Comments and forex-analytics from FBS Brokerage Company - page 125
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Goldman Sachs: trading USD/JPY
Analysts at Goldman Sachs advise to sell USD/JPY. The currency pair may weaken to 79 yen because the Japanese currency may rebound after declining since the beginning of February to the middle of March.
The idea is supported by the seasonal patterns as the financial year in the country is coming to an end and the unexpected improvement in Japan’s trade balance (a surplus of 32.9 billion yen against the forecasted deficit of 120 billion yen).
If USD/JPY strengthens, strategists recommend closing the trade above 84.50 yen. Today the greenback is trading in the 82.86 area.
SocGen: comments on AUD/USD
Analysts at Societe Generale point out that the pair AUD/USD has seemed exhausted since the beginning of March lagging all the other G10 currencies against US dollar. The bank thinks that Aussie has weakened as both domestic and external factors ran out of steam.
The specialists claim that Australian dollar is testing 100-day MA versus the greenback at $1.0370. In their view, this may be a pivotal level. If Aussie breaches this support, it will likely decline to $1.0145 (this year’s minimum) and then to the parity.
At the same time the economists comment on rising US Treasury yields: “The recent sell-off in US Treasuries and swap rates has also played a key role in AUD/USD's trajectory. Although US 10-year yields may have found a bottom, it is still premature to call a lasting uptrend. The narrowing in the 10-year AU/US spread may thus soon run out of steam, helping to set a floor for AUD/USD.”
According to SocGen, though the Reserve bank of Australia may have been reassured by the recent stabilization (even though it may be temporary) of the euro zone debt crisis, it will remain concerned by the Chinese data. With key rates currently at 4.25%, the central bank clearly has plenty of room to act if necessary. The next RBA meeting is on April 3.
It will be also necessary to watch Chinese data in April: the official PMI and Q1 GDP are released on April 1and 13 respectively, the CPI (which hit its June 2010 minimum of 3.2% y/y in February) is expected on 9 April. If Chinese economic growth keeps slowing, the People’s Bank of China may be tempted to ease monetary policy further.
Reuters: survey on USD/JPY
According to a survey, conducted by Reuters among Japanese companies on March 1-16, 60% of the respondents expect USD/JPY to trade in the 76.00-80.00 area in the first half of the fiscal year (beginning in April), while 31% of the pollees forecast yen to stay weaker at 81.00-85.00 level. The average rate for USD/JPY for the first half-year was 80.6 yen per dollar. The resulting data shows Japanese market participants do not expect the yen to depreciate further.
SocGen: comments on USD/JPY
Analysts at Societe Generale say that risk sentiment has stabilized in March mainly due to the temporary solution of Greece’s debt problems. If global risk appetite consolidates in the second quarter of the year, Japanese yen will remain a funding currency versus high yield currencies. The main risk factor to this scenario is the worsening of the euro zone’s debt crisis.
The specialists claim that though it’s too early to know whether there will be a durable uptrend in US yields and as the Bank of Japan’s intervention was the first trigger, a floor in US yields would help determine a floor for the USD/JPY.
Comments on USD/JPY’s correlation with WTI: “1-month correlation stands at 0.78. Our commodity analysts expect WTI at around $124 per barrel by the end of 2012, again USD/JPY supportive.”
Aussie may weaken versus yen
Strategists at Aspen Trading Group, one of the leading providers of actionable analysis and trading strategies in the currency markets, recommend selling the AUD/JPY at 85.90 with a stop at 87.00 targeting 82.50.
According to analysts, the currency pair follows the S&P 500 stock index. Recent negative manufacturing reports from China (Manufacturing PMI declined to 48.1 in Feb. against 49.6 in Jan.) and Europe (PMI indices stand below 50) put a downward pressure on the S&P 500 index, so the Aussie is going to decrease against the yen.
GBP/JPY: growth potential
There may be a chance to benefit from buying British pound versus Japanese yen. Note that GBP/JPY has broken above the weekly Ichimoku Cloud for the first time in 4 years.
As a result, sterling may rise to 140 yen in the coming weeks and opening longs on the pair may be a sensible way to play on potential yen’s weakness.
