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[LF.Anastasia]

Euro/USD: Euro is again under pressure from external background

At the Forex currency market, the pair EUR/USD is traded being under pressure on Monday.

By 9.00 Moscow time the Euro is at 1.4084 against closing level of 1.4118 in Friday.

The next series of sales of the Euro was caused by the news about the arrest of the Managing Director of IMF Dominique Strauss Khan due to which even the meeting of the Fund was also postponed.

Moreover, concern about situation in Greece also prevents the growth of the Euro.

Therefore, the major pair is at the lows of this February.

Most likely the pair EUR/USD will not go beyond the range of 1.4000-1.4190 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound is still on sale

At the Forex currency market the British Pound Sterling rate continues to be in focus of the traders on Monday as investors keep on moving away from risk due to the unfavorable external background.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and goes down, volumes have also dropped, which gives a clear sell signal. Stochastic Oscillator has come into oversold zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.6150, the pair will go to 1.6130 and 1.6100. If downward breakdown does not take place, the pair will consolidate close to the current levels.

It became known today, that house prices Rightmove in the UK rose by 1.3% m/m (+0.7% y/y) in May.The Pound has ignored this statistics so far.
We would remind that at the regular meeting, the Bank of England has left interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept unchanged- at the level of stg200 billion. The situation in the British economy is far from being stable.

However, the Bank of England believes that by the end of this year interest rate will reach the level of 0.75%, while in QIV, 2012 it will be 1.75%, i.e. the Bank has made provisions for one fact of the rise in the indicator in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will grow slightly above 1.9% in two years time.

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI. CBI expects that the British economy will grow by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% on average.

 

[LF.Anastasia]

CHF: Swiss Franc is on the standstill this morning

Swiss Franc rate is on the standstill at the Forex currency market on Monday, trying to regain from the previous sales. However there is a high possibility at the moment that Swiss currency will continue to be weak.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going upward giving a pair buy signal. Stochastic Oscillator has reached overbought zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8940 the pair USD/CHF will go to 0.8955 and 0.8970. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Important data on Swiss economy will be released on Thursday, 19 May, it will be the index of investor economic expectations ZEW in May.
The head of the National Bank of Switzerland, Mr. Hildebrand noted that strong and expensive Franc undermines exports and disrupts tourism industry; therefore negative impact of the CHF can be worse than predicted. “We intend to take any measures to achieve price stability” stressed monetary politician. According to him, downside risks to recovery are still preserved, although economy demonstrates steadier growth rate than previously expected. Statement made by Hildebrand that long term expansionary monetary policy constitutes a menace to some industrial sectors is worthy of being noted.

At present, the fall in the CHF rate reduces the hawkish spirits of the SNB to zero.
Earlier it was made public that unemployment rate in Switzerland fell to 3.1% in April against the previous level of 3.3%. It is a positive indication for the economy. The data released earlier showed, that real retail sales in Switzerland decreased by 0.2% in March against the growth by 1.8% in February. In addition index SVME – PMI in Switzerland fell to 58.4 points in April against the previous level of 59.3 points. In addition statistics released earlier showed that consumption indicator UBS in Switzerland rose to 1.660 points in March against the revised level of 1.453 points in February; while volume of export in Switzerland fell by 4.8% m/m in March against the level of +3.6% m/m in February.

Real level of retail sales in Switzerland increased by 1.5% m/m in February against the decline by 2.4% m/m in January; level of CPI in Switzerland rose by 0.6% m/m (+1,0% y/y) in March against the forecast of growth by 0.2% m/m. It is an ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

 

[LF.Anastasia]

JPY: Japanese Yen stuck in the range

At the Forex currency market the Japanese Yen rate remains in the quite narrow range of 80.15-81.33 at the beginning of the week. At the moments the interest of players in JPY has been observed, since it acts as a safe asset while external background is still tense.

Forex forecast: MACD indicator for the pair USD/JPY has crossed the signal line from top to bottom and is not giving a clear signal. Stochastic Oscillator started to go down in the neutral zone, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 80.70 the pair will go to 80.50 and 80.10. If downward breakdown does not take place the pair will consolidate in the current range.

The following Japanese data was released today:

– Consumer confidence fell to 33.1 points in April against the level of 38.6 points in March;
– Net orders in the machine building sector rose by 2.9% m/m in March against the revised level of -1.9% m/m in February;
– Index of CGPI rose by 0.9% м/м in April against the growth by 0.6^ m/m in March.

However, the most essential factor for the Yen at the moment is the interest of investors who are shifting to safe assets under the pressure of the external environment.

The minutes of the Bank of Japan meeting of 6-7 April has been released earlier; it states that some members of the CB believe that the policy of quantitative easing in March had a positive impact on the state of the financial market and business confidence; however it is still required to monitor carefully the effect of the high prices for commodity. In addition, the Bank of Japan is concerned about the effects of the interest rates rise by the European Central Bank. In regards to the YPY rate, the document indicates that weak Yen positively affects the state of the capital expenditures. It should be taken into consideration that the meeting took place at the beginning of April when the YPY was really weak.

