Comments and forex-analytics from FBS Brokerage Company

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Societe Generale: buy euro at 1.34/38

Analysts at Societe Generale advise to buy the pair EUR/USD at 1.34 and a sell at 1.38 in the short term. The specialists note that the single currency keeps rebounding from 1.34 helped by the central bank demand.

As the Fed’s chairman Bernanke doesn’t regard inflation as the problem for the United States, the country’s monetary authorities are free to promote weak dollar. This, in its turn, will encourage Asian central banks for further euro purchases in order to diversify their currency reserves.

BofT-Mitsubishi UFJ: euro under pressure of Ireland's elections

Analysts at Bank of Tokyo-Mitsubishi UFJ claim that the single currency may get under negative pressure due to the approaching Ireland's general elections that will take place on Friday. The victory of the opposition Fine Gael party would affect euro’s rate. The specialists think that the pair EUR/USD may fall this week to 1.3450.

As the Fine Gael leader Enda Kenny said so far, the senior bondholders within other banks aside from the nationalized Anglo Irish Bank and Irish Nationwide Building Society could be asked to engage in “burden-sharingâ€￾ that may lead to the spreading of Ireland's woes elsewhere in Europe.

It’s necessary to take into account that German Chancellor Angela Merkel's party was defeated in the regional election in Hamburg on Sunday as the population doesn’t approve that tax money are used to bailout indebted euro area’s nations.

Daiwa SB: yen’s rate will weaken

Japanese yen may weaken as the global economy rebounds encouraging the country’s investors to look forward for higher yielding assets abroad reducing their demand for the national currency, claim the analysts at Daiwa SB Investments Ltd.

The pressure on yen is created due to the widening differential between yields on Treasuries and Japanese government bonds. Investors begin returning to the carry trades borrowing in Japan where the yields are low in order to buy assets in higher-returning countries.

In 2011 carry trades with yen as a funding currency brought the profit of 23.8%, while from dollar-funded trades investors gained only 2.8%. Rising popularity of the yen-carry trades means that the Japanese currency to be sold.

According to the data from Commodity Futures Trading Commission, for the first time since June futures traders are betting on a drop in yen versus dollar – net shorts for yen were 18,548 February 15, compared with net longs of 36,731 a week earlier.

So, the general trend has reversed from what we’ve seen at the beginning of 2010 when investors were looking for a refuge from Europe’s sovereign-debt crisis propelled yen to 15-year maximum versus the dollar.

According to the Bloomberg’s data, yen lost 8.1% from its August maximum versus the basket of it 9 developed-nation counterparts. In February the pair USD/JPY has gained 1.3%. Economists surveyed by Bloomberg News claim that yen will fall to 86 per dollar by the end of the second quarter and 90 by the end of the year. Currency strategists at Daiwa SB believe that the pair USD/JPY has already hit its lowest point and is now on its way up.

Yen’s depreciation will be very positive for Japanese exporters and may help the Prime Minister Naoto Kan to improve his approval rating that declines last month to 17.8%.

Commerzbank: USD/CHF will rise to 1.0067

Last week the pair USD/CHF declined almost by 3% falling to 0.9425 earlier today, the minimal level since February 3.

Technical analysts at Commerzbank note that the greenback may reverse after last week’s decline versus Swiss franc and gain 6% climbing to December maximum at 1.0067.

The specialists believe that US currency will test resistance at 0.9774 centimes (61.8% Fibonacci retracement of the drop from December and January 11 maximum).

Ueda Harlow: EUR/USD may drop to 1.2867

Technical analysts at Ueda Harlow Ltd. claim that the single currency may fall to 5-month minimum versus the greenback.

The specialists note that the pair EUR/USD broke today below the key technical levels – 5-day MA at 1.3628 and the 20-day MA at 1.3641.

The momentum deteriorates and euro’s now moving down towards the trend line connecting January 4 maximum at1.3433 and February 14 minimum at 1.3427. If the European currency drops below this line, it may fall to the 1.2969 level hit on November 30 or to this year’s minimum at 1.2867 tested on January 10. The last time euro traded below 1.2867 was September 14.

NZD is falling down after the earthquake

New Zealand’s dollar fell to this year’s minimum versus its US counterpart as magnitude 6.3 earthquake broke out in Christchurch, the country’s second-largest city. The pair NZD/USD slumped from 0.7640 getting below 0.7500.

Analysts at Nomura Australia claim that damage and disruption from today’s earthquake may lower New Zealand’s first-quarter GDP to the flat level, while earlier they projected 0.8% increase. In their view, the Reserve bank of New Zealand will raise its benchmark rate by 25 basis points this year to 3.25%. Earlier they forecasted 3 rate hikes with the first already in April.

Analysts at Citigroup expect New Zealand’s central bank to be on hold for all of 2011 and possibly the first quarter of 2012.

Economists at Australia and New Zealand Banking Group note that this is already the second strong earthquake after the one that happened on September 4, 2010. The specialists believe that there’s the serious risk that New Zealand will be downgraded. In their view, the government may not be able to achieve the goal of a budget surplus by 2014.

UniCredit: strong franc is not an obstacle for exports

Despite the franc’s strength Switzerland's export growth remains strong. According to the data released today, Swiss trade balance surplus reached 1.96 billion francs, while the economists were looking forward to 1.65 billion.

Specialists at UniCredit say that although high demand for franc as a safe haven currency reduces the exporters’ profits, it helps, on the other side, to stem the commodity related rise in input costs.

In addition, Swiss export goods have the advantage of having high quality and, consequently, being less sensitive to the price shifts. As the global economy’s rebounding, the demand for Swiss exports is increasing.

Commerzbank: comments on EUR/USD

The single currency didn't manage to overcome the 1.3715 level on Friday on its way to February 9 maximum at 1.3745. Technical analysts at Commerzbank note that as long as the pair EUR/USD trades below this maximum, it will remain under bearish pressure.

According to the specialists, euro will be poised down to the 1.3396/61 area limited by the 55-day MA and the 50% retracement of the move seen this year.

If EUR/USD climbs above 1.3745, it will rise to resistance line connecting the maximums of November and January at 1.3770 and the recent maximum at 1.3862.

Sakakibara: yen will rise to the postwar maximum

Eisuke Sakakibara, formerly Japan’s top currency official known as “Mr. Yenâ€￾ for his efforts to influence the yen rate through verbal and actual intervention in the currency markets in 1997-1999, expects that yen will rise versus the greenback above the postwar maximum at 79.75. In his view, Japanese currency will stay this year above 80 yen per dollar. Such forecast is based on the structural weakness of the American economy.

Sakakibara notes that the US still faces a balance-sheet problem with businesses saddled with bad loans and households with excess debts. As a result, the economist doesn’t think that the current economic recovery seen in the United States is sustainable.

According to Sakakibara, the pair USD/JPY will remain in the downtrend during the medium or long term. The former official says that Finance Minister Yoshihiko Noda should declare that strong currency is in Japan’s interest.

Yen reached the maximal level since April 1995 on November 1 when it advanced to 80.22 per dollar. Economists surveyed by Bloomberg expect yen to fall to 86 per dollar by the middle of this year ending 2011 at 89 yen per USD.