Concerns about the state of UK economy aren’t very likely to affect GBP/JPY unless the nation is stripped of its top credit rating or the double dip recession occurs.
BNP Paribas: still bearish on EUR/USD
Strategists at Societe Generale point at the growing concerns over Europe and China. Despite these worries EUR/USD rebounded today from a low of $1.3133 to $1.3293.
However, BNP Paribas analysts expect the euro to keep weakening. In their opinion, Treasury yields may overcome the levels expected given the current Fed policy. Moreover, specialists believe the strain in Europe may rise on the backdrop of the French and Greek elections.
Note that we may see a “head and shoulders” pattern on the daily chart (neckline at $1.3000), so the levels in the $1.3000/2969 area have to be watched for confirmation of a larger bearish move. There are the talks of sell orders in the $1.3290/3300 zone. Support for EUR/USD is found at $1.3180 (100-day MA), $1.3150/57 (76.4% Fibonacci correction from the move $1.3286/1.3133/March 22 maximum, 50-day MA).
MIG Bank: USD/JPY technical levels
According to MIG Bank analysts, the USD/JPY is confidently continuing a downward movement from 84.00 area after the 800-pip rally since early February. To bring the bullish trend back to the market a consolidation above 84.18 is required.
The currency pair is expected to stay above the 80.59 (March 7 swing low) and 80.00 (psychological level) support lines. Support lies at 82.25.
Bernanke: comments on the economic situation
The Federal Reserve Chairman Ben Bernanke has spoken several times this week on the most important questions concerning US and global economic prospects.
According to Bernanke, the U.S. economy is standing on pre-crisis levels in the context of the sovereign debt volume and low consumer confidence. A rise in consumer spending is needed to support U.S. economic growth.
Moreover, high unemployment (8.3%) still raises serious concerns. Recent indicators, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead.
During the testimony before Congress on Wednesday Bernanke noted the commodity price growth poses a significant risk to the U.S. and global economy, adding that the current increase in oil and gas prices probably would reverse before sparking long-term inflation.
On Thursday Ben Bernanke opined that the financial crisis hasn’t been caused by low Federal funds rates in the early 2000s. “Monetary policy did not play an important role in raising house prices,” Bernanke said. He noted housing prices began to pick up in the late 1990s before the Fed began cutting interest rates and rose dramatically after the central bank began tightening. One of the alternative reasons for home prices rise, according to Bernanke, could be the psychological optimism generating a growth in stock prices.
As for the euro area, the Fed’s Chairman claimed that the financial and economic situation in there remains complicated regardless of the slight easing of stress. In order to overcome the recession European authorities have to keep strengthening the region’s banking system, reducing debt levels and encouraging economic growth.
Bernanke pointed that the influence of the debt crisis in southern Europe on American banks is limited. However, analysts say, Greek, Spanish, Italian and Portuguese bonds account for 7% of the U.S. banks assets.
BOTMUFJ, UBS: still long on USD/JPY
The greenback recovered from 10-day minimum versus Japanese yen where it fell on Friday due to weak data from Europe and China, while Japan posted trade surplus in February.
Never the less, strategists at Bank of Tokyo-Mitsubishi UFJ and UBS are still long on USD.
Bank of Tokyo-Mitsubishi UFJ: “Even though the dollar rally on the yen has lost a bit of momentum, the dollar is still strong after it didn't break below the 81.97 support twice in the last two weeks”. The specialists think that USD/JPY won’t be seriously affected by the repatriation flows ahead of Japan’s fiscal year-end as there’s more talk about importers buying dollar on the dip than about offers by exporters. According to BOTMUFJ, many exporters have already finished their currency hedging, not only for the fiscal year to March 31, but also until the end of the first quarter of the next financial term.
UBS: USD/JPY may still rise to 85 yen in the next few weeks, so buy US currency on dips. The analysts say that “Japan's recent run of monthly trade deficits isn't the main reason to be bearish on the yen”. In their view, the Bank of Japan's monetary loosening announced last month plus higher yields in the US are the factors that suggest the currency will weaken further against the dollar.