LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 04.08.10: AUD: Currency will be in demand later

At the Forex currency market on Wednesday the Australian Dollar stands still awaiting signals for the further trend formation. Short term trend: trades within range, medium term trend: ascending.
According to the world economists AUD is the appealing currency to buy at Forex, however it should go down to 0.8960 to be in demand. In this case buyers’ targets will be the previous highs – 0.9389 and 0.9406.
It became known today that trade surplus in Australia has reached the record-breaking value and amounted to A$3.54 billion - analytics say that it was activated by the Chinese demand in iron ore and coal.
Regardless of the external background, demand in Australia remains depressed, although situation in the mining sector is quite optimistic. After raising interest rate for six times, the CB is going to have a break. Market predicts that the rate is unlikely to be increased again before the end of this year.
Reserve Bank of Australia retained current interest rate at the previous level of 4.50% per annum. The main and official version –current level of inflation easing will prevent from undertaking drastic measures to tighten monetary policy- and it is true in general: the last inflation report in Australia released on 28 July showed that net prices increased by 2.7% on annual basis in QII. The head of RBA Stevens is planning to hold inflation level in the range of 2-3%. He says that the core inflation is expected to be approximately in the center of the indicated range until mid- 2011, however CPI inflation can rebound above 3% due to the introduction of the tobacco and public utilities taxes.
However global situation is far from being stable and quiet – and this is the second factor which put pressure on the RBA. According to Stevens global economy growth forecast is still obscure, considering inflation factor and ambiguous prospects of the global capital markets. RBA can extend the break in the serious of rate increases indefinitely.
Economists note that RBA has an opportunity to observe the situation: mortgage rates now are close to the pre-crisis levels in the country; sharp rise in inflation is not impending either.
Worth noting that inflation rate in Australia increased by 0.6% (+3.1% on annual basis) in QII this year against the forecast growth by 1.0% and the previous rate of +0.9%. The main CPI items which had price reduction were fruit prices (-4.8%), food in general (-0.3%); lack of interest to the leisure and recreation sector (-1.8%). Contrariwise, tobacco products prices rebounded by 15.4% within a quarter. Investors began to sell AUD on Wednesday: market believes that only if CPI is above 0.9% against the previous level, it can put pressure on the Reserve Bank of Australia, causing the next rate increase

 

[LF.Anastasia]

Forex Analytics of LiteForex of 04.08.10: GBP: Correction for the “British”?

Trading session is quiet for the British Pound Sterling at the Forex currency market today, however sales has improved during the last hour which is logical after nine sessions of the uninterrupted growth.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD; however it started to descend, giving ground for a pair sell signal. Stochastic Oscillator has not formed a clear signal on Wednesday.
Forex recommendations: off the board.
Feasible event scenario at Forex: in case of downward breakdown at the level of 1.59, the sales will increase and sellers’ targets will become1.5860 and 1.5800. However there is a high possibility that the rollback will be brief.
The data released today showed that the UK job market decreased in July - KPMG/REC assessment shows that permanent jobs index declined to 60.2 in July against the level of 60.7 in June. Temporary jobs index reduced to 54.3 in July against the previous level of 57.0.
According to Halifax houses prices increased by 0.6% on monthly basis (+4.9% y/y) in July.
Employment data is of interest because statistics on Tuesday showed that number of jobs in the UK increased to 102 as per Reed index in July – key level of the growth rate is specified to be 100, excess over this level indicates rate growth. At the same time work force is required urgently in some sectors: production sector has reached the level of 116, insurance sector – 138.
British Minister of Business Affairs Mr. Cable stressed earlier that it is unacceptable to let financial problems prevent country’s economic recovery. He also noted that the banks confronted some serious financial difficulties currently. It is anything but a secret though.
Earlier the Bank of England representative Miles stressed that it is too early to raise interest rate as high inflation makes it difficult to conduct correct course of monetary policy. However, slow growth of wages must hold the price increase. Miles also stressed that the risk that the European economy recovery will come to a halt is quiet high. Earlier the Bank of England left the interest rate unchanged at the level of 0.5% per annum. The volume of the British Central Bank assets repurchase program was also kept untouched (200 billion pounds sterling).

