LiteForex's analytics

[LF.Anastasia]

EURO/USD: EURO keeps on descending movement

The pair EUR/USD is traded downward at the Forex currency market on Monday morning, keeping on moving in the downward channel.

By 9.15 Moscow time the Euro is at 1.4124 against closing level of Friday at 1.4188.The major pair is under severe pressure due to the fact that IMF and EU has not yet made a decision on a new package of financial aid for Greece. Today, Greece will start a debate on the measures outlined and recommended by the European politicians.

Considering the mood of opposition and population of the country, discussion is going to be difficult.Voting in the Parliament according to different sources will be held on Tuesday or Wednesday.At the beginning of the week, the U.S. President, Obama, will meet leaders of the Senate to discuss the issue of increasing a maximum permissible level of the government debt –the decision shall be taken before 2 August.Therefore, the day is going to be eventful.Most likely the pair EUR/USD will not go beyond the range of 1,4070-1.4290 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound has reached lows of March and continues to fall

At the Forex currency market the British Pound Sterling rate continues to fall on Monday; it has gone below the level of 1.60, threatening to break down 1.59 amid negative external factors.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom earlier, it gives a sell signal. Stochastic Oscillator goes down after coming into the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5900, the target for purchase will be the levels of 1.5880 и 1.5850.

There is a chance of technical rebound; however it is only possible in case of stabilization of th external environment.It became known today that house prices in Great Britain fell by 0.1% m/m (-3.9% y/y) in June, as per Hometrack estimates. Houses in the UK continue to become cheaper and it is a negative signal for the economy, given the reluctance of the British to spend money.

The head of the Bank of England, Mervyn King said earlier that he believes it is European crisis that is the main reason of the financial instability in the country. According to him, fiscal instability could spread through financial markets and it is not clear whether Britain will be able to withstand the crisis.British Prime Minister Cameron stressed earlier that situation in the Eurozone impacts negatively on the country, and the UK should not be involved in helping Greece, as Eurozone is strong enough to prevent its own collapse.

The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who substituted a “hawk” Sentence, joined conservative camp.

As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.Representative of the Bank of England Mr. Fisher said that at the moment British economic forecast is vague, since risks are incorporated both in inflation expectations and in weak growth as well. According to him, it will be more difficult for the Central Bank to cope with deflation than inflation; however despite temporary inflation rise, MPC intends to achieve its medium term objectives.

As for the interest rate, Fisher noted that the rise will be required, if wages begin to grow, however, it is not necessary to change monetary police now. The politician also touched upon the issue of the Pound value. He believes that government should not influence on the rate of the Pound and that the currency looks fairly stable since 2009.

 

[LF.Anastasia]

CHF: Swiss Franc is being corrected after retesting new historic highs

At the Forex currency market Swiss Franc rate is being corrected on Monday morning after reaching historic highs of 0.8318 on Friday and retesting this level in the morning.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, continues to go up, giving a pair buy signal. Volumes remain average. Stochastic Oscillator is moving along the signal line at the border between the oversold and neutral zones, not giving any signals.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 0.8390, the pair USD/CHF will go to 0.8410 and 0.8460.

If upward breakdown does not take place, the pair will be able to aim at 0.8300.Marco-economic situation in Switzerland remains unchanged on Monday morning.Statistics released earlier showed that producer prices and prices for imports decreased by 0.2% (-0.4% y/y) in May against the forecast of growth by 0.1% m/m. 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%.

At the meeting last week Swiss National Bank left three- month Libor rate in the previous range of 0-0,75% with a tendency to 0.25%. At the same time, the SNB said that GDP growth would amount to 2% this year.

Inflation in 2011 is predicted at around +0.9% (previously +0.8%), in 2012: +1.0% (previously 1.15), in 1013: +1.7% (previously +2.0%).It is worth noting that 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.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%.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 %.

The data released earlier 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).It became known earlier that trade balance in Switzerland rose by 3.31 billion francs in May against the value of +1.44 billion in April. In addition, level of exports fell by 1.5% m/m in May against the growth of 3.1% in April.

 

[LF.Anastasia]

JPY: Japanese Yen weakens at the beginning of the week

At the Forex currency market the Japanese Yen rate weakens in pairing with the USD.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, slightly goes up, shaping a buy signal. Stochastic Oscillator is growing in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 80.90, the pair will go to 81.20 and 81.3 5.

Economic situation in Japan is stable on Monday morning.Apparently, investors do not trust the Yen too much now; even in the situation when currency market is not stable, currency which is considered “a safe harbor”, does not appeal traders enough to break down at 80.00. Statistics remain mixed. 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.Finance Minister of Japan Mr. Noda, who has not been in public for quite a long time, said that authorities continue to closely monitor currency market; and they remain confident that currency rates should reflect macro-economic foundation. In the event that motion will be chaotic in nature, Finance Ministry intends to take drastic measures.

