Dukascopy Morning Forex Overview

Dukascopy Bank SA

Dukascopy Fundamental Analysis

“We think the ECB could bring rates as low as 0.5 percent in March”
– Fabio Fois, an economist at Barclay’s Capital
Eurozone inflation eased more than expected in December, giving the European Central Bank more room to lower borrowing costs as the economy heads toward a recession.


“The pace of [manufacturing sector] recovery has accelerated”
– Millan Mulraine, a senior U.S. strategist at TD Securities
New York region’s manufacturing sector grew in January at the fastest pace since May 2011, reflecting improving sales, employment and orders.


“We’re going to see inflation drop very sharply over the next six months”
– David Tinsley, chief U.K. economist at BNP Paribas SA
U.K. year on year inflation slowed in December to its weakest pace in six months, easing pressure on consumers. Consumer prices gained an annual 4.2 per cent, said the Office for National Statistics on Tuesday.

“European markets are likely to get a massive lift from the data out of China”
– Stan Shamu, a market strategist at IG Markets
Swiss stocks advanced for a second day amid speculation that slowing economic growth in China may lead to an easing of monetary policy.

“European markets didn’t take the downgrades very seriously and that reassured investors”
– Kenji Sekiguchi, general manager at Mitsubishi UFJ Asset Management Co.
Japanese stocks rose on Tuesday as investors shrugged off Standard & Poor’s downgrade of nine euro zone countries, including France, Italy and Austria.

Dukascopy Technical Analysis

“The euro’s move up is a short-term correction to recent excessive pessimism, but its medium-term continuation is questionable”
– State Street Global Markets (based on CNBC)
Current rally of EUR/USD is expected to last for several days, being capped by a resistance zone situated at 1.2871/86 (20 day ma). Nonetheless, the overall outlook remains bearish with the initial target lying at 1.2530/88.


“Only expectations are supporting the euro, including one that Greece’s debt-swap deal will be settled somehow”
– Ueda Harlow Ltd. (based on Bloomberg)
Bullish momentum of the pair has faded off circa 98.29. Now EUR/JPY is expected to commence trading off toward 94.92. However, this target will be reached provided that the price penetrates supports located at 97.04 and 96.15.


“Sterling looks particularly vulnerable against the euro in the very near term”
– Citi (based on Reuters)
A key support level at 1.5272 in conjunction with a subsequent line at 1.5145 has repelled the Cable, sending it higher. Even though resistances at 1.5633 (55 day ma) and 1.5672 are likely to halt rallies, the price should attempt to recover.


“The U.S. economy is showing signs of recovery. Haven currencies including the dollar and the yen will come under a bit more pressure”
– Rochford Capital (based on Bloomberg)
USD/JPY has just retested 76.56 and is getting ready to challenge the initial resistance line situated at 77.69. In case the latter level is breached, the price then will target resistances at 78.52 (200 day ma) and at 79.56 (55 week ma).


“We are highly confident the [US debt] deal will get done”
– Marathon Asset Management LP (based on Bloomberg)
Considering the long-term perspectives, USD/CHF is expected to continue trading well above 0.9377/17. Ultimately, the price should climb up to 0.9595 and surpass this threshold. The immediate resistance and support are located at 0.9572 and 0.9448.

Press Review

S&P Downgrades See Muted Market Response
Less than a week after the New York-based company cut its ratings of nine countries including France, the French 10-year bond is little changed at 3.08 percent and borrowing costs fell this week at the country’s sale of 8.59 billion euros ($11 billion) in bills.


U.S. losing high-tech manufacturing jobs to Asia
The United States lost more than a quarter of its high-tech manufacturing jobs during the past decade as U.S.-based multinational companies placed a growing percentage of their research-and-development operations overseas, the National Science Board reported Tuesday.

Asia & Pacific

China data shows cooling economy, as curbs take effect
Foreign direct investment in China rose 9.7 percent in 2011 to a record $116 billion, though December’s inflow of $12.24 billion was down 12.7 percent versus year ago levels, the Commerce Ministry said on Wednesday.