Analysts at HSBC claim that it’s very difficult to determine whether Chinese currency is under- or overvalued. The specialists note that yuan rose versus the greenback by 6.4% in real terms since June 2010, but declined slightly on a REER basis. In their view, yuan can still strengthen a bit more. The uncertainty about its fair value will keep the pair USD/CNY from any sharp moves.
Strategists at Standard Chartered believe that China’s tightening cycle may be close to an end as the inflation...
The single currency went up from Monday’s minimum in the 1.4300 area but failed at 1.4500 returning back below 1.4400.
Technical analysts at Commerzbank believe that euro is on its way down to support in the 1.4010/1.3968 zone. In their view, EUR/USD trend is neutral/negative after euro last week didn’t manage to overcome 78.6% retracement resistance at 1.4732.
According to the bank, resistance is found at 1.4540/65, 1.4732 and at May maximum of 1.4940.
Chart. H4 EUR/USD
Eisuke Sakakibara former Japan’s top currency official known as “Mr. Yen” believes that Japanese yen may strengthen to 75 versus the greenback.
As the reasons for such forecast the specialist cites US economic slowdown and the risk of its credit rating downgrade. Ratings agencies Moody’s Investors Service and Standard & Poor’s have so far put US credit rating under review and the United States may lose its top rating unless it makes progress in solving its debt issues. Sakakibara says...
Last week the market’s attention was focused on the central bankers with both Ben Bernanke and Jean-Claude Trichet speaking.
Investors were waiting for some key words from the ECB: as the central bank’s President said “strong vigilance” about inflation euro immediately spiked. When Trichet uses the expression “very close monitoring” euro moves quite a bit.
Analysts at Westpac note that as investors got used to coded messages from central banks, so it the tension escalates, the market would...
Economists at ZKB believe that strong franc won’t make the Swiss National Bank intervene at the currency market as Switzerland’s economy still isn’t strong enough, while the SNB’s currency reserves are already too high. The specialists note that the nation’s getting used to the strong national currency, though Swiss exports will stay under negative pressure in the second half of the year.
Strategists at BNP Paribas also don’t regard the possibility of SNB intervention as strong. According to...
Technical analysts at Commerzbank claim that the single currency is close to support at 1.20 versus Swiss franc.
In their view, the pair EUR/CHF may drop to the 3-year downtrend channel at 1.1950. The bank thinks that this level will be able to hold the first attack of the bears, though doubts that it will be able to initiate euro’s upward reversal.
The longer term targets are set at 1.1790 and 1.1600.
Chart. Daily EUR/CHF
Analysts at Nomura claim that the greenback may strengthen to 82.5 yen by the end of the second quarter.
The specialists think that the demand for the Japanese currency may decrease in the coming months. Such assumption is base on the fact that in May there was a significant increase in outward portfolio investment via investment trusts.
In addition, although the nuclear power plants will be gradually restarted in the second half of 2011, there risk that shutdowns will last longer remains....
Currency strategists at UBS expect the single currency to decline versus the greenback.
In their view, the dynamics of the pair EUR/USD after ECB’s President Jean-Claude Trichet’s hinted on Thursday at the coming rate hike shows that the potential of policy differentials as euro’s driving force is fading away.
According to the bank, July will characterize by the increased macroeconomic uncertainty in the euro area and the end of the Federal Reserve’s QE2. As a result, risky assets, equities and...