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 is worth noting that trade balance deficit amounted to Y853.7 billion (forecast –Y710.1 billion) against the surplus a year earlier.

It 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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to fall

At the Forex currency market the Australian Dollar rate continues to fall, amid negative external background and investors’ minimal interest in risk.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, after breaking through the signal line from top to bottom earlier, it goes down gradually, giving a sell signal. Stochastic Oscillator is going down in the neutral zone, giving a weak sell signal, and closely approaching oversold area.

Forex recommendations: in case of breakdown at the level of 1.0400, the pair will go to 1.0370 и 1.0350.

We cannot expect growth in the AUD, as long as pessimistic sentiments are too strong at the market, although current levels are very attractive for purchasing. It became known earlier that leading indicator index WestpacMelbourne increased to 0.6 points, up to the level of 280.6 points, which indicates growth of 2.7% on annual basis and proves stability of economic outlook for the next 3-9 months.

Minutes of the last meeting of the Reserve Bank of Australia was released earlier; the document stressed that inflationary prospect in the country suggests further tightening; however recent macro-data does not encourage the rise in the rates. “Current inflation rate is partly due to the deflationary effects of the rise in interest rate and slowdown in the increase of expenditure for labour force,” stressed the document.

The AUD fell amid such background, since investors did not like uncertainty in the views of the RBA.Interest rate of the Reserve Bank of Australia is at the level of 4.75% per annum now; next meeting is scheduled for 5 July and Westpac believes that the rise in the rates at this meeting is hardly probable.According to the data released last week, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points.

In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%. It became known yesterday, that inflation expectations have remained at the level of May at 3.3% q/q in June. We would remind that vice president of the Reserve Bank of Australia Mr. Low, stressed last week, that special efforts shall be given to maintain low and stable level of inflation.

According to him previous growth of CPI was attributed mostly to the external factors and influence of the currencies’ exchange rates was insignificant.He also noted that very little unused spare capacity is left in the economy, and the upward pressure on inflation was caused by such facts as labour costs and growing utility prices.

 

[LF.Anastasia]

NZD: New Zealand Dollar collapsed at the beginning of new week

The New Zealand Dollar rate collapsed at the Forex currency market on Monday, as higher yielding currencies are still under close attention of sellers.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and goes down, giving a sell signal, however volumes are below average. Stochastic Oscillator started to decline fast in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8000, the pair will go to 0.7980 and 0.7965.

It became known today that trade balance in New Zealand was at the level of NZD$605 billion in May against the forecast of NZD$1000 billion. This is a negative data, because decline in the trade balance will indicate decline in the level of exports later, which will be the impact of cooling Chinese economy.

Earlier, the Reserve Bank of New Zealand decided to keep interest rate unchanged at the minimum of 2.50% per annum, since it is going to continue its work on improvement in economic system. According to the head of the RBNZ, NZD has been overvalued because of high export prices for raw materials, therefore, national currency rate, which has increased over the last two months, has adverse impact on the rebalancing of the economy in New Zealand.

Bollard expressed confidence that decline of the NZD will be gradual because currency intervention will not be able to change the trend. The data of last week showed that current account balance amounted to -NZD$0.097 billion in Q1 against the forecast of -NZD$0.900 billion. Note that ratio of the deficit to GDP totaled to -4.3% in Q1 this year against the forecast of -4.4% and the level of -2.3% in Q4 last year.

Index of trading conditions in Q1 increased to a 37 - year highs in Q1, demonstrating the growth of 0.9% on quarterly basis (+6.8% y/y), which could be one of the signs of economic recovery in New Zealand, as it reflects changes in prices for exports and imports.Consumer confidence index Westpac in New Zealand increased to 112.0 points in Q2 against the level of 97.7 points in Q1.

Consumer confidence ANZ increased to 112.5 points in June against the preliminary level of 103.3 points. In addition, volume of retail sales in New Zealand rose for the first time in the last three quarters in Q1, which is a good sign of the economic recovery. Thus, indicator increased by 0.9% q/q which agreed with the forecast, excluding inflation.

 

[LF.Anastasia]

EUR/USD: EURO is being moderately corrected after growth at the beginning of the week

The pair EUR/USD is traded slightly downward at the Forex currency market on Tuesday morning after steady growth yesterday.

By 9.15 Moscow time the Euro is at 1.4275 against closing level of Friday at 1.4285.Market’s expectations are positive - today and tomorrow players will wait for approval of the bill on the budget reduction by Greek parliament, proposed by IMF and EU.

