official Financial News And Analysis by Octafx.com

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In a recent speech to the European Parliament, French President Francois Hollande urged the euro zone to set a mid-term target for the EUR exchange rate

In a recent speech to the European Parliament, French President Francois Hollande urged the euro zone to set a mid-term target for the EUR exchange rate and to forge a jobs policy to fight political disillusionment at reforms.

Hollande's calls ran into immediate opposition from German Economy minister Roesler who recommended that the focus should instead be on competitiveness rather than weakening the currency. Luxembourg Finance Minister Luc Frieden said the euro's level doesn't concern him at present and its strength follows the economic reality of the euro zone.

Staying in Europe, Fitch joined Moody's and S&P in assigning a negative outlook to Netherland's AAA rating. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The outlook revision reflects Fitch's concerns over persistent banking system problems – as highlighted by the recent nationalization of SNS Reaal (the country's fourth largest banking group) - and public debt levels higher than those of top-rated peers.” Dutch 10yr yields closed 3bp higher on the day and were largely unmoved following Fitch's announcement.

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Feb 06, 2013

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Forex: GBP/USD soars as Carney testimony starts

GBP/USD has soared closed to a point as in coming BoE Governor Carney is delivering his testimony to the Treasury Select Committee this morning.

He has told the group that the bank must exit unconventional policy and protect the integrity of the Pound. He added that the bar to changing monetary policy framework must be very high and central banks should be flexible on targeting inflation. Further, he believes that the BoE must enhance forecasting. The market reaction has seen Cable soar on talk that an end to easing will be targeted and spot is now currently trading at 1.5731, just below the hourly 200 MA, having made a high at 1.5767. RSI has spiked high and climbed to 76.

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Feb 07, 2013

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[OctaFX_Farid]

Forex: GBP/USD holds up at 1.5700 after UK NIESR GDP

Incoming BoE Governor Carney brought the GBP/USD back above the 1.5700 psychological level after triggering a rally from 1.5650 to 1.5769 spike high with his testimony before the UK Parliament. Since then, the pair has been consolidating its position above 1.5700, even after the release of UK NIESR GDP estimate for January.

From an estimated -0.3% recession in December, the estimate of growth over the last 3 months in the UK has risen to 0.0% in January, according to NIESR.

Incoming BoE Governor Carney assured that he would not alter significantly the central bank's current monetary policy strategy but that he was in favor of introducing more stimulus for a period of time and communicating it in order to help manage market expectations. He also said that the central bank must exit unconventional policy.

The MPC decided to keep the key rate at 0.5% and the asset purchases at £375B, as expected by investors, in the meeting of February 7. “The £6.6 billion cash flow comprises the redemption payment on the gilt, as well as the cash flow resulting from the indemnity provided by HM Treasury to the Bank of England in order to cover any difference between the redemption payment and the original amount invested”, said the official statement.

“The GBP/USD currency pair continues consolidating near its minimums. I think today the pair may form any type of reversal pattern to start growing up and break the latest descending channel”, wrote Roboforex.com analyst Igor Sayadov.

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Feb 07, 2013

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Forex Flash: USD/JPY year-end target at 95.00 – Scotiabank

The Japanese yen seems to have found intraday support in the boundaries of 93.10 on Thursday, after the ECB has ignited a rally in the safe havens, dragging the cross from levels around 93.70

“The upward trend in USDJPY is too strong to fight and tied into equities. Technicals are not providing any warning signals that the trend is at risk. We hold a year-end USDJPY target of 95, but expect that it could temporarily range as high as 100 before drifting back”, assessed Camilla Sutton, Chief Currency Strategist at Scotiabank.

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Feb 07, 2013

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[OctaFX_Farid]

Forex Flash: What lies ahead of EUR/USD? – Commerzbank, BTMU and UBS

The shared currency has managed to put the ECB meeting in the rear window and is currently posting fresh highs in the proximities of 1.3420, buoyed by the likeliness of an agreement from the European Council on the 2014-2020 Budget.

Recalling the last break above the key area of 1.3485/1.3562, Karen Jones, Head of FICC Technical Analysis at Commerzbank commented, “We suspect that this was a false break higher, however key support remains the 1.3125 6 month uptrend and a close below here is required to negate the upmove completely.”

In addition, Derek Halpenny, researcher at BTMU, explains “We may finally get an EU budget deal later today with rumours of a deal based on the first real-term budget cut in EU history. That may help stabilise the single currency which is being undermined in part by some renewed liquidation of yen short positions”.

The bullish outlook on the cross remains intact, according to Strategists G.Yu and G.Berry at the Swiss UBS, arguing, “The strong support is at 1.3354. While this holds, the risk is for resumption of strength. Resistance is at 1.3578 ahead of 1.3711”.

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Feb 08, 2013

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[OctaFX_Farid]

Forex Flash: NOK/SEK could find downside pressure this week – Danske Bank

The pair is retracing earlier gains after posting fresh monthly highs in the proximities of 1.1660 ahead of the Riksbank monetary policy meeting due on February 13. Market consensus still remain pretty divided regarding a rate cut, as late improvement in Swedish data out of the retail sales and manufacturing and services PMI would add further pressure to the Nordic central bank.