 

[LF.Anastasia]

Forex Analytics of LiteForex of 04.08.10: JPY: Yen grows to the new highs against USD making economic situation in the country more complicated

At the Forex currency market the topic of the day is Japanese Yen upsurge against USD, which has reached the level of 85.32, the highest in 15 years.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and going down, confirming a pair previous sell signal. Stochastic Oscillator is giving a similar signal.
Forex recommendations: sellers’ targets today will be the levels of 85.30 and 85.00.
Although Yen’s growth started neither today nor yesterday, Japanese authorities have not started currency intervention yet. On Wednesday Japanese Minister of Finance Mr. Noda emphasized once again that authorities closely monitor currency fluctuations; investors still believe that the economy in the country of the rising sun is stable enough to be impacted by the expensive national currency. It is exports in Japan which is affected the first of all, as it actually shoulders the burdens of the domestic economy recovery after the recession.
Noda stated earlier that currency markets have the right to fix currency exchange rate by themselves. The Minister was not alerted by the expensive Yen or its possible impact on the Japanese economy. The politician said on Tuesday that in general Yen growth effects exports decline and government economic growth strategy makes references to the necessity to avoid Yen excessive growth. Noda also noted that currency abrupt and random movement is very undesirable for the economy.
Japanese authorities fear that JPY consolidation at Forex will become one of the factors, affecting national economy recovery pace. Currently expensive JPY reduces exports level. Finance Minister Deputy Motohisa Ikeda stated earlier that the government would like to avoid this. The official also noted that Yen’s growth can jeopardize the growth of the GDP levels. Experts believe that the pressure on the Bank of ponies can now be amplified by the Prime Minister Khan. “If Yen continues to demonstrate rapid growth, pressure on the Bank of Japan is likely to increase. It seems that the Government intends to take all efforts to prevent this situation” - says Societe Generale SA.
Interest rate was kept at the previous level of 0.1% at the last meeting in July; current course of monetary policy was also maintained. The rate has been at the same level since December 2008. Analyzing meeting results experts noted that Japanese economy would continue to show signs of the recovery slowing down as the issue of the European countries’ sovereign debts still remains uncertain which has major impact on financial markets.

Japanese Prime Minister Khan stated that financial authorities represented both by the Bank of Japan and government intends to achieve rise in inflation in general. Khan also said that the Bank of Japan should work hard on the unemployment level reduction.

It is worth noting that total nominal wages in Japan increased by 1.5% on annual basis in June and amounted to 437.677 yen – thus the growth rate has been going on for the 4th consecutive month. Unemployment rate in the country of the rising sun increased unexpectedly to 5.3% in June against the previous level of 5.2%.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 04.08.10: CAD: Canadian Dollar consolidates close to the local highs

At the Forex currency market on Wednesday the Canadian Dollar rate reduces slightly, although the pair USD/CAD movement pattern of the last 2 days suggests that it is consolidation which followed a sharp fall.
USD/CAD
Support levels: 1.0141, 1.0013.
Resistance levels: 1.0390, 1.0500.
Short term trend seems like trades in range so far; medium trend –is downward with the target at 0.9930.
Last month the Bank of Canada announced a decision to raise interest rate to 0.75% per annum which was the second consecutive rate increase. In spite of positive development, the last comments of the Bank’s representatives poured cold water on those who were interested in buying CAD. The Bank noted that the world economy recovery is still in progress; however it is slow and constraint. Bank’s representatives also stressed that further interest rate increase will be carried out with extreme prudence based on the progress in both Canadian and world economy.
Most likely by such comment the Bank ensured that they have wiggle room left, not implying that the interest rate increase is impossible in the foreseeable future. The Bank of Canada expects that the country’s economy will grow by 3.5% this year; while the growth forecast in April was by 3.7%. Growth forecast for 2011 was reduced to 2.9% from 3.1%.
The next meeting of the Bank of Canada will be held on 8 September.

