[FBS_Official]

Commerzbank: outlook for pound has improved

British pound advanced yesterday versus the greenback gaining more than 170 pips. Sterling was encouraged by the improved market’s risk sentiment due to the EU summit that managed to show that the European authorities have made progress bringing the second bailout for Greece.

Technical analysts at Commerzbank claim that GBP/USD has overcome the 3-month downtrend at $1.6211, the 55-day MA at $1.6206 and the 50% Fibonacci retracement at $1.6265. As a result, the pair has got above the key short-term resistance levels and the bias switched from negative to neutral.

According to the bank, British currency may rise to the 78.6% Fibonacci retracement of the decline from April and May maximums in the $1.6540/47 area.

The main results of EU summit

The European leaders agreed yesterday on the 159 billion euro ($229 billion) second bailout package for Greece inducing the private bondholders to take part in financing the indebted nation.

109 billion euro will come from the euro region and the International Monetary Fund, while the rest 50 billion euro will be brought by the financial institutions after a series of bond exchanges and buybacks that will also reduce Greece’s debt burden. Investors will have the option to exchange existing Greek debt into four instruments: 3 will be fully collateralized by AAA-rated zero-coupon securities and have a 30-year maturity, and the fourth will be for 15 years and partially collateralized by funds held in an escrow account.

The 440-billion euro European Financial Stability Facility was authorized to buy debt of the peripheral euro zone’s nations in stress. In addition, the fund was enabled to help the problem banks (the stress tests showed that 24 out of 90 banks have financial difficulties) and offer credit-lines for the European nations that are losing investors’ confidence (the practice used by the IMF).

All in all, it\s necessary to note that the European policymakers tried to compromise and develop a strategy to support Greece and make sure that Greek crisis doesn’t spread.

Analysts at UniCredit believe that the measures taken by the EU officials create the best possible conditions for Greece and other peripheral countries. The specialists point out, however, that the market will keep pricing in some probability that these steps won’t be enough to stop the contagion.

SocGen, BarCap: euro may rise to $1.50

Analysts at Societe Generale believe that though the negative factors for euro are, of course, not all gone, the single currency may climb in the short term to $1.50 versus the greenback after the EU summit was successful enough.

Strategists at Barclays Capital advise investors to buy EUR/USD on its slide down to $1.4300/1.4280 or on the break above $1.4460. In their view, the pair may rise to the trend line resistance at $1.4580. If euro manages to overcome this level and close the week above it, it will be able to strengthen to $1.4700 and possibly $1.4950. The specialists note that the outlook for the pair will turn negative if the rate falls below $1.4180.

Commerzbank: watch today’s Canadian economic data

Yesterday the greenback went down versus its Canadian counterpart breaching support at 0.9450.

Analysts at Commerzbank believe that the market’s attention will be focused on Canada’s inflation report released today at 15:00 (GMT+4) and retail sales data published at 16:30 (GMT+4). For the timely information see our economic calendar (Economic calendar - Analytics and market news - FBS).

The specialists note that Canadian June CPI data has to be surprisingly high, while May retail sales have to show solid growth. In such case the pair USD/CAD may fall below 0.9425 to July 2007 minimums in the 0.9060 area, especially if investors remain optimistic after the Greek bailout.

BarCap, Commonwealth: bullish forecast for Aussie

Australian dollar is on its way up versus the greenback and Japanese yen.

According to the data released today, Australia’s import prices added 0.8% in the second quarter while the economists were looking forward to 1.1% decline.

The CPI data due next week may show that inflation pace rose to the maximal level in more than 2 years – economists surveyed by Bloomberg expect consumer prices to 3.4% in Q2 from the 2010 level. As a result, the chances of the Reserve bank of Australia’s rate hike increase.

Analysts at Commonwealth Bank of Australia are very bullish on Aussie. In their view, after the inflation report there will be no more speculation about the reduction of Australian borrowing costs. Strategists at Citigroup also think that the next move of the RBS will be to raise the rates.