“We remain hesitant and still believe that a cut in April is more plausible as the Swedish economy in line with the global economy seems to be stabilising. If we are correct that the Riksbank will keep rates unchanged, NOK/SEK should see some downside potential this week”, explained Senior Analyst C.Tuxen at Danske Bank.

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Feb 11, 2013

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[OctaFX_Farid]

Forex: EUR/CHF retraces from highs, around 1.2330

The Swiss franc is trimming earlier gains vs. the single currency on Tuesday, pushing the pair from the boundaries of 1.2280 to the current levels around 1.2330, challenging overnight tops above 1.2340

After a G7 statement regarding the so-called ‘currency war’, Trevor Greetham, Director of Asset Allocation at Fidelity Worldwide Investment, argued, “On one level, this is a slap on the wrist to Japanese ministers talking about specific levels but it allows them to carry on with policies aimed at creating domestic inflation. You could argue the clear FX manipulators out there are the Swiss with the SNB’s Jordan saying today that the Swiss franc’s 1.20 cap against the euro is still in place, the franc will weaken further and they stand ready to take further measures”.

At the moment, the cross is posting marginal losses at 1.2332 or 0.02%.

Next support levels line up at 1.2255 (lows Feb.8/11) ahead of 1.2200 (psychological level) and then 1.2187 (low Jan.14).

On the upside, a break above 1.2356 (high Feb.12) would expose 1.2369 (high Feb.6) and then 1.2505 (high Feb.4).

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Feb 12, 2013

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Forex Flash: Credit, CAD, and AUD are all showing signs of valuation fatigue – Societe Generale

Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that data wise, there is little on offer this afternoon.

He comments that he will sit back and watch equities while waiting for the State of the Union address later this evening and he will be paying especial attention to how credit performs relative to the S&P Index. In particular he notes that Credit, AUD and CAD are all showing signs of valuation fatigue.

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Feb 12, 2013

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[OctaFX_Farid]

EMU: Trade surplus unchanged at €12B in December

Eurozone Trade surplus s.a. remained unchanged at €12 billion in December, according to data released today by Eurostat. Eurozone trade surplus n.s.a. narrowed to €11.7B in December, from €13.0 billion in November and against expectations of widening slightly to €13.1 billion.

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Feb 15, 2013

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Forex: GBP/USD trading at 1.5487/88 after failed recovery attempt

A recent recovery attempt at the 1.5560 mark was stymied, driving the GBP/USD lower during the late morning of the European session Friday. With weak GBP data leaving a bitter taste in investors mouths, the pair breached support at 1.5500 again, and is now trading at 1.5487/88 at the time of writing, down -0.03%.

Earlier today in the United Kingdom, Retail Sales (YoY) were reported at -0.6% In January, against estimates calling for +0.8%. Moreover, Retail Sales (MoM) came in at -0.6% in January, missing expectations of +0.4%. Finally Retail Sales ex-fuel (YoY) grew only +0.2%, against projections of +1.4%.

Briefing the technicals, after a movement below calculated support at 1.5500, the ICN.com analyst team points to additional supports at 1.5455 and finally 1.5415. On the positive side, a break above 1.5525 will trigger resistances at 1.5580 and 1.5610.

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Feb 15, 2013

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Forex Flash: Europe trend growth below "Great Moderation" – Merrill Lynch

After running several scenarios (one hypotheses on the speed at which investment recovers and whether it can reach pre-crisis levels; and another taking into account the impact of higher unemployment (and the capacity to reduce it), demographics and the quality of education) and looking at the fundamentals behind an economy’s capacity to grow (investment in physical and human capital, and the ability to innovate and embed innovation into business) and capacity to innovate, the overall result is that the capacity to grow (trend growth) remains below that observed during the “Great Moderation” (1995-07), according to BofA Merrill Lynch analysts.

"Having said that, assuming European productivity converges with that of the US, we expect healthy trend growth after 2015", they wrote, pointing to elevated deflation risks, due to steep loss in cyclical production. "Consequently, in our exercise, we assume the negative output gap that opened up in 2008 remains large throughout the crisis period and closes only by end-2014 - an assumption in line with most international organizations’ projections", they continued, expecting inflation to decelerate to end-2014. In case inflation decelerates faster, ECB would likely "need to cut rates further and possibly experiment with more unconventional policies".

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Feb 15, 2013

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[OctaFX_Farid]

Forex: USD/CAD rallies after US and Canada data

From 1.0025 area, that was serving as resistance during the European morning, the USD/CAD broke through and rallied to as high as 1.0067 on Canada and US data releases.

Canada manufacturing shipments fell -3.1% in December, a wider drop than the -0.8% expected. US NY empire state manufacturing came in at 10.08 in February, surprising analysts that were only expecting an improvement from -7.78 to -2.00.

Although capacity utilization in the US improved from 78.8% (revised from 79.3%) to 79.1% in January, beating 78.9% consensus, industrial production fell -0.1%, instead of rising 0.2% as expected. Last month's data was revised lower, from 0.4% to 0.3%.

MIG Bank analysts expect the USD/CAD to edge lower as it has failed to break its resistance at 1.0100. "The inability to break the resistance area between 1.0057 and 1.0100 could be the start of a medium-term bearish reversal pattern", wrote analyst Bijoy Kar, pointing to an hourly resistance at 1.0044 (13/02/2013 high), while supports can be found at 1.0000 (14/02/2013 low) and 0.9933 (07/02/2013 low).

