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Dukascopy Forex Overview: 19-04-2012 - Morning

Dukascopy Bank analytic desk report
Published: 19/04/2012 09:35
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
The seasonally adjusted current account of the euro zone swung a deficit of €1.3 billion in February from a surplus of €3.7 billion in January, said the European Central Bank on Wednesday.


USD
"We got used to companies beating estimates by a pretty good margin"
- Burt White, chief investment officer at LPL Financial Corp.
U.S. stocks fell after Intel Corp. and International Business Machines Corp. disappointed market participants with their quarterly results.


GBP
"… the monetary policy committee is likely to remain on hold on the stock of asset purchases at its May meeting"
- Mauro Giorgio Marrano, an economist at UniCredit SpA
U.K. claims for unemployment benefits rose less than expected and unemployment declined, signs that the economy is stabilizing. Claims increased by 3,600 in March to 1.61 million, said the Office for National Statistics on Wednesday.

CHF
"Clearly Spain is starting to have some problems of refinancing"
- Jean Borjeix, a strategist at Platinium Gestion
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, retreated 0.43%, or 26.92 points, to 6,173.35. The broader Swiss Performance Index lost 0.37%, or 21.15 points, to 5,684.21.

JPY
"The environment for equities is pretty good"
- Donald Williams, chief investment officer at Platypus Asset Management Ltd.
Japanese stocks surged on Wednesday, after the International Monetary Fund raised its global economic forecast and Spain sold more debt than its target.
Dukascopy Technical Analysis
EUR/USD
"It's a sideways movement [for EUR/USD] because we do not know exactly what happens with QE3 in the U.S. and on the other hand we have the European debt crisis which is not solved"
- CitiFX Wire (based CNBC)
At the moment EUR/USD currency pair is contained by 1.3205 (55 day ma) from above and by 1.2995 form below. Given that long-term outlook remains negative, the focus is on the supports located at 1.2974/54 and 1.2945.

EUR/JPY
"Markets are pricing in additional easing by the BOJ. A trade deficit is a negative catalyst for the yen"
- Mitsubishi UFJ Morgan Stanley Securities Co. (based on Bloomberg)
Breakout of 107.10 would confirm intentions of EUR/JPY to continue moving in the upwards direction and would set the following target at 108.62. Provided that 104.24/103.50 stays intact, we could observe a rally up to 111.43/57.

GBP/USD
"We think sterling can strengthen further because stopping QE effectively stops devaluing the pound"
- Bank of America Merrill Lynch (based on Reuters)
Even though the Cable bounced off 1.5848/40 (55 and 200 day ma) and is now headed towards 1.6062/67, there is little chance for the latter level to be breached. Additional support is provided by 1.5805 and 1.5780.

USD/JPY
"Even if they [BoJ] get 5 trillion yen extra in asset purchases it probably won't be enough because the market is expecting so much. We recommend holding dollar/yen shorts going into the [BoJ] meeting"
- Nomura (based on CNBC)
Bearish correction is likely to be over at 80.29 and USD/JPY should now commence recovery. The initial resistance lies at 81.78, while 82.03, 83.31 and 84.19 will also attempt to hamper bullish advancement.

USD/CHF
"Raising the [EUR/CHF] floor makes sense, both to loosen the monetary stance and tactically to ensure the floor continues to meet little challenge. We expect an increase to 1.25 over the next quarter"
- Barclays Plc (based on Bloomberg)
While USD/CHF is supported by a formidable level at 0.9066/0.9000, the pair is bullish and should penetrate 0.9180 in the near future. This would imply an extension of a rally up to 0.9317 with the possibility to reach 0.9595 afterwards.
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Expert Commentary
"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>>

"We have got a trade recommendation of selling Euro and buying Sterling"
Ankita Dudani, Currency Strategist at Royal Bank of Scotland, analyses the performance of the British Pound>>
Press Review
Europe
French election stirs fears of euro-zone turmoil
Nicolas Sarkozy’s fading hopes for re-election ahead of Sunday’s first-round presidential vote have investors fretting over the potential triumph of Socialist challenger François Hollande and the thought of further turmoil in the euro zone.

USA
Obama vs. Romney: Close, nasty and unpredictable
The 2012 presidential election is more than six months away, but here is what we know so far: It is going to be close, it is going to be nasty, and the outcome could turn on a series of unpredictable events.

Asia & Pacific
Japanese exports rise as car shipments surge in March
Japan's exports rose in March, boosted by a surge in shipments of cars as the sector continues to recover from last year's natural disasters.
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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 rallied on Tuesday lifted by more optimistic global growth forecasts from IMF and Spain bond auction results. US index gained 1.55% or 21.21 points and closed at 1,390.78. First Solar rocketed 10.3% on news its will eliminate 2000 jobs through 2012 and cut production output.

Dow Jones Industrial Average
Dow Jones Industrial Average index extended sharp gains on Tuesday despite disappointing US factory output and housing starts data. Blue chip index surged 1.50% or 194.13 points settling at 13,115.54 with all 30 stocks making gains.

FTSE 100
German DAX index fell on Wednesday after Spain reported its proportion of non-performing loans versus total lending rallied to 7.91% January, the highest figure since 1994 raising doubts about nation’s ability prevent debt turmoil.
Commodity Overview
Precious Metals
Precious metals were supported by mixed real estate data from the US that added speculation about the next Fed meeting’s outcome. Successful Spain’s bond auction that eased concerns across the Euro Zone’s debt crisis also bolstered the commodity group.
 
Industrial Metals
Industrial metals balanced between flat US industrial output last month and the IMF report on better global economic perspectives.
 
Energy
Energy commodities attempted to equilibrate waning supply risk premium and improving demand prospects.
 
Agriculture
Rural commodities have continued to follow weather forecasts and crops estimates upgrades in the major planting regions
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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: Australian dollar
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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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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