Tag Archives: Fundamental Analysis

The Complex Japanese Yen

japanese yen

Trading foreign currencies in the derivative markets is not an easy pie to devour. As a lone individual trader along with many others, you have to compete with well-established banks, trading houses and other financial institutions that have developed years of experience in trading currencies. You cannot hope to make gains while you remain uninformed. To be successful you must benchmark the way operations take place in well-established players of the market.

This means that your fundamental knowledge must cover the basic and major aspects in your analysis; as such big players do it. The knowledge includes current economic data of the country, the effects of dynamic interaction between economies and any other unique elements affecting currencies.

The Japanese Yen is among the eight most traded currencies of the world. These eight currencies account for more than 80% of the global trades. The Bank of Japan, mandated to monitor JPY, faces damning problems when it comes to stabilizing JPY. It has to keep interest rates lower to allow its exports to run, to spur growth and fight deflation and to keep employment figures up.

You need to dig more in to Japanese economy to trade JPY successfully. From being oldest economy in the world to being the leader in electronics, automobile manufacturing and ship construction, Japan still lacks the energy to give it a strong economic growth. For most of the past decade, Japanese economy has lingered at meager growth rates, up to 2% at max and sometimes even contracting. Since the burgeoning economy of China started to overshadow global economy, Japan with its dwindling fertility rates and older workforce has to rely more and more on economic partnership with regional powerhouses such as South Korea.

You also need to understand that many countries around the globe, particularly in Asia, keep large reserves of Japanese Yen to help them in import Japanese goods and meeting trade obligations. That said, Japan generates huge trade surpluses and altogether garners a lot of positive strength for its currency. At the same time, Japanese economy is heavily entangled in domestic debt. Its domestic nature of debt, that does not create alarm bells with the traders; however, it has caused political turmoil in the country.

There are specific elements that drive the demand and supply of the JPY in foreign exchange market. Just like the consumer / business confidence report is released in the USA, the Bank of Japan issues Tankan Report every quarter which explains the Japanese business mood. The Japanese stocks and trading are particularly responsive to this report. Second major driver for JPY is the carry trading carried out by Bank of Japan. The Bank of Japan offers its own currency to traders around the globe, to enable them to benefit from other high yielding currencies, against some premium of course.

Among other important aspects, affecting Japanese stock and currency are the natural disaster the country faces. It has been affected countless times with powerful earthquakes, hurricanes and even tsunamis.

If you are a long-term trader, such fundamental information is beneficial for you. However, even the short-term traders must know, what actually is going on behind a currency when they attempt to explain price bars with technical tools.

Author Bio:

By Free Forex trading – intellitraders.com

Yen likely to continue weakening

japanese yen

Greetings fellow traders!

I hope you’ve been paying attention to the forex market lately because there is a massive profit opportunity ripe for the taking. The Japanese Yen has been taking a beating lately. It has been falling in value since July of 2012 and in my opinion the conditions are such that it will most likely continue its downtrend for a bit longer. Japan’s new PM (Prime Minister) Shinzo Abe is determined to stop the nation’s past rampant deflation. In order to achieve this long term goal he has recently been putting a lot of pressure on the BoJ (Bank of Japan) to set it minimum inflation target at 2%. We will know for sure if this policy is adopted or not at the next rate review  meeting which should take place January 21 to 22. Once this policy is officially adopted and announced to the world it pretty much guarantees continued easing by the BoJ most likely in the form of an increase in its 101 trillion Yen ($1.2 trillion) asset buying and lending program.

Now the question is, should we put on further short Yen positions? Personally I’ve been short Yen since November 2012 (ie long gbp/jpy, eur/jpy, usd/jpy). I think yen pairs will continue to rise and this is what I’m betting on. Is it too late to get in this if you missed the train two months ago? It’s tough to say, but most likely not. You gotta make sure you get in on retracements and set a fairly wide stop loss and wait it out.

