Daily FA from FBS

[TamingSari]

2010-07-05 08:54



Analysts at RBC Capital Markets believe that more successful than expected European Central Bank’s tenders may improve market’s sentiment about the single currency and make investors stop betting on euro’s decline.

Never the less, the specialists keep forecasting the downtrend on euro and expect European currency to struggle to extend last week's gains. RBC Capital Markets notes that the tenders switched from macro and model accounts on EUR/USD, EUR/CAD and EUR/AUD to wholesale short covering.

h4 eurusd 13-00

Chart. H4 EUR/USD

 

[TamingSari]

2010-07-05 09:34

The survey conducted by Deloitte LLP showed that the confidence of chief financial officers at major British currency companies dropped to 12-month minimum due to the fears that the budgets reduction with spending cuts and tax increases of 113 billion pounds ($172 billion) will lead to economic recession.

Only 24% of CFOs seem to be optimistic, while in the first quarter this figure was equal to 40%. In addition, 38% of respondents believe that double-dip recession is possible, while at the beginning of the year such opinion was shared by 33%. However, it’s necessary to mention that CFOs’ sentiment about the availability of credit went up almost to maximal level since 2007.

Deloitte specialists comment that the results of survey demonstrate the increase in concerns about further growth of British economy accompanied by better corporate credit and liquidity outlook.

 

[TamingSari]

UBS: EUR/CHF rebound won't last long

2010-07-05 10:03

Strategists at UBS AG expect that the single currency’s recovery versus Swiss franc won’t last long. It may happen due to the central banks’ demand for franc as a reserve currency and Switzerland’s better fiscal outlook and economic growth in comparison with euro zone's countries. In addition, the risk that the Swiss National Bank will intervene to the market has almost disappeared.

On July 1 the pair EUR/CHF fell to the absolute minimum since 1999 at 1.3074 francs and recovered rising today above 1.33. UBS analysts keep their 3-month euro forecast at 1.35 francs, although they see the risks of decline. All in all, European currency dropped by 10% versus franc since the beginning of 2010.

 

[TamingSari]

Mizuho: yen's up versus dollar and euro

2010-07-05 10:33

Analysts at Mizuho Corporate Bank claim that after the pair USD/JPY closed last week at one of its all-time lowest levels it will continue declining as least during a month.

As for EUR/JPY, last week the single currency hit its minimal level versus yen and is likely to trade volatile during its consolidation within recent ranges this week. While the European currency’s gaining versus many of its counterparts, there’s a spike low on its weekly charts versus yen. It’s also necessary to mention the potential ‘wedge’ formation at the bottom of bear market since October 2009.



Chart. Daily USD/JPY

 

[TamingSari]

Merrill Lynch: yen forecast up

2010-07-05 11:31

Analysts at Bank of America Corp.’s Merrill Lynch increased forecasts for Japanese yen versus dollar and euro. The specialists’ judgment is based on the expectations that US interest rates will be lower and risk appetite will fall on the uncertain prospects of the world’s economic growth. As a result, yen will be able to gain on the risk aversion.

Merrill Lynch believes that yen will reach 90 per dollar by the end of 2010, while the previous estimate was at 97. Japanese currency will trade at 104 per euro by year-end while the previous projection was at 112 yen. As for the third quarter, yen forecasts were lifted from 94 to 89 versus dollar and from113 to 107 versus European currency. The forecast for 2011 was also revised from 106 to 97 versus the greenback and from 117 to 107 against euro.



Chart. Daily USD/JPY

 

[TamingSari]

2010-07-05 12:25

The single currency went down from 6-week maximum versus the greenback at $1.2612 as the market expects that the European Central Bank will have to keep interest rates at the minimal level as the austerity measures have a negative impact on the euro zone’s economic growth.

Economists surveyed by Bloomberg expect that the benchmark rate will be left at the current 1% level at the ECB’s policy meeting on July 8.

Analysts at Commerzbank AG in Frankfurt claim that European economy is too weak and not ready to the rates increase. According to them, the probability of euro’s near-term advance against dollar isn’t high.



Chart. H1 EUR/USD