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[LF.Anastasia]

CHF: Swiss Franc is getting closer to historic highs

At the Forex currency market Swiss Franc rate has stepped back slightly in the middle of the week, however the trend of the last three days indicates disposition of the CHF towards strengthening.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, giving a buy signal; volumes are below average. Stochastic Oscillator has pushed away from oversold zone and started to shape a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.8350, the pair USD/CHF will go to 0.8370 and 0.8390. If upward breakdown does not take place, the pair will aim at the level of 0.8300/0.8270.

Situation in the economy of Switzerland remained almost unchanged this morning.

At the meeting of Swiss National Bank earlier, it was decided to leave 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%).

Representative of Swiss government noted the day before yesterday that national economy is still in good shape despite strengthening of the national currency. As the same time, first signs of cooling in the export sector could be seen and if these symptoms will continue to develop, it will have a negative impact on the economy as a whole.

According to authorities, Swiss National Bank is solely responsible for the course of monetary policy and will likely to adopt new effective measures to achieve price stability soon.

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.

The data which was made public earlier showed that consumption indicator UBS in Switzerland rose by 1.91 points in May against the growth of 1.57 points in April.

 

[LF.Anastasia]

JPY: Japanese Yen has approached highs of March

The Japanese Yen rate has re-tested the highs of March at the Forex currency market on Wednesday, reaching the level of 78.49.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator started to go up in the neutral zone pushing away from oversold zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 79.65, the pair wil go79.80 and 80.15. If upward breakdown does not take place, the pair will go to 78.80.

As it became known today capacity utilization in Japan increased by 12.8% y/y in May against the decline of 1.1% in April. In addition, revised volume of industrial output in Japan rose by 6.2% m/m in May against preliminary value of +5.7%.

It became known today that consumer confidence index in Japan rose to 35.3 points in June against the level of 34.2 points in May. It is a good sign, showing that economy in the Country of the Rising Sun continues its slow but sure recovery. Statistics released earlier showed that bank lending in Japan decreased by 0.6% y/y in June against the forecast of -0.5% y/y.

In addition, orders in the machine-building industry of Japan rose by 3.0% m/m in May against the fall of 3.3% in April. According to the Cabinet “orders are recovering, however some sectors are lagging behind”. The indicator is usually considered as a leading index of corporate capital expenditures.

At the meeting of the Bank of Japan today, it was decided to leave interest rate unchanged in the target range of 0-0.1% per annum as expected.

Lending program was also left unchanged in the volume of 30 trillion yen. According to the Bank estimates, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%.

Note: that starting from this June, the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

 

[LF.Anastasia]

AUD: Australian Dollar started to recover

At the Forex currency market the Australian Dollar rate is growing on Wednesday, regaining from the sales of the last three days. Currency has slid to the levels, which are attractive for the purchase, however bulls should not lose vigilance.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; it has broken through the signal line from bottom to the top earlier and is rising, maintaining a buy signal. Stochastic Oscillator is going down slowly in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0650, the pair will go to 1.0670 and 1.0690. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Vice president of the Reserve Bank of Australia Mr. Low stressed earlier 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.

At the meeting of the Reserve Bank of Australia yesterday the decision was made to leave interest rate at previous level of 4.75% per annum and according to the comments of the regulator, moderately restrictive monetary policy is consistent with the actual situation. According to the RBA, the base rate will rise very gradually and economic growth in 2011 will be slower than expected. Stevens, the head of the RBA has said in the accompanying statement that Australian economy is gradually recovering after natural disasters, while European debt problems interfere with the process. Market expected that Stevens would drop a hint at the time when the rate would be raised, however it did not happen. As per the RBA estimates, employment sector of Australia is in the stable state, unemployment rate is described as moderate lately, although it has not affected unemployment rate, which remains at the level of 5%.

As the data released this week showed, business conditions index in Australia increased by 2 points in Jule, as per NAB estimates< against zero value in May.

At the same time, business confidence index NAB amounted to 0 points against the level of +6 points in May, and GDP forecast for the fiscal year of 2011-2012 had been reduced to 1.7%

 

[LF.Anastasia]

NZD: New Zealand Dollar rate shifted to strengthening in the middle of the week

At the Forex currency market, the New Zealand Dollar rate has shifted to strengthening on Wednesday after two days of large- scale sales under pressure from external background.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and is moving along the signal line, not giving a clear signal. Stochastic Oscillator continues to decline in the overbought zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8240, the pair will begin to correct toward 0.8260 and 0.8290.

On Thursday, 14 July market expects the release of GDP in New Zealand, which has been postponed earlier.

