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Dukascopy Forex Overview: 12-02-2016 - Afternoon

Dukascopy Bank analytic desk report
Published: 12/02/2016 16:20
Latest Expert Commentary
"A lot of the credit has been funded in the state-owned enterprises that are not using them very efficiently, which results in increased debt risks."
- Julian Evans-Pritchard, China Economist at Capital Economics Asia Pte ltd, on Chinese economy
China is attempting to shift away from an export-driven and investment-led economy to a more balanced consumption-oriented one. To achieve its goals and double GDP from 2010 levels, the Chinese leadership has set out on an extensive reform agenda. This includes further financial market liberalisation and state-owned enterprise, fiscal, and rural land reform. What will be the major risks for this transition? Can we speak about the full integration of Chinese economy into the global economy?
Dukascopy Technical Analysis

EUR/JPY takes another step towards the channel’s support
“Historically, JPY appreciation from extreme undervaluation, especially amid risk aversion, has been rapid and large. We expect this appreciation to be the same.”
- Barclays (based on Market Watch)
After having tested the support line near the 2015 low, the EUR/JPY cross negated most of its intraday losses and closed trade just below the immediate support cluster. The pair remains subject to weakness, and is likely to end the day in the red zone, as the monthly S1 and the weekly S3 provide resistance quite close to the opening price.
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Dukascopy Fundamental Analysis
RBA to keep rates unchanged throughout 2016
Testifying before the House of Representatives Economics Committee, RBA Governor Glenn Stevens said that the Australian economy continued to grow at a sub-trend pace, but a weaker Aussie Dollar and easy monetary policy is supporting growth. Stevens stressed that further easing is possible if inflation slows and global headwinds threaten Australia’s growth trajectory. The central bank head estimated that inflation is unlikely to cause near-term issues over the next two years though, partly due to the weakening Australian Dollar, which was tracking falling commodity prices.
Expert Commentary
"A lot of the credit has been funded in the state-owned enterprises that are not using them very efficiently, which results in increased debt risks."
- Julian Evans-Pritchard, China Economist at Capital Economics Asia Pte ltd, on Chinese economy
China is attempting to shift away from an export-driven and investment-led economy to a more balanced consumption-oriented one. To achieve its goals and double GDP from 2010 levels, the Chinese leadership has set out on an extensive reform agenda. This includes further financial market liberalisation and state-owned enterprise, fiscal, and rural land reform. What will be the major risks for this transition? Can we speak about the full integration of Chinese economy into the global economy?>>
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Press Review
Bloomberg
Is There a Golden Age Coming for U.S. Banks?
Bloomberg's Michael McKee and Peter Coy and Bloomberg TV Contributor William Cohen report on the banking industry.
Market Research
Currency Index & Volatility: EUR
For the majority of the observed indexes, the movement directions for the entire period was set on its very first day.
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Dukascopy Bank Sentiment Index
January Release
The global economy entered into 2016 on a wobbly footing, with China sending jitters around the world. China’s economy in 2015 grew 6.9%, the slowest pace in 25 years. The world's second biggest economy saw a difficult start to the current year, which included financial markets closure on two occasions as steep declines of more than 7% triggered market circuit breakers and a halt to trading. These developments had a devastating impact on business and consumer sentiment in January.
Global Stock Market Review
European shares diminished sharply due to oil weaknesses
The second week of February was fully reversed to the opposite direction, as small gains during the previous week, again were changed by losses, since oil prices continued to fall. The European stock market declined, showing its worst performance since middle of January. Meanwhile, ECB president Mario Draghi resumes to highlight possible monetary easing when the Governing Council meets to set rates in March.
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Commodity Overview
Oil Tumbles on Stronger US Dollar
Crude oil finished lower by the close of a volatile week on Friday, as a broadly firmer US Dollar coupled with worries that crude oil oversupply will remain for longer weighed on investors’ sentiment. A week earlier, indications that OPEC and non-OPEC oil producers may come closer to an agreement to decrease production in order to handle one of the most substantial supply gluts in decades caused prices of oil going up.
Trade Pattern Idea
EUR/TRY 1H Chart: Rising Wedge
EUR/TRY’s trading range has been declining since the first day of this month. Given that the trend is positive, we are now dealing with the rising wedge pattern in the 1H chart.>>

GBP/NZD 1D Chart: Falling Wedge
GBP/NZD appears to be trading within the falling wedge, meaning we should be wary of a strong rally once the price is above the red trend-line.>>
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Economic Research

Forecasting Models for Exchange Rate
The science of prognostics has been going through a rapid and fruitful development in the past decades, with various forecasting methods, procedures and approaches flooding the economic world. It is estimated that there are more than 100 prediction methods, and sometimes the diversity makes it difficult to choose the one that would do the trick.
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. Dukascopy Aggregate Technical Indicator for 30 min and 1H time frame charts for major pairs for the last 144 periods till 14:30 GMT.
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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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