Earlier the CB of Canada brought down economic growth quarterly forecasts until QI 2011 inclusive as a response to the weak and obscure world economic outlooks. Inflation forecasts were also slightly adjusted. However, investors viewed the report as a signal of the monetary policy tightening, which was mainly activated by the phrase that the Bank intends to implement a gradual reduction of monetary stimulus, which will correspond to the achieved target level of inflation.

Worth noting that the Bank of Canada representative Dagvey stressed more than once that interest rate dynamics cannot be determined in advance, however he stated that as the rates level is quiet low currently and monetary incentives level is high, further rates increase should be taken just as unavoidable necessity.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 05.08.10: EUR looks quite stable

Downward correction continues for the pair EUR/USD at the Forex currency market on Thursday, however at a slow pace.

By 9:40 Moscow time the Euro is at 1.3158 against yesterday’ closing session level of 1.3162

Today players await a lot of important information: first of all European Central Bank and Bank of England will announce interest rate decisions. Surprises are not expected here as it is obvious that both Eurozone and UK economies are not ready to such monetary policy tightening

And secondly the U.S employment data will be released tonight, including the number of unemployment benefit applications for the last week. Statistics traditionally has had a profound influence on the trading process therefore volatility at the market can increase in advance of the news release.

In general the pair EUR/USD looks quite stable and the growth to 1.3250 and above in the short term is not excluded.

Most likely the EUR/USD will be in the range of 1.3100-1.3280 on Thursday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 05.08.10: Russian Rouble draws back a little at the currency market

With the start of the trading session in the MICEX currency section the Russian Rouble is retreating slightly in pairing with the USD amid the growth of the latter one at Forex.
Thus, trading session for the USD started at the level of 29.83 roubles, which is 6 kopeks more than yesterday’s level; the EUR started at the level of 39.25 roubles, (-4 kopeks).
Dual currency basket value has changed very little today and amounted to 34.07 roubles in the morning.
In general, domestic currency still remains close to the highs and a slight correction today was caused by the USD growth in pairing with the EUR at Forex.
Most likely the pair rouble/dollar will not go beyond the range of 29.78-30.00 roubles per the USD at today’s trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 05.08.10: GBP: British Pound Sterling is standing still on Thursday morning, pending rate decision

At the Forex currency market on Thursday the British Pound Sterling is traded in the narrow range with no clear trend in advance of the Bank of England interest rate meeting to be held today.

Forex forecast: MACD indicator is close to the signal line for the pair GBP/USD, not giving a clear signal. Stochastic Oscillator is giving a pair sell signal, being in the neutral zone.

Forex recommendations: off the board.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5850 the pair will go to 1.5800 and further down to 1.5770. If an activator turns up, which will make a pair growth continue- buyers’ target will be 1.5910.

GBP ascending trend lasts since mid-May at Forex – the pair GBP/USD had started at the level of 1.46 and went up to 1.58 and above.

Investors do not cherish illusions regarding the Bank of England meeting today. Most likely the bank will keep the interest rate at the previous level of 0.50% per annum; volume of the assets buy-back program will be maintained at the same level of 200 billion pound sterling ($319 billion). Its average reduction to 175 billion pounds is projected only at the end of 2012.

The UK budget deficit will be one of the major factors to prevent rise in the cost of money in the UK at least until 2012. Authorities carefully cut down expenses to cope with this problem.
According to the data released yesterday the UK job market has been decreasing in July - KPMG/REC calculation shows that permanent jobs index declined to 60.2 in July against the level of 60.7 in June. Temporary jobs index reduced to 54.3 in July against the previous level of 57.0.
According to Halifax houses prices increased by 0.6% on monthly basis (+4.9% y/y) in July.
Employment data is of interest because statistics on Tuesday showed that number of jobs in the UK increased to 102 as per Reed index in July – key level of the growth rate is specified to be 100, excess over this level indicates rate growth. At the same time work force is required urgently in some sectors: production sector has reached the level of 116, insurance sector – 138.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 06.08.10: AUD: Australian Dollar rate stays put

Trading session at the Forex market on Friday is lacking in movement: in advance of the weekend and the U.S. employment rate statistics, (excluding agricultural sector); investors are hesitant to make active transactions, preferring to wait out.

The pair AUD/USD movement prospects is vague today: it is better to stay off the board.

