Re: nincs cím

Morning Adviser Americas 7/30/2010 12:05:00 PM

Growth Gauges

By Manuel Oliveri

Equity markets are weaker, and the yen firmer, in the wake of comments from the Fed's Bullard with respect to the US being closer to Japanese-style deflation. Bullard, who had been one of the more hawkish FOMC members, also said that the most likely scenario is that no further easing will be needed, but added that the Fed has to be prepared. The US and Canada report GDP today. The US report will include benchmark revisions back to Q1 2007. Our economists expect a very slight slowdown in real GDP growth. EURUSD traded 1.2981-1.3094 and USDJPY 86.15-86.45.

Research Spotlight "Whither Emerging EMEA?" UBS Global Investment Strategy

For perspective on growth in emerging EMEA, it is important to note that the relatively larger and healthier countries in the region make up the bulk of GDP; the share of the laggards is just 15%. This gives dominance to fast-growing Russia and Turkey, and solidly growing Israel, Poland and South Africa. We expect overall EMEA GDP of around 4.9% in 2010 and 4.6% in 2011 - not impressive by Asia standards, but not so bad by the much humbler standards of broader Europe.

Please see the "Whither Emerging EMEA?" on www.ubs.com/fx for details.

EUR: Targets: EURUSD 1m 1.2000, 3m 1.1500

At 1.7% (cons. 1.7%, prev. 1.4%) inflation in July rose in line with market expectations. The unemployment rate remained unchanged in June at 10.0%. According to our economists base effects pushed inflation higher With respect to labor data our economists highlighted that latest stabilization in combination with strong PMI figures may make a case for double dip fears to be excessive.

As investor focus shifted back to the US, the Euro will likely remain driven by global risk sentiment for now.

JPY: Targets: USDJPY 1m 90, 3m 95

Headline CPI in June was -0.7% y/y as expected (cons. -0.7%, prev. -0.9%). Consumer prices by this measure have now been falling for 17 consecutive months. The unemployment rate rose to 5.3% in June (cons. 5.2%, prev. 5.2%), and industrial production for June was released at -1.5% (cons. 0.2%, prev. 0.1%), below market expectations.

Finance Minister Noda broke his silence on the question of the strengthening yen to say that he's watching the FX market closely. Vice-Finance Minister Ikeda later followed up to say: "I will not comment on levels but generally speaking, I'm worried about the impact it may have on Japanese exporters, which have been a driving force (for the economy)".

We do not see the risk of intervention around current levels in USDJPY, as the BOJ will unlikely take any action into consideration without the support from other G7 members. In the current environment further USDJPY downside is likely.

AUD: Targets: AUDUSD 1m 0.8500, 3m 0.8500

June lending data failed to meet expectations, rising only +0.2% m/m (cons. +0.4%, prev. +0.5%) and +2.8% y/y (cons. +3.1%, prev. +2.7%). Taken together with the weaker CPI and weaker PPI this week, our Australia economists note that today's data re-enforce expectations that the RBA will leave interest rates unchanged at its August meeting next week, and increase the likelihood they main remain on hold for several months to come.

CHF: Targets: EURCHF 1m 1.37, 3m 1.35

At 2.23 (cons. 2.30, prev. 2.25) the Kof leading indicator for July was released below market expectations. Prior month's reading was revised down to 2.23 from an initially reported 2.25. Although the KoF leading indicator was unchanged on a monthly basis, it continues to indicate an expanding economy over the next six months.

The SNB announced in June they would undertake measures to remove excess liquidity in the system. 3m Libor had been trading well under target but has since come up from a low of about 8bp to 17bp currently versus the target of 25bp. The SNB's moves to mop up excess liquidity have inevitably raised the prospect of a near-term policy shift.

Our Swiss economist maintains his call of a 25bp hike in September and 25bp in December and we remain of the view that EURCHF will trend lower again in the short to medium term.

SEK, NOK Targets: EURSEK 1m 9.6500, 3m 9.5000, EURNOK 1m 7.8000, 3m 7.6000

In Sweden, at 1.2% q/q (cons. 1.0%, prev. 1.4%) and 3.7% y/y (cons. 3.3%, prev. 1.4%) second quarter GDP showed that the economy grew at the fastest pace in more than three years. The improvement was driven by stronger consumption and trade. Altogether most recent development may make a case for the Riksbank to rise its growth forecasts.

In Norway, at 3.0% (cons. 3.1%, prev. 2.8%) the unemployment rate rose in July, but less than feared.

FX Technicals

EURUSD BULLISH Upside move through 1.3094 exposes 1.3416 with scope for 1.3692 next. Near-term support holds at 1.2737 ahead of 1.2480 USDJPY BEARISH Bearish momentum remains intact with the break of 86.27, which exposes 84.83 reaction low. Near-term resistance comes in at 88.12 ahead of 89.16 GBPUSD BULLISH Violation of 1.5816 would open up the way for further gains towards 1.6069. Near-term support comes in at 1.5125 ahead of 1.4857 USDCHF BEARISH Decline through 1.0395 has exposed 1.0131 ahead of 0.9918. Near-term resistance is defined at 1.0676 ahead of 1.0789 AUDUSD BULLISH Next big resistance above 0.9077 lies at 0.9389. On the downside, initial support lies at 0.8738 ahead of 0.8316 USDCAD NEUTRAL Break below 1.0139 would put odds in favor of a bearish tone. Initial resistance is defined at 1.0587 ahead of 1.0853 reaction high. EURCHF BEARISH Pullback from 1.3819 brings our focus back on the downside. Initial support lies at 1.3342 ahead of 1.3074. EURGBP NEUTRAL Currently holds above 0.8252 support level ahead of 0.8068. Initial resistance lies at 0.8532 with next resistance lying at 0.8633 Fibonacci level. EURJPY BULLISH Upside potential holds below 115.49 ahead of 117.50. Near-term support is defined at 110.02 ahead of 107.32 key low.

*NOTE: The trend for each currency pair as defined in the table is determined by our proprietary model and is independent of our discretionary interpretation of price action