BNP Paribas: It's time to sell the Australian dollar

This month the Australian dollar again raise its price, however, as before, it failed to break through key resistance levels, and while its attempts to decrease remain limited, the dynamics of the pair shows a weakening of upward momentum, analysts said.
Analysts at BNP Paribas note that market participants in recent years have gained a strong track record of long positions and the positions of speculators close to important technical levels suggest the attractiveness of short positions in AUD/USD.
At the bank believe that the new period of decrease will also contribute to fundamental factors and announced the opening of short positions in AUD at 0.7695 with target 0.7400 and a stop at 0.7815.

Review of today's macroeconomic events

Today Donald Trump for the first time will appear in front of representatives of both US Houses of Parliament with their vision regarding the implementation of plans for the pre-election program. The main points of his speech will be the cancellation of Obamacare, the implementation of infrastructure projects in the energy sector, aimed at creating new jobs, and changes in tax legislation. This last point is extremely important for the global stock market. On the one hand, there may be disclosed tax incentives for the transfer of production in the US for many American manufacturers. From the other hand, it will be possible to assess the implications of these initiatives for the Asian and European economies. Given the uncertainty of the results of performance of Donald Trump, investors around the world are afraid to make deals. Trade turnover in the European and Asian markets today fell on average by 20% compared with the values ​​of the last two weeks. To date, European indexes traded in a small plus. Published today in France, statistics on GDP growth coincided with market expectations, growth of the economy of the country amounted to 1.2% y/y.

Gold rising

On Friday, the price of gold reached a maximum of three and a half months due to lower expectations for a quick reform of the tax administration of the Trump.
Gold futures for April rose by 0.53% to $1258.05 on a division of the New York Commodity Exchange COMEX. During the trading session, the price of gold rose to a maximum from November 11 - $1258.8.
For the week gold has risen in price by 1.56%, registering the fourth consecutive week of increase.
On Thursday, US Treasury Secretary Steven Mnuchin said that he would like to hold a large-scale tax reform through Congress before the holidays in August, but there is still a lot of work.
He also noted that the Trump administration's actions to change economic policies are likely to have an effect only next year.
These statements have reduced investors' expectations that the tax reform will boost the inflation and will force FED to raise interest rates in the United States.

Barclays reduced its target price for oil in 2018 by $10

On Friday, analysts at Barclays (LON: BARC) lowered their forecast for the price of Brent crude oil at the end of 2018, but confirmed the trend in the increase of oil prices.
In particular, analysts have lowered the forecast of oil on the London Commodity Exchange to $67 per barrel from the previous value of $77.
The analysts at Barclays explained, that they maintain their forecast that the price increase will be by $10 higher than the current rate futures.
They also left unchanged the forecast for the average price of a barrel of Brent crude oil for 2017 at $57 per barrel, noting that the forecast for the second quarter was $62.
Analysts called the situation "a game of musical chairs", which will end as soon as the US shale oil producers to increase production, or completed action on the production reduction agreement.
According to the analysts, if OPEC agreement is not renewed, it will decline in 2018, oil prices will be more volatile when stockpiling will continue, as OPEC spare capacity.
British bank's forecast for the price of WTI crude oil was $56 per barrel in 2017 and $65 per barrel in 2018.

Deutsche Bank: Short positions in EUR/CHF have become more attractive

The fundamentals remain constructive for the Swiss currency, in addition to these, analysts believe that increased political risks in Europe that are negative for the euro and positive for francs and which maintain the status of the franc as a safe haven currency.
At Deutsche Bank noted that the inflow of foreign capital continues to urge the franc to rise, as 1.06 level seems to have become the new unofficial border of the Swiss National Bank, as bank analysts do not talk about defense of this level at any cost.
At Deutsche Bank advised attempts to growth of EUR/CHF to be used for sales of еuro, expecting to break below 1.06 and the fall of the exchange rate at 1.00. Analysts note that the data show favorable for such a deal positioning of market participants.

Danske Bank: Uncertainty about the economy of Trump may lead the Fed to raise rates only twice in 2017

As expected, we have not learned many new from FOMC, as most members of the committee have already expressed their views after its meeting in February. The head of the Federal Reserve Janet Yellen also spoke, as she did in mid-February before Congress.
FOMC members believe that the economy continues to show improvement, but Trump's economics makes predicting future decisions indefinite. The word "uncertainty" was mentioned in the minutes of FOMC 14 times. This is slightly less than in December, when it was mentioned 15 times, but significantly more than in November, when Donald Trump won the elections (only 5 times).
Although most members of the Commission expect that the increase in interest rates will happen "very soon", only a small portion of the hopes are that this will happen at the meeting in March. This confirms the opinion of analysts of the bank that the increase in interest rates in March seems unlikely. The Fed can not afford to sit on the fence, pointing to the strong dollar and inflation, which remained below the target level of 2%.
The bank analysts continue to believe that the Fed will raise rates twice in 2017: in June and December. But there is a chance for a third increase. If economic indicators remain strong, analysts of the bank will receive more information about the economy of Trump, as then they do not exclude the possibility of an increase in interest rates in May.