Feel free to tell me what you think and share your trading idea(s) or your opinion regarding my current yen bearish position.

Join me in the Interactive Trading section of my forum and let’s chat:

http://www.forexnirvana.com/f50/

Now if you’ll excuse me it’s time to get back to my trading.

Happy trading and many pips to you all!

Alan out.

What a German Departure Could Mean for Currency Investors

Jack Crooks

We all remember the term “Grexit.” It was coined when investors began thinking Greece might soon exit the euro zone. Not long after came similar headwinds in Spain. And analysts began talking of Spain possibly leaving the euro zone, too.

At about that time I looked hard at whether Germany might in fact be the first country to bow out. I wondered if they would take their ball and go home. And I wondered if the lackluster potential of Germany’s intra-euro trade partners was worth the headache.

Now …

Others Are Wondering
Those Same Things

I came across an article in the Financial Times this week written by Martin Wolf, who is widely considered to be one of the world’s most influential writers on economics. He was expounding upon a Centre for European Policy Studies (CEPS) working paper suggesting German exposure to its fellow euro-zone members is not as substantial as feared.

Wolf mostly agrees. But Wolf and the CEPS go their separate ways at the bottom line.

You see, Germany holds claims on euro-zone periphery nations. Those claims are driven to some degree by Germany’s current account surplus — the amount they export over the amount they import — and by speculative capital flows. In other words: Germany’s trading partners owe them money. And these trading partners are dumping boatloads of cash into the safety of German assets.

If the claims were based mostly on current account surplus, Germany’s risk would be substantial. But since speculative flows have become a larger part of these claims, Germany could survive if the euro zone fell apart or if they decided to exit.

They would, however, need to carefully manage converting inflows into their new currency, thereby pushing losses on said claims onto the periphery nations via a devalued euro.

Here is the difference between Wolf and CEPS …

CEPS believes fear over German claims are over-exaggerated and suggests Germany should be able to finance and manage euro-zone recovery efforts without taking on undue risk should the euro zone fall apart.

Wolf also believes fears over German claims are over-exaggerated. But he suggests Germany should be able to exit the euro zone instead of dealing with the years of agony in managing euro-zone recovery efforts.

We can’t underestimate the political will of key players in this crisis. Indeed, this is without doubt the highest, and perhaps insurmountable, hurdle. But I think a German exit is looking better and better each day while …

The Euro Zone Is Looking
Worse and Worse Each Day

Will Germany be the first one to exit the euro  zone?
Will Germany be the first one to exit the euro zone?

The IMF continues to scold Greece for not meeting its budget goals. And they continue threatening to withhold the latest promise of bailout funding. The Greek political scene is a mess, and the people aren’t too happy either. But Greece is small potatoes.

Take Spain, where everything is going wrong …

Spanish 10-year note yields are back above 6 percent. Every step above this level adds pressure to Spain’s debt obligations. Capital is rapidly fleeing the banking system. Regional governments are requesting bailout money from the central government. Catalonia, by output the largest of Spain’s 17 autonomous regions, is considering breaking off and seeking independence from Spain.

Italy isn’t in much better shape. France is laying low because they can’t afford assisting the least of these euro-zone countries. The relatively better off countries maintain significantly more exposure to the periphery nations than Germany does.

Still, Germans bear most of the responsibility for bailouts. But remember: there are all kinds of conditions on the ECB bond buying and the upcoming European Stability Mechanism (ESM). It’s already been determined that Germany can’t legally be required to front more cash than what has already been decided.

I suppose we should expect more meetings, more decisions, and more can kicking … to find a solution. We could be talking years of this stuff. And for what end? It changes nothing.

Is the Captive Market
Worth the Pain?

Clearly, Germany has made hay off of the common currency. It’s had a captive market to sell its goods. Many would question why Germany would exit the euro and forfeit this advantage.

A reasonable question. But the market seems to be forcing a slow, painful rebalancing anyway. The acquired mercantilist policy Germany lucked into is losing its appeal.

