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Dukascopy Forex Overview: 23-05-2012 - Afternoon

Dukascopy Bank analytic desk report
Published: 23/05/2012 18:46
Dukascopy Fundamental Analysis
EUR
German bunds rose on worries that European leaders will struggle to resolve the euro zone debt crisis during tonight's European summit.  David Schnautz of Commerzbank AG in London thinks that Europe is unlikely to solve key topics and will probably disappoint the market. The 5-year bund lost 5 bp to 0.47 percent at 10:49 GMT after tumbling to 0.461 percent, the lowest since 1990, when Bloomberg began gathering data.

USD
Crude oil futures declined in Asian session on Wednesday as Iran is ready to invite nuclear inspectors, the move that may ease oil import sanctions. Light, sweet crude oil futures for July delivery traded at 91.27 US Dollars per barrel, retreating by 0.63% from the last session's high of 91.72 US Dollars per barrel.

GBP
Today the minutes of the Monetary Policy Committee's meeting, which took place on May 9-10, were published. During the meeting 2 votings were carried out. The Committee voted unanimously regarding the proposition to maintain Bank Rate at 0.5%. The second proposition to keep the stock of asset purchases at GBP 325 billion was supported by 8 members out of 9, since David Miles was in favour of increasing the size of the programme to GBP 350 billion.
 
CHF
The official SNB exchange rate for EUR/CHF is 1.2010 today; yield on 10-year Swiss Confederation bonds decreased to 0.68%. 3-month LIBOR CHF stands at 0.11%, and is within the target range of 0.00-0.25%. Swiss SMI stock index has lost 0.84% since the opening bell, and is currently fluctuating around 5860 points.

JPY
A day after Fitch ratings agency downgraded Japan's debt rating, the country reported smaller then anticipated exports and bigger than expected trade deficit. Exports rose 7.9% with comparison to the same period last year. This underscored estimations of specialists by 3.9%. Trade deficit increased from JPY 84.5b to JPY 520.3b (USD 6.5b) in one month. Specialists state that all major Asian economies experience decrease in exports due to political instability in Europe which might slow down growth of these economies.
Dukascopy Technical Analysis
EUR/JPY
"Now it’s not very necessary to present any new measures [to support the euro]."
- Andres Lipstok, head of Estonia’s central bank (based on Bloomberg)
The recovery of EUR/JPY stalled today after the announcement Bank of Japan is not going to introduce additional measures to stimulate its economy.

AUD/USD
"We’re just lost in this fog of Europe, and speculation regarding tonight’s meeting of European leaders is all over the place. We’re back on the risk-off psychology, which suggests that the Aussie is likely to see weakness today."
- Hans Kunnen, chief economist at St. George Bank Ltd. (based on Bloomberg)
The US dollar strengthened today against the Australian dollar, thus the recovery was short-lived.

USD/CAD
"From a strictly domestic standpoint, I think it does advance the case for the bank raising rates."
- Doug Porter, deputy chief economist at BMO Capital Markets(based on Bloomberg)
Yesterday’s losses were erased today as the greenback appreciated against the Canadian dollar and touched the first daily resistance at 1.0224 (R1 Daily).

NZD/USD
"All the bad news has been priced in; As long as there's not much in the way of news and volatility dies off, the New Zealand dollar could retrench some of its recent decline."
- Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia (based on Bloomberg)
The NZD/USD recovery was stopped today as the pair continued trading in a bearish trend. The currency couple approached the initial support level at 0.7512 today and a breach here would expose the next levels at 0.7417 (Lower Bollinger band) and 0.7369 (November 2011 low).
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Expert Commentary
"EU summit is not going to be an event that will trigger a very sharp moving in EUR/USD."
N. Christensen, Chief Currency Strategist at Nordea Bank, on the Euro. >>

"There is no reason to buy the Yen for the time being."
Masafumi Yamamoto, Chief Currency Strategist at Barclays Bank, on the Yen>>

"We are now expecting AUD/USD at the year end at around 97, a continued move below parity."
Emma Lawson, Senior Currency Strategist at NAB, on the Aussie Dollar>>
Press Review
Europe
European Banks Unprepared For Greek Exit From Euro
Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro.

USA
U.S. stock futures drop ahead of EU summit
U.S. stock-index futures fell sharply Wednesday as Wall Street readied to extend a global selloff ahead of a gathering of European Union leaders coinciding with renewed worries over the euro-zone debt crisis.

Asia & Pacific
Bank of Japan Holds Off on Easing Policy as Expected
The Bank of Japan kept monetary policy steady on Wednesday, preferring to save its ammunition as Europe's deepening debt crisis may warrant further action in the coming months to fend off damage to the fragile economy.
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Market Research
Currency Index & Volatility
Despite some of the massive sell-offs of the Greenback within the previous five trading days, bullish sentiment towards the currency persisted, allowing the US Dollar to appreciate by 1% from May 16 till May 22 amid the overall search for refugees from global instability and increasing risks.
Dukascopy Bank Sentiment Index
The current and the three-year global economic sentiment indices deteriorated slightly in April to 0.49 and 0.64 points respectively. The six month economic sentiment index improved to 0.54 from 0.52 in March, according to a poll conducted by Dukascopy Bank SA.
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Dukascopy Aggregate Technical Indicator
Dukascopy Bank presents a new research product - the aggregate technical indicator. The new tool will indicate the strongest signals on major currency pairs.
Commodity Overview
Precious Metals
Precious metals declined on Tuesday amid broadly stronger US Dollar after unexpected surge in the US existing home sales in April.
 
Industrial Metals
Industry metals were mixed after OECD cut its global growth forecast, citing instability in the single currency union. Moreover, weak manufacturing data from the US added pressure on the commodity group.
 
Energy
Energy commodities were mostly lower apart from natural gas due to easing supply fears ahead of key meeting between Iran and six world powers aimed at coming to a consensus over Iran’s nuclear program.
 
Agriculture
Agricultural commodities slid on Tuesday as weather conditions in top grain growing regions improved. 
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Trade Pattern Idea
EUR/JPY Emerging Pattern: Channel Down
EUR/JPY continued its move to the lowest level in four months around 99.228 and has formed a Channel Down pattern on the 4H chart. The pattern has 63% quality and 98% magnitude in a 234-bar period.
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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