Athens has no other options and voting is going to be emotional.However the U.S. statistics is scheduled for the release this afternoon, can change balance of forces in the currency pair.In general, external background continues to dictate directions to the marketMost likely the pair EUR/USD will not go beyond the range of 1.4200-1.4350 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound tends to sales again

At the Forex currency market the British Pound Sterling rate reverted to sales on Tuesday after brief rebound last night. Recall that earlier in the week the GBP had reached lows of February.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom earlier, gives a sell signal. Stochastic Oscillator goes down after coming into the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5940, sales target will be the levels of 1.5900 and 1.5880. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Economic situation in Great Britain remains almost unchanged on Tuesday morning.Last week, British Prime Minister Cameron stressed that situation in the Eurozone impacts negatively on the country, and the UK should not be involved in helping Greece, as Eurozone is strong enough to prevent its own collapse.

The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who substituted a “hawk” Sentence, joined conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.

The head of the Bank of England, Mervyn King said earlier that he believes it is European crisis that is the main reason of the financial instability in the country. According to him, fiscal instability could spread through financial markets and it is not clear whether Britain will be able to withstand the crisis.Representative of the Bank of England Mr. Fisher said that at the moment British economic forecast is vague, since risks are incorporated both in inflation expectations and in weak growth as well.

According to him, it will be more difficult for the Central Bank to cope with deflation than inflation; however despite temporary inflation rise, MPC intends to achieve its medium term objectives. As for the interest rate, Fisher noted that the rise will be required, if wages begin to grow, however, it is not necessary to change monetary police now. The politician also touched upon the issue of the Pound value.

He believes that government should not influence on the rate of the Pound and that the currency looks fairly stable since 2009. It became known yesterday that house prices in Great Britain fell by 0.1% m/m (-3.9% y/y) in June, as per Hometrack estimates. Houses in the UK continue to become cheaper and it is a negative signal for the economy, given the reluctance of the British to spend money.

 

[LF.Anastasia]

CHF: Swiss Franc maintains positions near historic highs

At the Forex currency market Swiss Franc rate is traded upward on Tuesday remaining close to the historic peak which it has reached earlier.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, continuing to grow slowly and shifting to a lateral movement. Stochastic Oscillator has come into oversold zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8330, the pair USD/CHF will go to 0.8318, and to new lows of 0.8300. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Swiss leading indicators index KOF in June will be known in the middle of the week, index of industrial sector will be made public on Friday (reduction to 57.8 points is predicted against the previous value of 59.2 points).

In other respect Swiss economic situation remains stable.

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 %. The data released earlier 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).

It became known earlier that trade balance in Switzerland rose by 3.31 billion francs in May against the value of +1.44 billion in April. In addition, level of exports fell by 1.5% m/m in May against the growth of 3.1% in April.

Statistics released earlier showed that producer prices and prices for imports decreased by 0.2% (-0.4% y/y) in May against the forecast of growth by 0.1% m/m. 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%. At the meeting last week Swiss National Bank left three- month Libor rate in the previous range of 0-0,75% with a tendency to 0.25%. At the same time, the SNB said that GDP growth would amount to 2% this year. Inflation in 2011 is predicted at around +0.9% (previously +0.8%), in 2012: +1.0% (previously 1.15), in 1013: +1.7% (previously +2.0%).

It is worth noting that 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.

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]

JPY: Japanese Yen continues to rise in price after yesterday’s sales

At the Forex currency market the Japanese Yen rate started to rise on Tuesday after significant fall yesterday.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, slightly goes up, shaping a buy signal. Stochastic Oscillator is growing in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 80.90, the pair will go to 81.20 and 81.3 5.

If upward breakdown does not take place, the target for the pair will be the level of 80.45.The head of the Bank of Japan, Shirakawa stressed today that CB should review the situation in the long term prospect, since focus on the short term inflation can lead to the formation of the bubbles. The issue of the Naoto Khan resignation has not been resolved yet.

On Tuesday morning the politician outlined his position: he suggested to the opposition that he would resign if parliament adopts three disputable bills, including additional budget for the next year. Plus, draft bills on source of renewable energy and deficit financing with the help of issuing bonds- the last one is very important. Responses from opposition has not been reported.The data released today showed that preliminary retail sales in Japan decreased by 1.3% y/y in May, against the forecast of reduction by -2.2% y/y.

The data was better than expected which was caused by the effect of the Japanese economic recovery after the disaster of 11 March.It is worth noting that trade balance deficit amounted to Y853.7 billion (forecast –Y710.1 billion) against the surplus a year earlier. It 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.

Statistics remain mixed. 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.