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Dukascopy Forex Overview: 13-03-2012 - Afternoon

Dukascopy Bank analytic desk report
Published: 13/03/2012 18:16
Dukascopy Fundamental Analysis
EUR
European governments urged Spain to implement larger budged deficit cuts to prevent debt crisis from returning to the region. 10 days ago Spanish PM Rajoy unilaterally increased Spain's deficit target to 5.8% of GDP for year 2012 and claimed the country will aim to attain region's common target of maximum 3% in 2013. The announcement was not praised by region's officials who recently signed fiscal discipline treaty.

USD
US federal budget deficit widened more than expected in February, reported Department of the Treasury. The US federal budget balance declined to minus 231.7 billion US Dollars on a seasonally adjusted basis in February as compared to minus 27.4 billion US Dollars in January. Experts predicted the deficit to attain 229.3 billion US Dollars.

GBP
UK house sales improved slightly last month, reported Rics citing its latest survey. More people started to buy property ahead of adoption of a 1% stamp duty for houses priced less than 250,000 British Pounds. The duty comes in force 24 March. In effect, average sales per agency branch increased to 16 from 15.7 in February. Moreover, people do not expect real estate prices to tumble further, the agency added.

CHF
The official SNB exchange rate for EUR/CHF is 1.2060 today; yield on 10-year Swiss Confederation bonds increased to 0.74%. 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 0.90% since the opening bell, and is currently fluctuating around 6245 points.

JPY
The Bank of Japan decided to expand its programme for US Dollar loans, adding JPY 1 trillion (USD 12 billion). BoJ also announced it will keep its key interest rate unchanged between zero and 0.1%. Central bank's stimulus follows a call from leading Democratic Party to implement more tough steps to tackle deflation. Japanese Yen climbed on today's decision.
Dukascopy Technical Analysis
EUR/USD
Daily maximum: 1.3191
Daily minimum: 1.3051
EUR/USD has changed its direction before encountering a support at 1.3046/41 and is now headed towards a resistance located at 1.3132/40, which should be able to contain near-term rallies. Daily Resistance: 1.3108; 1.3132/40; 1.3189/3201. Daily Support: 1.3074; 1.3046/41; 1.3014. Daily Bias: Strongly bearish.

EUR/JPY
Daily maximum: 108.48
Daily minimum: 108.24
EUR/JPY has been fluctuating within the levels of 108.65 and 108.25/10 intraday. Nonetheless, in days to come the pair should breach the immediade resistance and continue advancing. Daily Resistance: 108.65; 108.82; 109.17. Daily Support: 108.25/10; 107.82; 107.58. Daily Bias: Bullish.

GBP/USD
Daily maximum: 1.5746
Daily minimum: 1.5620
Bearish momentum of the Cable has weakened, allowing the pair to bounce off a support at 1.5603/5583. However, the current rally is likely to be tepid and halt near a tough resistance located at 1.5742/56. Daily Resistance: 1.5691/5716; 1.5742/56; 1.5779/5789. Daily Support: 1.5666/49; 1.5603/5583; 1.5556. Daily Bias: Bearish.

USD/JPY
Daily maximum: 82.85
Daily minimum: 81.96
After USD/JPY rebounded from an uptrend at 82.10, the US Dollar continued to appreciate relative to the Japanese Yen and is expected to do so for the time being. Daily Resistance: 82.75; 82.90/98. Daily Support: 82.56; 82.38/15; 81.92/90. Daily Bias: Bullish.

USD/CHF
Daily maximum: 0.9240
Daily minimum: 0.9139
Strong bullish impetus of the currency pair has been stopped by a strong resistance located at 0.9237/41, turning daily bias to neutral. Now the price should target support at 0.9140/29. Daily Resistance: 0.9237/41; 0.9264. Daily Support: 0.9197; 0.9180/74; 0.9140/29. Daily Bias: Neutral.
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Expert Commentary
"One would be overconfident to think that the problem will disappear in the long run"
Dukascopy is carrying out a research to evaluate the current Libor-setting system, find out whether new measures proposed by the BBA can combat the potential future manipulations. The bank interviewed H. Shefrin, Professor of Finance at Santa Clara University and author of numerous books on behavioural finance. >>

"We expect the NZD to re-strengthen as New Zealand economic growth begins to ramp up and the RBNZ raises interest rates"
Mike Jones, Currency Strategist at Reserve Bank of New Zealand on the performance of NZD. >>

"The US is going through a very slow recovery, with several unanticipated difficulties, if compared to previous recessions"
In light of a steady recovery of the US economy, Dukascopy decided to interview Olivier Morand, Professor of Economics at University of Connecticut, who shared his opinion on the present economic situation in the US and its prospects. >>
Press Review
Europe
Spain Agrees to EU Budget Demands
Spain will comply with the additional budget cuts the European Union has demanded of it, likely ending a dispute over its 2012 budget that has been regarded as a key test of ambitious new rules for the euro currency bloc.