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Feb 15, 2013

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American equity markets in the green Friday following G20

The US Stock market experienced a slightly positive opening Friday, as investors digest the statement of the G20, which has sent the yen plummeting. In the United States, Net Long-term TIC Flows (December) were reported at $64.2B, relative to $54.2B in the previous month. Moreover, Industrial Production (MoM) has contracted -0.1% in January, against expectations for a +0.2% growth. Finally, the Reuters/Michigan Consumer Sentiment Index (February) came in at 76.3, vs. projections of 74.8.

Beginning with the indices and composites, the NASDAQ rose +0.09% as it settles in region of 3202.20, up +2.76 points in these moments. In addition, the S&P 500 is trading in positive territory, operating at 1522.88, ascending -1.52 points or +0.13% at the time of writing. Finally, the Dow Jones has moved higher at the opening as well, trading in the zone of 13981.15, presently +0.06% after a movement of +7.76 points.

Sectors are all in the green at the opening, however the Energy and Basic Materials sectors have distinguished themselves as the lone losers thus far, falling -0.43% and -0.23% respectively. In other news, the price of crude has settled above USD $94.45 Friday.

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Feb 15, 2013

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[OctaFX_Farid]

Italian campaign works to swing remaining voters in final week before election

Italian voters have braced for the impact of an upcoming onslaught of tax-cut promises and attacks on the European Union as the four leading candidates begin the final stretch of the campaign, taking to airwaves and a mad scramble to visit to all corners of the republic before the polls are opened.

After a prolonged period of suspense and campaigning, Italy goes to the polls February. 24-25 in the first parliamentary election since Europe’s sovereign debt crisis roiled the political establishment into a proverbial maelstrom. However, despite the recent buildup, nearly 20% of Italian voters are still fair game to the candidates, which pollsters say constitutes a large enough proportion as to potentially decide the election in the final week. However, the immediate risk is an inconclusive result that denies victory to any and leads to gridlock, requiring a second vote.

“The biggest issue is, is it going to be easy to form a government?” wrote Marc Ostwald, a rates strategist at Monument Securities Ltd. in London. Silvio Berlusconi kicks off the week with a rally today in Milan, capital of the battleground region of Lombardy near the Alpine foothills. The former premier will reiterate his pledge to hand out more than $5 billion in property-tax refunds as he seeks to build a blocking minority in the Senate. Berlusconi’s main rival, front-runner, Pier Luigi Bersani may appear on the other end of Italy in Cosenza, Calabria.

The duel between Bersani and Berlusconi, whose respective forces have dominated Italian politics since 1994, is muddied by the campaigns of Prime Minister Mario Monti, a professor-turned- politician at age 69, and comedian Beppe Grillo. Monti has sought to position himself as a kingmaker by courting both Bersani and the forces backing Berlusconi. Grillo has excluded alliances and embraced the role of spoiler.

Italians face trying times as they are being called to vote with the economy in a quagmire, culminating in its fourth recession since 2001, and having contracted for six quarters through the final three months of last year. However, despite Italy’s 10-year government bond yield, which reached a euro-era record of 7.261% on Nov. 25, 2011, the yields were holding fast at just 4.409% earlier today.

The election outcome “remains highly uncertain,” Giada Giani, an economist at Citigroup Inc. wrote in a research report last week. “Small moves in the votes can lead to large swings in the Senate seat allocation.” The upper house of Italy’s parliament is where Bersani, a former communist and labor-union favorite, is most vulnerable as seats are doled out on a regional basis, rendering national popularity less meaningful.

Bersani will probably need a post- vote alliance with Monti to secure a majority, a move that would please bond investors satisfied with the premier’s 15-month tenure, according to Citigroup and Eurasia Group. Bersani had 33.8% support in an SWG Institute survey published February 8, the day before Italy’s two-week polling blackout began. That compares with 27.8% for Berlusconi, 18.8% for Grillo and 13.4% for Monti. According to Italian election law, bonus seats are handed out in both the Senate and the Chamber of Deputies, allowing a party to secure a majority without winning 50% of the votes.

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Feb 18, 2013

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Forex Flash: EUR/USD to target 1.3000 in three-month window – UBS

Alongside the current account data, the ECB is also due to release December's portfolio flow data today. The creation of the ECB's OMT program has had a stabilizing effect on sovereign bond markets, which triggered a return of exiled capital in November. In fact portfolio inflows are now much larger than those associated with the current account surplus. We expect this pattern to continue in December as memories of the crisis fade a little further.

However, “when netted-off against outflows by Eurozone residents, the portfolio effect on the currency is more muted than it first appears. There has been no repeat of the enormous repatriation seen in Q4 2008, and Eurozone investors were net buyers of overseas assets in November. Also, like the temporary current account surplus, the return of portfolio inflows can only go so far. Ultimately, we expect broad-based dollar strength to come through later this year, taking the EUR/USD back down to 1.3000 in 3m.” writes Research Analyst Gareth Berry at UBS.

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Feb 18, 2013

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Forex Flash: What was real Chinese GDP growth in 2012?

Stephen Green of Standard Chartered Global research questions whether China´s official GDP announcements are reliable or actual GDP growth is closer to 5.5%.

Green begins by commenting that if there was an index for suspicion about China´s official statistics, it would be off the chart. While the global financial crisis added plenty of statistical smog, the issue with Chinese data is not new but scepticism has to be reasonable deployed as some numbers are better than others and the problems vary across different data sets.

