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Dukascopy Forex Overview: 27-03-2012 - Afternoon

Dukascopy Bank analytic desk report
Published: 27/03/2012 17:43
Dukascopy Fundamental Analysis
EUR
BMW AG, German car maker will recall 120,246 cars in China due to the difficulties with the automobile's batteries, nation's quality control agency reported on Tuesday. The recollection of the Coupe, BMW 6 Series Convertible, BMW 6 Series and BMW 5 Series, vehicles produced between year 2003 and 2010 will begin in May 10. An installation problem of the batteries can create safety risks, quality control agency claimed.

USD
US businesses project slower pace of revenue growth in China in 2012 amid rising operation costs and worries over global stagnation, according to survey of American Chamber of Commerce. About 43% of the firms surveyed expect increase in sales to approach 11% this year as compared to a 15% increase in 2011. The major contributors to more pessimistic outlook on China's economy are sharp fall in investments and slower GDP growth.

GBP
British FTSE 100 fluctuated between gains and losses on Tuesday. On the upside Royal Bank of Scotland rallied 4% on news UK government is considering to sell part of its RBS stake. In the negative area International Power lost 1.5% after Deutsche Bank lowered stock's rating from buy to hold. Resolution tumbled 3% after insurer reported a loss for 2011 citing a sharp decline in investment returns. At the moment of writing FTSE 100 is 0.14% or 8.19 points down at 5,894.51.

CHF
The official SNB exchange rate for EUR/CHF is 1.2065 today; yield on 10-year Swiss Confederation bonds decreased to 0.90%. 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 0.20% since the opening bell, and is currently fluctuating around 6270 points.

JPY
Asian stock markets rallied on Tuesday lifted by Fed chairman Ben Bernake's signals the US central bank is likely to prolong its low- interest rate policy to support labour market. Japanese Nikkei Stock Average gained 2.4%, Hong Kong's Hang Seng index advanced 1.8% and South Korea's Kospi soared 1%. Australia's S&P/ASX 200 jumped 0.9% but Shanghai Composite index breached the upward trend and lost 0.2% on news the profits for industrial companies dropped in January and February.
Dukascopy Technical Analysis
EUR/USD
Daily maximum: 1.3385
Daily minimum: 1.3319
EUR/USD rallied today and traded above the 1.33 level as German monthly import prices rose more than expected (1.0% act./0.9% est.), causing the daily mean target to breach the 1.3319 level. Daily Resistance: 1.3418; 1.3488; 1.3547. Daily Support: 1.3242; 1.3168; 1.3036. Daily Bias: Strongly bullish.

EUR/JPY
Daily maximum: 110.95
Daily minimum: 110.36
EUR/JPY advanced further and pierced the market participants' daily target at 110.29 after Ben Bernanke's comments yesterday regarding the continuation of loose monetary policy. Daily Resistance: 111.16; 112.68; 116.48. Daily Support: 109.61; 108.03; 101.58. Daily Bias: Strongly bullish.

GBP/USD
Daily maximum: 1.5997
Daily minimum: 1.5943
The British pound moved higher today as the continuation of quantitative easing program will supported the appreciation of the British pound. Daily Resistance: 1.6028; 1.6087; 1.6197. Daily Support: 1.5855; 1.5783; 1.5710. Daily Bias: Strongly bullish.

USD/JPY
Daily maximum: 83.23
Daily minimum: 82.64
USD/JPY moved upwards today as Japan's Nikkei 225 paired 20% losses from last year quake and nuclear disaster. Daily Resistance: 83.08; 83.65; 85.25. Daily Support: 82.44; 81.53; 77.55. Daily Bias: Neutral.

