LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar shifted local lows

The Australian Dollar rate continues to remain under pressure at the Forex currency market, shifting local lows to the level of April.

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.

Interesting situation is taking shape in the index swap Overnight: Investors’ opinion is reflected on the rate which can reach the level of 4.515 by December this year, and taking into account that the rate is now at 4.75% per annum, market incorporates a chance that interest rate will go down amid deterioration of the global situation.

However, these actions of the investors can force the Reserve Bank to make an opposite decision.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 are required 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 prices for utilities.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to move downward

At the Forex currency market the New Zealand Dollar rate goes down on Tuesday.

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 declines 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. If downward breakdown does not take place the pair will consolidate close to the current levels.

The economic situation in New Zealand has not changed much this morning.

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.

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.

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 Chinese economy cooling.

In general, investors’ interest in risk in minimal, which does not prompt purchase of the AUD excluding purchases even during the rebound.

 

[LF.Anastasia]

EUR/USD: EURO awaits decision of Greece

The pair EUR/USD stands still at the Forex currency market on Wednesday morning after two days of steady growth.

By 9.25 Moscow time the Euro is at 1.4370 against yesterday’s closing level at 1.4369.A decisive voting on the budget will take place in Greece today and investors will be waiting for the signals. A two-day strike continues in the country today, government offices are shut and traffic is limited.In general, it is the main driver for the market today.

The U.S. index of outstanding deals of house sales in May is scheduled for the release today; however it is unlikely to affect the market dramatically.Most likely the pair EUR/USD will not go beyond the range of 1.4280-1.4430 at the trading session in the middle of the week.

 

[LF.Anastasia]

GBP: British Pound determines movement direction

At the Forex currency market the British Pound Sterling rate stands still on Wednesday morning after yesterday’s attempt to push away from local lows.

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, and is giving a sell signal. Stochastic Oscillator tends to come out of the oversold zone and started to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 1.6010, the target for the purchase will be the levels of 1.6040 and 1.6080.

If upward breakdown does not take place, the pair will consolidate close to the current levels.According to the representative of the Bank of England Mr. Dale, internal inflationary pressure in the UK remains relatively low, although in 2-3 years time inflation will be back at the target level. Dale believes that medium term GDP forecast should be revised downward.

The data released on Tuesday showed that final GDP in the UK (third reading) increased by 0.5% on quarterly basis (+1.6% y/y) which agreed with the forecast. At the same time level of consumer spending fell by 0.6% on quarterly basis (-0.5% y/y). in Q1 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 for 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.

It became known earlier 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. 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.

 

[LF.Anastasia]

CHF: Swiss Franc has reached historic highs once again

Swiss Franc rate is traded downward at the Forex currency market on Wednesday morning, aiming to retest new historic highs of 0.8275, achieved yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, reversing downward and shaping a sell signal. Stochastic Oscillator remains in the 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 new lows of 0.8275, and to 0.8300.

If downward breakdown does not take place, the pair will consolidate close to the current levels.It became known yesterday that consumption indicator UBS in Switzerland rose by 1.91 points in May against the growth by 1.57 points in April.

Representative of Swiss national Bank Mr. Brunetti noted today that growth rate of national currency reflects economic situation in the country, although the Franc soared sharply due to demand in currency –shelter. Swiss government does not influence on the exchange rate, he stressed, saying also that aggravation of the debt crisis in Europe threatens to bring more serious problems.

Leading indicators В середине недели будет представлен индекс опережающих индикаторов KOF в Швейцарии за июнь, а в пятницу ожидается публикация индекса производственного сектора в июне (прогноз – снижение до 57,8 пунктов с прежнего значения 59,2 пункта).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.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 recovers after two days of weakness

At the Forex currency market the Japanese Yen rate started to recover on Wednesday morning after two days of rebound.

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 81.20, the pair will go to 81.40 and 81.55.

If upward breakdown does not take place, the target for the pair will be the level of 80.65.It became known in the middle of the week that preliminary volume of industrial output in Japan rose by 5.7% m/m (-5.9% y/y) in May.