Germans are quick to tout the discipline, dedication, and financial prudence of their countrymen. I won’t disagree. But consider where they are now:

  • The pace of real disposable income growth is slow; wage growth is stagnant.
  • Consumption growth is also slow.
  • Productivity is not significantly increasing relative to some other developed economies.
  • Fiscal austerity is keeping demand constrained.

There is nothing inherently wrong with the above bullets taken in isolation. In fact, I very much respect a producer-oriented culture instead of a consumer-oriented one.

But at a time when the end result of prosperity is slowly slipping out of reach for a growing percentage of the population, expect a change. Enter the policymaking superheroes. It is time for them to swoop in and promise a better standard of living for Germans.

If they don’t, they’ll eventually be up against potentially higher inflation, a loss of productivity, risky claims on external surpluses, and growing bailout obligations to euro-zone members mired in prolonged recessions.

A German Exit Leads the Way …
to Competitiveness

A German exit means Germany abandons the euro and adopts its own national currency, say the deutschemark. Since Germany’s economy is far more solid than remaining euro-zone members, the deutschemark would appreciate relative to the euro.

A stronger deutschemark brings about a higher standard of living in Germany. It helps them avoid inflation and better balance their economy.

A cheaper euro makes the producers in periphery nations more competitive. That then gives them a growth outlet to escape more quickly the grip of deflationary recession.

Seems like a decent compromise.

If things stay as they are now, the periphery becomes desperate for German assistance; Germany becomes insistent upon the periphery forfeiting sovereignty; at best, the current economic imbalances are perpetuated and lead to deeper recession for the periphery as well as greater internal and external headaches for Germany.

So is it time for Germany to go?

We’ll have to wait and see. But if Germany goes, there is no doubt in my mind that the euro will fall off a cliff … a very deep one.

Best wishes,

JR

Source: http://www.moneyandmarkets.com

Why QE3 will fail, and why that may be very good for the U.S. dollar

by Jack Crooks

Jack Crooks

It seems to me the Great Depression has cast a long dark shadow over Fed Chairman Ben Bernanke’s thinking. The man seems obsessed by the idea, based on his own historical research that if the Fed had just done “more” the Great Depression could have been avoided.

I think he is dead wrong. And in fact it was the Fed that, through money and credit manipulation, set the stage that caused the Great Depression.

Mr. Bernanke gave a summary of why he believes the Fed was at fault for allowing the depression to become “Great” in a speech he gave back in 2004, “Money, Gold, and the Great Depression.” This speech provides an excellent insight into Mr. Bernanke’s core beliefs. Here are a few key excerpts:

During the first decades after the Depression, most economists looked to developments on the real side of the economy for explanations, rather than to monetary factors. Some argued, for example, that overinvestment and overbuilding had taken place during the ebullient 1920s, leading to a crash when the returns on those investments proved to be less than expected.

… To support their view that monetary forces caused the Great Depression, Friedman and Schwartz revisited the historical record and identified a series of errors—errors of both commission and omission—made by the Federal Reserve in the late 1920s and early 1930s. According to Friedman and Schwartz, each of these policy mistakes led to an undesirable tightening of monetary policy, as reflected in sharp declines in the money supply. Drawing on their historical evidence about the effects of money on the economy, Friedman and Schwartz argued that the declines in the money stock generated by Fed actions—or inactions—could account for the drops in prices and output that subsequently occurred.

… The transmission of monetary tightening through the gold standard also addresses the question of whether changes in the money supply helped cause the Depression or were simply a passive response to the declines in income and prices. Countries on the gold standard were often forced to contract their money supplies because of policy developments in other countries, not because of domestic events. The fact that these contractions in money supplies were invariably followed by declines in output and prices suggests that money was more a cause than an effect of the economic collapse in those countries.

This is a powerful defense for monetary easing. But by any measure, it seems that goal of increasing money and monetary supply to cure economic ills has already been achieved by Mr. Bernanke and Company. And they are fighting a losing battle.