Specialists at Barclays Capital note that AUD/USD has manage to break above the upper border of its trading range at $1.0810 rising to 2-month maximums in the $1.0867 zone. The analysts think that the pair may go higher and climb to $1.0890 and then to May maximums in the $1.1010 area. The bank says that the outlook for Australian currency will remain bullish as long as it’s trading above $1.0765.

BBH, Saxo bank on the prospects of EUR/USD

Currency strategists at Brown Brothers Harriman believe that the single currency has strong chances rise to $1.47 versus the greenback if it manages to overcome $1.46. The specialists base their assumptions on the data from the CFTC and Tokyo Financial Exchange.

Analysts at Saxo bank add, however, that euro won’t be able to get higher than that and will fall to the $1.35 zone by the end of the summer.

In their view, the market’s optimism encouraged by the second bailout for Greece will fade away during the next few weeks. The bank underlines that the summit didn’t change enough as the insolvency issues are still solved by increased liquidity.

UBS: EUR/USD will drop to $1.40 in a month

Currency strategists at UBS are bearish on the single currency versus the greenback. The specialists expect EUR/USD to slide to $1.40 in a month. The 3-month target of the bank is at the same level. The specialists expect euro to decline despite yesterday's decisions of the European leaders to provide Greece with the second bailout.

Here are UBS targets for some other major currency pairs:

- EURCHF: 1-month 1.20; 3-month 1.25;

- USDCAD: 1-month 1.00; 3-month 1.00;

- EURGBP: 1-month 0.90; 3-month 0.86.

Westpac: the pair NZD/USD has renewed the record maximum

New Zealand’s dollar reached today the record maximum versus its American counterpart at $0.8674.

The sentiment all over the world improved after yesterday’s EU summit and investors seem to be optimistic on Greece. Analysts at Westpac claim that market’s attention will now switch to the US debt problems. In their view, the greenback will be declining until American debt ceiling is lifted up.

In the near term resistance for the pair NZD/USD is found at $0.8700, while support for the pair is situated at $0.8575.

Credit Suisse Group AG index based on swaps shows that the market expects the Reserve Bank of New Zealand to raise the interest rates during the next year by 94 basis points – that’s the maximal estimate since November.

New Zealand’s CPI rose gained 5.3% in the second quarter on the annual basis making the biggest advance since 1990. The RBNZ will hold a policy meeting on July 28.

Never the less, it’s necessary to be cautions with the long positions as kiwi is currently overvalued and technical indicators show that it’s rate has risen too quickly and risks to reverse.

On-line analytics from FBS always is available on: Free Forex Charts, Fundamentsl Forex Market Analysis, Live Forex Trading Charts, Forex Technical Analysis, Forex Forecasts - Analytics and market news - FBS

[FBS_Official]

UBS, Credit Agricole: risk factors for the single currency

Currency strategists at UBS think that the United States may avoid default, but get downgraded by the ratings agencies.

At the same time, the situation in Europe is far from optimistic as there are the prospects of a selective default in Greece, the bailout implementation risks as the EFSF has not been expanded.

It’s also necessary to mention the renewed concerns about the peripheral euro zone’s nations and deteriorating data in the core economies of the region such as lower German and euro-zone PMI data and weaker German IFO.

As a result, the specialists advise to sell EUR/USD at its advances to $1.44/1.45.

Analysts at Credit Agricole also note that euro will remain very vulnerable to the negative news from the PIIGS this week. In addition, the bank points out that if the European economic data keeps worsening, investors may start wondering if the ECB had made the right decision to raise rates in April and June.

Commerzbank: GBP/USD will rise above $1.65

British pound gained last week about 130 pips versus its US counterpart consolidating in the $1.6300 area.

Technical analysts at Commerzbank believe that GBP/USD has broken up the key short-term resistance levels – its 3-month downtrend line at $1.6211, 55-day MA at 1.6204 and the 50% Fibonacci retracement at $1.6265.

The bank now expects sterling to rise to the previous 2010-2011 uptrend line at $1.6395 and 78.6% retracement of the decline from April and May maximums at $1.6540/47.

Standard Chartered cut UK GDP forecast

Analysts at Standard Chartered claim that the Bank of England will keep the borrowing costs at the current 0.5% level until the beginning of 2013.

