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Dukascopy Forex Overview: 06-04-2012 - Morning

Dukascopy Bank analytic desk report
Published: 06/04/2012 09:45
Dukascopy Fundamental Analysis
EUR
"Spain is facing an economic situation of extreme difficulty"
- Mariano Rajoy, Prime Minister of Spain
Demand for Spain’s debt tumbled on Wednesday and the nation only sold 2.59 billion euros of bonds,  just above the minimum amount it planned. The average yield on five-year bonds rose to 4.319 percent from 3.376 percent the previous month.


USD
"Demand for Spain’s debt tumbled on Wednesday and the nation only sold 2.59 billion euros of bonds,  just above the minimum amount it planned. The average yield on five-year bonds rose to 4.319 percent from 3.376 percent the previous month"
- Ryan Sweet, a senior economist at Moody’s Analytics Inc.
The number of Americans claiming for unemployment benefits declined slightly to 357 thousand in the week ended March 31 from the week before, said the Department of Labor on Thursday.


GBP
"It doesn't feel right - the 1% fall in manufacturing"
- Ross Walker, economist at RBS
U.K. manufacturing output fell by the most for 10 months in February, said the Office for National Statistics on Thursday. Factory output plunged 1 per cent from January, casting doubt on the nation's economic recovery.

CHF
"The phase of ‘all is well’ was at the start of the year; now we’re returning to reality"
- Yves Maillot, the head of investments at Robeco Gestions SA
Swiss stocks were little changed on Thursday. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, fell 0.05%, or 3.30 points, to 6,163.49. The broader Swiss Performance Index erased 0.01%, or 0.40 points, to 5,670.32.

JPY
"The fact that investors were so unenthusiastic about Spain’s auction reminded people that Europe has made very little real progress in solving its debt problems"
- Hisakazu Amano, a fund manager at T&D Asset Management Co.
Japanese stocks retreated for a third consecutive day on Thursday, after yields on Spanish bonds soared.The Nikkei 225 erased 0.53%, or 52.38 points, to 9,767.61, while the broader Topix retreated 0.33%, or 2.79, to 832.57.
Dukascopy Technical Analysis
EUR/USD
"It's rare for FX markets to not test psychological levels in major currencies, so the market will give $1.30 another look and will breach the level in the next week or so"
- BBVA (based on WSJ)
After encountering an accelerated downtrend at 1.3037, EUR/USD has been trading flat.

EUR/JPY
"[The Euro] is likely to keep extending losses as there's no event that could stop its decline amid worries over Spain"
- Bank of Tokyo-Mitsubishi UFJ (based on CNBC)
For now EUR/JPY is unlikely to exit down trending channel. Rallies should be halted by 107.55/91, 108.22 and 109.05, leaving almost no room for recovery.

GBP/USD
"UK industrial and manufacturing production will be of interest. The market is expecting UK IP to rebound after a disappointing January number, so a downside surprise will weigh on GBP"
- Lloyds (based on Reuters)
GBP/USD has managed to rebound from an uptrend at 1.5803 and is now aiming for 1.5888 and a confluence of resistances at 1.5926/49, which is unlikely to be penetrated at the very first attempt, given mixed signals of most of the indicators.

USD/JPY
"Morgan Stanley MUFG Securities Co., Mizuho Securities Co. and SMBC Nikko Securities Inc. predict that the BOJ will expand asset purchases at a meeting on April 27"
- Bloomberg
USD/JPY is presently forming a symmetrical triangle on an hourly chart. The price is struggling at a resistance at 82.28, which guards 82.49/52 and 82.69/78. In case the pair tumbles, the dip should be limited by levels at 82.03 and 81.87.