According to the data released earlier, current account balance in Japan fell by 34.3%, to Y1.679 trillion in March against expected -32.0%. The data released earlier showed that leading indicators index decreased by 4.5% and index of coincident indicator subsided by 3.2%. In addition it is also became known that gold and foreign currency reserves of Japan have reached a new peak level.

Note that according to the Bank of Japan real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar has not finished yet

At the Forex currency market the Australian Dollar rate remains under the pressure on Monday because investors are not interested in the high-yielding currencies yet.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, giving a pair sell signal, while volumes are slightly above average. Stochastic Oscillator goes down in the neutral zone, approaching the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0550 the pair will go to 1.0535 and 1.0510. If a downward breakdown does not take place the pair will consolidate at the current levels.

It became known at the beginning of the week that finance of the housing construction in Australian fell by 1.5% m/m in March. However it is just a minor factor for the exchange rate formation of the AUD.

Last week, ABS, Australian Bureau of Statistics did not receive authorization for additional funding to assess inflation indicators in the country on a monthly basis instead of existing quarterly basis. Therefore, from all OECD countries only Australia and New Zealand do not release inflationary data on monthly basis. It became known earlier that unemployment rate remained unchanged, at the level of 4.9% in April, and the change in the employment rate in April amounted to -22.1 thousand compared to +37.8 thousand in March. Market did not expect such an unpleasant surprise from the employment sector which, along with investors’ risk aversion in the market, has encouraged ongoing sales of the AUD.

Statistics made public earlier showed that trade balance in Australia rose to A$1.74 billion in March against the level of -A$0.08 billion in February. Moody's Investors Service agency gave positive assessment to the data; according to observers of the agency, resolution of the authorities to revert the balance of the state budget to the zone of surplus is well-founded and such attitude supports credit rating of the country, which is at Aaa.

Note that the rise in the indicator was caused by the growth of exports of iron ore and coal and also by the reduction of gasoline imports. Also take not of CPI level in Australia that increased by 1.6% on quarterly basis (+3.3% y/y) in QI. Therefore, inflation in the Green Continent has reached five-year highs; natural disasters have triggered the rise in costs for food and other consumption goods for people. In addition, commodity prices at the global markets remain high, because tension in the Middle East does not abate. RBA expects that net CPI will reach 3% against predicted 2.75% by the end of this year. Exports increased by 9%, to A$25 billion in March; import rose by 1%. It became known earlier that index of import prices increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia has been keeping interest rate unchanged for a long time. Exports increased by 9%, to A$25 billion in March; import rose by 1%. It became known earlier that index of import prices increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia has been keeping interest rate unchanged for a long time.

 

[LF.Anastasia]

NZD: New Zealand Dollar is in the focus of traders

The New Zealand Dollar rate remains at the low level at the Forex currency market at the beginning of the week, because market has not any interest in risky positions. External background is still complex, which prevents from regaining from the previous sales.

Forex forecast: MACD indicator is in the positive area for the pair NZD/US, however it goes down, giving a pair sell signal. Stochastic Oscillator goes down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.7830 the pair will go to 0.7800 and 0.7780.

The release of the data on the index of selling prices of manufactures in New Zealand for QI will attract traders’ interest this Wednesday.

The situation in the economic situation of New Zealand remains almost unchanged this morning.

According to the official data, the outflow of population was the highest in March over the past 10 years; migration factor will cause slowdown in the NZD recovery process.At the same time unemployment rate New Zealand fell to 6.6% in QI against the level of 6.8% in QIV, 2010. The forecast had been 6.7%. In addition the proportion of labor force increased to 68.7% against the previous level of 67.9%. Although indicators are favourable, ASB still believes that report is ambiguous: it is possible that the earthquake of February will have more serious impact on the economy than expected and it will have additional pressure on the labor market of New Zealand and will have an adverse affect on the prospects for the sector as a whole.

It is also worth noting that budget deficit in New Zealand amounted to NZ$10.17 billion for the 9 months by 31 March which was in average 15% higher than expected by economists. This was the fact that provoked previous sales of the NZD.

It became known earlier that house prices index in New Zealand increased by 1.1% m/m in April, as per REINZ estimates against the forecast of growth by 0.5% m/m. In addition the agency reported that the level of house sales last month was -4.2% y/y against the level of -5.1% y/y in March.

Macro- economic data, released last week showed that house prices fell by 1.9% m/m in April against the decline by 2.0% in March and credit cards expenses rose by 1.7% м/м in April against the increase by 0.5% in March. Therefore, real estate sector of New Zealand started to recover and it is a strong supportive factor for the economy.

Recall that the Reserve Bank of Zealand has left interest rate unchanged, at the level of 2.5% per annum. The head of the RBNZ Mr. Bollard stressed that interest rate is not going to be changed yet. The regulator pointed in the follow-up comments that high rate of the New Zealand Dollar is undesirable, since it has a negative impact on the economy.

 

[LF.Anastasia]

Euro/USD: Euro tries to grow

The pair EUR/USD is traded slightly upward at the Forex currency market on Tuesday morning, however the Euro continues to be under the pressure due to problems in Greece.