The specialists lowered UK economic growth forecast in 2011 from 1.4% to 1.1%. In their view, inflation may surge in the coming months, but this increase is likely to be short-lived.

The economists expect consumer prices’ growth pace to return to the target levels by the end of 2012. As a result, British central bank will start tightening monetary policy in 2013.

Analysts at BNP Paribas advise investors to pay attention to the Britain’s preliminary GDP release on Tuesday, July 26, at 12:30 pm (GMT+4). According to them, UK economy won’t grow at all, while the market is looking forward to 0.2% advance.

BofNY Mellon, BOTMUFJ: US dollar prospects

Economists at Bank of New York Mellon note that once US government and Congress reach agreement on lifting up the debt ceiling, dollar’s rate will rebound. In their view, the greenback will show the most significant growth versus British pound as at the beginning of the year the market was too excited about the potential rate hikes in the UK where the inflation level is high, but the central bank is unable to tighten policy because of the low economic growth.

At the same time, analysts at Bank of Tokyo-Mitsubishi UFJ warn that if the debt problem remains unsolved by the deadline on August 2 the United States may face another recession. In their view, if the nation loses its top AAA credit rating, the near-term impact won’t be that strong, but in the longer time perspective it will seriously affect US currency.

Analysts at Barclays Capital believe that in the short-term the pair GBP/USD may rise to $1.6385 and $1.6425. Support is situated at $1.62. As for USD/JPY, the strategists advise investors to sell the greenback versus Japanese yen on its advance to 78.75. In their view, the pair is on its way down to 77.50.

Pimco: US risks to lose its credit rating

US President Barack Obama has asked for a $2.4 trillion borrowing boost in the $14.3 trillion debt ceiling. House Speaker John Boehner encouraged the Republicans to unite their efforts in order not to let Obama obtain the money at once without any guarantees of spending cuts.

Mohamed A. El-Erian, the head of Pacific Investment Management Co, the world’s largest manager of bond funds, believes that the United States may lose its top AAA credit rating even if US Congress agrees to lift up the debt ceiling.

The specialist notes that the nation already suffers from weak economic growth and high unemployment and the debates over the debt limit make the problems intensify.

Standard & Poor’s estimates the possibility of US rating cut within 3 months by 50%.

Yields on benchmark 10-year rose to 2.96% on July 22 but remain below the 5-year average of 3.71%.

Deloitte: forecast for the RBA rates

Analysts at Deloitte Access Economics expect the Reserve bank of Australia to raise the interest rates 3 times the next year, but not earlier.

The specialists base such forecast on the expectations that the mining boom encourages the growth of wages stimulating the economic recovery from the costliest floods.

According to Deloitte, Australian incomes will rise because of high commodity prices and strong demand. The number of people employed won’t be sufficient enough for the growing economy. As a result, the demand for labor will get higher than the supply and the wages will go up.

The last time the RBA changed rates was in November 2010. Since that time, the central bank’s benchmark rate accounts for 4.75%. During the period from April and June the number of jobs dropped by 5,400. Australian dollar appreciated by 22% during the past year.

It’s necessary to note that Australia’s recovery is two-speed as the mining industry flourishes, but other areas such as tourism, manufacturing, farming and retailers suffer from the strong national currency. That’s why the economists expect hikes in the longer term.

Mizuho, SocGen advise to sell USD/JPY

Currency strategists at Mizuho note that last week the greenback has posted another minimum versus Japanese yen. In their view, the downside momentum for USD/JPY has increased. The specialists say that all elements of the weekly Ichimoku chart indicate short position. In their view, the greenback is on its way down to 76.25.

Analysts at Societe Generale believe that as there’s some temporary improvement in Europe, all attention will switch to the United States. The economists claim that the situation in the US is very different from what’s happening in Japan. The bank reminded about the high current account surplus. As a result, Societe Generale recommends selling dollar versus yen with stops at 79.75 and target at 75.00.

[FBS_Official]

Citigroup: US dollar may gain as a safe haven

Analysts at Citigroup believe that the demand for the greenback as a safe haven may rise in the situation of uncertainty caused by the lack of agreement between Barack Obama and US Congress on raising the $14.3-trillion debt ceiling and reducing the budget deficit.