He notes that headline statistics are particularly important. He writes, “The government has very clear annual GDP targets, and these numbers hit newspaper headlines. We believe the GDP numbers, especially the first prints, are possibly subject to smoothing at times of super-fast or unusually slow growth. We have previously explored various proxies to track the industrial and investment cycle (electricity, freight, diesel, and concrete production, for instance).”

Green notes that consumption is trickier to monitor, though he does like “KFC same-store, car and Hong Kong retail sales, to name a few proxies.” Across the board, he notes that the proxies told the same story from Q3-2011 onwards: an economy slowing significantly through to Q3-2012, before those shoots did their green thing in Q4. The official y/y GDP numbers, however, attempt to tell a different story: pretty stable growth. The official q/q numbers suggest that Q3 was actually the strongest quarter in 2012.

Questioning why this is the case, he notes that one e hypothesis is that there is a problem with the GDP deflator, i.e., the number that is used to measure overall inflation and that gets us from nominal to real growth. He cites two studies which conclude that service-sector inflation is underestimated within the GDP deflator. Considering Chinese inflation, he feels that it is not too bad, despite still having some obvious issues however.

Overall, he notes that growth boomed in 1992 with Deng Xiaoping‟s revival of reform, but then slowed sharply with Zhu Rongji‟s retrenchment policies of the mid-1990s. The economy was further weakened by domestic restructuring and the Asian Financial Crisis in 1997-98. Then, with the state-enterprise reforms of the mid-1990s feeding through, China‟s entry into the WTO in 2001, and strong global growth, China‟s economy took off again in 2001, peaking out in 2007.

From that point Green notes that growth has slowed considerably since the height of the stimulus. he writes, “Our guesstimates for the past two years look considerably weaker than the official estimates: our guesstimates for 2011 and 2012 are 7.2% and 5.5%, respectively, compared with the official prints of 9.3% and 7.3%.” He continues to explain that “When we say guesstimates, that is exactly what we mean. We have to use official data to question official data; we do not have access to an independent nationwide assessment of service-sector inflation, and it requires a leap of faith to choose the alternative services series we have.”

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Feb 18, 2013

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[OctaFX_Farid]

Session Recap: USD mixed. Range trading prevails

Following a long-weekend in the US, FX markets resumed full volume trading but consolidative moves prevail. Sentiment received a boost in the wake of stellar ZEW survey, but wasn´t strong enough to take EUR/USD out of its recent range. While the pound remains vulnerable amid chatter of a possible UK downgrade, the yen strengthened versus the euro and the dollar. The Aussie rose after the RBA minutes, but Loonie´s weakness persisted, with USD/CAD reaching a 7-month high.

Main Headlines in Europe (in chronological order):

Commodities Brief – Precious metals hold onto Asian gains amidst modest rise

Spanish T-Bill auction results – top end of target

Spain meets top end of target at bond auction

Germany: ZEW Survey – Economic Sentiment rises to 48.2 points in February

EMU: ZEW Survey – Economic Sentiment climbs more than expected in February

EMU: Construction Output declines 1.7% in December

French President Hollande -”must give Greece every chance “

European markets cheer positive ZEW survey

Rehn proposes loosening deficit targets for distressed Member States

Bundesbank’s Weidmann – G20 communique important signal that economic weakness can not be fought with protectionism and currency manipulation.

UK unlikely to be downgraded before budget

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Feb 19, 2013

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Forex Flash: Antipodean monetary policy expectations to diverge – ANZ

Looking ahead, we expect monetary policy expectations to move in opposite directions again as the Australian market prices in a less aggressive easing profile and the NZ market prices out rate hikes. In New Zealand, the market has moved to price in 80% odds of a rate hike by October. The 2-year swap rate has surged as a consequence. Markets can and will lurch from one extreme to the other.

However, we are cognizant that the NZ dollar trade-weighted index has hit a record high in the past week (partly due to weakness in this cross), thereby tightening NZ financial conditions. We are also mindful of NZ’s contractionary fiscal stance; and the potential for macro-prudential policy to take pressure off the RBNZ. These factors do not, in our view, lend themselves to a 2013 commencement in the rate hike cycle. And as such, we expect rates to moderate in NZ.

By contrast, the RBA has scope to ease as today’s February minutes have again made clear. We expect cuts in June and November. However, there appears to be growing fears in the market that the RBA are done for now. This is a vulnerability and may place further upward pressure on AUD short end rates

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Feb 19, 2013

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Forex: EUR/USD still finds opposition around 1.3370

The EUR/USD spiked to 1.3373 high on the release of very appealing German and Eurozone economic sentiment figures by the ZEW February survey, at 48.2 and 42.4, respectively. After trading below the opening price throughout the rest of the European session, the market strengthened back to its highs on US money flows and just ahead of US NAHB housing market index.

The Housing Market Index by NAHB was expected to rise from 47 to 48 in February, but actual data points to a drop to 46, disappointing investors. The pair could only rise to as high as 1.3372 and is currently stuck at 1.3360/70.

“The EUR/USD currency pair continues consolidating inside a narrow trading range near the level of 1.3330”, wrote Roboforex.com analyst Igor Sayadov, expecting the pair to extend the downside towards 1.3240. “After reaching this target, the pair may make a reverse to start a new ascending movement”; he added.