USD/CHF
"In the near-term, the SNB may have to intervene to defend their credibility, but whether this policy will continue to work remains to be seen"
- Morgan Stanley (based on Bloomberg)
The currency pair is facing a formidable resistance at 0.9234, thus we are likely to observe a temporary bearish correction down to 0.9167/47 or even 0.9075, before the bullish momentum is reignited.
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Expert Commentary
"We believe that the Fed will be laying the groundwork for additional growth supporting measures around the middle of the year"
Sean Callow, Senior Currency Strategist at Westpac, shared with Dukascopy Westpac’s market outlook for April 2012. we believe that the Fed will be laying the groundwork for additional growth supporting measures around the middle of the year. >>

"For EUR/USD our forecast for the 2Q is 1.32"
Carolin Hecht, Currency Strategist at Commerzbank, favors bullish scenario for the Euro/Greenback pair. >>

"For USD/JPY our forecast for the 2Q is 85"
Michael Sneyd, the FX strategist at the UK-based BNP Paribas branch, shares his views on the dollar-japanese yen currency pair>>
Press Review
Europe
Spain’s Economic Woes Rattle Investors; Europe Markets Slide
A slide in Spanish stocks and bonds deepened as investors’ concerns that Prime Minister Mariano Rajoy may require international aid rattled markets.

USA
Market Expects Another Month of 200,000 Job Growth
Companies were expected to have hired slightly fewer workers in March than in February, but economists say the employment picture continues to improve. The consensus forecast is that 203,000 total jobs were added in March and that the unemployment rate   held steady at 8.3 percent, according to Thomson Reuters. That compares to 227,000 workers added in February.

Asia & Pacific
Japan Feb Key Index Rebounds, Govt Now Says Econ Improving
Japan's coincident composite index (CI), which reflects current business conditions, marked the first rise in two months in February while the leading index continued to rise, indicating a gradual recovery amid easing concerns about prospects for the global economy, preliminary Cabinet Office data showed on Friday.
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Market Research
Currency Index & Volatility
The US Dollar has been relaively stable throughout the last five trading days due to anicipaion of FOMC Meeing Minutes release. For the most of the ime, however, greenback’s currency index has been hovering below a base value of 100.
Dukascopy Bank Sentiment Index
Current global economic outlook
The current global economic outlook improved for a third straight month in March, while the six-month economic outlook stagnated at 0.52. Current economic expectations advanced to 0.50, up by 0.02 points from the previous month. The three-year economic outlook improved to 0.67 from 0.66 in February.
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Global Stock Market Review
S&P
S&P 500 index tumbled on Wednesday as weak Spanish bond auction renewed investor fears about possible recession.

Dow Jones Industrial Average
Dow Jones Industrial Average index prolonged losses on Wednesday, pressed by financial stocks which responded negatively to the developments in Europe.

FTSE 100
After dropping 2.3% on Wednesday, FTSE 100 index prolonged losses on Thursday as data showed manufacturing production tumbled by 1% in February, falling below economists’ predictions of a 0.1% improvement.
Commodity Overview
Precious Metals
Precious metals continued their tumble for the second consecutive day on Wednesday as hopes for further easing measures in the US disappeared.
 
Industrial Metals
Industry metals faced persistent pressure after FOMC minutes that indicated Fed unwillingness to start the next round of the quantitative easing.
 
Energy
Energy commodities fell on Wednesday amid firmer US Dollar and EIA report on the US crude oil inventories.
 
Agriculture
Rural commodities, except for sugar, were lower on Wednesday along with stronger US Dollar and softer global equities. 
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Trade Pattern Idea
NZD/USD Emerging Pattern: Descending Triangle
NZD/USD was decreasing during the last week, forming a Descending triangle pattern. The formation has 76% quality along with 71% magnitude within 117 bars.

The price recoiled from the pattern's support level at 0.8123, and slowed testing the resistance at 0.8169. Bullish investors may focus their attention on the key level around 0.8178/97. If the price breaks this level, the forecast target for long traders might be around 0.8215.

Economic Research
Commodity Currencies: AUD
The Dukascopy Bank research department continues its research on commodity currencies. In the first issue we have established that the relationship between CAD/AUD and commodities is rather strong, yet inverse. That is, the AUD strengthens against the CAD as commodity prices go up, and weakens when they go down. This allows us to expect the AUD exchange rates to be more closely linked with commodity price changes. Therefore we make the Australian dollar the subject of our current research.
 
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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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