The specialists remind that during the times of elevated risk aversion investors tend to seek most liquid and deepest markets and American Treasuries and dollars have traditionally been such.

As US authorities have reached the deadlock, stock markets are down so that investors’ risk sentiment worsens. That will make traders desert riskier assets.

House Speaker John Boehner who represents the main opposition force against the White House’s called for a 2-step debt-limit extension that would provide a roughly $1 trillion – less than Obama has requested – demonstrating his unwillingness to compromise and withstanding the threat of President’s veto.

Standard & Poor’s estimates the possibility of US rating cut from AAA to AA+ within 3 months by 50%.

BOTMUFJ: USD/CHF has potential for rebound

Technical analysts at Bank of Tokyo-Mitsubishi UFJ believe that the greenback may rise from the record minimum versus the Swiss franc in the 0.8000 area hit today.

The specialists underline that 14-day RSI (relative strength index) for USD/CHF dropped to 30 that may mean that its rate has fallen too rapidly and risks reversing. As a result, the economists see the chance of the pair’s short-term recovery.

In their view, US currency that is now at roughly 6% below the Ichimoku Cloud has to reach it in order to confirm the rebound and the change of trend.

Wells Fargo: EUR/USD won’t rise above $1.47

The single currency rose today to the 3-week maximum versus the greenback at $1.4500.

Analysts at Wells Fargo Bank claim, however, that though they have become more positive on euro, they think that its advance is going to be limited as there’s evidence of the euro zone’s economic slowdown and remained uncertainty about the possibility of further contagion.

According to the specialists, the pair EUR/USD has potential to gain during the next few weeks, but it will be capped by the June maximum in the $1.47 area.

The bank adds that commodity and emerging currencies may be the best performers in the longer term as the risks in Europe and United States ease down.

Commodity currencies have become less dependent on commodities

The currencies of the large exporters of raw materials are becoming less correlated with the dynamics of commodity prices as investors choose them as a refuge from the debt issues in Europe, the United States and Japan.

The following figures speak for themselves: S&P’s GSCI Total Return index of 24 commodities lost 8.45% since April, while Canadian, Australian and New Zealand’s dollars and Norwegian krone added 1% on average during the same period. Strategists at BMO Capital Markets claim that Canadian dollar seems to have outpaced its commodity-price fundamentals.

Analysts at Citigroup underline that the desire of the central banks, especially the Asian ones, to diversify their reserves is a significant driver of commodity currencies. Strategists at Mizuho Corporate Bank note that the greenback is slowly but surely losing its status as the world’s reserve currency, while Australian and Canadian dollar are now the majors with large markets.

According to the IMF data, the share of the world’s currency reserves denominated in “other currencies” such as Aussie, kiwi and loonie rose from 3.6% a year ago to 4.7% in the first quarter. The greenback that accounted for 72.7% of the reserved 10 years ago represented 61.8% in the first 3 months of 2010 and 60.7% at the beginning of 2011.

Another reason of commodity currencies’ strength is relatively higher interest rates. Investors will get about 4.35% more from 2-year government bonds in Australia, Canada, New Zealand and Norway than from Treasuries of similar maturity.

US dollar may suffer this week from the economic data

US Q2 GDP is released on Friday at 4:30 pm (GMT+4). If the reading is low, US dollar will get under a very negative pressure the debt burden will be accompanied by the nation’s economic weakness.

Economists surveyed by MarketWatch expect to see annual growth 1.6% after 1.9% in the first quarter.

During the past 7 quarters the growth accounted for 2.8% on average. Never the less, for US to enjoy the sustainable decline in unemployment, economic growth pace has to exceed 3%, so the results between 2.5% and 3% just won’t be enough.

It’s also necessary to note that many experts are already thinking about the third quarter hoping that the economic situation in the US will improve due to the increased auto output as the Japan supply-chain problems are resolved as well as lower commodity prices. However, if the Q3 data disappoints the market the sentiment will turn very negative as traders are tired of the constant bad news they have been getting so far.