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Feb 19, 2013

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[OctaFX_Farid]

Forex: AUD/USD trading at support near 1.0310

The AUD/USD has spent the afternoon of European trading in a tailspin, as the yesterday’s gains now seem like a distant memory. After the publication of US data, the pair has found traction at the 1.0310 support, where the pair is presently testing in these moments, already suffering a decline of -0.41%.

In the United States, Building Permits (MoM) were reported at 0.925M in January, beating estimates of only 0.915M. Meanwhile the vaunted Producer Price index ex Food and Energy (MoM and YoY) grew +0.2% in January (in line with expectations of +0.2%), and +1.8% (exceeding projections calling for only +1.6%) respectively. Finally, the Producer Price Index (MoM and YoY) climbed only +0.2% in January (slightly missing a consensus of +0.3%) and yielded +1.4% in January (consistent with projections) respectively.

According to the Technical Analyst Team at ICN.com, “The AUD/USD dropped sharply towards 1.0310, however we still think that the possibility for positivity is valid in that the pair couldn’t break 1.0275 levels. Moreover, the linear regression indicators worry us with negativity, but at the same time we will count on stability above the mentioned support at 1.0275 to keep the suggested scenario valid.”

ICN.com analysts posit the next supports at 1.0310, then 1.0275 and finally 1.0220. Should the pair initiate from a prolonged recovery, a break below the 1.0345 resistance will usher in the additional means of corrective structures at 1.0385 and 1.0400.

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Feb 20, 2013

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[OctaFX_Farid]

Forex: USD/JPY wavers after US data

USD/JPY wavered smoothly, rising to 93.20 and then pulling back to the 93.10 area, as investors continue to assess the latest string of US data, which showed jobless claims rose more than expected last week, while consumer prices were flat overall in January.

USD/JPY is currently trading around 93.10, still down 0.5% on the day, having bounced from a low of 92.78 during the European session.

As for technical levels, on the upside immediate resistances are seen at 93.52 (100-hour SMA), followed by 93.85 (intraday high). On the other hand, supports could be found at 92.78 (intraday low) and 92.65 (21-day SMA).

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Feb 21, 2013

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Forex Flash: NZD/USD uptrend hinges on stability above 0.8300 – Westpac

The RBNZ inflation expectations survey (Tuesday) will be the week’s highlight for markets. According to Global Strategist Sean Callow at Westpac, “We don’t expect a dramatic reversal of the 18-month decline in expectations just yet, indeed the last few CPI prints have been surprisingly low so this survey has downside risk.” The other important release is the Q4 terms of trade (Monday), which could surprise with a bounce based on lower import prices (currency effect). Migration (Wednesday), trade balance (Wed), building permits (Thursday) and business confidence (Thursday) complete a busy week.

Ultimately, “the 9 month long uptrend is at risk if 0.8300 below gives way. Global sentiment has soured during the past two days, and RBNZ Governor Wheeler talked the NZD moderately lower in a speech earlier this week. Should the Italian elections this weekend scare the bulls, the extreme long positioning in the NZD would be at risk of being pared. If 0.8300 holds, however, we will retain positive multi-month bias towards

0.8570 next.” writes Callow.

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Feb 21, 2013

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Bearish pressure increases on the Euro

The European currency extended its decline against the dollar on Thursday amid renewed signs the euro zone economy is struggling after the region's PMI came in lower than expected. Besides, the US dollar remains underpinned expectations the Fed may stop providing monetary stimulus after yesterday's FOMC minutes.

"As markets continue to digest the news, the evolving view is that the minutes might not be quite as hawkish as first perceived, but they are still hawkish enough to have global equity markets under significant pressure today and the greenback and yen benefiting from the unsettled market backdrop", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "Next week's testimony from Fed Chairman Bernanke now takes on added importance as a barometer of whether the minutes simply reflect ongoing discussion, or a real changed in the Fed's policy view".

Elsewhere, the pound fell to a 2 ½-year low versus the greenback although it managed to trim losses, while the yen strengthened dragging USD/JPY below the 93.00 mark. Stocks and oil are broadly lower on risk aversion, but gold advanced slightly.

Euro falls below trendline support

The EUR/USD broke below the 1.3200 psychological level, and more importantly below an ascendant trendline coming off July 2012 lows, turning the immediate term and longer term bearish for the cross. A close below this level would reinforce the bearish perspective with 1.3110 as next target (100-day SMA) ahead of the 1.3070 zone (38.2% retracement of the 1.2041/1.3710 rally).

On the upside, the 1.3235 area offers immediate resistance to the EUR/USD, but the pair would need to regain the 1.3300 level to ease the immediate pressure.

In this regard, the BBH analyst team notes that "serious technical damage" is being inflicted. "The euro is falling through the uptrend drawn off last July (Draghi-induced) lows", they commented. "It comes in just below $1.3200 today. The next technical target is near $1.3070-80".

Meanwhile, Wells Fargo analysts note that for the balance of the week their view remains tilted to U.S. dollar strength and foreign currency weakness "as market potentially remain somewhat unsettled after the Fed comments, and depending on whether Germany’s IFO confidence survey shows similar weakness to today's Eurozone confidence data".

