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Financial pacific, Wealth Management Research (third party)
Financial pacific, Wealth Management Research (third party)
Financial pacific, Wealth Management Research (third party)
Financial pacific, Wealth Management Research (third party)
Financial pacific, Wealth Management Research (third party)
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Financial pacific, Wealth Management Research (third party)


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In today’s global economy it is important to be fully aware of the intricacies of international investments and the opportunities that these have to offer. Financial Pacific offers proven overseas …

In today’s global economy it is important to be fully aware of the intricacies of international investments and the opportunities that these have to offer. Financial Pacific offers proven overseas investment opportunities.

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  • 1. Wealth Management Research 23 July 2010 UBS daily forex US Thomas Flury New Forecast: Big shifts across G4 strategist, UBS AG We change our forecasts for EUR, USD, GBP and JPY, as the relative strength of the four major currencies has shifted since our last change in May. The big shift over the last few months comes from rising confidence into Europe and more question marks surrounding the US recovery as well as US deficit financing. We anticipated all three elements and therefore feel comfortable rolling our forecast to reflect slightly more EUR strength and New WMR forecasts USD weakness. In May, we were leaning against the market by forecasting Reflecting more USD weakness moderate appreciation of EURUSD. Since then, the mood of the market has shifted and is now friendlier towards the Euro. With the release of the 23. Jul 10 3M 6M 12M bank stress tests, one major obstacle is cleared and therefore it is time for EURUSD 1.2828 1.25 1.32 1.35 us to show a bit more euro-strength. Due to severe short comings in all USDJPY 87.30 90 92 95 USDCAD 1.0397 1.00 0.97 0.95 four major currencies our best advice remains, where possible, to switch AUDUSD 0.8923 0.88 0.90 0.93 to smaller, more stable currencies like the AUD, NZD, CAD, CHF and the GBPUSD 1.5372 1.50 1.55 1.59 scandies. NZDUSD 0.7258 0.71 0.73 0.75 USDCHF 1.0546 1.04 0.98 0.96 s EURUSD: Forecast change EURCHF 1.353 1.30 1.30 1.30 GBPCHF 1.6211 1.56 1.53 1.53 s JPY: Forecast change EURJPY 112.08 113 121 128 s GBPUSD: Forecast change EURGBP 0.8344 0.83 0.85 0.85 s AUDUSD: Forecast change EURSEK 9.4409 9.40 9.40 9.30 EURNOK 7.9646 7.80 7.60 7.60 Source: UBS WMR FX Heat map Currency Pair Actual Forecast Technical Indications Implied Volatility Volatility Comment 3m 6m Bias 2. Support 1. Support 1. Resistance 2. Resistance 3m 6m Comment EURUSD 1.2916 1.20 1.25 neutral 1.1877 1.2523 1.3094 1.3689 12.85 12.95 Volatility is high in USDJPY 87.03 95 100 neutral 84.83 86.27 92.89 94.99 12.00 12.70 relation to last 12 months. GBPUSD 1.5263 1.45 1.48 bearish 1.4231 1.4784 1.5524 1.7041 11.65 12.09 Volatility is low in USDCHF 1.0405 1.08 1.04 neutral 1.0131 1.0400 1.1138 1.1731 11.37 11.40 in relation to last 12 months. USDSEK 7.3114 7.83 7.52 neutral 0.7000 0.7102 7.6193 8.1372 14.62 14.97 USDNOK 6.1734 6.50 6.08 neutral 5.8241 6.1003 6.7281 7.3144 14.02 14.48 Clients can find information on USDCAD 1.0389 1.00 0.97 bearish 1.0000 1.0268 1.0781 1.0870 12.45 12.75 the construction and elements AUDUSD 0.8924 0.85 0.89 neutral 0.7268 0.8067 0.8871 0.9406 15.25 15.65 of the FX Heat Map under NZDUSD 0.7243 0.68 0.72 neutral 0.6197 0.6561 0.7326 0.7635 15.60 15.90 Currencies from the Online USDBRL 1.7632 1.80 1.80 na na na na na 14.50 15.60 Services Research platform. USDMXN 12.7567 12.70 12.30 bearish 11.8212 12.4870 13.2529 13.4416 13.00 13.25 USDZAR 7.4462 7.70 8.00 na na na na na 14.90 15.60 Date & Time / 22.07.2010 / 11:16:31 / EST Source: THOMSON REUTERS; UBS WMR This report has been prepared by UBS AG. Please see important disclaimers and disclosures that begin on page 4.