By 9.10Moscow time the Euro is at 1.4168 against yesterday’s closing level of 1.4156.

However the factor of support today will be the news that Finance Ministers of Eurozone endorsed requirements for granting financial assistance to Portugal in the amount of 78 billion euro.

Meanwhile, IMF will grant 26 billion euro to the country; the remaining money will come through the temporary stabilization mechanism of the Eurozone.

Investors will await the U.S. statistics in the afternoon, which can affect trading process. Most likely the pair EUR/USD will not go beyond the range of 1.4100-1.4230 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling began to regain

At the Forex currency market the British Pound Sterling rate is growing on Tuesday, trying to regain amid stable external background.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD; however it goes downward, volumes have dropped which gives a clear sell signal. Stochastic Oscillator is in the oversold zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.6180, the target for sales will be the level of 1.6150. If downward breakdown does not take place, the pair will be able to go to 1.6230.

General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI. CBI expects that the British economy will grow by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% on average.

It became known yesterday, that house prices Rightmove in the UK rose by 1.3% m/m (+0.7% y/y) in May. The Pound has ignored statistics.

We would remind that at the regular meeting, the Bank of England has left interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept unchanged- at the level of stg200 billion. The situation in the British economy is still far from being stable.

However, the Bank of England believes that by the end of this year interest rate will reach the level of 0.75%, while in QIV, 2012 it will be 1.75%, i.e. the Bank has made provisions for one fact of the rise in the indicator in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will grow slightly above 1.9% in two years time.

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

 

[LF.Anastasia]

CHF: Swiss Franc gathers strength

At the Forex currency market Swiss Franc rate is traded slightly upward on Tuesday, continuing yesterday’s trend.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is growing, giving a pair buy signal. Stochastic Oscillator has come out of the overbought zone, going down and is giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 0.8840 the pair USD/CHF will go to 0.8825 and 0.8800. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Inflation has slowed down in Switzerland which became another negative factor for the Franc which is pushing the currency downward. It became known last week that the index rose by 0.1% m/m (+0.3% y/y) which is below the forecast by 0.6% y/y.

Swiss National Bank is going to discuss monetary policy issues on 16 June and it is possible that the rates will be increased for the first time in four years.

The head of the National Bank of Switzerland, Mr. Hildebrand noted that strong and expensive Franc undermines exports and disrupts tourism industry; therefore negative impact of the CHF can be worse than predicted. “We intend to take any measures to achieve price stability” stressed monetary politician. According to him, downside risks to recovery are still preserved, although economy demonstrates steadier growth rate than previously expected.

At present, the fall in the CHF rate reduces the hawkish spirits of the SNB to zero.

Earlier it was made public that unemployment rate in Switzerland fell to 3.1% in April against the previous level of 3.3%. It is a positive indication for the economy. The data released earlier showed, that real retail sales in Switzerland decreased by 0.2% in March against the growth by 1.8% in February. In addition index SVME – PMI in Switzerland fell to 58.4 points in April against the previous level of 59.3 points. In addition statistics released earlier showed that consumption indicator UBS in Switzerland rose to 1.660 points in March against the revised level of 1.453 points in February; while volume of export in Switzerland fell by 4.8% m/m in March against the level of +3.6% m/m in February.

Important data on Swiss economy will be released on Thursday, 19 May; it will be the index of investor economic expectations ZEW in May.

 

[LF.Anastasia]

JPY: Japanese Yen has left the range and is retreating

At the Forex currency market the Japanese Yen rate is traded downward because investors are leaving safe harbors while external background is stable.

Forex forecast: MACD indicator for the pair USD/JPY has crossed the signal line from top to bottom and starting to give a pair buy signal. Stochastic Oscillator started to grow in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 81.45 the pair will go to 81.60 and 81.85. If upnward breakdown does not take place the pair will consolidate in the current range.

Representatives of the Central Bank of Japan stated today that the fall in sentiments can “disarm” the Central Bank. In addition the head of the regulator Mr. Shirakawa noted that economy is in the dire state after the earthquake.

It is also worth noting that according to the Bank of Japan real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

It became known yesterday that consumer confidence fell to 33.1 points in April against the level of 38.6 points in March, at the same time index of CGPI rose by 0.9% м/м in April against the growth by 0.6^ m/m in March.

The minutes of the Bank of Japan meeting of 6-7 April has been released earlier; it states that some members of the CB believe that the policy of quantitative easing in March had a positive impact on the state of the financial market and business confidence; however it is still required to monitor carefully the effect of the high prices for commodity. In addition, the Bank of Japan is concerned about the effects of the interest rates rise by the European Central Bank. In regards to the YPY rate, the document indicates that weak Yen positively affects the state of the capital expenditures. It should be taken into consideration that the meeting took place at the beginning of April when the YPY was really weak.

According to the data released earlier, current account balance in Japan fell by 34.3%, to Y1.679 trillion in March against expected -32.0%. The data released earlier showed that leading indicators index decreased by 4.5% and index of coincident indicator subsided by 3.2%. In addition it is also became known that gold and foreign currency reserves of Japan have reached a new peak level.