The data is above the forecast (5.5%). Recall that in March, when severe earthquake and tsunami hit the country, industrial production collapsedl by 15%.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.The issue of Naoto Khan’s 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 yesterday 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.

 

[LF.Anastasia]

AUD: Australian Dollar rapidly regains from lows

At the Forex currency market the Australian Dollar rate is traded upward on Wednesday morning, continuing to follow yesterday’s trend. The pair AUD/USD descended to the local lows at the beginning of the week, reaching the levels which are attractive for purchases.

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, however the signal is fading. Stochastic Oscillator started to grow in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0575.0400, the pair will go to 1.0590 and 1.0630.

Macro-economic background in Australia remains unchanged this morning.We would remind that vice president of the Reserve Bank of Australia Mr. Low, stressed last week that special efforts are required 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 prices for utilities.

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.Interesting situation is taking shape in the index swap Overnight: Investors’ opinion is reflected on the rate which can reach the level of 4.515 by December this year, and taking into account that the rate is now at 4.75% per annum, market incorporates a chance that interest rate will go down amid deterioration of the global situation.

However, these actions of the investors can force the Reserve Bank to make an opposite decision.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.

 

[LF.Anastasia]

NZD: New Zealand Dollar has been strengthening for the second day

At the Forex currency market the New Zealand Dollar rate continues to regain from lows of June on Wednesday, amid quiet on the whole external background.

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 reversed in the neutral zone and started to rise, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8150, the pair will go to 0.81650 и 0.8190.

If upward breakdown does not take place the pair will consolidate close to the current levels.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.As it became known this week, 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 Chinese economy cooling.In general macro-economic background in New Zealand can be evaluated as tranquilConsumer 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.

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. Statistics on New Zealand, which is going to be released on Thursday, will present number of news, including trade balance, number of construction permits in May, level of exports in May.

 

[LF.Anastasia]

EUR/USD: EURO rose to three –week highs

The pair EUR/USD continues to grow at the Forex currency market on Thursday morning: yesterday Greece adopted a plan of budget reduction for a medium term. By 9.20 Moscow time the Euro is at 1.4503 against yesterday’s closing level at 1.4434.

Thus, primary reason of tension in the market has been removed: Greece had adopted the five- years plan of measures to reduce budget, despite protest actions and opposition views. In addition, positive sentiment of the investors is supported by the ECB president Trichet, who said in his presentation this week, that regulator is prepared to raise interest rate in July.

In addition, the data on index of procurement managers of Chicago District (Chicago PMI) will become known tonight, which will become a preview of tomorrow’s publication of ISM Manufacturing in June.

Both indices are projected to decline.Most likely the pair EUR/USD will not go beyond the range of 1.4450-1.4550 at the trading session in the middle on Thursday.

 

[LF.Anastasia]

GBP: British Pound continues to grow in a moderate pace

At the Forex currency market the British Pound Sterling rate continues to grow on Thursday morning, amid external positive factor. However, the GBP has not got its own catalysts for growth as yet.

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, and is giving a sell signal. Stochastic Oscillator is going up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.6130, the target for the purchase will be the levels of 1.6150 and 1.6180.

If upward breakdown does not take place, the pair will consolidate close to the current levels.As it became known today, consumer confidence Gfk in Great Britain fell to -25 points in June against the level of -21 points in May. After the record growth in April, the indicator is falling, showing that the royal wedding had been the only factor of growth in the past.

Reduction of the indicator, which fell to the lows of 2010, has been observed in all five components. “What really causes frustration of the government is the scale of reduction, which has nullified half of the increase of last month, so that consumer confidence reached the lowest level of the whole last year”, noted in the accompanying commentary GfK NOP.

According to the data released yesterday, volume of output in the service sector of UK decreased by 1.2% m/m (+0.8% y/y) in April. At the same time net mortgage lending on the UK amounted to Stg1.098 billion in May against the value of stg1.047 billion in April.

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 for 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.It became known earlier 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 data released on Tuesday showed that final GDP in the UK (third reading) increased by 0.5% on quarterly basis (+1.6% y/y) which agreed with the forecast. At the same time level of consumer spending fell by 0.6% on quarterly basis (-0.5% y/y) in Q1.