  • 2. UBS Wealth Management Research 23 July 2010 UBS daily forex US EURUSD: Forecast change EURUSD We roll over our EURUSD forecast. The new three month forecast is 1.25, Spot, forwards and forecast which was our old six month forecast. The new six months forecast is 1.32, which is just a tick above the old twelve month forecast of 1.30 and the new twelve months forecast is 1.35. Markets lost to a great extend their fears about a potential European meltdown. The ECB managed to lower their liquidity provision. In the US on the other hand, worries about the recovery have increased. Thomas Flury, strategist Source: Thomson Reuters, UBS WMR JPY: Forecast change USDJPY We lower our USDJPY forecasts to 90 (95) in 3 months, to 92 (100) in Spot, forwards and forecasts 6 months and 95 (105) in 12 months and our EURJPY forecasts to 113 (114) in 3 months, 121 (125) in 6 months and 128 (137) in 12 months. While we stick to our long-term negative JPY view, we do not expect it to weaken dramatically against the USD in the short term. The JPY should remain strong in the short term, benefiting the negative real interest rate differential to the US, a result of low US rates and deflation in Japan. Giovanni Staunovo, strategist Source: Thomson Reuters, UBS WMR GBPUSD: Forecast change GBPUSD We have set the three months forecast for GBPUSD at 1.50 (prev. 1.45), Spot, forward and forecasts put the six months forecast at 1.55 (1.48) and the twelve months forecast at 1.59 (1.55). Our considerations for the pound versus US dollar forecast were quite similar to the EURUSD forecasts. Pound is on a recovery path relative to the greenback, it has made some nice advances over the last couple of months and we think it is time roll over our forecast and show values closer to equilibrium, which we identify at 1.67. Thomas Flury, strategist Source: Thomson Reuters, UBS WMR UBS daily forex US - 2
  • 3. UBS Wealth Management Research 23 July 2010 UBS daily forex US AUDUSD: Forecast change AUDUSD We raise our AUDUSD forecasts to 0.88 (0.85) in 3 months, to 0.90 (0.89) spot forward and forecasts in 6 months and keep our 12 month forecast unchanged at 0.93. While we keep our positive long term view on the commodity producing currencies such as the AUD, in the short term the AUD is likely to remain shaky, driven by shifts in risk sentiment. The uncertain outlook for the global economy and the fears of a global double dip will drive risk sentiment and the AUD in the short term. Giovanni Staunovo, strategist source: Thomson Reuters, UBS WMR NZDUSD: Forecast change NZDUSD We raise our NZDUSD forecasts to 0.71 (0.68) in 3 months, to 0.73 (0.72) Spot, forwards and forecasts in 6 months and keep our 12 month forecast unchanged at 0.75. The Reserve Bank of New Zealand is likely to continue to hike the policy rate. The widening interest rate differential to the US should support the NZD gradually against the USD over the next 12 months. However, in the short run we expect risk aversion respectively risk taking to continue to push down respectively up the NZD over the next weeks. Giovanni Staunovo, strategist source: Thomson Reuters, UBS WMR UBS daily forex US - 3
  • 4. UBS Wealth Management Research 23 July 2010 UBS daily forex US Appendix The FX Heatmap is designed to serve as a guide to short-to-medium-term investment decisions concerning major currency pairs. The elements in this concise table may help your timing and positioning decisions when considering a foreign exchange transaction. WMR Foreign Exchange Research publishes the FX Heatmap in the UBS daily forex and UBS daily guide. In our view, an ideal FX Heatmap should contain the relevant items that an investor should consider when making short- to medium-term decisions in the foreign exchange market. The WMR FX Heatmap contains in the first column the spot rate (actual rate), provided as a mid-rate by Reuters and refreshed daily. In the second and third columns are the three-month and six-month WMR forecasts. Next come the technical indications, and in the last two columns, the traded volatility of the exchange rate is indicated. Fundamental Forecast is not a trading target WMR makes its three- and six-month forecasts using its 'three-pillar' approach: Fundamentals, cyclical influences and market drivers. The purpose of the forecast is to indicate a direction, justified by the fundamentals, and to show the strength of drift within a given forecast horizon. WMR forecast the exchange rate that we consider most likely to be reached in the last couple of weeks of the forecast horizon. This might differ substantially from a trading target, which we define as an exchange rate that diverges as much as possible from spot while having a fair