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Dukascopy Forex Overview: 04-04-2012 - Morning

Dukascopy Bank analytic desk report
Published: 04/04/2012 09:41
Dukascopy Fundamental Analysis
"It is very hard to see how Spain can have a sustainable recovery"
- Frances Hudson, global strategist at Standard Life Investments
European stocks closed lower on Tuesday hit by concerns over Spain’s ability to tackle its deficit.

"As the economy continues to strengthen, more of the pent-up demand will be released"
- Don Johnson, U.S. sales chief for General Motors Co.
U.S. factory orders rose for the third month in February, boosted by desire for business equipment. Bookings increased 1.3 per cent, Commerce department data showed on Tuesday.

"The UK economy is still facing huge challenges"
- John Longworth, director general at the British Chambers of Commerce
U.K. construction activity jumped to a 21-month high in March, reinforcing hopes that the economy has not slipped back into recession.

"Though investors have become slightly more cautious, sentiment remains quite robust"
- Alessandro Fezzi, a senior market analyst at LGT Capital Management AG
Swiss stocks retreated on Tuesday as returns on Spanish government securities rose and U.S. factory orders increased less than forecast.

"The strengthening yen “drags down shares as it has the greatest impact on manufacturers’ earnings"
- Masaru Hamasaki, chief strategist at Toyota Asset Management Co.
Japanese stocks retreated on Tuesday. The Nikkei 225 fell 0.59%, or 59.48 points, to 10,050.39, while the broader Topix lost 0.59%, or 5.03, to 851.02.
Dukascopy Technical Analysis
"U.S. monetary policy will stay status quo for the foreseeable future. The U.S. dollar, particularly against the euro, is a bit of a buy at these levels in the short term"
- Rochford Capital (based on Bloomberg)
EUR/USD has sold off from a resistance at 1.3385 down to 1.3201 (55 day sma) and is now expected to extend its losses. The immediate support may be found at 1.3127, while subsequent levels are located at 1.3004 and 1.2974/54.

"The euro has to go lower. The basis of buying euro on a risk-on day is simply not there anymore"
- Arab Bank Australia (based on CNBC)
Yet another fruitless attempt to pierce through 111.57 implies EUR/JPY is likely to pull back to 107.83, where it should stabilise and regain strength. Supports are situated at  108.49, 107.83 and 105.65.

"Sterling looks like an okay bet for now as most of the bad news for the UK has been priced in, but in the next few months we think it is likely to head lower"
- UBS (based on Reuters)
Inability of the currency pair to penetrate a tough resistance at 1.6067 resulted in a dip to 1.5881. Consequently, GBP/USD will now be aiming for 1.5849 (200 day sma) and then for 1.5796 (55 day sma).

"If you get clearly weak [US] economic data, then the markets will start pricing back easing. As long as there is no clear sign of deterioration in economic data, the market is going to assume now the Fed is done"
- Morgan Stanley (based on WSJ)
As long as supports at 81.55 and 81.09/00 remain intact, the outlook for the currency couple is positive with the possibility of attaining 83.31/40 in the near-term. Above the latter level we are likely to observe a rally up to 84.19 or even 85.53.

"A couple of [FOMC] members indicated that the initiation of additional stimulus could become necessary if the [US] economy lost momentum or if inflation seemed likely to remain below 2%"
- FOMC Meeting Minutes (based on Bloomberg)
USD/CHF has recovered from 0.9000 and is currently close to 0.9140 (55 day sma). In case the pair manages to hold above 0.9066, it should then continue climbing higher. Additional resistances are at 0.9179 and 0.9263.
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Expert Commentary
"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. >>

"There is a triangular relationship between Euro, Dollar and Swiss Franc: if one goes down, the other goes up"
Gareth Berry on USD/CHF and EUR/CHF. >>

"GDP growth will be around -1.5% by the end of 2012"
Dukascopy asked Santiago Carbó-Valverde, Professor of Economics at University of Granada in Spain and Consultant at the Federal Reserve Bank of Chicago, to evaluate the current economic situation in Spain and share his outlook for the Spanish economy for the 2012. >>
Press Review
Draghi Tested as German Pay Deals Add to Euro Divergence Threat
Wage moderation in Germany may be coming to an end at precisely the wrong time for European Central Bank President Mario Draghi.

U.S. Economy Enters Sweet Spot as China Slows
The U.S. once again may be emerging as a main engine for global growth -- and at an opportune time, as Europe slides into recession and China’s economy decelerates.

Asia & Pacific
China official tips GDP growth at 8.4%
China’s economy is set to grow 8.4% in the first quarter from a year earlier, according to a senior official with the nation’s economic planning agency, who said the figures were preliminary and based on research.
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Market Research
Currency Index & Volatility
After somewhat bullish start of the week, when currency index of the European currency peaked at 100.5, the Euro erased all of its previous gains on Thursday. During the remaining day, nonetheless, it managed to recover and closed on Mar 30 with 0.25% appreciation.
Dukascopy Bank Sentiment Index
Current global economic outlook
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 500 index advanced on Monday as data showed US manufacturing acivity expanded in March.

Dow Jones Industrial Average
Dow Jones Industrial Average index surged on Monday lifted by US manufacturing data and reached the highest value since December 2007.

FTSE 100
FTSE 100 index erased morning gains and strived lower on Tuesday as miners and banks weighed down on the index as metal prices tumbled.
Commodity Overview
Precious Metals
Precious metals advanced on Monday despite broadly stronger US Dollar.
Industrial Metals
Industry metals rallied on Monday after upbeat manufacturing data releases from the US and China.
Energy commodities soared on Monday on the improved demand perspecives from the US and China.
Rural commodities were mixed on Monday with growing coffee and corn prices and falling wheat and sugar futures. 
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Trade Pattern Idea
USD/JPY Emerging Pattern: Channel Down
USD/JPY rebounded twice from the resistance level at 83.02, then at 82.99, forming a Channel Down pattern on the 1H chart. The formation has 61% quality along with 88% magnitude in a 67-bar period.

The price skyrocketed to the pair’s resistance level at 82.99 on April 3, and eased after had tested it. The RSI indicator jumped above 70% level, and eased, which can be a sign of possible pair’s rebound.  If the Greenback depreciates versus Yen, the primary target for short traders could be around 82.12.

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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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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