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.

It became known earlier that business sentiment NZIER in New Zealand rose to 27 points in Q2 against -27 points earlier. In general, it is a positive factor.

The data released earlier showed that net level of budget deficit in New Zealand rose to -NZD$40 billion (20.4% billion of the country’s GDP) in May, which was below economists’ forecast. According to the estimates of the Finance Minister Mr. English, budget deficit is still too large and active measures are required to reduce it.

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 in Chinese economy.

 

[LF.Anastasia]

EUR/USD: EURO is growing, amid bad news from the USA

The pair EUR/USD is traded upward on Thursday morning, supported by external background factors.

By 9.45 Moscow time the Euro is at 1.4200 against yesterday’s closing level of 1.4165.

Positions of the USD begun to decline because rating agency Moody's is going to revise the rating of the U.S. bonds ,which is now AAA, with the prospects of downgrade; that has never happened since 1995. At the moment Congress cannot reach consensus regarding the increase of the maximum permissible level of public debt, which is now at the level of $14.3 trillion.

According to Moody's, lack of decision on this issue creates risk of short term default, which agency evaluates as “small”.

At the same time agency Fitch has revised Greece rating to the level of CCC from B+, making it worse.

Therefore, there are plenty external momentums for movement.

Most likely the pair EUR/USD will not go beyond the range of 1.4150-1.4270 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound continues to recover

At the Forex currency market the British Pound Sterling rate continues to grow on Thursday, taking advantage of the USD weakness after Moody's warning about ranking.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is moving along the signal line, not giving any signals. Stochastic Oscillator is going up in the neutral zone, giving a buy signal.

Forex recommendations: in case of break down at the level of 1.6140, the pair will go to 1.6160 and 1.6190. If upward breakdown does not take place, the pair will consolidate at the levels, achieved earlier.

As it became known yesterday unemployment rate in the UK amounted to 7.7% in March-May, level of unemployed reduced by 26 thousand within the same period. The level of unemployed rose by 24 thousand in June, while unemployment rate amounted to 4.7%.

Average weekly earnings in Great Britain rose by 2.3% including bonuses in May against the growth of 2% in April.

Thus, situation in the labor market remains tense, largely due to the austerity measures of the government

The head of the Bank of England Mr. Mervyn King noted yesterday that in the next couple of years inflation in the country shall revert to the level of 2.0%. According to him, current monetary policy is quite logical and its aggressive tightening in the past and this year had been an unwise step. The meeting of the Bank of England was held last week: interest rate was kept unchanged at the level of 0.50% per annum. Statements on the monetary policy have not been made. It is likely that the rate will remain at the current level until Q1 2012. The minutes of the meeting will be made public on 20 July.

As it became known earlier, CPI in Great Britain fell by 0.1% m/m (4.2% y/y) in June versus the forecast of growth by 0.2% m/m. In addition, overall trade balance in the UK amounted to -stg4.06 billion in May against the forecast of stg2.700 billion. It seems that the rise of imports in May triggered the growth of deficit in trade balance of the country.

Economists of JP Morgan reported last Friday that they have revised the UK GDP downward: most likely economy of the country will be either flat in Q2, or will demonstrate slight rise by the end of Q2. By the way, as predicted by OECD, British economy will rise by 0.1% in Q2.

According to the forecast made by NIESR, GDP in Great Britain will rise by 0.1% in June against the revised level of 0.5% in May. It is logical, because economic situation in the UK remains tense. Comparable sales index BRC in Great Britain reduced by 0.6% in June against the slump by 2.1% y/y in May.

 

[LF.Anastasia]

JPY: Japanese Yen stays at the highs of March

At the Forex currency market the Japanese Yen rate remains strong on Thursday, largely due to the current weakness of the USD.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator started to go up in the neutral zone pushing away from oversold zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 79.00, the pair will go 79.80 and 78.16. If downward breakdown does not take place, the pair will go to 80.00.

Economic situation in Japan has not changed significantly this morning, except for the fact that expensive Yen poses additional high risks to the fragile economic recovery in the Country of the Rising Sun.

At the meeting, which was held this week, the Bank of Japan decided to leave interest rate unchanged in the target range of 0-0.1% per annum, as expected.

Lending program was also left unchanged in the volume of 30 trillion yen. According to the Bank estimates, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%.

Note: that starting from this June the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

According to the data released this week, capacity utilization in Japan increased by 12.8% y/y in May against the decline of 1.1% in April. In addition, revised volume of industrial output in Japan rose by 6.2% m/m in May against preliminary value of +5.7%.