Analysts at JPMorgan also advise investors to pay attention to US bond auctions. US Treasury will offer 2-year securities on Tuesday, 5-year papers on Wednesday and 7-year bond on Thursday. In their view, low demand for Treasuries will make dollar weaken versus Japanese yen, Swiss franc and the single currency.

MIG bank: strategists of selling USD/CHF

Technical analysts at MIG bank advise investors to sell US dollar versus Swiss franc.

The specialists give 2 possible strategies. Firstly, one may sell USD/CHF on its rebound to 0.81 with stops above 0.82 targeting 0.80, 0.7825 and 0.7650. Secondly, if the greenback doesn’t recover, the bank recommends opening shorts on the pair’s break below 0.7997 stopping above 0.8097 and targeting 0.77 and 0.76.

It’s necessary to remember about the fundamental factors though. Strategists at HSBC believe that American currency will gain support once US debt issue is resolved. In their view, if US lawmakers approve a package of at least $3.5 trillion of cuts, the danger of a credit downgrade should decrease.

BMO Capital: how to hedge from US default

Analysts at BMO Capital claim that there are 3 scenarios of the debt-ceiling debate:

1)The plan close to the one developed by the “Gang of Six” will be adopted.
2)President Obama will agree to a small extension of the debt limit to prolong the discussion of a major shift of the debt ceiling.
3)The worst case scenario: US will default or/and loses its top credit rating.
The specialists note that Standard & Poor's seems to be extremely worried by the dynamics of US debt and deficit, so the agency is likely to downgrade the nation even if the debt ceiling is raised.

Fearing the worst, one should sell Australian dollar, the classic riskier currency, versus Swiss franc, the classic safe haven. BMO recommends going short on AUD/CHF at 0.9073 stopping above 0.9203 and targeting 0.8503. Strategists at J.P. Morgan say that selling EUR/CHF may also suit as a strategy.

UBS: about the potential reduction of US debt

Analysts at UBS think that the United States may lose its top AAA credit rating in August if the White house and Congress agree to limited reductions of the budget deficit, while Standard & Poor’s and Moody’s Investors Service insist that $3-$4 trillion cuts are necessary.

According to the bank, the downgrade will certainly affect the prestige of America, but the impact on the greenback probably won’t be very significant as the central banks won’t sell Treasuries as they have to hold foreign-exchange reserves in liquid assets.

John Taylor, the head of the world’s largest currency hedge fund, believes that dollar won’t lose its dominance even in case of the nation’s downgrade.

[FBS_Official]

Western Union: RBNZ may raise the interest rate

New Zealand’s dollar renewed today the record maximum versus its American counterpart rising to 0.8763. Resistance for NZD/USD is situated at 0.8800.

Analysts at Western Union claim that kiwi managed to strengthen because of US dollar’s weakness, positive domestic business confidence survey and Australian CPI data.

The Reserve bank of New Zealand will announce its interest rate decision on Thursday at 1:00 am (GMT+4). Although the consensus forecast is that the central bank will leave the borrowing costs unchanged at 2.5%, Western Union economists regard the chance of the rate hike as rather high.

The specialists underline that when the RBNZ cut the interest rates by 50 basis points in March it clearly signaled that this was a temporary measure taken in order to help the national economy overcome the consequences of devastating earthquake that occurred in February. In their view, it’s obvious now that the disaster wasn’t as great as everyone feared. In addition, there’s significant enough inflationary pressure – one more argument to look forward to the monetary tightening.

Commerzbank: bullish outlook for EUR/USD

The single currency is consolidating in the 1.4500 area versus the greenback.

Technical analysts at Commerzbank note that as long as EUR/USD is trading above the short-term uptrend line at 1.4324, the outlook for it will remain bullish.

According to the specialists, the pair will be trying to retest 1.4580 (July 4 maximum) and 1.4694/1.4704 (June maximum and 78.6% retracement of the decline from May highs).

RBS: sell dollar versus yen and franc

Currency strategists at the Royal Bank of Canada note that US authorities seem to make no progress in the debt deal.

In their view, if the market’s sentiment keeps deteriorating, it’s necessary to sell the greenback versus Japanese yen and Swiss franc. The specialists underline that these currencies were steadily appreciating since US debt issues escalated and the policymakers have reached a deadlock in trying to raise the debt ceiling and avoid default.

