Comments and forex-analytics from FBS Brokerage Company - page 150
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Analysts: BoE may extend QE program
On Thursday, May 10, the Bank of England holds its monthly meeting. Some analysts expect the regulator to extend its asset purchase program tomorrow.
According to the BoE governor Mervyn King, the inflation in the U.K. is too high and the nation's economic recovery too slow. The annual rate of inflation, which was 3.5% in March, remains well above the BOE's 2% target. Mervyn King said last week that the current crisis is far from over.
Investec: In conditions of sticky inflation versus stuck economy the BoE may add another £25bn to its £325bn program of QE on its Thursday meeting. The committee will worry more about low growth than an inflation rate that is taking longer to come down than it predicted.
Capital Economics: The BoE may add £25bn to its asset purchase program in autumn.
Commerzbank: The BoE may adopt the wait-and-see approach: despite the fact that in a longer term the QE extension is possible, now we expect the bank to leave the room for maneuver in case if the markets require support.
Photo: Daniel Jones
Scotia Capital: better to sell EUR vs. GBP
Analysts at Scotia Capital recommend selling the single currency versus British pound as an alternative for trading volatile EUR/USD which has been fluctuating this year in the $1.30/35 area, so that many traders burned their fingers. “EUR/GBP is still really euro, but the risk/reward is better than with EUR/USD.”
The specialists note that Europe’s future looks dim in both cases: either the currency union will continue with austerity measures and there will be a long period of slow growth in the region, or it won’t, so the crisis will dramatically escalate. According to Scotia Capital, EUR/GBP will slide to 0.77 by the end of 2012.
Euro may rise against… Aussie
Analysts at Commerzbank believe that the single currency may rise versus its Australian counterpart to 1.2906/1.3004 (200-day MA, 2010-2011 minimums, April 2012 maximum).
The specialists say that euro’s advance is likely to end there. However, if the resistance is breached, EUR/AUD may climb to 1.3111. The bank remains bullish on the pair in the short-term as long as it’s trading above 1.2646.
According to the bank, if euro slips below 1.6246 (April minimum) and 1.2641 (55-day MA), it will slide to 1.2571 (April 30 minimum), the level below which the pair’s prospects will become negative.
RBS: betting on USD/CHF advance
The current turmoil in Europe makes analysts come up with more and more ideas of how to avoid exposure to risks associated with the single currency.
Strategists at Royal Bank of Scotland propose selling US dollar versus Swiss franc. In their view, the Swiss National Bank will continue to maintain EUR/CHF floor, so that franc won’t have chance to appreciate. At the same time, the bank is bullish on the greenback due to relatively positive economic reports released so far. RBS thinks USD/CHF may strengthen to 0.9950.
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: $1.3000, $1.3085, $1.3100, $1.3130 and $1.3150;
USD/JPY: 79.05,80,00 and 80.25, 81.00;
EUR/JPY: 106.35;
GBP/USD: $1.6060, $1.6300;
AUD/USD $1.0000, $1.0195, $1.0200;
AUD/JPY: 83.00.
Have a profitable trading day!
Image from deNull: Обо всем в сети.
EUR/USD: technical comments from Commerzbank
Analysts at Commerzbank claim that there is considerable divergence on H4 chart, so they expect a corrective rebound today.
Chart. H4 EUR/USD
At the same time the situation on the daily chart remains negative. Commerzbank targets $1.2624 (January minimum) with support at $1.2809 (January 17 maximum). Rebound will become possible if EUR/USD overcomes resistance at $1.3080 (May 4 minimum) and $1.3233/50 (late April/ early May highs area).
Chart. Daily EUR/USD
Bloomberg Poll: hard times for Europe ahead
The market is always about sentiment. During the last 2 years we have been continually discussing the possibility of disintegration in Europe. More than half of the experts surveyed by Bloomberg think that the 17-member currency union will once again become 16-memer one and that this will happen in 2012.
According to Bloomberg Global Poll, 57% out of the 1,253 investors believe that Greece will quit euro zone this year. In addition, 80% of respondents foresee more stress for the European bond markets.
Note that 47% of interviewed expect Spanish default, 63% – the one of Portugal and about 25% – the one of Italy or Ireland. As for Greece, 94% of investors said it will default on its debt. The nation has already restructured its debt to private bondholders.
The survey was conducted on May 8.
Lloyds Banking: “Another flare-up of the crisis is likely. The key variable for Europe is domestic politics.”
Photo by Bloomberg
Merkel’s firm on austerity plans
In her speech to Bundestag today German Chancellor Angela Merkel said that:
· Europe's only hope is to implement structural reforms alongside austerity measures.
· Economic growth may be reached through structural reforms. The calls for growth through debt would throw the region back to the beginning of the crisis.
· It would take a long time to overcome the crisis.
Germany keeps favoring austerity measures in the euro area, but will anyone follow its lead now when Merkel’s main ally – France – no longer supports such approach?
Image from debatepolitics.com
Barclays: bearish on EUR/GBP
Analysts at Barclays are bearish on the single currency versus British pound. This week euro hit the minimal levels versus sterling since 2008.
In their view, EUR/GBP will weaken to firstly to 0.7960 and then to 0.7700 (October 2008 minimum) and 0.7300 in the medium and long terms.
According to the bank, the pair’s prospects will remain negative as long as it's trading below 0.8075/0.8100.
2 ways of trading GBP/USD
Danske Bank: sell GBP/USD at $1.6155 targeting $1.6055 and stopping at $1.6208.
Commerzbank: try small longs at $1.6085 targeting $1.6300 with tight stops at $1.6065/50.