As you can see in the chart below, bank reserves are in the ozone.

Chart 1

What’s more, the money supply is still trending higher …

Chart 2

But all that money is NOT stimulating the economy! The plunging rate Americans are spending is clearly shown in the following chart. I believe this drop is due to changing consumption/savings patterns as U.S. consumers attempt to recover from this serious balance sheet recession, similar to the experience of the Great Depression.

Chart 3

And so far, historically low interest rates by the industrial world central banks haven’t done diddlysquat for the unemployed.

Chart 4

Simply put, Mr. Bernanke must fix the plumbing before any amount of money is going to improve the real economy! The mechanism that transmits credit into the real economy is broken. And pushing rates lower only exacerbates the problem domestically and creates monetary tensions overseas.

What It Means for the Dollar

At first blush all this quantitative easing looks very bad for the U.S. dollar. And it has been to a large degree. But because QE3 actually retards the ability of the real economy in the U.S. to grow, it has a massive negative feedback on Europe and China; both require strong U.S. demand to export.

So in a sense, a very bad sense, QE3 may be very good for the U.S. dollar as it will likely trigger a major change in risk appetite for global assets markets. And that could happen once sentiment shifts and people realize that history shows there is much more to reviving a complex system such as the global economy than through pure money and credit manipulation.

And at some point, the liquidity-driven financial markets will reflect the very poor conditions of the underlying real economy here and abroad.

Best wishes,

Jack

Source: http://www.moneyandmarkets.com

How Long Will the Dollar Remain the World’s Reserve Currency?

green dollar sign

We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy.  But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency.  This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971.   Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it– not even a pretense of gold convertibility! Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region. The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers.  The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies. In 2009 Iran completely ceased any oil transactions in U.S. dollars.  These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world’s reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar’s status in the Middle East, an even larger threat resides in the Far East.  Our greatest benefactors for the last twenty years– Asian central banks– have lost their appetite for holding U.S. dollars.  China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever.  Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency.

If we act now to replace the fiat system with a stable dollar backed by precious metals or commodities, the dollar can regain its status as the safest store of value among all government currencies.  If not, the rest of the world will abandon the dollar as the global reserve currency.

Both Congress and American consumers will then find borrowing a dramatically more expensive proposition. Remember, our entire consumption economy is based on the willingness of foreigners to hold U.S. debt.  We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.

Ron Paul

Pros and Cons of Fundamental Forex Trading

Many forex traders are technical traders, but there is a school of thought that says fundamental analysis is the best route. Fundamental analysis is the process of analyzing the market using both qualitative and quantitative factors that take into account economic and political factors.

Fundamental traders are concerned more with how the economy and political landscape shapes the world and affects trading activity. In forex, fundamental traders look at the macro and micro economic factors that affect a nation’s currency to determine the value of that currency relative to another currency. Since fundamental indicators don’t always result in instant market reactions, fundamental traders tend to have a more long-term view of the market.

While there is no shortage of trading software and tools for the technical analyst, fundamental analysts often find that they must put in more manual labor to realize a profit. Is it worth the effort?

The Benefits of Fundamental Analysis

There is a certain kind of romanticism surrounding fundamental analysis. The idea that politics and the economy drive financial decisions means that there’s more than just numbers that move the world along. This lends an artistic element to the process of analysis. Still, fundamental traders do look at numbers including:

  • the measure of overall economic growth for a country.
  • trade and current account balances.
  • interest rates and investment (i.e. bond) yields.
  • political stability.

The measure of economic growth for a nation is often measured by its GDP, but traders will often look at unemployment rates as well. Any decrease in the employment rate is seen as a weakening of the economy. When economies weaken, central banks have a history of lowering interest rates to spur growth. For traders, this means inflation. Inflation destroys the value of a currency causing traders to bet against that currency. If enough traders have the same view of a weak nation, that nation’s currency value could drop.

