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CAD: Canadian Dollar Tends To regain Part Of Its Losses

At the Forex currency market the Canadian Dollar rate tries to regain part of its losses after sales on Friday which were observed amid the surge of investors’ risk aversion.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD; however it is moving along the signal line and is not giving any signal. Stochastic Oscillator reversed in the neutral zone, shaping a buy signal which is still very weak.

Forex recommendations: off the market.

Feasible event scenario: in case of breakdown at the level of 0.9790, the pair will go to .9810 and 0.9830. If the level of 0.9750 is exceeded, traders’ target will be the level of 0.9710.

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 $8.92љљ 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.

As it became known last week, 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.љ

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.

 

[LF.Anastasia]

AUD: Australian Dollar Inclines Towards Correction After Sales

At the Forex currency market the Australian Dollar rate demonstrates attempts to regain on Monday after massive sales last Friday.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, giving a pair sell signal. Stochastic Oscillator declines in the neutral zone, giving a sell signal and approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.0530, the pair will go to 1.0515 and 1.0480. If downward breakdown does not take place, the pair will consolidate at the current levels.

Last week, the Reserve Bank of Australia 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 earlier, 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 last 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.

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.

If previous sale of the AUD was provoked by weak data on Chinese exports, which upset investors; sales on Friday were clearly triggered by risk aversion.

 

[LF.Anastasia]

CHF: Swiss Franc Is Getting Weaker At The Beginning Of The Week

At the Forex currency market Swiss Franc rate continues to become weaker on Monday morning and is moving further away from historic highs, reached last week.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is increasing in the neutral zone, giving a pair buyl signal.

Forex recommendations: in case of breakdown at the level of 0.8450 the pair USD/CHF will go to 0.8465. If upward breakdown does not take place, the pair will consolidate close to the current levels.

In general economic situation in Switzerland remains unchanged.

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 earlier 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. 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. As it was also made public 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.

Swiss GDP has 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 last week 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).

 

[LF.Anastasia]

JPY: Japanese Yen Is Under Presure On Monday

The Japanese Yen rate is becoming weaker at the Forex currency market on Monday, because investors are shifting to Dollar positions.

Forex forecast: MACD indicator for the pair USD/JPY is moving along the signal line and s not giving a clear signal. Stochastic Oscillator goes up in the neutral zone, giving a pair buy signal.

Feasible event scenario at Forex: in case of breakdown at the level of 80.60 the pair will go to 80.80 and 81.10. If upward breakdown does not take place, the pair will consolidate in the current range.

According to the data released last Friday, 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. Japanese statistics released earlier 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.

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 risks.

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 earlier 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]

GBP: British Pound Begins This Week With Attemt To ascend

At the Forex currency market the British Pound Sterling rate tries to ascend on Monday morning after massive sales last Friday.

Forex forecast: MACD indicator for the pair GBP/USD is moving along the signal line in the positive area and is not giving a clear signal. Stochastic Oscillator goes down in the neutral zone and is shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6220, the target for sale will be the levels of 1.6200 и 1.61801. If downward breakdown does not take place, the pair will aim at the level of 1.6270.

Last week the meeting of the Bank of England was held, where interest rate was left unchanged at the level of 0.50% per annum, volume of assets redemption was also kept unchanged, at the level of stg200 billion.

The follow- up comments did not contain anything fundamentally new, as expected. It became knownearlier 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.

Rating agency Moody's warned Great Britain earlier that the country can lose its AAA rating due to the inefficient fiscal policy.

At the moment the situation is pessimistic for the British Pound.

 

[LF.Anastasia]

EUR/USD: Euro tries To Regain From Sales On Friday

The pair EUR/USD is traded slightly upward at the Forex currency market on Monday morning after the fall last Friday.

By 6.30 Moscow time the Euro is at 1.4346 against closing level of 1.4345on Friday.

