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Dukascopy Forex Overview: 20-04-2012 - Morning

Dukascopy Bank analytic desk report
Published: 20/04/2012 09:52
Dukascopy Fundamental Analysis
EUR
"The debt crisis is far from over still and I think Spain will be worse before it gets better"
- Henrik Drusebjerg, a senior equity strategist at Nordea Bank AB
Spain sold 2.54 billion euros of debt dated 2014 and 2022 on Thursday, above the target range of 1.5 to 2.5 billion euros for the auction.


USD
"Progress in the labor market is not quite as strong as people had hoped, but we are still on a recovery track here"
- Scott Brown, chief economist at Raymond James & Associates Inc.
The number of Americans claiming for unemployment benefits declined by 2,000 to 386,000 in the week ended April 14 from the week before, said the Department of Labor on Thursday.


GBP
"Economic data does look like it is showing some stabilization"
- Samantha Fitzpatrick, senior investment manager at Aberdeen Asset Management Plc
The benchmark FTSE 100 Index lost 0.01%, or 0.74 points, to 5,744.55. The FTSE All-Share Index erased 0.02%, or 0.62 points, to 2,987.79.

CHF
"Clearly Spain is starting to have some problems of refinancing"
- Jean Borjeix, a strategist at Platinium Gestion
Swiss stocks edged higher after Spain scraped through a key bond auction on Thursday.

JPY
"The key reason for the good result is a solid rebound in exports to the U.S. where cars are selling well"
- Yoshimasa Maruyama, chief economist at Itochu Corp.
Japanese exports surged 5.9 per cent in March, compared to the same period last year, said the Ministry of Finance on Thursday. The trade deficit for March was 82.6 billion yen, less than economists forecast of 223.2 billion yen.
Dukascopy Technical Analysis
EUR/USD
"We have a stronger dollar view and weaker euro view"
- Barclays (based on WSJ)
On the occasion that 1.3206 (55 day ma) remains untouched, the outlook for EUR/USD is negative. The closest support is at 1.2995/1.3004, followed by 1.2974/54 and 1.2854, which should be reached in the near future.

EUR/JPY
"It's not that people are outright buying the euro to go long on it, but it's more looking like they're buying the euro to get out of their short positions"
- Faros Trading (based on CNBC)
Penetration of a resistance at 107.10 confirms the ability of EUR/JPY to maintain the current course and climb even higher. The initial target lies at 107.88, while subsequent goals are at 108.62 and 111.43/57.

GBP/USD
"We don't like the outlook for sterling due to weak government finances, low rates and weak growth. We are buyers of dollars above $1.60"
- Midas balanced growth fund (based on Reuters)
The Cable is attempting to close above 1.6062/67, which guards 1.609 and 1.6129. Nonetheless, the resistance is unlikely to give in for now and should be able to contain the pair. The interim support is at 1.5856/44 (55 and 200 day ma).

USD/JPY
"The indication from BOJ board members over the last week or so has been that they are considering further policy easing. The yen has been unambiguously weaker"
- ANZ (based on Bloomberg)
USD/JPY is soon to encounter a tough resistance at 81.93, breach of which would dispel doubts regarding the resumption of a long-term bullish move by the currency couple. Then the pair will aim for 83.31 and 84.19.

USD/CHF
"The momentum is holding up. Job creation and income growth are positives for [US] economic growth"
- Deutsche Bank Securities Inc. (based on Bloomberg)
USD/CHF remains sidelined, but is still viewed as capable of challenging a resistance at 0.9317/42. A formidable support located at 0.9066/0.9000 should contain near-term dips of the price, thus preserving bullish outlook.
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Expert Commentary
"According to Purchasing Power Parity, the Swiss Franc is overvalued at this point, thus the EUR/CHF is undervalued by 12 %"
Recently Thomas Jordan was appointed as a new interim president of the Swiss National Bank. Are there  going to be any significant changes in the policy of SNB regarding the Swiss Franc? Where the EUR/CHF will be heading? What will be the main drivers for the EUR/USD movement? All these questioned were addressed to Sonja Marten, Currency Strategist at DZ Bank AG>>

"I expect the Fed will be managing the reduction of liquidity it has injected into the economy and the increasing interest rates that go along with the recovery"
Edward Feasel, Professor of Economics at SOKA University of America, analyses the current economic situation in the US>>

"Our official USD/CAD forecast for the Q2 is around 1.02"
Lauren Rosborough, Senior FX Strategist at Societe Generale, shares her view on the Canadian Dollar>>
Press Review
Europe
Europe Urged to Fix Crisis as G-20 Warns of More Stress
Europe’s governments were told the onus for fixing their debt woes still lies with them as the Group of 20 warned the two-year crisis still threatens global growth.

USA
Microsoft quarterly profits beat expectations
Microsoft's profits in the three months to the end of March dropped slightly but the results still beat analysts' expectations after a surprise rise in sales of its Windows operating system.

Asia & Pacific
BRICS demand bigger IMF role before giving it cash
The International Monetary Fund's bid to win a big boost in funding to handle the euro-zone debt crisis hit a speed bump on Thursday when Brazil demanded more power at the IMF for emerging economies as a condition for lending it extra cash.
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Market Research
Currency Index & Volatility
For the last five trading days the value of the US Dollar has hovered below its initial level. At some point it nearly returned to its base value, but instead started another leg lower which lasts until now. On Thursday the US Dollar lost 0.75%, as a result of positive data on Australian labour market and disappointing statistics on US economy - surging unemployment claims and slowing growth of producer prices.
Dukascopy Bank Sentiment Index
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 declined on Wednesday as large scale IT companies issued disappointing financials results.

Dow Jones Industrial Average
Dow Jones Industrial Average index traded lower on Wednesday as Heavyweight Intel and IBM financial reports disappointed investors.

Nikkei 225
Japan's Nikkei Stock Average fell on Thursday, breaching the upward trend across the region as investors awaited the results from French and Spanish debt auctions.
Commodity Overview
Precious Metals
Precious metals  continued to be pressured by renewed concerns over the Euro Zone’s debt crisis ahead of the key Spain’s bond auction on Thursday that will define a future trend of the commodity group.
 
Industrial Metals
Industry metals lost momentum lent by the global growth outlook improvement and slid along with weakening global equities and uncertainty over China’s demand.
 
Energy
Energy commodities were exposed to the inventory buildup at the US warehouses and global demand worries as economic state of the Euro Zone remained uncertain.
 
Agriculture
Rural commodities  continued to fall as excellent weather conditions in the key planting regions escalated worries over surplus in the market
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Trade Pattern Idea
Emerging Pattern: NZD/USD
NZD/USD bounced off the support level at 0.8120, forming a rising wedge pattern on the 1H chart. The formation has 61% quality along with 83% magnitude in a 47-bar period. 

The price was capped at 0.8220, then at 0.8226, and lowered to the support level around 0.8198. The Stochastic indicator lowered to 40.78% after it had touched the 80% area. The initial target for bears is around 0.8190, near the present support level. If the price breaches support level, the second target for short traders could be around 0.8167, where the previous local low stands.

Economic Research
Commodity currency: Norwegian Krone
The Dukascopy Bank research department presents the final part of its research on commodity currencies. In the current issue we consider commodity sectors’ influence on Norwegian krone exchange rates. Norway is the second largest non-OPEC oil exporter, and energy products make up more than 50% of its exports. It gives us an opportunity to establish whether the exports’ share can be named as one of the relationship-defining factors.
 
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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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