Trade balance can dramatically affect a nation’s currency. When a country has a trade deficit, it will generally result in a weak currency since that country will have continuous commercial selling of its money.

GDP, or Gross Domestic Product, can foretell a strong or weak nation. If GDP rises, there is an expectation of higher interest rates. These higher rates may be positive for a country. As interest rates rise, borrowers must pay more for their debt. Some businesses will default. Even so, the rising rates curb inflation by reducing the incentive to borrow. By curbing inflation, a currency grows stronger because it is not being devalued as much. Taken to the extreme, a deflationary environment would make a currency grow (sometimes rapidly) in value as fewer currency units become available in the marketplace.

An economy can still grow under high interest rate environments. This growth would be good for the economy, thus signaling a buying opportunity for forex investors.

The Disadvantages of Fundamental Analysis

Some critics of fundamental analysis point out that:

  • fundamental analysis requires a background knowledge of economics and is difficult to understand.
  • fundamental analysis is time consuming.
  • the information unearthed by fundamental analysis is already priced into the market.
  • it fails to give traders objective trading signals.

Economics is not an easy subject to master. There are two basic competing theories of economics: the Keynesian school of economics and the Austrian school. Keynesians believe that economic growth can be achieved through government stimulus. When an economy is sluggish, the central bank can “grease the grooves” by providing an infusion of capital to the market. The market then invests this money thus contributing to a recovery.

The Austrian school holds the opposite view. Instead of government stimulus helping the economy, it plants the seeds of its own destruction. The boom created by an influx of capital is really just a sign of malinvestment waiting to crash. This, according to the Austrians, is why central bank-induced boom periods are always followed by busts.

Many economists study just one theory for their entire life and still never master it enough to predict market trends. For traders, they must be able to pick the correct economic theory and know how it will impact the markets – a tough job at best.

Because of the nature of fundamental analysis, it’s time consuming. While some calculations can be done to assess the health of an economy, much of the analysis is qualitative. In other words, the trader has to know how to interpret the news and political speeches. This could take years of practice not to mention the fact that economic and political news may or may not have an immediate effect on the currency markets.

Many technical traders argue that markets are perfect and that this means that all of the fundamental indicators are already priced into the marketplace. This line of thinking is closely related to the efficient market hypothesis which states that financial markets are not over or undervalued. All relevant information is instantaneously priced into the markets. If that’s true, then fundamental analysis is a waste of time.

Technical traders also believe that fundamental analysis does not give investors the ability to make objective trading goals. Since much of the work is qualitative in nature, fundamental analysts are often perpetual “buy and hold” investors that seek gains over a long period of time. Because there’s no software that tracks historical trends, there’s no data mining. It’s this lack of historical data that accounts for this criticism of fundamental analysis.

Making a Choice

One option that you have open to you is to blend both technical and fundamental analysis into a new trading strategy. You don’t have to choose just one. In fact, an increasing number of traders use technical analysis to spot trends, then use fundamental analysis to confirm the validity of the trend before investing. A combination of the two methods might yield good results and provide flexibility in your trading strategy.

Author Bio:

Guest post contributed by Stacy Pruitt, a freelance forex strategy and finance writer. Stacy writes about advanced trading. Learn more about forex trading.

Dukascopy Afternoon Forex Overview

Dukascopy Bank SA

Dukascopy Fundamental Analysis
EUR

Nicolas Sarkozy, France’s President, said that the country may consider withdrawing for Schengen zone unless more efforts are put in stopping illegal immigration. Sarkozy speaking at President’s election rally stressed that the progress has to be made during next 12 months otherwise France will exit Schengen zone. Illegal immigration is expected to be the core issue during elections in France.

USD

Crude oil futures eased down during the Asian session on Monday as traders started to cash out from the market after crude oil moved higher on the positive US labour data. Light, sweet crude oil futures for April delivery traded at 106.92 US Dollars per barrel on the New York Mercantile Exchange, tumbling.