chance to be reached at any point within the next three (or six) months. Chart Technical Support and Resistance The technical elements within the FX Heatmap are first and second supports and resistances, and a technical bias, which can be bullish (exchange rate moves higher), bearish (exchange rate moves lower) or neutral. Technical analysis is one approach to market forecasting. It is based on the study of past price movements, human psychology and the laws of probability. Technical analysts study market behavior, primarily using charts, for the purpose of forecasting future price trends. WMR chartists use bar charts that consist of daily highs, lows and closes. First-level support/resistance is then defined as initial support/resistance and comprises of a technical outlook of several days to several weeks. Second-level support/resistance is secondary support/resistance encompassing several weeks to several months. Typically, they utilize one- to three-months of daily bar charts for most of the FX technical analysis. Volatility Indication The last two columns of the FX Heatmap table contain the one- and three-month implied option volatility, as they are traded in the interbank over-the-counter option market. The data provider is Reuters. WMR indicates the volatilities, which are relevant for option contracts with a strike level at the one-month (or three-month) forward rate of the exchange rate. Historical analysis suggests that most currency volatilities tend to revert to a stable mean. We use this characteristic to evaluate the level of current volatility. Global Disclaimer Wealth Management Research is published by Wealth Management & Swiss Bank and Wealth Management Americas, Business Divisions of UBS AG (UBS) or an affiliate thereof. In certain countries UBS AG is referred to as UBS SA. This publication is for your information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Certain services and products are subject to legal restrictions and cannot be offered worldwide on an unrestricted basis and/or may not be eligible for sale to all investors. All information and opinions expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness (other than disclosures relating to UBS and its affiliates). All information and opinions as well as any prices indicated are current as of the date of this report, and are subject to change without notice. Opinions expressed herein may differ or be contrary to those expressed by other business areas or divisions of UBS as a result of using different assumptions and/or criteria. At any time UBS AG and other companies in the UBS group (or employees thereof) may have a long or short position, or deal as principal or agent, in relevant securities or provide advisory or other services to the issuer of relevant securities or to a company connected with an issuer. Some investments may not be readily realizable since the market in the securities is illiquid and therefore valuing the investment and identifying the risk to which you are exposed may be difficult to quantify. UBS relies on information barriers to control the flow of information contained in one or more areas within UBS, into other areas, units, divisions or affiliates of UBS. Futures and options trading is considered risky. Past performance of an investment is no guarantee for its future performance. Some investments may be subject to sudden and large falls in value and on realization you may receive back less than you invested or may be required to pay more. Changes in FX rates may have an adverse effect on the price, value or income of an investment. We are of necessity unable to take into account the particular investment objectives, financial situation and needs of our individual clients and we would recommend that you take financial and/or tax advice as to the implications (including tax) of investing in any of the products mentioned herein. This document may not be reproduced or copies circulated without prior authority of UBS or a subsidiary of UBS. UBS expressly prohibits the distribution and transfer of this document to third parties for any reason. UBS will not be liable for any claims or lawsuits from any third parties arising from the use or distribution of this document. This report is for distribution only under such circumstances as may be permitted by applicable law. Australia: Distributed by UBS Wealth Management Australia Ltd (Holder of Australian Financial Services Licence No. 231127), Chifley Tower, 2 Chifley Square, Sydney, New South Wales, NSW 2000. Austria: This publication is not intended to constitute a public offer or a comparable solicitation under Austrian law and will only be used under circumstances which will not be equivalent to