USA
Retail Sales in U.S. Rose in February by Most in Five Months
Retail sales in the U.S. rose in February by the most in five months, reflecting broad-based gains that indicate the world’s largest economy is picking up even as gasoline costs climb.

Asia & Pacific
BOJ Keeps Monetary Policy Steady, Miyao Proposes Easing
The Bank of Japan held off on easing monetary policy on Tuesday after last month's surprise loosening, but board member Ryuzo Miyao unsuccessfully proposed a further easing by increasing the bank's asset-buying and loan scheme by 5 trillion yen ($61 billion).
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Market Research
Currency Index & Volatility
Even though the Euro’s value has been wavering within the limits of -0.5% and +0.5% for the last five trading days, the single currency has ended the preceding week exactly at the base value along with the Swiss Franc due to their strong correlation.
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 traded almost flat on Monday, facing the thinnest volumes in 2012 as investors awaited what effect China’s slowdown will have on monetary easing. S&P 500 added 0.02% or 0.22 points and finished at 1,371.09.

Dow Jones Industrial Average
DDow Jones Industrial Average index appreciated for the fourth consecutive session, lifted by upcoming monetary policy decision from Fed as investors expect forthcoming economic data may limit Fed’s incentives to stick to low interest rates.

FTSE 100
British FTSE 100 index advanced on Tuesday lifted by financial sector which added 1.7% after UK PM Cameron said the government will boost construction through supporting buyers with small cash deposits to purchase new homes.
Commodity Overview
Precious Metals
Precious metals were mostly lower on Monday amid broadly weaker US Dollar and stronger equities. Precious metals were balancing between improved commodity imports in China and wider China’s trade deficit. The slowdown of China’s economy may impact middle class that is major consumer of gold’s jewelry.
 
Industrial Metals
Base metals apart from zinc tumbled on Monday along with pessimistic trade balance data from China and widening federal budget deficit in the US. The sluggish economic performance of China dampened traders’ confidence in growth-sensitive assets.
 
Energy
Energy commodities fell on Monday amid signs of stagnation of China’s and Italy’s economies. Even high energy commodity imports did not managed to offset worries over record high trade deficit in China and capped any upswing of the group.
 
Agriculture
Rural commodities except for coffee were higher on Monday amid broadly weaker US Dollar and improved investors’ appetite for agricultural commodities after weather setbacks. Grains gained support as speculation on strong China demand persist. 
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Trade Pattern Idea
GBP/USD Emerging Pattern: Channel Down
GBP/USD rebounded from support level at 1.5602 and formed a downside channel on 1H chart. The pattern started on March 7 and now it has 52% quality and 71% magnitude within 112 bars.
Recent Articles
Australian home loan approvals fell in January
The number of Australia's home loan approvals declined in January, first time since March 2011 while the business confidence index fell to a 5-month record low indicating the labour market recovery may slow down. Australian home loan permissions dropped 1.2% in January or twice as much as was predicted by economists. The business confidence lost ground and attained the lowest reading since September 2011. >>

Crude oil moves higher before Fed meeting
Crude oil prices increased during Asian trading hours on Tuesday, after declining for several sessions amid China's demand concerns and low probability of further easing by Feb. Light, sweet crude oil futures for April delivery traded at 106.68 US Dollars per barrel on the New York Mercantile Exchange, gaining 0.32%. >>

Loonie drops against US Dollar after Chinese trade data
Canadian Dollar declined versus its US peer on worries global growth will slow as China posted the record high trade shortfall in February. Oil, the main Canadian export good tumbled 1.9% on China news. Canada's currency slipped 0.2% against the Greenback to CAD 0.9924. Currently USD/CAD is trading at CAD 0.9900. >>
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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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