USD/CHF
Daily maximum: 0.9052
Daily minimum: 0.9017
USD/CHF inched higher today as the UBS consumption indicator revealed deterioration in consumer sentiment in Switzerland. Daily Resistance: 0.9102; 0.9219; 0.9252. Daily Support: 0.8988; 0.8925; 0.8883. Daily Bias: Strongly bearish.
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Expert Commentary
"It will take at least 10 years for the Yuan to be a global currency"
For more than three years, China has been developing a strategic plan to globalize the Yuan. It was announced last week , that China is planning to extend the Yuan-denominated loans to BRICS countries, which would be a significant step towards increasing the "people's currency" role in cross-border trade settlement. >>

"For EUR/USD we have a target of 1.25 on a short-term horizon, and for the end of September ‘12 we expect EUR/USD to reach 1.30"
C. Hecht, Currency Strategist at Commerzbank, evaluated the greenback’s performance and gave a forecast for the US Dollar against the basket of currencies for a short and long term. >>

"The Japan’s trade deficit effect on FX will be limited. Therefore, the Yen weakness will reduce in the second half of the year"
Today Dukascopy interviewed the Head of FX Strategy at JP Morgan Chase & Co in Singapore concerning a forecast for ASD/JPY, EUR/JPY and USD/JPY. >>
Press Review
Europe
German consumer confidence stalls on high oil prices
High oil prices are denting consumer confidence in Germany, data showed Tuesday, but household spending will remain robust enough to keep Europe's biggest economy from falling into recession.

USA
U.S. Consumer Confidence in March Holds Close to One-Year High
Confidence among U.S. consumers in March held close to the highest level in a year, underpinned by an improving labor market.

Asia & Pacific
China’s Industrial Company Profits Fall 5.2% on Exports
Chinese industrial companies had their first January-February profit decline since 2009 as slowing exports and a government campaign to cool property prices damped earnings.
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Market Research
Currency Index & Volatility
During the last five trading days the currency index of the British Pound has wandered around 105, but its value returned to the initial level (100) at the very end. In other words, the Sterling proved to be stable relative to the other major currencies and reluctant to change.
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 rallied on Monday after Fed Chairman Ben Bernake said expansionary monetary policy is still necessary to boost jobs. US index gained 1.39% or 19.40 points and closed at 1,416.51.

Dow Jones Industrial Average
Dow Jones Industrial Average index advanced sharply on Monday as Ben Bernake fuelled speculations the US central bank is likely to continue its economy-stimulating policy.

Nikkei 225
Japan’s Nikkei Stock Average made the biggest one-day advance in 5 months on Tuesday lifted by weaker Yen and Fed’s Chairman announcement. Nikkei 225 index rallied 2.36% or 236.91 points and closed at 10,255.15. Sumitomo Metal Mining jumped 5.9% on news its gold mine in Alaska has discovered a gold deposit. Japanese leading exporters added to gains with Toyota Motors soaring 3.6% and Sony Corp advancing 3.1%.
Commodity Overview
Precious Metals
Precious metals rallied on Monday after Ben Bernanke hinted on continuation of the Fed current monetary policy with record low interest rates. The announcement was interpreted as a possible sign of new round of quantitative easing in the country that spurred the precious metals price.
 
Industrial Metals
Industry metals except for nickel advanced on Monday after Fed reported it would maintain the current monetary policy in view of weak job market. Broadly lower US Dollar added to the positive mood of the commodity pack.
 
Energy
TEnergy commodities apart from natural gas were higher on Monday after Fed reaffirmed it would keep record low interest rates further and may consider providing more monetary stimulus to boost growth.
 
Agriculture
Rural commodities were mixed on Monday with growing wheat and coffee prices and declining corn and sugar futures. Agricultural commodities as all commodity markets were backed up after Ben Bernanke reported that the US central bank would maintain low interest rates and may provide additional monetary stimulus to increase hiring
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Trade Pattern Idea
AUD/USD Emerging Pattern
AUD/USD spiked its resistance at $1.0500, bounced off slightly below the level, and has formed a Channel Down pattern. The formation has 61% quality along with 100% magnitude within 101 bars.
Economic Research
Commodity Currencies: CAD
The Dukascopy Bank research department is launching a series of research devoted to various traders’ perceptions and general myths that are popular among investors. We start the series with research on commodity currencies (currencies of countries rich in natural resources, with the Canadian, the Australian, and the New Zealand dollars being the most liquid of them), as they are believed to be highly linked to the movements in physical commodity prices.
 
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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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