As the RBA report released today showed the economic growth of the country is unlikely to keep inflationary pressure in check – mainly due to the households’ frailty and low level of public spending.

According to RBA core inflation level will amount to 2.75% by December 2011, by mid-2012 - 3%.

At the same time annual inflation rate will merely grow: this year – to 3.75%; next year – to 4%.

Worth noting that according to RBA, investors risk aversion caused by the deterioration of the Eurozone situation will also impact country’s economy, although such prospect currently is less feasible than 5 months ago.
Regardless of the external background, demand in Australia remains depressed, although situation in the mining sector is quite optimistic. After raising interest rate for six times, the CB is going to take a break. Market predicts that the rate is unlikely to be increased again until the end of this year. Earlier the Reserve Bank of Australia retained current interest rate at the previous level of 4.50% per annum. The main and official version –current level of inflation easing will prevent from undertaking drastic measures to tighten monetary policy- and it is true in general: the last inflation report in Australia released on 28 July showed that net prices increased by 2.7% on annual basis in QII. The head of RBA Stevens is planning to hold inflation level in the range of 2-3%. He says that the core inflation is expected to be approximately in the center of the indicated range until mid- 2011, however CPI inflation can rebound above 3% due to the introduction of the tobacco and utilities taxes.
However global situation is far from being stable and quiet – and this is the second factor which put pressure on the RBA. According to Stevens global economy growth forecast is still obscure, considering inflation factor and ambiguous prospects of the global capital markets. RBA can extend an interval in the serious of rate increases indefinitely. Economists note that RBA has an opportunity to observe the situation: mortgage rates now are close to the pre-crisis levels in the country; sharp rise in inflation is not impending either.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 09.08.10: GBP: British Pound Sterling is ready to consolidate

At the Forex currency market on Monday the British Pound Sterling slowed down its rapid growth and is apparently ready to consolidate at the current levels.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and moving along the signal line, has not formed a clear signal. Stochastic Oscillator is giving a pair buy signal, being in the overbought area.

Forex recommendations: if the pair exceeds the level of 1.6000, buyers’ targets will be 1.6050 and 1.6080. If the current situation maintains, the pair will enter the period of consolidation.

Last week the Bank of England kept the interest rate unchanged at the level of 0.50% per annum, which agreed with the market expectations, the assets buy-back program was also left unchanged in the amount of 200 billion pound sterling. Note, that one of the MPC members, Sentence has already advocated for the rate increase earlier – however market believes that it will not happen until spring next year. Further forces alignment will fall into place as soon as the minutes of the meeting is released.

The UK budget deficit will be one of the major factors to prevent rise in the cost of money in the UK at least until 2012. Authorities carefully cut down expenses to cope with this problem.
According to the data released earlier the UK job market has been decreasing in July - KPMG/REC calculations show that permanent jobs index declined to 60.2 in July against the level of 60.7 in June. Temporary jobs index reduced to 54.3 in July against the previous level of 57.0.
As per Halifax data houses prices increased by 0.6% on monthly basis (+4.9% y/y) in July

Employment data is of interest also because statistics on Tuesday showed that number of jobs in the UK increased to 102 as per Reed index in July – key level of the growth rate is specified to be 100, excess over this level indicates rate growth. At the same time work force is required urgently in some sectors: production sector has reached the level of 116, insurance sector – 138.

The pair GBP/USD ascending trend has been in progress since mid-May this year at Forex.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 09.08.10: Euro is still attractive in terms of purchase

At the Forex currency market the pair EUR/USD on Monday morning is traded with slight pullback following a surge to the 3 months high.
By 9:50 Moscow time the Euro is at 1.3279 against Friday closing session level of 1.3291
This week will become a milestone for the USD – the market believes that on Wednesday, following the Federal Reserve System meeting, when the FD decision on interest rate is known, monetary politicians will announce further qualitative policy easing.
It will not be the most positive news for the USD – the currency is still under the pressure of the slow pace of the U.S. economic recovery.
The day is going to be quite in regards to the macro- economic news today.
Most likely the pair EUR/USD will be in the range 1.3200-1.3390 on Monday trading session.