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Feb 21, 2013

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[OctaFX_Farid]

Forex Flash: Spain remains on the edge - BBH

Brown Brothers Harriman analysts note that Spain´s situation remains notably precarious, with EC calculations showing Spain as having ran a budget deficit of 10.2% of GDP last year, the most in three years.

They comment that it projects that a deficit this year of 6.7%, which seems a Herculean task to meet. They finish by writing, “There has been some suggestion that Spain could be given more time to reach its deficit targets, but given the lack of progress last year and some backtracking this year, it too may undermine credibility.”

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Feb 22, 2013

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[OctaFX_Farid]

Forex: GBP/USD trapped around 1.5110/20

The sterling continues its march north on Monday, advancing above the key level at 1.5100, as investors continue to digest the UK’s sovereign debt≠≠≠ downgrade by agency Moody’s.

Lee Hardman, Currency Analyst at BTMU, commented, “With fiscal policy set to remain tight, the burden to stimulate growth remains upon the BoE through looser monetary policy, and a weak/weaker pound”. The analyst added that a fragile external demand could hamper any support from a weak GBP, and these efforts could echo in higher inflation, affecting real incomes and consumption.

As of writing, GBP/USD is up 0.09% at 1.5108 facing the next resistance at 1.5330 (high Feb.22) ahead of 1.5393 (MA10d) and finally 1.5452 (high Feb.20).

On the downside, a breach of 1.5073 (hourly low Feb.25) would bring 1.4949 (low Jul.12 2010) en route to 1.4873 (low Jul.1 2010).

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Feb 25, 2013

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Forex: USD/CAD testing Friday’s tops, around 1.0260

The Canadian dollar is depreciating against the buck on Monday, breaking above the congestion range between 1.0220 and 1.0240 to revisit Friday’s highs around 1.0260, as risk aversion is creeping back to the markets,

“USD/CAD has run into better selling interest in the mid 1.02 area since Friday but the chart patterns suggest consolidation rather than a reversal in what remains, in our opinion, a very strongly-entrenched bull trend across a range of timeframes… We rather expect USD losses to remain limited currently and for USD dips will remain well supported and are a buy”, assessed the research team at TD Securities.

USD/CAD is up 0.35% at 1.0260 with the next resistance at 1.0342 (high Jun.29) ahead of 1.0363 (high Jun.28) and then 1.0382 (high Jun.6).

On the flip side, a breakdown of 1.0113 (MA10d) would expose 1.0101 (high Jan.25) and then 1.0055 (low Feb.18).

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Feb 25, 2013

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[OctaFX_Farid]

Forex Flash: Fed's Bernanke speech about QE as main focus – TD Securities

More important than US housing reports (house prices for December and new home sales for January) and Conference Board’s consumer confidence index for February (“where markets are looking for a bounce from the 14-month low of 58.6 up to 61.2”), TD Securities analysts point to Fed Bernanke’s semi-annual testimony to the Senate Banking Committee at 15:00 GMT as the main focus of the day.

“This will be the first update since the Fed adopted open-ended QE, and there is little doubt that Congress will be interested in exactly how and when the Fed will end the program”, wrote analyst Annette Beacher.

“Aside from Bernanke’s updated outlook on the economy (probably slightly more upbeat), the market will be looking for any further clarification on when QE will end and what specific triggers the Fed may use to gauge the end of the program”, she added.

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Feb 26, 2013

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Forex: GBP/USD rejected from 1.5215

The recovery of the pound against the dollar stalled once again at the 1.5215 area, where the 100-hour SMA reinforces static resistance. GBP/USD then fell back below the 1.5200 mark and even hit a fresh daily low of 1.5127, weighed by BoE's Tucker saying "real fx rates need to be lower".

However, GBP/USD found support and managed to recover some ground. The pair is currently trading around 1.5160, where it remains virtually unchanged since opening.

"Cable tried moving up but is facing resistance near 1.5200-15 levels. The bigger trend remains bearish and a failure to rise past 1.5200-15 will be a signal that the short covering is losing steam and a fall towards 1.4850 can well be seen in the coming days", says the Kshitij Consultancy Services Team. "A rise above 1.52 can push it further towards 1.5250-300".

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Feb 26, 2013

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[OctaFX_Farid]

Forex Flash: USD to weaken on today, helping EUR/USD to consolidate - Commerzbank

After last FOMC minutes making investors think the Fed is “hawk in a dove plumage”, Bernanke's speech yesterday “has caused market participants to rethink this view” and Fed's Chairman will speak again today in front of the House of Representatives’ committee.

“Just like yesterday he will show his commitment to QE3 and underline that the Fed will support QE3 for as long as necessary and that at present the benefits of QE3 outweigh the risks – even though he discussed the risks in detail”, wrote analyst Antje Praefcke.

“The statement in the minutes that “many” FOMC members showed concern about the side effects and risks of QE3 was omitted by Bernanke yesterday”, Praefcke continued, explaining that there was no indication yesterday of a possible end or changes to the scale of QE3 and he will avoid that again today.

However, solid and better than expected US data (Richmond Fed Index, consumer confidence, home sales) made up for Bernanke’s dovish approach. Commerzbank analysts expect US Durable goods orders for January to disappoint today. “However this is due to one-off effects and the underlying trend still continues to point clearly upwards”, they explained, predicting USD weakness today, helping the euro to consolidate somewhat. “But in the end the effect is likely to be limited while the crisis bogey still puts pressure on the euro”, Praefcke concluded.

