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[LF.Anastasia]

JPY: Japanese Yen Is Being Corrected After The Rise

At the Forex currency market the Japanese Yen rate declines on Thursday after steady growth this week.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and go down sluggishly, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone, giving a pair sell signal.
Forex recommendations: in case of breakdown at the level of 80.51 the pair will go to 80.30 and 80.45. If upward breakdown does not take place, the pair will consolidate in the current range. It became known today that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%.
This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic.
According to the data released yesterday trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.
The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risksJapanese statistics released last Tuesday showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics.In addition, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.
Prime Minister of Japan Naoto Khan is going to resign as soon as reconstruction of the country after the earthquake will gain stability. Some markets have been discussing such possibility for some time already, while political forces demand Khan’s resignation.

 

[LF.Anastasia]

CHF: Swiss Franc Slightly Moves Away From Historic Highs

At the Forex currency market Swiss Franc rate goes down slightly, moving away from historic highs, which it reached quite recently. However volumes of USD/CHF are not high, which could be an indication that sellers might be back in the pair.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down, forming a pair sell signal; while volumes are increasing. Stochastic Oscillator tends to come out of the oversold zone; however it has been keeping this position for a few days already, maintaining a pair sell signal.
Forex recommendations: in case of breakdown at the level of 0.8370, the pair USD/CHF will go to 0.8390. If upward breakdown does not take place, the pair will consolidate close to the current levels.
It became known yesterday that unemployment rate in Switzerland fell to 2.9% in May against the level of 3.1% in April and the forecast of 3.0%. It is positive data for Swiss economy because strong Franc does not prevent cohesive economic growth.
As became known earlier the level of trade balance in Switzerland rose by 1.52 billion in April against the rise of 1.0 billion in March. In addition, exports in Switzerland increased by 7.9% in April against the fall by 3.1% in March. Index of leading indicators KOF in Switzerland rose to 2.30 points in May against the forecast of growth by 2.22 points.
In addition, index of PMI SVME in Switzerland increased to 59.2 points against the forecast of 57.5 points. It proves once again that national economy has learnt to be effective even in circumstances where national currency is expensive.
GDP in Switzerland slowed down growth rate in QI this year, increasing by 0.3% on quarterly basis (+2.4% y/y) against the rise of 0.8% last quarter and the forecast of growth of 0.6 %.
According to estimates of the SNB, the main activator for economic growth in Switzerland is still national consumer demand, triggered by the rise in the demand for houses and health care expenditure, as well as high level of export.
The data released on Tuesday showed that CPI in Switzerland remained unchanged on monthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m (+0.3% y/y).
Julius Baer Group believes that it is not clear yet whether Swiss economy requires the increase in the interest rate or not: “any rise will have an impact on the economy as a whole for a year”. However it is quite possible that local economy and its recovery process are strong enough to cope with the interest rate rise to 1%-1.5%.

 

[LF.Anastasia]

GBP: British Pound Stays Put In Advance Of The Meeting Of The Bank Of England

At the Forex currency market the British Pound Sterling rate almost stays put on Thursday morning in advance of the meeting of the Bank of England, which will be held today.
Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from bottom to top, started to increase, and is giving a pair buy signal. Stochastic Oscillator is moving along the signal line in the neutral zone, and is not giving a clear signal.
Forex recommendations: in case of breakdown at the level of1.6440, the target for purchase will be the levels of 1.6460 and 1.6485. If upward breakdown does not take place, the pair can consolidate close to the current levels.
Rating agency Moody's warned Great Britain yesterday that the country can lose its AAA rating due to the inefficient fiscal policy.
The meeting of the Bank of England will be held today, which is unlikely to bring surprises and the rate will be left at the previous level. The Bank of England believes that interest rate will reach the level of 0.75% by the end of this year; while by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest 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 be slightly above 1.9% in two years time, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the Central Bank to further policy easing. In addition, in case of unexpected economic downturn there is a chance that economic stimulation with the help of repurchasing of the securities from the market will continue.
Deloitte & Touche LLP believe 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 them to leave rates at the current level at least until the end of this year and throughout 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.
It became known yesterday that retail price index BRC in Great Britain rose by 2.3% y/y in May against the growth of 2.5% y/y in April. Slowdown in the retail price growth is not a good sign.

 

[LF.Anastasia]

EUR/USD: Euro Is Awaiting For Signals From ECB

The pair EUR/USD is growing at the Forex currency market on Thursday morning, as investors expect positive signals from the head of the ECB Mr. Trichet, following today’s meeting.
By 9.20 Moscow time the Euro is at 1.4626 against yesterday’s closing level of 1.4583.As the outcome arising from the meeting of the European central Bank, market expects signals that interest rate will increase in July; however American data is not positive: dollar index ICE dropped which is particularly noticeable after the release of Beige Book, and in advance of the publication of the U.S. foreign trade balance which is expected to be unfavourable.
Volatility is expected to increase today at the trading floors.
Most likely the pair EUR/USD will not go beyond the range of 1.4500-1.4750 at the trading session on Thursday.