It became known today that consumer confidence index in Japan rose to 35.3 points in June against the level of 34.2 points in May. It is a good sign, showing that economy in the Country of the Rising Sun continues its slow but sure recovery. Statistics released earlier showed that bank lending in Japan decreased by 0.6% y/y in June against the forecast of -0.5% y/y.

 

[LF.Anastasia]

AUD: Australian Dollar failed to find a momentum to grow

At the Forex currency market the Australian Dollar rate declines on Thursday morning. China has brought in a negative factor to the pair AUD/USD, reporting that inflation will continues to increase and the CB will raise interest rate once again.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; it has broken through the signal line from bottom to the top earlier and is rising, maintaining a buy signal. Stochastic Oscillator is going up in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0750, the pair will go to 1.0770 и 1.0790. If upward breakdown does not take place, the pair will consolidate close to the current levels.

According to the data released today, consumer inflationary expectations MI in Australia rose to 3.4% in July against the level of 3.3% in June. The AUD has not reacted strongly to the data, focusing its attention on the Chinese statistics and forecasts.

At the meeting of the Reserve Bank of Australia yesterday the decision was made to leave interest rate at previous level of 4.75% per annum and according to the comments of the regulator, moderately restrictive monetary policy is consistent with the actual situation. According to the RBA, the base rate will rise very gradually and economic growth in 2011 will be slower than expected. Stevens, the head of the RBA has said in the accompanying statement that Australian economy is gradually recovering after natural disasters, while European debt problems interfere with the process. Market expected that Stevens would drop a hint at the time when the rate would be raised, however it did not happen. As per the RBA estimates, employment sector of Australia is in the stable state, unemployment rate is described as moderate lately, although it has not affected unemployment rate, which remains at the level of 5%.

As the data released this week showed, business conditions index in Australia increased by 2 points in Jule, as per NAB estimates< against zero value in May.

At the same time, business confidence index NAB amounted to 0 points against the level of +6 points in May, and GDP forecast for the fiscal year of 2011-2012 had been reduced to 1.7%

Vice president of the Reserve Bank of Australia Mr. Low stressed earlier 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar shot up due to statistics

The New Zealand Dollar rate has highly upgraded local peaks at the Forex currency market on Thursday after the release of a positive report on GDP in New Zealand.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and is going up, giving a buy signal. Stochastic Oscillator goes up in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8450, the pair will go to 0.8480 and will try to retest upper border of the range at 0.8507.

Thus, released statistics showed that GDP in New Zealand rose by 0.8% on quarterly basis (+1.4% y/y) in Q1 against the forecast of growth by 0.3% q/q (+0.5% y/y)

The indices have been very favourable, which supports the NZD.

It is possible that the data will be less positive in Q2, however, in general, the trend will remain the same, which is favourable for the pair NZD/USD in long term outlook.

It became known earlier that business sentiment NZIER in New Zealand rose to 27 points in Q2 against -27 points earlier. In general, it is a positive factor.

The data released earlier showed that net level of budget deficit in New Zealand rose to -NZD$40 billion (20.4% billion of the country’s GDP) in May, which was below economists’ forecast. According to the estimates of the Finance Minister Mr. English, budget deficit is still too large and active measures are required to reduce it.

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 in 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.

 

[LF.Anastasia]

CHF: Swiss Franc has significantly upgraded historic highs

At the Forex currency market Swiss Franc rate has significantly upgraded historic highs, reaching the level of 0.8081.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, giving a buy signal; volumes are below average. Stochastic Oscillator has come back to the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8100, the pair USD/CHF will start to retest new lows of 0.8081.

Statistics released earlier showed that producer prices and prices for imports decreased by 0.5% m/m (-0.4% y/y) in June against the forecast of reduction by 0.3% m/m.

Representative of Swiss National Bank Mr. Jordan said that Switzerland went through the crisis easier than other countries largely due to its monetary policy and if the country will return to deflation, the CNB knows how to fight it. Jordan is concerned, however about recent dynamics of the EUR/CHF, saying that risks will increase when Italy will be in the list of the problematic countries of the EU.

According to authorities, Swiss National Bank is solely responsible for the course of monetary policy and will likely to adopt new, effective measures to achieve price stability soon.

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.

The data which was made public earlier showed that consumption indicator UBS in Switzerland rose by 1.91 points in May against the growth of 1.57 points in April.

At the meeting earlier, Swiss National Bank decided to leave 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%).

Representative of Swiss government noted earlier that national economy is still in good shape despite strengthening of the national currency. As the same time, first signs of cooling in the export sector could be seen and if these symptoms continues to develop, it will have a negative impact on the economy as a whole.