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Dukascopy Forex Overview: 20-03-2012 - Afternoon

Dukascopy Bank analytic desk report
Published: 20/03/2012 18:20
Dukascopy Fundamental Analysis
EUR
Deutsche Boerse (DB) is likely to sue the European Commission over the decision to restrict merger of the DB and NYSE Euronext. DB officials had hoped that this massive deal would encourage similar mergers in the future and make a significant step towards the development of the worldwide derivative market.

USD
The greenback ascended versus most of its counterparts on news China's steel manufacturing is slowing, curbing demand for currencies dependent on Asian growth. US dollar climbed 0.3% versus Aussie to USD 1.0576 and advanced to against Japanese currency to JPY 83.43. Greenback traded USD 1.3236 per Euro. Currently EUR/USD is trading at USD 1.3236 and USD/JPY is trading at JPY 83.40.

GBP
UK’s CPI and Core CPI in February was in line with forecasts of 3.4% and 2.4% respectively on a year-to-year basis. However, the inflation is still above the Bank of England limit, mainly because of food and alcohol price increases.

CHF
The official SNB exchange rate for EUR/CHF is 1.2064 today; yield on 10-year Swiss Confederation bonds increased to 0.93%. 3-month LIBOR CHF stands at 0.10%, and is within the target range of 0.00-0.25%. Swiss SMI stock index has lost 0.33% since the opening bell, and is currently fluctuating around 6305 points.

JPY
Royal Bank of Scotland has decided instead of selling shut some of its divisions in Singapore, South Korea and Indonesia. RBS, the biggest British State-owned bank will start reforms today with closing equity capital markets, corporate finance units and cash equities in South Korea. RBS has eliminated in total 30 000 working places since its rescue.
Dukascopy Technical Analysis
EUR/USD
Daily maximum: 1.3251
Daily minimum: 1.3172
Despite the majority of indicators being bullish, EUR/USD has sold off to a confluence of supports at 1.3169/58, where it has managed to regain its upside momentum and commence rallying. The pair is thus expected to attain 1.3276/82 in the near-term and consolidate there. Daily Resistance: 1.3276/82; 1.3335/55; 1.3405. Daily Support: 1.3211; 1.3186; 1.3169/58. Daily Bias: Bullish.

EUR/JPY
Daily maximum: 110.82
Daily minimum: 110.27
EUR/JPY has been trading flat today as it has been struggling with a resistance at 110.85. Being that the long-term outlook remains bullish, this level should be breached after the pair pulls back to and then rebounds from 110.01. Daily Resistance: 110.85; 110.98; 111.40. Daily Support: 110.04/01; 109.77/65; 109.46. Daily Bias: Strongly bullish.

GBP/USD
Daily maximum: 1.5896
Daily minimum: 1.5830
Cable's bullish momentum has temporarily weakened, allowing for a dip down to 1.5780/74. Nonetheless, the pair should be able to regain strength at the latter level and recommence advancing towards 1.5949/66. Daily Resistance: 1.5873; 1.5926; 1.5949/66. Daily Support: 1.5830; 1.5780/74; 1.5739. Daily Bias: Strongly bullish.

USD/JPY
Daily maximum: 83.82
Daily minimum: 83.31
Given a large amount of resistances USD/JPY is currently facing, it will take some time to erode the area from 83.52/84.20. Therefore the pair is likely to drop down to 82.90/77 first and only then current bearish correction will be deemed to be over. Daily Resistance: 83.52/62; 83.573; 83.86. Daily Support: 83.44; 83.32; 83.07. Daily Bias: Neutral.

USD/CHF
Daily maximum: 0.9152
Daily minimum: 0.9099
The currency couple has failed to overcome 0.9148 and is now attempting to form a base near an immediate support located at 0.9110. This level is unlikely to withstand bearish pressure for long, as USD/CHF has been trading in a downward sloping channel since Mar 15 and there is little chance of a reversal in the nearest future. Daily Resistance: 0.9128; 0.9148; 0.9166. Daily Support: 0.9110; 0.9079; 0.9042. Daily Bias: Bearish.
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Expert Commentary
"For EUR/USD we have a target of 1.25 on a short-term horizon, and for the end of September ‘12 we expect EUR/USD to reach 1.30"
C. Hecht, Currency Strategist at Commerzbank, evaluated the greenback’s performance and gave a forecast for the US Dollar against the basket of currencies for a short and long term. >>