 

[LF.Anastasia]

CAD: Canadian Dollar Gives Way To His American Colleague

At the Forex currency market the Canadian Dollar rate goes down on Friday after previous rise caused by the American statistics.
Forex forecast: MACD indicator in moving in the positive area for the pair USD/CAD; however it goes down, giving a pair sell signal. Stochastic Oscillator is reversing in the neutral zone, giving a pair buyl signal.Forex recommendations: off the market.
Feasible event scenario: in case of breakdown at the level of 0.9750, the pair will go to 0.9770 and 0.9790. If the level of 0.9720 is exceeded, traders’ target will be the level of 0.9680.
As it became known yesterday, trade balance in Canada amounted to -CAD 0.92 billion in April; index of prices for new houses rose by 0.3% m/m in April against the forecast of +0.1% m/m.
Meanwhile CAD received support from the mixed U.S. statistics yesterday.
Inflation in Canada increased by 3.3% y/y, 0.3% m/m in April against the forecast of 3.4% y/y and 0.5% m/m; while energy costs rose by 17.1% y/y, as per the estimates of the Canadian Statistics Service.
The Bank of Canada stated earlier that CPI in the country will begin to rise, as soon as it exceeds expected level. At the same time value of key index of net CPI is also growing.It became known earlier that balance of current account in Canada was at the level of –CAD $8.92 billion in QI against the level of CAD$10.28 billion in QIV last year. In addition, real GDP of basic prices increased by 0.3% (+2.8% y/y) in QI against revised level of -0.1 % m/m in February.
At the beginning of June the Bank of Canada left the interest rate unchanged at the level of 1.00% per annum which agreed with market expectations. The regulator said in the follow-up comments that minimization in incentives shall be thoroughly considered, although eventually all the incentives will be phased out. According to the Bank of Canada, core inflation remains relatively low and economy is active, as expected. At the same time expensive Canadian Dollar may well become a break on national economic growth and provide a restraining influence on inflation.
Note: GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.

 

[LF.Anastasia]

AUD: Australlian Dollar Remains Under Pressure Of Sales

At the Forex currency market the Australian Dollar rate continues to retreat on Friday morning under pressure of both internal news and external background.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, moving upward along the signal line, and not giving a any signals. Stochastic Oscillator goes down in the neutral zone, giving a sell signal.
Forex recommendations: in case of breakdown at the level of 1.0600, the pair will go to 1.0560 and 1.0540. If downward breakdown does not take place the pair will consolidate at the current levels.
Weak data on Chinese exports upset investors, however trade balance report in May keeps market from larger sales.
The Reserve Bank of Australia has left interest rate at the previous level of 4.75% per annum and stressed that current course of policy is quite acceptable, which triggered sales of the AUD because it might mean that monetary policy tightening will continue to be suspended in the next few months.
As it was announced earlier inflation in Australia increased by 0.2% m/m (+3.3% y/y), as per TD Securities estimates. It is the weighted average inflation index which is a guideline in decision making for the Bank of Australia, and it is slowing down its growth rate now (in April: +0.3% m/m), indicating that prospects of the increase in the interest rate in the coming months are slipping away.
According to the data released on Wednesday, mortgage lending in Australia increased by 4.8% m/m in April. Meanwhile, revised data on mortgage lending for March amounted -1.1% (-1.5% m/m previously). Therefore, Australian economy continues to recover from the flooding in January. Another reason that helps improvement in the mortgage sector is market’s belief that the RBA will keep interest rate unchanged for a long time.
Earlier representatives of the Ministry of Finance in Australia said that level of GDP is not the way to determine further movement of economy, although the Ministry still expects further improvement in the country’s economic growth. We would remind that GDP in Australia fell by 1.2% on quarterly basis (+1.0% y/y) in QI, which is the maximum fall in 20 years.
The data released on Thursday showed that Australian economy created fewer jobs than expected; employment rate in Australia increased by 7.8 thousand in May against the forecast of growth by 25 thousand.
At the same time unemployment rate remained at the level of 4.9%, the same as in April.
Investors were frustrated with this data, since it indicates slowdown in the recovery rate of the local economy, caused in particular by the flooding in January.

 

[LF.Anastasia]

JPY: Japanese Yen Strengthens On Friday

The Japanese Yen rate strengthens at the Forex currency market on Friday morning after the fall yesterday.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and go down, giving a pair sell signal. Stochastic Oscillator has come out of the oversold zone and is growing in the neutral zone, giving a pair buy signal.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 80.10 the pair will go to 80.00 and 79.80. If downward breakdown does not take place, the pair will consolidate in the current range. The following Japanese news was released today:
– Tertiary activity index rose by 2.6% m/m in April against the fall of 5.9% in March;
– Index of prices for corporate production increased by 2.2% y/y in May against +2.5% in April.
The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risksJapanese statistics released last Tuesday showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics.In addition, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.
It became known yesterday that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%.
This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic.
According to the data released yesterday trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.

