high and trades below $0.8200. USD/CAD trades on its lowest level in three month, hovering right above parity.

Events to watch today:

Euro area: Sentix investor confidence (8:30 GMT) is expected to decline from -29.6 in July to -30.8 in August. The indicator is in the negative zone since the second half of 2011.

US: You must have missing Bernanke with all the talk about the ECB, haven’t you? Well, we’re going to hear the news about the Fed’s Chairman anyway as he will speak in a prerecorded video about economic measurement before the 32nd General Conference of the International Association for Research in Income and Wealth. Bernanke may add some comments about the central bank’s decision to add monetary stimulus last week, but will probably say he’s still worried about the state of American economy.


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