"The Japan’s trade deficit effect on FX will be limited. Therefore, the Yen weakness will reduce in the second half of the year"
Today Dukascopy interviewed the Head of FX Strategy at JP Morgan Chase & Co in Singapore concerning a forecast for ASD/JPY, EUR/JPY and USD/JPY. >>

"No doubt, the importance of the USD will be reduced with more countries using the Yuan as an alternative currency for trade settlement"
Will this decision pose a risk to the US Dollar, a key global currency? Will the Chinese currency become alternative global reserve currency? Dukascopy interviewed Roy Teo, FX Strategist at ABN Amro Bank NV, to find out the answers to these questions. >>
Press Review
Europe
European Stocks Decline as BMW, Daimler Retreat on China
European (SXXP) stocks retreated for a second day as an official at China’s association of carmakers said auto sales will miss its forecast in 2012.

USA
Housing starts dip; permits near 3-1/2-year high
Permits for U.S. homebuilding neared a 3-1/2 year high in February, even as groundbreaking activity slipped, suggesting a nascent recovery in the housing market was still on track.

Asia & Pacific
China Correct to Approach Freer Yuan With Caution: Lamy
China needs to allow the value of its currency to appreciate but its financial regulators should do so at a pace that will not hurt its economy, according to Pascal Lamy, Director-General of the World Trade Organization.
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Market Research
Currency Index & Volatility
Fluctuations of Euro’s value relative to volatility of other major currencies have been less prominent. During the observed period the average price of the single currency did not deviate by more than 0.5% of its base value, closing the previous week with a half per cent gain, while being on a upswing.
Dukascopy Bank Sentiment Index
The current and six-month global economic outlooks improved for a second consecutive month in February. Gauges assessing the economic expectations advanced to 0.48 and 0.52, according to a poll conducted by Dukascopy Bank SA. The three-year economic outlook rose to 0.66 from 0.64 in January.
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Global Stock Market Review
S&P
S&P 500 index strengthened to an almost four record high on news Apple Inc prepares to pay dividends and buy back its stock. US benchmark advanced 0.4% or 5.58 points and finished at 1,409.75. Apple surged 2.7% and UPS jumped 3.4% on announcement the company increased its bid for TNT Express NV by 5.6%.

Dow Jones Industrial Average
Dow Jones Industrial Average index traded close to flat on Monday as trading volumes were low and investors paused after recent rally. Blue chip index added 0.05% or 6.51 points and closed at 13,239.13 with energy and financial stocks marking the most notable gains.

FTSE 100
British FTSE 100 index extended losses on Tuesday after BHP Billiton announced the demand for iron ore from China was falling. Resource stocks weighed heavily on the index with BHP Billiton tumbling 3.4% and Fresnillo slipping 4.4%.
Commodity Overview
Precious Metals
Precious metals eased up on Monday on the weaker US Dollar and mixed equities. Moreover, the commodity group gained a spree as Fed is still undecided on wheatear to embark on the next round of quantitative easing.
 
Industrial Metals
Base metals advanced on Monday amid broadly weaker US Dollar and growing energy prices. The industry metals pack continued to balance between the positive headlines from the US and signs of stagnation in China’s economy.
 
Energy
Energy commodities were mixed on Monday amid depreciating US Dollar and lingering supply disruption concerns. Brent and crude oil continued to be exposed to the key macroeconomic data from the US and China.
 
Agriculture
Rural commodities were mixed with advancing sugar and coffee and falling grains amid broadly lower US Dollar. Wheat and corn futures came under pressure as US planting conditions improved after rains and as Russia announced it would not impose any restriction on the grain exports this year
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Trade Pattern Idea
Emerging Pattern GBP/NZD
GBP/NZD reached its resistance level at 1.9460 and has formed the ascend-ing triangle pattern. It has 55% quality along with 80% magnitude in the 82 bar period.
Economic Research
Commodity Currencies: CAD
Dukascopy Bank research department is launching a series of research devoted to various traders’ perceptions and general myths that are popular among investors. We start the series with research on commodity currencies (currencies of countries rich in natural resources, with the Canadian, the Australian, and the New Zealand dollars being the most liquid of them), as they are believed to be highly linked to the movements in physical commodity prices.
 
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Disclaimer:
This overview can be used only for informational purposes. Dukascopy Bank SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

 


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