Comments and forex-analytics from FBS Brokerage Company - page 194
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GBP/USD: technical comments
On Monday GBP/USD slid below $1.5700 from a five-week high after an increase on Thursday and Friday. As can be seen from the daily chart, sterling repelled from a 200-day MA, but trades close to the upper bond of the sideway channel. The pair has been moving sideways since June after trading in a bearish channel in May. On the H4 chart GBP/USD trades above the 200-, 100- and 50-day MAs.
In our view, GBP/USD is likely to remain in a sideway channel in the nearest future because of the strong resistance in the $1.5743/80 area. A close above $1.5780 could open the way for a further rise to $1.5904.
Support: $1.5661 (38.2% Fib. retracement of a May decline); $1.5580 (50-day MA); $1.5457 (July 25 minimum)
Resistance: $1.5715 (200-week MA); $1.5742 (200-day MA); $1.5780 (50% Fib. retracement, 100-day MA and June 20 maximum); $1.5904 (61.8% Fib. retracement)
Chart. Daily GBP/USD
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Balkanisation of European banking markets
German banks cut their net lending to Greece, Ireland, Italy, Portugal and Spain by nearly a fifth (55 billion euro) to a total of 241 billion euro between January and the end of May, the lowest level since 2005.
This development reflects growing fears of the euro zone’s break-up, says Morgan Stanley. The bank’s specialists warn that such move will harm “lending, economic recovery and be a source of systemic instability”.
Image from photosteve101 on Flickr
BNZ: bullish view on NZD/USD
On Monday NZD/USD slid from a 2.5-month high above $0.8100, heading back into the sideway channel the pair left on Friday. The pair traded sideways after an uptrend early June.
According to analysts at BNZ, Friday’s break through $0.8080 resistance was a strong bullish signal. Despite the current kiwi’s weakness, specialists forecast an increase to $0.8200. 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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Barclays: forecasts for EUR, USD and GBP
Analysts at Barclays give the following forecasts for the major currencies.
EUR: The ECB is widely expected to hold the policy rate unchanged on Thursday, so the focus will be whether it makes changes to the collateral framework and whether the bond purchase program will be re-activated. The meeting of Italy’s Prime Minister Mario Monti and Spanish Mariano Rajoy that is scheduled on the same day as the rate decision is also very important as it could result in one or both countries requesting that the EFSF buy their debt. More easing by the ECB may support risky assets if deemed credible but will unequivocally remain negative the EUR.
USD: The Fed will refrain from taking further policy action at the August FOMC, which is likely USD supportive, especially against low-yielding currencies. September is its most likely decision point. The outcome of US employment data on Friday will be critical for the prospect of USD. “We expect headline NFP of 100K (cf. 100K) and an unemployment rate of 8.2% (cf. 8.2%) and if correct, initial currency reaction is likely muted.” USD/JPY remains the most sensitive USD-cross to the employment report announcements.
GBP: A series of UK PMI data this week will be important following disappointing Q2 preliminary GDP (-0.7% vs. -0.2% expected). The existence of special factors such as weather and holidays makes it difficult to interpret the GDP data, and PMIs will shed more light on the underlying strength of UK economy. BoE rate decision (Thursday) becomes another local risk event to GBP, but it is widely expected to hold the policy rate and amount of asset purchases unchanged. Overall, these pieces of data probably won’t be a catalyst for a strong directional move in the GBP, however may add to GBP volatility over the course of next week.
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Macroeconomic indicators
The table below provides recent data on the main macroeconomic indicators and is an extremely valuable resource for any trader.
Table. Main macroeconomic indicators
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July 31: forex news and currencies
Risk sentiment is rather high today ahead of the central bank meetings scheduled this week. The MSCI Asia Pacific Index (MXAP) of stocks rose by 0.9%.
The greenback weakened versus the majority of its counterparts on the speculation of more easing from the Fed tomorrow. At the same time, euro’s advance has also stalled below $1.2300 due to the talk that the ECB may expand its balance sheet on Thursday to stem the rise of the region’s sovereign-bond yields. Spanish 10-year yields near 11-day minimums around 6.6%, and Italian ones at 6.15%, highest for last 3 days. EUR/USD rose from yesterday’s minimums around $1.2225 consolidating in the $1.2280/60 area.
AUD/USD touched its highest level in 4 months after a report today showed the nation’s building approvals decreased by less than economists expected, while NZD/USD trades on a 3-month maximum. USD/CAD touched the lowest level in more than 10 weeks. GBP/USD remains flat ahead of the news from euro zone, ready to follow the market sentiment. USD/JPY strengthens as high risk appetite sapped demand for safe currencies.
Europe: There is a bunch of data in Europe which may have some impact on euro: German retail sales, French consumer spending and PPI, Spanish retail sales, German and Italian unemployment. The markets will be looking at the euro zone’s CPI and unemployment figures. Germany will auction 3 billion of 3-year EFSF bonds at 06:00 GMT.
Canada: GDP may add 0.2% m/m in May after stronger than expected 0.3% increase in April as retail sales in May added 0.7%, manufacturing sales rose by 0.2% and the volume of wholesale trade increased by 0.4%.
US: CB Consumer confidence is probably low and that households may be spending less than they are earning.
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Key options expiring today
Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).
Here are the key options expiring today:
EUR/USD: $1.2150, $1.2200, $1.2235, $1.2380, $1.2400;
USD/JPY: 78.25, 79.00;
GBP/USD: $1.5660;
EUR/GBP: 0.7900.
AUD/USD: $1.0470.
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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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UBS: AUD and NZD may drop
Analysts at UBS still think current strength of the Aussie and the kiwi is overdone. In their view, both currencies are pricing in the Fed monetary easing and the ECB re-entering government bond markets. If the regulators don’t act, both risky currencies will depreciate.
Photo: MSN
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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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