 

[LF.Anastasia]

CHF: Swiss Franc Continues To Move Away From Local Highs

At the Forex currency market Swiss Franc rate almost stays put on Friday morning, however it is obvious that the Franc is moving further away from the historic highs, reached this week.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down, forming a pair sell signal; while volumes are increasing. Stochastic Oscillator is increasing in the oversold zone, giving a pair sell signal.
Forex forecast: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 0.8420 , the pair USD/CHF will go to 0.8445. If upward breakdown does not take place, the pair will consolidate close to the current levels.
Economic situation remains unchanged in Switzerland.
GDP in Switzerland slowed down growth rate in QI this year, increasing by 0.3% on quarterly basis (+2.4% y/y) against the rise of 0.8% last quarter and the forecast of growth of 0.6 %.
According to estimates of the SNB, the main activator for economic growth in Switzerland is still national consumer demand, triggered by the rise in the demand for houses and health care expenditure, as well as high level of export.
The data released on Tuesday showed that CPI in Switzerland remained unchanged on monthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m (+0.3% y/y).
Julius Baer Group believes that it is not clear yet whether Swiss economy requires the increase in the interest rate or not: “any rise will have an impact on the economy as a whole for a year”. However it is quite possible that local economy and its recovery process are strong enough to cope with the interest rate rise to 1%-1.5%.
It became known yesterday that unemployment rate in Switzerland fell to 2.9% in May against the level of 3.1% in April and the forecast of 3.0%. It is positive data for Swiss economy because strong Franc does not prevent cohesive economic growth.
As it became known earlier level of trade balance in Switzerland rose by 1.52 billion in April against the rise of 1.0 billion in March. In addition, exports in Switzerland increased by 7.9% in April against the fall by 3.1% in March. Index of leading indicators KOF in Switzerland rose to 2.30 points in May against the forecast of growth by 2.22 points.
In addition, index of PMI SVME in Switzerland increased to 59.2 points against the forecast of 57.5 points. It proves once again that national economy has learnt to be effective even in circumstances where national currency is expensive.

 

[LF.Anastasia]

GBP: British Pound Continues To Decline

At the Forex currency market the British Pound Sterling rate continues to remain a target for sellers on Friday morning.
Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from bottom to top, started to increase slightly, and is giving a pair buy signal. Stochastic Oscillator begun to go down in the neutral zone, and is making shape of a sell signal.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.6370, the target for purchase will be the levels of 1.6385 and 1.6400. If upward breakdown does not take place, the pair will aim at the level of 1.6320.
The meeting of the Bank of England was held yesterday, interest rate was left unchanged at the level of 0.50% per annum, volume of assets redemption was also kept at the level of stg200 billion.
Follow up comments were not fundamentally new, as expected
The data on the dynamics of industrial production and dynamics of output in manufacturing industry in April will become known today, as well as indices of selling and purchasing prices in May.
It became known yesterday that retail price index BRC in Great Britain rose by 2.3% y/y in May against the growth of 2.5% y/y in April. Slowdown in the retail price growth is not a good sign.
The Bank of England believes that interest rate will reach the level of 0.75% by the end of this year; while by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest 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 be slightly above 1.9% in two years time, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the Central Bank to further policy easing. In addition, in case of unexpected economic downturn there is a chance that economic stimulation with the help of repurchasing of the securities from the market will continue.
Deloitte & Touche LLP believe 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 them to leave rates at the current level at least until the end of this year and throughout 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.
This week rating agency Moody's warned Great Britain that the country can lose its AAA rating due to the inefficient fiscal policy.

 

[LF.Anastasia]

EUR/USD: Euro Regains From Sales On Thursday

The pair EUR/USD is traded upward at the Forex currency market on Friday morning after yesterday’s decline.
By 7.30 Moscow time the Euro is at 1.4535 against yesterday’s closing level of 1.4508.
The main event of this week was the meeting of the European Central bank yesterday, which went quite smoothly: the head of the ECB, Trichet has reminded in his speech of “hyper alertness and noted that it could mean the opportunity of the rise in the rate next month; however the Bank never makes decisions in advance. Current rate of monetary policy remains accommodative and inflation in the region goes up due to the rise in prices for raw materials and energy resources.
The Euro rose straight after the conference; however the rise proved to be short-lived. The rate was kept at the level of 1.25% per annum.
The U.S. data is scheduled for the release this afternoon; however it is unlikely to exceed the effect of the external background at the moment.
Most likely the pair EUR/USD will not go beyond the range of 1.4500-1.4590 at the trading session on Friday.