Comments and forex-analytics from FBS Brokerage Company - page 83
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Commerzbank: comments on GBP/USD
British pound consolidated versus the greenback at the levels around $1.6000.
Technical analysts at Commerzbank believe that as long as GBP/USD stays below the 200-day MA at $1.6140, the outlook for the pair will be negative.
The bearish pressure would ease only if British currency overcomes 61.8% Fibonacci retracement at $1.6185. In such case pound will be poised up to 78.6% retracement of the decline from May at $1.6430.
The specialists, however, think that sterling is more likely to break support at $1.5875 (55-day MA).
RBS: sell euro versus Canadian dollar
Currency strategists at Royal Bank of Scotland see the trading opportunity on the current European mess.
The specialists note that the euro zone’s economic outlook is very dim, while the prospects of Canadian economy seem to be much more favorable. According to RBS, it would be beneficial to sell the single currency versus Canadian dollar in the longer term.
The analysts underline that trading EUR/CAD is a better idea then EUR/USD as the latter is strongly correlated with the S&P500 index that tends to jump on positive news from Europe, so this type of trade doesn’t suit here.
As a result, the bank’s recommendation is to open shorts on EUR/CAD in the $1.3925 area stopping above $1.4380 and targeting the levels just below $1.2800.
Commerzbank: negative outlook for EUR/USD
Technical analysts at Commerzbank claim that as long as the single currency is trading versus the greenback below resistance in the $1.3855/1.3930 area, the outlook for it will remain negative.
The specialists expect EUR/USD to decline to $1.3381/60 (September 26, October 7 minimums) and then to $1.3145 (October 4 minimum). According to the bank, in the longer term the pair will drop to $1.2000.
J.P. Morgan: trading in case of risk aversion
Currency analysts at J.P. Morgan believe that in the long term the efforts of European authorities to solve the region’s debt crisis will be repaid.
At the same time, there are still plenty of risks, so the specialists advise traders to watch for the events this week. If the news turns out to be more negative, it will be necessary to sell Australian dollar versus its US counterpart.
As the reasons for choosing this type of trade in the risk-off situation the bank cites the fact that the Reserve Bank of Australia has so far started reducing its benchmark interest rate. In addition, there are some concerns about Australian economic growth and the currency is correlated with euro and its ability to reflect the risk sentiment and the state of the things in the euro area.
So, the recommendation is to open shorts at AUD/USD in the $1.0360 area stopping above $1.0500 and taking profit at $0.9950. The strategists also warn investors that the market seems to be extremely volatile and one should put place the stops close.
Morgan Stanley: comments on the European crisis
Analysts at Morgan Stanley warn that as the European leaders have officially raised the possibility of Greece leaving the euro area, the consequences may be very dangerous (see the Greece: the referendum story).
The specialists underline that until last week such idea was a taboo but now it seems likely the currency union will use the threat of exclusion against its recalcitrant members.
In their view, the crisis may get much more severe, for example, there may be runs on sovereigns and banks in the indebted peripheral nations.
Greece: Papandreou agreed to step down
Greek Prime Minister George Papandreou agreed to step down for the new national unity government to be formed. Its creating was agreed after the negotiations of Papandreou, the head of socialist Pasok party, Antonis Samaras, the leader of the main opposition party and President Karolos Papoulias.
The main goal of this government is to assure that the nation gets bailout money and help the nation’s economy survive.
The elections will take place right after the decisions of European Council made on October 26 are implemented. According to finance ministry’s statement, the most suitable date is February 19.
Analysts at Standard Chartered Bank note that the markets have become a bit more confident about Greece and investors’ attention has moved to Italy where Prime Minister Berlusconi is under pressure to step down.
Commerzbank: comments on USD/CHF
Technical analysts at Commerzbank expect the greenback to rise to 0.9082 versus Swiss franc.
Then, if US currency manages to overcome this level, it will be poised up to 0.9317 (October maximum) and 0.9341/99 (April maximum and 50% Fibonacci retracement of the 2010/2011 decline).
Here the specialists look forward to some profit taking on USD/CHF.
BMO: sell pound versus franc
Currency strategists at BMO Capital Markets advise investors to pay attention to the Bank of England’s meeting on Thursday as it, in their view, represents good trading opportunity.
The specialists distinguish 3 possible scenarios:
- BoE doesn’t act at all;
- BoE undertakes minor quantitative easing on the order of 25 billion pounds;
- BoE does more significant easing.
The analysts regard the third outcome as likely as British economy is in a very poor condition that together with the euro zone’s debt crisis will keep pound under pressure, while franc has upside potential as a safe haven. BMO thinks that the results of Swiss National Bank’s any intervention won’t last long. As a result, the bank recommends selling sterling versus Swiss franc.
Westpac: market is focused on Italy
Today the market’s attention is focused on the budget vote in Italy. The nation’s Prime Minister Silvio Berlusconi is under pressure to step down, so the vote will show whether the premier still has a majority in the 630-seat Chamber of Deputies.
Next week Berlusconi plans to hold the confidence vote a on implementation of measures pledged to the European Union that are designed to promote Italian economic growth and reduce its huge debt.
Analysts at Westpac Banking claim that it seems that the market will be satisfied only if Berlusconi resigns and technocratic government is formed. The specialists say that when it happens, risk sentiment increases and the euro increases. In their view, one should use the advance of EUR/USD to sell the single currency as the relief for euro won’t last long.
Analysts at Societe Generale are worried about high Italian borrowing costs as the 6.5% yields would be soon unbearable for the country with only 1.8% nominal GDP growth and the debt accounting for 120% of GDP. Another thing to watch will be the nation’s auction of fixed-rate bonds on November 14 that may cause euro’s sell-off if the borrowing costs increase once again.
BBH: euro will fall to $1.3145
Technical analysts at Brown Brothers Harriman claim that the single currency has breached the support of its middle-term upside channel within which it was trading since September 2010.
So, at the end of the last month this line started to play the role of resistance in the $1.4200 area.
According to BBH, the pair EUR/USD is poised down to $1.3145 (October 4 minimum).