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Dukascopy Forex Overview: 05-03-2012 - Morning

Dukascopy Bank analytic desk report
Published: 05/03/2012 09:45
Dukascopy Fundamental Analysis
EUR
"It [signed fiscal compact] helps prevent a repetition of the sovereign debt crisis"
- Herman Van Rompuy, President of the European Council
All but two of the European Union leaders Friday signed a treaty to adopt strict new rules on national deficits and debts. Only Britain and the Czech Republic did not sign the agreement.


USD
"There’s a lot of room to go in the stock market"
- John Carey, a Boston-based money manager at Pioneer Investments
The Standard & Poor's 500 lost 0.32%, or 4.46 points, to 1,369.63. The Dow Jones Industrial Average slid 0.02%, by 2.73 points, to 12,977.57. The Nasdaq Composite Index dipped by 0.43%, or 12.78 points, to 2,976.19.


GBP
"The improved performance of the construction sector adds to other positive data released on the UK economy"
- Sarah Bingham, economist at Markit
The Markit/CIPS purchasing managers' index for construction jumped to 54.3 in February, the highest since last March, from 51.4 in January, said the Markit research agency on Friday.

CHF
"Dampening sentiment is a report that shows that banks continue to park large amounts of cash with the ECB"
- Chris Beauchamp, a market analyst at IG Index
Swiss stocks gained on Friday despite the fact that the European Central Bank overnight deposits soared after the bank allotted 529.5 billion euros in long-term refinancing operation.

JPY
"The U.S. economy overall is headed for a mild recovery, and that’s supporting stocks"
- Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co.
Japanese household spending fell 2.3 per cent in January from the same period last year and unemployment rose by 0.1 per cent to 4.6 per cent, showed the government data on Friday.
Dukascopy Technical Analysis
EUR/USD
"We see further U.S. dollar strength versus the euro, yen and sterling"
- Barclays Capital (based on Reuters)
This week EUR/USD currency couple is expected to seek for lower levels. At the moment the pair is approaching an uptrend at 1.3156, which guards 1.3072 (55 day ma). From above EUR/USD is capped by 1.3322 and 1.3389.

EUR/JPY
"The debt crisis is by no means over given the negative growth/budget deficit dynamics in play, but the LTROs appear to have bought the euro zone some time"
- Brown Brothers Harriman & Co. (based on WSJ)
Being that a resistance at 108.75 proved to be impenetrable for EUR/JPY for now, the pair is likely to sell off to 106.90 (200 day ma). Additional support is provided by 106.78 and 106.02. Despite this temporary weakness, EUR/JPY is bullish in the long-term until it reaches 111.57.

GBP/USD
"Sterling is expected to feel the effects of a broader scaling back of global investor optimism. Hence, we maintain our sterling/dollar bearish strategy"
- Morgan Stanley (Reuters)
Since the Cable has already pierced through 1.5893 (200 day ma), it may extend its losses to 1.5802. In case the latter level is breached, the pair should target 1.5751 next. Resistances situated at 1.5893 and 1.6000 should contain intraday rallies.

USD/JPY
"If the jobs data comes in strong, we could see the dollar rise another 1.5 yen or so"
- Mizuho Corporate Bank (based on CNBC)
USD/JPY is expected to struggle at 81.49/63 today and then resume advancing toward 82.23 en route to 83.80, which is a long-term goal. Dips should be limited by supports at 80.42 and 80.00.

USD/CHF
"It does seem that risk appetite is not as strong as it was one month ago"
- Standard Chartered Plc (based on Bloomberg)
Current bullish momentum which was confirmed by a breach of 0.9066/88 is likely to persist until 0.9263 is attained, though USD/CHF will have to overcome 0.9150 and 0.9203 first. In the longer term the pair is targeting 0.9595.
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Expert Commentary
"The government in Japan is pressuring the Bank of Japan to take more aggressive policy measures"
Jane Foley expects the Yen to weaken further. >>

"There is a risk that bailout funds serve only to delay the inevitable"
Prof. Makin doubts whether Eurozone will raise the size of bailout fund. >>

"We do believe that with market embracing the positive aspects of LTRO, we would not be surprised to see EUR/USD continue to climb higher"
Paul Robson on EUR/USD. >>
Press Review
Europe
Greece Debt-Swap Deadline This Week to Show If Europe Moving Past Crisis
The European Union faces a first test in its attempt to turn the page on the two-year debt crisis when Greece’s private creditors decide this week whether to sign off on the biggest sovereign-debt restructuring in history.

USA
U.S. risks persist, China in good stead so far: IMF
A renewed drop in housing prices could thwart the U.S. economic recovery in the short term while Washington's lack of a "credible, comprehensive" fiscal plan poses a major medium-term risk, a top IMF official said.

Asia & Pacific
China cuts growth target to 7.5% in 2012
China expects economic growth of 7.5% this year as it looks for more sustainable expansion, prepares for a change in leadership and rides out a global slowdown.
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Market Research
Currency Index & Volatility
Weakness of the British Pound invoked by concerns regarding the possibility of further easing of monetary policy by BoE (Feb 22) has waned off. For the last five trading days the Sterling has been appreciating (except Feb 27) and gained 2% in value on average relative to the other currencies.
Dukascopy Bank Sentiment Index
Current global economic outlook
The current and six-month global economic outlook improved modestly by 0.03 to 0.46 in January from December, according to a poll conducted by Dukascopy Bank SA. The three-year global economic outlook remains fairly positive with a mean value of 0.64, up 0.01 from December.
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Global Stock Market Review
S&P
S&P 500 index finished higher on Thursday, supported by financials on news Greek plan to restructure its debt should not affect any bond insurance payments yet.

Dow Jones Industrial Average
Dow Jones Industrial Average index traded higher on Thursday lifted by positive US jobs data.

FTSE 100
British FTSE 100 index traded lower on Friday, pushed down by mining and telecommunication shares.
Commodity Overview
Precious Metals
Precious metals rallied on Thursday amid positive economic data releases and stronger demand.
 
Industrial Metals
Base metals apart from zinc caught momentum on Thursday amid better than expected PMI data worldwide.
 
Energy
Energy commodities, except for natural gas, posted firm gains on Thursday amid expected tightening of the supply and hopes for stronger demand due to improved manufacturing activity of the world’s largest economies.
 
Agriculture
Rural commodities were mostly lower on Thursday after volatile trades ahead of March contract expiration
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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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