Comments and forex-analytics from FBS Brokerage Company - page 121
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J.P. Morgan: trading recommendations
Strategists at J.P. Morgan Asset Management claim that the drive to lower interest rates will bring the currencies down. It is therefore beneficial to trade on this tendency.
According to analysts, USD/JPY is going to hit 86 yen in the coming months. Japan’s current account surplus disappeared, and the Japanese investors recommenced putting up money overseas.
Canadian economy will strengthen along with improving situation in U.S., so J.P. Morgan specialists recommend going long on the loonie against the yen. Their advice is to enter the trade at 84.00, setting a stop at 82.00 and a target at 88.00.
March 19-23: main events of the week
US dollar has significantly strengthened during the last week on the FOMC meeting which gave no hints of QE3, though by the end it has given up some of the rally. American economy kept showing positive figures, but will this trend continue?
The European and the IMF policymakers have finally approved second bailout for Greece and the tensions in the region eased, though the market’s attention started shifting to another problem nations such as Spain and Portugal.
The Bank of Japan disappointed many investors by not increasing monetary stimulus. Despite some correction, yen’s still trading within the downtrend versus the greenback. Many experts think that it will have to do more easing in the coming months. Barclays and J.P. Morgan increased forecasts for USD/JPY by the end of the year.
The Swiss National Bank left EUR/CHF floor unchanged at 1.20 and increased Switzerland’s 2012 economic forecast from 0.5% to 1%. Franc rose on the news.
This week one has to pay attention to the following data releases:
Tuesday, March 20
- RBA March Monetary Policy Meeting Minutes (0:30 GMT).
- UK Inflation (9:30 GMT): British CPI growth pace declined from 4.2% in December to 3.6% in January (y/y). Inflation is decreasing in line with predictions, though is still above the Bank of England’s 2.0% target. Now the analysts expect a further drop to 3.4%.
- US Building Permits (12:30 GMT): there’s a growth trend in US housing sector. The number of building consents may have increased to 0.69 million in February.
Wednesday, March 21
- MPC Macrh Meeting Minutes (9:30 GMT).
- US Existing Home Sales (14:00 GMT): in January the index rose by 4.3% to a 4.570 million annual rate. Last month the existing home sales may have climbed to 4.61 million.
- New Zealand’s Q4 GDP (21:45 GMT): the nation’s economy has been rising since 2009. The analysts expect 0.6% advance after 0.8% growth in the previous quarter.
Thursday, March 22
- US Unemployment Claims (12:30 GMT): last week the index dropped to the 4-year minimum of 351,000 claims. Now a small rise to 355,000 is expected.
Friday, March 23
- Canadian inflation data (11:00 GMT): Canada’s CPI growth pace unexpectedly rose in the first month of the year (by 0.4%, probably due to high energy prices) after 0.6% decline in December. In February consumer priced may have increased by 0.5%.
- US New Home Sales (14:00 GMT): another piece of US housing market data. The number is seen rising to 326,000.
Also note that the Fed’s Chairman Ben Bernanke is speaking on Tuesday evening, while the ECB President Mario Draghi’s speech is scheduled on Thursday.