Comments and forex-analytics from FBS Brokerage Company - page 220

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EUR/USD: news from the battlefield

Today EUR/USD hit 1-week minimum at $1.2886. MACD gave a bearish signal yesterday.

Support: $1.2885 (today’s lows), $1.2827 (200-day MA), $1.2760/45 (50% retracement of the decline from February maximums to July minimums, June highs).

The market’s attention is focused primarily on Spain which is to release budget for 2013 this week.

Citigroup: “The risks for EUR/USD remain on the downside as investors await a potential bailout request from the Spanish government. Our economists reckon that the bailout request could come only after the Spanish regional elections on October 21.”

In addition, there are signs of a further slowdown in the euro zone’s largest economy. Data released yesterday showed that German business sentiment dropped to the worst level since the beginning of 2010.

Westpacproposes buying EUR/USD on the dips around $1.2850 as the tail risks in the euro area have declined and the large speculators will likely keep unwinding euro shorts.

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JPMorgan: what can pull EUR/USD to $1.25?

Specialists at JPMorgan offer four key scenarios, which may pull EUR/USD down to $1.25 in Q4:

1) Europe refuses to finance Greek debts because of the disagreement with the new government;

2) Italian election campaign will raise investors’ concerns about budget discipline and stability (in April 2013 the current Prime Minister Mario Monti has to leave);

3) Spain refuses to apply for EFSF financial aid, raising fears that its budget deficit is much bigger than promised;

4) The Fed will become less dovish due to the inflation surge caused by QE3.

Specialists, therefore, recommend watching the following eventsattentively:

• FOMC meetings (October 24 and December 12);

• Greek negotiations with troika;

• ECB meetings (October 4, November 8 and December 6);

• EU leaders’ summit (October 18-19);

• Spanish regional elections (October 21);

• Italian election campaign in late Q4.

[SofiaFBS]

Scotiabank: sell EUR/GBP

Strategists at Scotiabank recommend going short on EUR/GBP at 0.7965 with a stop at 0.8030 and a target of 0.7800.

In their view, the wave of high risk appetite on the back of global policy easing has already rushed by. As a result, demand is shifting to the currencies, where central banks’ policy is hawkish or neutral (AUD, CAD and NZD). British pound also looks attractive as the BoE’s easing volumes are relatively small and the regulator seems to be concerned about the financial stability.

[SofiaFBS]

NAB: comments on AUD/USD

AUD/USD keeps hovering around $1.0425 (50-day MA), remaining under pressure in conditions of risk aversion. The Australian currency depreciates after peaking $1.0623 on September 14. However, one should note the Aussie’s firmness: during the last week the pair twice recovered back above the $1.0400 mark.

According to analysts at NAB, AUD/USD will stay under pressure until it manages to fix above $1.0460 (Monday’s maximum). In the medium term specialists remain bearish on the Aussie. However, if the RBA remains on hold on the next policy meeting (October 2), a short-term bounce to $1.0500 may happen.