RBS advises to stay away from commodity currencies such as Canadian and Australian dollars as they are vulnerable to the rising risk aversion even despite the fiscal strength of these nations.

It’s very difficult to say how low US dollar will fall. However, some analysts think the greenback’s slide in case of the United States downgrade won’t be that strong.

Analysts at Well Fargo, for example, have studied other instances when a country has lost its AAA credit rating. The economists came to the conclusion that the impact of the rating cut will be moderate of 3-5%.

Fund managers look forward to US downgrade

The largest fund managers such as BlackRock, Loomis Sayles and Franklin Templeton Investments expect United States to be downgraded.

Analysts at BlackRock note that when the policymakers face the deadline, the debt ceiling will be raised. Never the less, the nation will be still likely to lose its top credit rating.

Specialists at Loomis Sayles Bond Fund doubt that the White house and the Congress will manage to reach an agreement and expect that at least one agency will reduce US debt rating. At the same time, the AAA or AA rating doesn’t exactly matter for US debt as the Treasuries will continue to be a large and liquid market, says the fund.

Strategists at BNP Paribas, however, do think that the credibility of US bonds is declining. Yields indicate investors are favoring bank or company debt over Treasuries. 10-year Treasury yield hit 2.97% level today, though it’s still below the decade’s average of 4.05%.

Economists at Franklin Templeton Investments say that the lack of long-term solution of American debt issues will cast doubt on the risk-free status of US Treasuries.

Mitsubishi UFJ, BarCap: comments on USD/JPY

Analysts at Mitsubishi UFJ Morgan Stanley Securities believe that Japanese monetary authorities have given up on verbal interventions as all comments fail to curb demand for yen as a safe haven.

In addition, the specialists note that the atmosphere seems to be calmer than in the past as the stock markets didn’t seriously suffer. Japan realizes that even though strong yen makes exports less competitive, it makes imports cheaper and the nation currently needs plenty of foreign materials for reconstruction from the March 11 earthquake and tsunami. It’s also necessary to note that the breakdown at the nuclear power plant increases Japan’s dependence on foreign fuel imports.

Strategists at Barclays Capital claim that support for USD.JPY is situated at 77.40. Below that level it will slump to the record minimum at 76.25 hit in March. According to the bank, the negative pressure on the pair will ease only if it overcomes 78.40.

GS, JPMorgan Chase, Merrill Lynch about US GDP forecast

Analysts at the major banks such as Goldman Sachs, JPMorgan Chase and Bank of America-Merrill Lynch have reduced US economic growth forecast in the second quarter from 3.25% to 2.5%.

In their view, slower recovery will make the Federal Reserve hold the borrowing costs at the record minimum of 0-0.25%. JPMorgan and Goldman Sachs don’t rule out the possibility of the recession in the United States.

The economists are worried as the growth in the second quarter was more due to the expansion of inventories rather than to demand. Domestic final sales which exclude inventories, exports and imports gained only 0.5% from April to June, while business inventories added 1% in both April and May.

The rise in inventories may be explained by the fact that Americans have become more worried about the future. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell in July to 63.8, the weakest reading since March 2009, three months before the recession ended. The deterioration in consumer confidence, in its turn, may be caused by the discouraging situation at the labor market. The unemployment rate rose in June to 9.2%.

Economists surveyed by Bloomberg News believe that US GDP added 1.8% in Q2 after rising by 1.9% during the first 3 months of the year. Data is released on Friday at 4:30 pm GMT.

Credit Agricole: US problems and EUR/USD dynamics

Analysts at Credit Agricole believe that the risks that the US will lose its top credit rating are high given the current impasse in the negotiations about the debt ceiling increase.

If the United States is downgraded, equity markets will fall and the bearish pressure on US dollar will strengthen, while the gold prices will rise. The bank thinks that shock to the American economy in case of the rating cut could lower the next quarter's real GDP growth close to zero, though 4Q growth is likely to show some rebound after a possible resolution to the budget standoff.

According to Credit Agricole, EUR/USD should remain supported for some time by the widening of yield spread between US and German government bonds. The specialists warn, however, that as investors’ demand for safe havens increases, Treasury yields may actually get lower.

