Dukascopy Morning Forex Overview

Dukascopy Fundamental Analysis

“Are we going to see in the next few weeks a significant rally in Italian bond yields? The answer is probably not”
– Bob Parker, a senior advisor at Credit Suisse
Italy sold almost 20 billion of debt during this week, pushing yields on government securities lower but failing to reassure investors over the nation’s ability to raise finance in the markets next year.


“The unemployment claims data continue to signal that the pace of improvement in the labor market may be gaining momentum”
– John Ryding, chief economist at RDQ Economic
More Americans applied for jobless benefits during the week ended December 24 than for the previous period.


“There is no real pressure on the market, [investors] want to get the next couple of days out of the way”
– Mark Hodds, head of execution at Oriel Securities
U.K. stocks rose on Thursday on better-than-expected economic data from U.S. The benchmark FTSE 100 index gained 1.08%, or 59.37 points, to 5,566.77.

“The post-Christmas malaise is likely to continue following a lack of cues from other markets and no significant economic data on the calendar”
– Jonathan Sudaria, a trader at London Capital Group
Swiss stocks closed little changed on Thursday after Italian bond auction and amid  low trading volume on the market.

“The  surge in ECB lending has caused the euro to drop against the yen”
– Kenichi Hirano, general manager and strategist at Tachibana Securities Co.
Japanese stocks closed mixed on Thursday and Euro dropped to a 10-year low against the yen after the European Centra l Bank balance sheet increased to record 2.73 trillion euros.

Dukascopy Technical Analysis

“The euro has moved in clear waves since the Lehman crisis, so the only downside objective that makes sense for the year ahead is its 2010 low of $1.1876”
– Tokyo-Mitsubishi UFJ (based on CNBC)
Even though the pair managed to recover from 1.2850, the outlook remains bearish.


“The fact that the [Italian] 10-year yield didn’t come down and they sold a bit less than that maximum target amount, that spurred further euro selling”
– Wells Fargo & Co. (based on Bloomberg)
EUR/JPY attempts to stabilise near a support situated at 100.00, nonetheless this endeavour is expected to fail and trigger a sell off down to 99.50.


“The BoE will move towards QE soon, and as the market prices in the increased probability of this Cable will suffer”
– Barclays Capital (based on Reuters)
A break below 1.5400 is a negative sign for the Cable, even though it is presently recovering from its recent low at 1.5355/65.


“The data have maintained their stronger tone and that suggests the [US] economy is on an upswing towards the end of 2011, but they are not pointing to robust growth in 2012”
– RDQ Economics (Reuters)
The bias for USD/JPY is slightly bearish, with the possibility of the currency couple dipping down to 77.00, since a tough resistance located at 78.25 is expected to repel rallies.


“To return to normal, the [Swiss] economy would need an exchange rate of 1.35 to 1.40 francs per euro”
– State Secretariat for Economic Affairs (based on Bloomberg)
Despite that USD/CHF pair is somewhat weak at the moment, the overall picture remains bullish.

What To Read Today

German economy ploughing ahead if euro holds
The Bundesbank’s forecast of a German economy growing a paltry 0.6 percent in 2012 may be pessimistic. If the euro zone stays in place, its troubles may redound to Berlin’s advantage.


Economy gaining momentum, housing shows a pulse
New U.S. claims for jobless benefits rose last week but the underlying trend pointed to an improving labor market, while regional factory data showed the economy gaining momentum as the year ended.

Asia & Pacific

China Factory Activity Shrinks, Growth Policies Eyed
China’s factory activity shrank again December as demand at home and abroad slackened, a purchasing managers’ survey showed on Friday, reinforcing the case for pro-growth policies to underpin the world’s second-largest economy.