GBP

According to Lloyds Bank Corporate Markets, concern of losing their jobs has been decreasing among Britons for the second month in the row. Job security index gaied 2 points in February, currently standing at -22 points. Bankers believe the labour market has still a long way to go to reach the pre-crisis levels of job security.

CHF

The official SNB exchange rate for EUR/CHF is 1.2057 today; yield on 10-year Swiss Confederation bonds decreased to 0.72%. 3-month LIBOR CHF stands at 0.09%, and is within the target range of 0.00-0.25%. Swiss SMI stock index has lost 0.04% since the opening bell, and is currently fluctuating around 6185 points.

JPY

Japan’s Nikkei Stock Average retreated after gains in previous two sessions as Yen appreciated and China reported a record high trade shortfall in February. Nikkei 225 index edged 0.4% or 39.88 points down to 9,889.86 with eight of ten industries posting losses. Nippon Paper Group led the drop among paper firms on a report which showed the wholesale prices of high-quality paper fell. Panasonic added 0.7% on news it plans to increase its sales of appliances by the end of March 2016.

Dukascopy Technical Analysis
EUR/USD

Daily maximum: 1.3135
Daily minimum: 1.3078
The single currency depreciated today versus the greenback after the Greece completed the biggest sovereign debt restructuring in history. Daily Resistance: 1.3235; 1.3347; 1.3416. Daily Support: 1.3054; 1.2985; 1.2873. Daily Bias: Strongly bearish.

EUR/JPY

Daily maximum: 108.14
Daily minimum: 107.5
EUR/JPY slipped slightly today, breaching the daily pivot point at 108.18. Daily Resistance: 108.66; 109.13; 109.61. Daily Support: 107.71; 107.23; 106.76. Daily Bias: Bearish.

GBP/USD

Daily maximum: 1.5695
Daily minimum: 1.5606
The British pound fell against the US dollar, heading towars a support level at 1.5551. Daily Resistance: 1.5779; 1.5891; 1.5949. Daily Support: 1.5609; 1.5551; 1.5439. Daily Bias: Strongly bearish.

USD/JPY

Daily maximum: 82.43
Daily minimum: 82.11
USD/JPY declined for a second day, after rising sharply by 87 peeps on Friday. Daily Resistance: 82.90; 83.35; 84.07. Daily Support: 81.73; 81.01; 80.56. Daily Bias: Bullish.

USD/CHF

Daily maximum: 0.9218
Daily minimum: 0.9178
USD/CHF Monday slid modestly towards the support level at 0.9106; technical indicators suggest the pair is likely to recover in the short-term. Daily Resistance: 0.9235; 0.9285; 0.9364. Daily Support: 0.9106; 0.9027; 0.8977. Daily Bias: Strongly bullish.

Press Review
Europe

Euro zone ministers to sign off Greek cash, grill Spain
Euro zone finance ministers will sign off on a second bailout for Greece on Monday and shift their focus to Spain, whose government looks set to violate newly agreed EU budget rules by missing its deficit target again this year.

USA

U.S. stock indexes pause after win streak
U.S. stocks were roughly flat Monday following a three-session rise as Europe readied to seal Greece’s rescue package and after China reported a large monthly trade deficit.

Asia & Pacific

Japan Machinery Orders Beat Expectations
Japanese core machinery orders rose more than expected in January from the previous month, a bright sign for economic growth in the first quarter of the year as a pickup in global trade and demand related to disaster reconstruction are beginning to spur growth at home.

Dukascopy Morning Forex Overview

Dukascopy Bank SA

Dukascopy Fundamental Analysis
EUR

“The debt-swap results show that international markets see the prospects the Greek economy has to regain a sustainable fiscal situation”
– Evangelos Venizelos, Greek Finance Minister
Greece pushed through the bond swap offer averting the immediate threat of an uncontrolled default and opening the way for a second rescue package.