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Natixis is awaiting fall of the pound to 1.18 in the coming months

Natixis publish its weekly review of the currencies of the G-10, draws attention to the fact that uncertainty about Brekzit will likely have a negative impact on economic growth in the UK, which will keep sterling under selling pressure.

Although GDP growth in the UK remains stable, uncertainty about the upcoming negotiations with the European Union is still very high, especially considering the rise of euroscepticism and the coincidence in time with the negotiation of a number of key elections.

For these reasons, analysts of the bank are cautious about prospects for economic growth in the UK in the medium term, recognizing the risk of stagflation. In the near time should be monitored CPI (looking to rise by 1.9% in January) and employment data. The bank remained wary of the pound, predicting a decline in GBP/USD towards 1.18 over the coming months. They expect EUR/GBP to vary between 0.84 and 0.86 in the near future.

Westpac advise to sell the euro at the moment

Westpac currency strategists still believe that any attempt of the euro to rise above 1.0600 area provides a good opportunity to sell. The euro has risen in January from around 1.04 to the top near 1.0830, it is supported by a narrowing of spreads in bond yields, strong data in the Eurozone and negative news from the US as well as the weakening of expectations of increasing inflation due the new policy of Trump, analysts say.

Since then, spreads on two-year bonds in the eurozone and the US have recovered almost all the losses in January, promising new lows for the euro, they added. However, EUR/USD pair fell by only 50% of the rally from the lows in January.

The chances of an increase in interest rates by the Federal Reserve rose to 45 percent in March, but they must remain at least at current levels, then need to be increased during the presentation of Trump before both houses of Congress, analysts say.

At the same time on the side of the euro are financial flows in defensive assets that can further reduce yields on German bonds, at least until the upcoming elections in the Netherlands (March 15), then in France (second round on 07 May). Bank analysts expect a continuation of the downward movement.

BNP Paribas: The dollar should be higher

According to estimates by analysts of the bank, now short-term speculators are in short positions in the dollar (-10 on a scale of -50 to +50), which creates prerequisites for its further growth. In addition, current market assessments of the likelihood of an increase in interest rates at the meeting of the FOMC in March is only 30% (full year foresees two increases, while so-called "points" show at least three).

According to estimates of the model of the bank, taking into account differences in yields, dollar index should be in the region of 105 (currently less than 101). The published data on the consumer price index of the United States, will also support US currency. Bank analysts recommended buying the dollar against major currencies in anticipation of reduced appetite for risk.

Danske Bank: Bank of Australia may prevent further growth of AUD/USD

AUD/USD won back almost all the losses suffered after the victory of Donald Trump in the US presidential election. The demand in mid-December was due to the uncertainty of the economic plans of the new US administration, the strong macroeconomic data from Australia, upbeat comments from Bank of Australia, as well as higher commodity prices and good appetite for risk, analysts say.

However, they believe that the Australian central bank wants to limit the potential growth of the couple through verbal intervention in case of its further strengthening. In addition, in the coming months there may be an increase in interest rates in the US. Analysts' forecasts of the bank for AUD/USD for 1, 3, 6 and 12 months, are respectively, $ 0.75, $ 0.73, $ 0.74 and $ 0.75.

The dollar almost repeated the record from 1975

Thanks to the publication of strong data on US inflation and quite aggressive tone of Janet Yellen in a speech to Congress, the market's assessment of the likelyhood for raise rates at the meeting of the FOMC in March rose by 25% to 40%, say analysts.

Against this background, the US currency has enjoyed good demand and fairly sharp turnaround in the second half of the trading session on Thursday, which did not allow the dollar to repeat the record from July to September 1975, when it grew 11 consecutive days between July to September 1975.

If recent sessions were completed with growth, this could be the second longest rally ever for the US currency, analysts say.

Commerzbank recommends caution regarding the pound

Analysts at Commerzbank remain wary of pound, adding that the behaviour of the currency can be described as somewhere between neutral and negative.
GBP/USD broke through 55-day moving average, but could not close below support, which is located at 1.2429. Price movements can be interpreted as a slight twist, so attention is now fully justified. Last week, the market bounced off the top of the channel at 1.2702. Closing below 55-day moving average, opens the way for a fall to 1.2253, a minimum of 18 January.
The forecast of analysts from the bank remains neutral to negative. They suspect that prices will have to break through 1.2250 to relieve the current upward pressure and cause testing of minimums at 1.1988/80.