a public offering of securities in Austria. The document may only be used by the direct recipient of this information and may under no circumstances be passed on to any other investor. Bahamas: This publication is distributed to private clients of UBS (Bahamas) Ltd and is not intended for distribution to persons designated as a Bahamian citizen or resident under the Bahamas Exchange Control Regulations. Canada: In Canada, this publication is distributed to clients of UBS Wealth Management Canada by UBS Investment Management Canada Inc.. Dubai: Research is issued by UBS AG Dubai Branch within the DIFC, is intended for professional clients only and is not for onward distribution within the United Arab Emirates. France: This publication is distributed by UBS (France) S.A., French "société anonyme" with share capital of € 125.726.944, 69, boulevard Haussmann F-75008 Paris, R.C.S. Paris B 421 255 670, to its clients and prospects. UBS (France) S.A. is a provider of investment services duly authorized according to the terms of the "Code Monétaire et Financier", regulated by French banking and financial authorities as the "Banque de France" and the "Autorité des Marchés Financiers". Germany: The issuer under German Law is UBS Deutschland AG, Bockenheimer Landstrasse 2-4, 60306 Frankfurt am Main. UBS Deutschland AG is authorized and regulated by the "Bundesanstalt für Finanzdienstleistungsaufsicht". Hong Kong: This publication is distributed to clients of UBS AG Hong Kong Branch by UBS AG Hong Kong Branch, a licensed bank under the Hong Kong Banking Ordinance and a registered institution under the Securities and Futures Ordinance. Indonesia: This research or publication is not intended and not prepared for purposes of public offering of securities under the Indonesian Capital Market Law and its implementing regulations. Securities mentioned in this material have not been, and will not be, registered under the Indonesian Capital Market Law and Regulations. Italy: This publication is distributed to the clients of UBS (Italia) S.p.A., via del vecchio politecnico 3, Milano, an Italian bank duly authorized by Bank of Italy to the provision of financial services and supervised by "Consob" and Bank of Italy. Jersey: UBS AG, Jersey Branch, is regulated and authorized by the Jersey Financial Services Commission for the conduct of banking, funds and investment business. Luxembourg: This publication is not intended to constitute a public offer under Luxembourg law, but might be made available for information purposes to clients of UBS (Luxembourg) S.A., a regulated bank under the supervision of the "Commission de Surveillance du Secteur Financier" (CSSF), to which this publication has not been submitted for approval. Singapore: Please contact UBS AG Singapore branch, an exempt financial adviser under the Singapore Financial Advisers Act (Cap. 110) and a wholesale bank licensed under the Singapore Banking Act (Cap. 19) regulated by the Monetary Authority of Singapore, in respect of any matters arising from, or in connection with, the analysis or report. Spain: This publication is distributed to clients of UBS Bank, S.A. by UBS Bank, S.A., a bank registered with the Bank of Spain. UAE: This research report is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates (UAE). The contents of this report have not been and will not be approved by any authority in the United Arab Emirates including the UAE Central Bank or Dubai Financial Authorities, the Emirates Securities and Commodities Authority, the Dubai Financial Market, the Abu Dhabi Securities market or any other UAE exchange. UK: Approved by UBS AG, authorized and regulated in the UK by the Financial Services Authority. A member of the London Stock Exchange. This publication is distributed to private clients of UBS London in the UK. Where products or services are provided from outside the UK, they will not be covered by the UK regulatory regime or the Financial Services Compensation Scheme. USA: Distributed to US persons by UBS Financial Services Inc., a subsidiary of UBS AG. UBS Securities LLC is a subsidiary of UBS AG and an affiliate of UBS Financial Services Inc. UBS Financial Services Inc. accepts responsibility for the content of a report prepared by a non-US affiliate when it distributes reports to US persons. All transactions by a US person in the securities mentioned in this report should be effected through a US-registered broker dealer affiliated with UBS, and not through a non-US affiliate.Version as per January 2010. UBS daily forex US - 4
  • 5. UBS Wealth Management Research 23 July 2010 UBS daily forex US Appendix © UBS 2010.The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. UBS daily forex US - 5