The reason for massive sales earlier was comments of S&P according to which France must continue to implement reforms if the country does not want to lose its AAA rating. Amid such news and taking into account that it was the end of the week, investors found it reasonable to move away from risk and started to close positions.

The day is going to be quiet in terms of macro-statistics; no important news is scheduled for the release today therefore market will be guided by external drivers.

Most likely the pair EUR/USD will not go beyond the range of 1.4290-1.4400 at the trading session on Monday.

 

[LF.Anastasia]

EURO/USD: Euro is making good progress

The pair EUR/USD continues to grow on Tuesday morning, regaining from the fall last week.

By 9.00 Moscow time the Euro is at 1.4432 against yesterday’s closing level of 1.4412.

President of ECB Mr. Trichet supported the Euro, saying that non-standard measures do not limit ability of the Central Bank to tighten policy; that is he indicated again about potential growth of the rate in July.

However, the growth of the Euro is restrained by the information that rating agency Standard & Poor’s downgraded the rating of Greece to CCC against the previous level of B (by three degrees at once), and defined the country as “ the least deserving a loan”.

The day is going to be eventful in terms of macro-statistics therefore volatility can increase in the afternoon.

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4490 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound soared due to aggressive comments

At the Forex currency market the British Pound Sterling rate grows steadily, continuing the rise, which started yesterday.

Forex forecast: MACD indicator for the pair GBP/USD is moving along the signal line in the positive area and is not giving a clear signal. Stochastic Oscillator goes up in the neutral zone and is shaping a buy signal.

Forex recommendations: in case of breakdown at the level of 1.6430, the target for sale will be the levels of 1.6450 and 1.6470. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Representative of MRS, Mr Wheal, one of the remaining “hawks” in the Bank of England, stressed that the soonest rise in the interest rate will reduce the need for its further raise, and it is necessary to increase the rate despite the fact that the level of inflation turned out to be below the forecast. According to him all conditions, required for the preventive actions of the Bank of England have been created, and the sooner the BoE launches tightening policy, the more flexibility it will give to the regulator in the future.

As reported in the publication of edition of “Independence”, the Bank of England must be prepared to save national economy from the threat of double dip recession, and according to the comments of BDO representative the regulator has to leave interest rate at the current level of 0.50% per annum and stop using it as a shield against inflation.

Last week the meeting of the Bank of England was held, where interest rate was left unchanged at the level of 0.50% per annum, volume of assets redemption was also kept unchanged, at the level of stg200 billion. The follow- up comments did not contain anything fundamentally new, as expected.

It is worth noting that Rating agency Moody's warned Great Britain earlier that the country can lose its AAA rating due to the inefficient fiscal policy.
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.

 

[LF.Anastasia]

CHF: Swiss Franc is growing back again

At the Forex currency market Swiss Franc rate continues to grow on Tuesday, keeping up the trend started on Monday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, shaping 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 0.8350 the pair USD/CHF will go to 0.8330 and 0.8310. If downward breakdown does not take place, the pair will consolidate close to the current levels.

In general economic situation in Switzerland remains unchanged.
The data released last week 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 earlier 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 growth of 1.0 billion 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 has 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.

 

[LF.Anastasia]

JPY: Japanese Yen goes down on Tuesday

The Japanese Yen rate is traded downward at the Forex currency market on Tuesday morning, as the Bank of Japan has proposed new fiscal measures to normalize financial situation in the country.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and is going down, giving a pair sell signal. Stochastic Oscillator goes up 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 80.40 the pair will go to 80.50 and 80.70. If upward breakdown does not take place, the pair will consolidate in the current range. As it became known on Tuesday, the Bank of Japan decided to leave interest rate unchanged, in the target range of 0-0.1% per annum. In addition, the regulator announced the launch of a new lending program at a rate of 0.1%; the amount of available funds will be Y500 billion. This measure is aimed at supporting economic recovery and can maintain the process of recovery that is hardly visible at the moment.

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 risksIt became known earlier 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 earlier 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.

Preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; in addition, 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.