Oil goes against the tide

The last few weeks the positioning and local forces prevail over the fundamental statistics. Strong growth in US oil inventories for the week (13.8 million) caused a rise in prices of raw materials. News feeds give this to the fact that the earlier API reported an increase to 14.2 million. However, this is far-fetched explanation. After news from API oil lost 60 cents, and after the EIA data it increased by 120 cents. More difficult is to fit into this explanation the fact that the production has also increased to 8.98 million barrels/day - the maximum since April 2016. Oil is clearly accumulated in stocks, which are already at 8% above year-ago levels and 0.7% lower then historical records. It's only the beginning. Until April crude oil inventories will rise, if left in force of the traditional seasonality.

Policy as a driver of the dollar

Wednesday passed without critical economic data amid growing geopolitical uncertainty. According to the chief economic analyst at Bloomberg, now the markets are moving not from economic data and the decisions of the Fed, but from the new US president Donald Trump, who controls market assets.
EUR/USD recorded minimal growth during the last session closing the session at 1.0697, although during the day it was trading at 1.0640.
The British pound also ended on green territory, closing at 1.2539. Recent data for inflation showed that it has accelerated to 1.6% in December.
New Zealand dollar recorded a second consecutive decline after the central bank left interest rates unchanged. NZD/USD ended the day at 0.7263.
The Australian dollar recorded growth, closing at 0.7643, breaking the two-day decline.
The Canadian dollar rose against the US dollar after oil broke decline, which began on Monday. USD/CAD closed at 1.3142.
Gold continued its upward range having passed 1,240 and closed at 1241.28 dollars an ounce.

Consolidation of the US dollar

The US dollar remains under pressure despite modest gains against the euro and the yen. USD/JPY rose to 112.50 during the American session, but eventually again the couple was dragged down and fell below 112 before settling slightly above that level. The only data published in the US yesterday were the trade balance in December, which showed that the deficit rose to its highest level since 2012.
The British pound made growth that has wiped out any downturn in the day after comments by the Bank of England, according to which, based on the current trend of inflation the bank may increase interest rates.
As the euro traded at lower levels against the dollar and fell to 1.0650, at the end of the day the single currency managed to erase some of the losses and ended the day at 1.0682. The initial decline was driven by a decline in German industrial production, which fell by 3% in December while investors had expected an increase. Turmoil in Greece also contributed to the decline of the euro as a 10 year bonds jumped by 8%.

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Sberbank CIB expects breakthrough of the euro above 1.08

The outcome of the US Federal Reserve on Wednesday was not surprising to anyone. As expected, the interest rate remained at 0.75% and the regulator did not promised increase in the future. The text of the final statement barely changed, analysts say.
The Fed reiterated that it believed that the risks to its economic outlook are roughly balanced and expects a gradual tightening of policy. At the same time the regulator has made it clear that there is improvement in business and consumer sentiment, the analyst added.
For obvious reasons, given the uncertainty about the future policy of the new US President, Federal Reserve prefers to be careful and not to give specific dates for the next increase in interest rates, analysts said.
The probability of such an outcome during the meeting in March is estimated at only 30% and if the Fed wants to tighten its policy in March, it will have to make quite an effort to significantly change expectations and not to shock the markets, analysts say. From CIB still expect two increases in interest rates this year and are waiting for the next increase in the second quarter.

Forecast of Danske Bank for EUR/USD

 Analysts at Danske Bank continue to expect that EUR/USD will move in the range of 1.0350/1.0750 for the foreseeable future. They believe that currency markets saw broad weakness of the euro against the currencies of G10 on Monday after a representative of the European Central Bank Nowotny mentioned that any discussion about a narrowing of the stimulus program, as well as data on German inflation, which came below expectations, reduce the pressure on the ECB to cut incentive program of quantitative easing. EUR/USD fell to 1.0620, report analysts.
The euro rose amid market concerns about the ban on the entry of foreigners introduced by Trump. Bank analysts still expect that EUR/USD will trade in a range of 1.0350-1.0750 over the coming months.

TDS sell the euro and the pound

Bank analysts at TDS have updated their forecasts and are now waiting for a raise in US interest rates twice this year and three times next year. The meeting of the FOMC on Wednesday will not be particularly interesting. In the first half of this week the trade likely will be in a range and from the bank prefer to buy the dollar on dips.
Yesterday's data on inflation in the eurozone showed significant growth, but the bank doubt that this will lead to an increase in nominal yields of European bonds (if this happens, then the real rate of return remains the main driver of the decline in EUR/USD). Acoording to TDS' analysts, it looks attractive to sell EUR/USD around 1.07 dollars.
As for the pound, political events may cause its further strengthening, but in the opinion of the bank, most of the news already have been calculated in prices, so analysts advise to sell in growth.