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Feb 27, 2013

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US: Durable Good Orders fell 5.2% in January

The Commerce Department has informed that orders for US long-lasting goods contracted 5.2% during January, missing expectations at -4.4%, and down from +3.7% (revised) in December.

If we strip the Transportation sector, orders rose 1.9%, above estimates at +0.2% and better than December’s +1.0% (revised).

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Feb 27, 2013

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US: Durable Good Orders fell 5.2% in January

The Commerce Department has informed that orders for US long-lasting goods contracted 5.2% during January, missing expectations at -4.4%, and down from +3.7% (revised) in December.

If we strip the Transportation sector, orders rose 1.9%, above estimates at +0.2% and better than December’s +1.0% (revised).

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Feb 27, 2013

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Forex: USD/JPY falls after US durable goods orders

The dollar weakened further against the yen and slipped to fresh daily lows after data showed US durable goods orders dropped more than expected in January as defense spending fell the most in more than a decade and demand for aircraft plunged although outside those volatile categories, there was underlying strength in orders.

USD/JPY lost nearly 30 pips on the data and printed a fresh daily low of 91.33. At time of writing, the cross is trading around 91.40, recording a 0.6% loss on the day.

As for technical levels, next supports could be found at 91.33 (intraday low), 91.00 (psychological level) and 90.85 (Feb 25 low). On the upside, resistances are seen at 92.25 (intraday high), 92.80 (100-hour SMA) and 93.00 (psychological level).

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Feb 27, 2013

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[OctaFX_Farid]

Forex: USD/CAD retreats after Canadian GDP

The Canadian dollar strengthened and dragged USD/CAD back from highs after data showed Canadian GDP grew 0.6% in Q4 2012, in line with market expectations, while the previous reading was upwardly revised to 0.7% from 0.6%.

USD/CAD pulled back from an 8-month high of 1.0341 scored right before the data, and slid toward 1.0300. At time of writing, USD/CAD is trading around 1.0305/10, where it is virtually unchanged since opening.

In terms of technical levels, the pair could face immediate supports at 1.0300 and 1.0260 (100-hour SMA), while resistances are seen at 1.0341 (intraday high) and 1.0360 (Jun 28 high).

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Mar 01, 2013

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[OctaFX_Farid]

Forex: GBP/USD consolidating below 1.5050

The sterling keeps the bearish mood below the 1.5050 level on Friday, dragged lower after softer-than-expected data from the UK manufacturing PMI print.

“The UK authorities have a de facto weak pound policy and will be all the more committed to it now. The economy is flirting with a return to recession, monetary policy is out of juice, and GBP/USD is heading for an imminent break of 1.50. After that, a shift to a test of $1.40 will follow on a 6-month time horizon”, argued Kit Juckes, analyst at Societe Generale.

GBP/USD is losing 0.92% at 1.5022 facing the next support at the psychological level at 1.5000 followed by 1.4949 (low Jul.12 2010) and then 1.4873 (low Jul.1 2010).

On the upside, a breakout of 1.5173 (hourly high Mar.1) would expose 1.5223 (high Feb.28) and then 1.5235 (MA10d).

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Mar 01, 2013

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Forex: USD/JPY breaks above 93.00

The US dollar continues to strengthen across the board, having recently broken above the 93.00 mark against the yen to hit its highest level since Monday, underpinned by better-than-expected US PMI and consumer confidence.

USD/JPY has risen nearly 70 pips within the last hour and reached a high of 93.50 before easing a tad. At time of writing, USD/JPY is trading around 93.35 where it records a 0.9% gain during the first day of March.

In terms of technical levels, if the USD/JPY manages to clear the 93.50 area, next resistances are seen at 94.00 and 94.30.On the other hand, immediate supports could be found at 93.00, 92.70 (20-hour SMA), and 92.40 (intraday low).

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Mar 01, 2013

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Forex: USD/JPY breaks above 93.00

The US dollar continues to strengthen across the board, having recently broken above the 93.00 mark against the yen to hit its highest level since Monday, underpinned by better-than-expected US PMI and consumer confidence.

USD/JPY has risen nearly 70 pips within the last hour and reached a high of 93.50 before easing a tad. At time of writing, USD/JPY is trading around 93.35 where it records a 0.9% gain during the first day of March.

In terms of technical levels, if the USD/JPY manages to clear the 93.50 area, next resistances are seen at 94.00 and 94.30.On the other hand, immediate supports could be found at 93.00, 92.70 (20-hour SMA), and 92.40 (intraday low).

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Mar 01, 2013

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[OctaFX_Farid]

Forex Flash: GBP/USD to move into a 1.45-1.55 range - RBS

The Sterling has been trading under pressure against the Greenback in the last weeks and after declining around 1350 pips since February 1st high at 1.6335, the GBP/USD seems to have found some support at 1.5000 where the pair built a consolidation movement.

RBS' analyst Paul Robson believes that the GBPUSD is moving into a 1.45-1.55 range, with risks skewed to the downside. "While we believe that GBP fundamentals have deteriorated further, and this will keep the pressure on GBP/USD, we do expect a kicker from a stronger USD tone from concerns over Italy."