USD

“The labor market has found its legs in the last few months, and it looks like there’s enough of a broad base that the momentum can be sustained”
– Julia Coronado, chief economist for North America at BNP Paribas
Employment grew for a third consecutive month in February, a sign the economic recovery is gaining momentum. Employers added 227,000 jobs to their payrolls, the Labor Department said on Friday, while the unemployment remained unchanged at 8.3 per cent.

GBP

“Manufacturing is past the worst that we saw in the second half of 2011, but it’s still in a very difficult situation”
– Howard Archer, chief European economist at IHS Global Insight
U.K. manufacturing output rose less than expected in January, said the Office for National Statistics on Thursday. Factory output gained 0.1 per cent from December, a sign the economy is still facing headwinds.

CHF
“The worst case scenario of a disorderly default has been cast aside, and this is a relief for the market”
– Benoit Peloille, equity-market strategist at Natixis
The Swiss blue-chip index SMI, a measure of the largest and most actively trad ed companies, gained 0.56%, or 34.58 points, to 6,188.51. The broader Swiss Performance Index rose 0.61%, or 34.66 points, to 5,681.28.

JPY
“It’s big that Greece is becoming less of a drag as the global economy rebounds”
– Kazuyuki Terao, chief investment officer of RCM Japan Co
“It’s big that Greece is becoming less of a drag as the global economy rebounds,” said Kazuyuki Terao, chief investment officer of RCM Japan Co.

Dukascopy Technical Analysis
EUR/USD

“We’re getting steady improvement in the U.S. while the European economic situation remains challenging”
– Wells Fargo (based on CNBC)
Being that EUR/USD’s growth will be halted by resistances located at 1.3285/91, 1.3325 and 1.3389, the outlook remains negative. The initial target lies at 1.2974/54, while a long-term goal is at 1.2624.

EUR/JPY

“The worst case scenario of a disorderly [Greek] default has been cast aside, and this is a relief for the market But the long-term solvency question remains”
– Natixis (based on Bloomberg)
Despite a recent failure of EUR/JPY near 108.75, formidable support at 106.37 should manage to contain dips. Afterwards we are likely to observe a recovery of the pair from the latter level. Rally should be able to extend beyond 108.75, up to 109.32/58 (55 week ma).

GBP/USD

“We expect cable to trade in the $1.57-$1.60 band”
– RWC Capital (based on Reuters)
A strong support situated at 1.5876 (200 day ma) is expected to continue to cap the price from above, while the bias of the Cable remains bearish. In the short-term 1.5650/43 is in focus, followed by 1.5581 and 1.5500.

USD/JPY

“The downside risk to U.S. growth is fairly limited from here”
– Russell Investment Group (based on Bloomberg)
As long as a key support at 80.86 is not violated, USD/JPY is likely to carry on advancing. The pair has already overcome 82.23 and should reach 83.80 soon enough. Within a longer time span, 85.53 and 86.80 are expected to be attained.

USD/CHF

“Tuesday’s retail sales could revive more QE3 talk, especially if the data is weaker than expected”
– WSJ
USD/CHF currency couple is currently gaining bullish momentum, as it is being supported by strong levels at 0.9088/66 and 0.8931. The initial target lies at 0.9246 (55 day ma), which guards 0.9317.

Press Review
Europe

Greece Now Has ‘New Starting Point’: Greek FinMin
After its second bailout was secured on Friday, Greece has been given a “new starting point” to try and restore its struggling economy to health, Greek Finance Minister Evangelos Venizelos told CNBC.

USA

Shares pause after U.S. jobs, monetary policy in focus
Asian shares fell on Monday as investors paused to assess the effect of strong U.S. jobs data, which scaled back expectations of more easing ahead of this week’s Federal Reserve meeting, while uncertainty over Chinese growth also weighed on sentiment.

Asia & Pacific

China reports large trade deficit as imports surge
China posted its largest trade deficit in at least a decade in February after imports of commodities jumped as companies built up supplies.