In addition, the strategists underline that the August 2 deadline isn’t ultimate as the White house will have 1-2 weeks more before it runs out of cash. As a result, the panic seen so far seems to be exaggerated. The analysts say thus that euro’s advance is going to be limited. Strategists at Societe Generale agree. In their view, the pair can't hold above $1.45.

[FBS_Official]

RBS: sell EUR/AUD and EUR/NZD

While the market’s attention was focused on the development of US debt debates, there’s a good chance to benefit from trading Australian and New Zealand’s dollars.

Strategists at Royal Bank of Scotland believe that both nations are likely to lift up the interest rates rather soon. The specialists note that there was a flow of encouraging economic data so far. That includes strong growth and confidence figures from New Zealand and higher than expected CPI in Australia. In addition, Aussie and kiwi will be driven by the demand for rising neighbouring Asian assets. The greenback, on the other hand, has little upward potential as there aren’t many positive factors to encourage it.

RBS also thinks that the problems in the euro area are going to escalate as the regions will be struggling to implement the second bailout for Greece. It will be very difficult for Europe to regain the market’s confidence as it may be seen from the rising Italian sovereign bonds.

The bank advises investors to sell EUR/AUD at 1.3010 stopping above on a 2-day close above 1.3500 and targeting 1.2000 by the first quarter of 2012. RBS recommend as well going short on EUR/NZD at 1.6500 stopping above on a 2-day close above 1.7000 and targeting 1.5000 by the first quarter of next year.

[FBS_Official]

Commerzbank: comments on GBP/USD

Technical analysts at Commerzbank note that this week for GBP/USD was quite volatile due to the high uncertainty at the market.

British pound didn’t manage to rise above $1.6380 and then eased down versus the greenback to the levels slightly above $1.6300. The bank thinks that the pair’s consolidating above June 22 maximum at $1.6260.

The specialists say that as long as sterling is trading above this level, it has chance to recover to the 78.6% Fibonacci retracement of the decline from April and May maximums in the $1.6540/47 zone.

[FBS_Official]

Reuters: Japanese authorities on stronger yen

As yen keeps appreciating versus its American counterpart and the markets are speculation on the potential intervention of Japanese monetary authorities, here are the key statements of the nation’s top officials as they are cited by Reuters.

Yoshihiko Noda, Finance Minister:

- “I am aware of various calls from the business sector and the severe situation Japanese companies face. We hope to take appropriate action with the cooperation of the Bank of Japan.”

- “We will take decisive action against excessive exchange rate volatility. I'd like to carefully examine how long we can leave current (exchange-rate) moves unattended.”

- “Movements have been one-sided. I think intervention has a certain effect temporarily. We should respond to excessive volatility and disorderly movements but it's not about (currency) levels.”

Kaoru Yosano, Economics Minister:

- “The yen's rise is not driven by domestic factors but by changes in global money flows ... The changes are occurring for a limited time period until August 2 so I hope the yen's rise will prove temporary...”

- “The government could counter a strong yen mainly by extending financial support to subcontractors and other firms suffering from the yen's rise... We have never thought about manipulating currency levels.”

- “Friday's economic data overall indicates the economy remains on a recovery trend, although employment is in a severe condition.”

Conclusion: if yen’s slump accelerates the intervention will come but it may happen at lower levels and after August 2.

[FBS_Official]

Lloyds: USD/JPY may test 76.00 yen

Japanese yen keep strengthening versus the greenback and the single currency.

The pair USD/JPY is under negative pressure as it seems that Japan’s monetary authorities won’t intervene before the uncertainty associated with US debt debates clears up. The deadline on the matter scheduled on August 2 is approaching.

Dollar fell to 77.45 yen, the lowest level since March 17 when it hit the postwar minimum at 76.25 yen.

Strategists at Ueda Harlow say that there seems to be no end of the debt ceiling discussion in America. In their view, the risk sentiment will keep worsening, so it’s necessary to buy Swiss franc and Japanese yen.

Analysts at Lloyds believe that yen is likely to gain more and even test 76.00 yen per dollar.