"This may mean that EUR/GBP falls at the same time as GBP/USD falls. The USD part has led us to lower our assumed profile for GBP/USD," points Robson. Currently the GBP/USD is itching higher and trading at 1.5070, 0.20% above opening price action. "We now see GBP/USD moving into a 1.45-1.55 range, with risks skewed to the downside," concluded RBS' analyst.

The bank expects the Pound to remain below the 1.5000 level across the 2013. RBS' forecasts are March: 1.4800; Q2 1.4600; Q3: 1.4900 to end the year at 1.4900.

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Mar 04, 2013

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Forex Flash: FLS fails to firefight monetary arson - Nomura

Nomura Economist Phillip Rush notes that there is little evidence that Funding For Lending (FLS) is imparting much stimulus.

He writes, “We do not believe it can do in the presence of strict regulatory pressure to deleverage. Nor is it tying sufficient funding to Bank rate for a cut to be worthwhile. Increasingly repressive policies are being brought up, but softer communication changes are likely to come first, in our view.”

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Mar 04, 2013

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Forex Flash: FLS fails to firefight monetary arson - Nomura

Nomura Economist Phillip Rush notes that there is little evidence that Funding For Lending (FLS) is imparting much stimulus.

He writes, “We do not believe it can do in the presence of strict regulatory pressure to deleverage. Nor is it tying sufficient funding to Bank rate for a cut to be worthwhile. Increasingly repressive policies are being brought up, but softer communication changes are likely to come first, in our view.”

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Mar 04, 2013

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[OctaFX_Farid]

Troika to suggest loan extension options for Ireland and Portugal and resume aid talks with Cyprus

At the press conference ending the two-day Eurogroup meeting on Tuesday EU Commissioner for Economic and Monetary affairs Olli Rehn assured that the the Troika would resume bailout negotiations with Cyprus as soon as possible, with an aim of reaching the final deal at the end of March.

As far as the extension of bailout loan maturities for Ireland and Portugal is concerned, Rehn said that it had been agreed that the Troika should consider establishing a new debt repayment schedule for a part of the loans. The final decision would be announced in April at the next Eurogroup meeting in Dublin.

The question of restricting bank bonuses, supported by all Eurozone officials except for UK Chancellor George Osborne, will be further examined from the side of technical details and put to vote in the nearest future.

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Mar 05, 2013

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Fundamental Afternoon Wrap: Euro PMIs and Central Bank meets in focus

This afternoon institutional report reflects market mood today, with focus falling on the key central bank meetings later in the week and the stablising European services PMIs today. There is a feeling that absent sudden Italian developments, EUR/USD may struggle to decline much further, while in the UK the shock of Manufacturing PMIs was offset by today's numbers.

EUR

Brown Brothers Harriman analysts note that Euro area service PMIs showed a bit of improvement from the 47.3 flash reading, rising to 47.9. However they add that the real take away and one not lost on the foreign exchange market which sold into the euro's bounce, was that the February reading was weaker than the 48.6 reading seen in January. ING economist Martin van Vliet notes that the sharp increase in retail sales raises hopes that the consumer sector will be less of a drag on the Eurozone economy in the first quarter of this year. Overall, he feels that the tentative signs of stabilisation in retail sales, coupled with the upward revision to the earlier “flash” Eurozone composite PMI (to 47.9 in February), reinforces his belief that the ECB will keep interest rates on hold on Thursday.

Jane Foley of Rabobank feels that despite the downside risks, on the back of the QE headwinds undermining USD, she is reluctant to call lower lows on EUR/USD. However, the Italian situation looks like a wildcard that needs to be monitored. Nick Bennenbroek of Wells Fargo notes that the euro is up on firmer than expected data and with some indications surrounding the European Union finance ministers meeting that more flexibility surrounding Europe’s austerity plans may be possible.

GBP

Brown Brothers Harriman analysts note that after reporting weak manufacturing and construction PMIS, the UK reported a better than expected CIPS service PMI, the highest reading since last September. BNP Paribas economist Catherine Stephan notes that in February, activity accelerated again in services, with the good news partially offsetting the poor performance in the manufacturing sector. Overall the PMI composite Index remained in expansion territory.

USD

Marc Chandler of Brown Brothers Harriman notes reports from the YS Commerce Department that estimate hat the dollar value of US exports rose sharply last year to $2.2 trillion which means that US exports appear to have surpassed Chinese exports, which the Chinese government estimates at $2.05 trillion.

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Mar 05, 2013

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Forex Flash: Policy-related drivers continue to dictate currencies – UBS

With the dust settling post-RBA, it is worth revisiting some of the non-policy related drivers behind the currency. As always, positioning comes to the fore. On a structural level, we have highlighted for some time that the amount of inflow into liquid 'super-AAAs' over the last 18 months have had the effect of insulating the currency from wider risk swings, both helping lowering the beta on the AUD and secularly compressing implied volatility.

Although the demand was there, the currency actually underperformed all other currencies in G10 bar the JPY. Investors need no reminder of the economic and political volatility out of China last year, where hard landing fears were not alleviated until late in the year, and in hindsight, only briefly. As such, “a China risk premium was already being priced into the AUD. Hence, when the big 'AAA-unwind' in favor of the EUR actually happened, and despite unfavorable commentary from the RBA, compared to the NOK and CAD, AUD hasn't really done that poorly due to the perception that it was always more at risk.” notes Research Analyst Gareth Berry at UBS.

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Mar 05, 2013

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