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[LF.Anastasia]

AUD: Sales of Australian Dollar led the currency below parity

At the Forex currency market the Australian Dollar rate accelerated its fall on Tuesday morning, dropping below parity; however later the situation has been improved.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, while volumes are low, and is giving a sell signal. Stochastic Oscillator is going down in the oversold zone, and maintaining a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0170, the pair will go to 1.0150 and 1.0130. If downward breakdown does not take place, the pair will consolidate close to the current levels.

The Australian Dollar has quickly responded to the deterioration of the external background, which partly explains sales of the AUD. Position of the RBA has become an additional factor of pressure when it raised inflation forecast and lowered forecast of economic growth. Now the AUD is becoming a barometer of external instability- investors are not willing to risk making purchases under instability of the market.

Internal situation in the country’s economy remains almost unchanged.

Price index of houses in Australia fell by 0.1% q/q in Q2 against the forecast of reduction by 0.9% on quarterly basis.

According to the decision of the Reserve Bank of Australia, interest rate in the country was left at the previous level of 4.75% per annum. In the follow-up comments, the head of the RBA, Mr. Stevens said that external uncertainty prevents the rise in the interest rate in Australia at the moment. He said that “it was agreed that it was reasonable to maintain current course of monetary policy especially taking into account acute sense of uncertainty at the financial markets recently. At the next meeting the RBA will continue to estimate varying prospects for growth and inflation”.

It became known earlier that business activity index in the construction sector AIG in Australia fell by 0.3 points in July, to the level of 36.1 points.

Index of PPI in Australia increased by 0.8% on quarterly basis in Q2 against the growth of 1.2% in Q1. Business confidence NAB in Australia amounted to +6 points in Q2 against the prior value of +11 points. At the same time index of current conditions rose by 3 points against preliminary +2 points and assessment of business conditions in the three-month term increased by 10 points (forecast had been the growth of 15 points). CPI in Australia increased by 0.9% q/q ((+3.6% y/y) in Q2 against the forecast of growth by 0.7% q/q. This data turned out above expectations and supported growth in the pair AUD/USD. It is worth noting that business conditions index in Australia increased by 2 points in July, 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]

GBP: British Pound Sterling is still too weak to recover

At the Forex currency market the British Pound Sterling rate is traded downward on Wednesday- situation at the financial markets is still too tense to take risk.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area, however it started upward reversal and is ready to give a buy signal. Stochastic Oscillator is moving along the signal line in the neutral zone, not giving a clear signal.

Forex recommendations: in case of break down at the level of 1.6280, the pair will go to 1.6270 and 1.62501. If downward breakdown does not take place, the pair will consolidate at the current levels.

Rating agency S&P said yesterday that rating downgrade does not threaten Great Britain.

Yesterday, Prime Minister Cameron called for Parliament to cut short vocation in order to proceed to work this Thursday, mainly because of the escalating situation in the country. This is a precedent. Parliament had been summoned from vocation only twice in the last decade in 2001, when there was a terrorist attack in the U.S. and in 2002 when Britain joined military campaign against Iraq.

It also became known last week, that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m.

Earlier, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.

The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds.

No special comments have been made: British regulator continues to adhere to the old monetary policy.

According to Finance Minister Osborne, Great Britain continues to hold a status of a quiet habour, because national authorities are taking tough measures on fiscal policy. He believes that the country shall continue to adhere to consolidation plan to get rid of debts; meanwhile the Britain is able to keep away from recession. Rejection from the fiscal plan at the moment will become a real threat to economic growth, thinks Osborne.

Current situation in the market does not facilitate full recovery of the Pound.

 

[LF.Anastasia]

CHF: Swiss Franc is full of energy to set new highs

At the Forex currency market Swiss Franc rate continues to be traded upward on Wednesday; demand for the currencies of safe harbors is so high at the moment, that even measures taken by the SNB cannot prevent strengthening of the CHF.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator is still in the oversold zone and maintains a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7220, the pair USD/CHF will go to 0.7200 and to new highs of 0.7190. If downward breakdown does not take place, the pair will consolidate at the current levels. High level of oversold is being observed at the moment.

It became known this week that consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

Talk that intensifies at the market says that as far as measures of the CNB did not succeed and the rate tends to zero, regulator can choose a different option guided by the experience in Brazil, and introduce a negative rate or tight control over capital movement.

As we expected before, Swiss National Bank will have to confront a huge number of currency investors, who try to hedge risks in the Franc, due to the increasing instability in the market, the demand in CHF has risen again.

Due to the aggravated situation in the U.S. economy, agency S&P has downgraded rating of the country by one step and gave the U.S. a “negative” forecast. This, along with the spreading of debt problems of the Eurozone towards Italy caused the rise of investors’ interest in safety currencies.

According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9% y/y in May. In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.

Current data shows that the data released previously has been of a seasonal character and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11. The data released earlier showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.

We would remind that earlier, Swiss national Bank had restricted three- month Libor rate to 0-0.25% (it had amounted to 0-0.75% previously). They also stated that increasing rate of the Franc is a negative factor for the national economy; therefore Libor rate will tend to zero and the SNB is going to infuse liquidity into the market in the nearest future to “chill out” the Franc. SNB named the threat to economic progress and price instability as main arguments.

 

[LF.Anastasia]

JPY: Japanese Yen is not planning to slow down

At the Forex currency market the Japanese Yen rate continues to strengthen on Wednesday; players are interested in safe currencies, although the Yen has lost part of its prestige as a safe currency over the last couple of months.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going down, giving a sell signal. Stochastic Oscillator goes down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 77.00, the pair will go to 76.80 и 76.65. The pair might go to 77.70/78.00 as part of the rebound.

The data released in the morning showed that composite index of consumer confidence in Japan increased to 37.0 points in July against the value of 35.3 points in June. It also became known yesterday that current account surplus in Japan was -50.2% y/y in June, Y526.9 billion against decline of 51.7% y/y in May.

It is interesting that currency intervention that has been conducted earlier does not prevent Yen’s growth. Demand for “quiet harbor” currencies continues to be high and holds back the JPY from the rebound.

Last weekend, Japanese Finance Minister Noda said that during the meeting of the Big Seven he clarified the importance of the conducted currency intervention which had been aimed to reduce the rise of the national currency. At the same time he did not indicate whether Japan is going to conduct currency intervention in the future. Despite liquidity that has been infused in the market, the Yen continues to grow again, using external instability as an activator.

According to statistics released earlier, preliminary index of leading indicators increased to 103.2 points in June against the previous level of 99.4 points. At the same time preliminary index of coincident indicators in June was at the level of 108.6 points against the forecast of 108.7 points. Statistics is positive, it demonstrates that Japanese economy is moving towards recovery although slowly and with halts.

We would remind that the Bank of Japan had held the meeting a day earlier than scheduled last week and left interest rate unchanged, in the range of 0-0.1%, at the same time program of assets purchase has been increased up to 15 trillion yen (previously: 10 trillion yen). In addition, volume of purchases of the long term government bonds was raised to 4 trillion yen (2 trillion yen earlier); size of program to purchase corporate bonds was increased to 2.9 trillion yen (2 trillion yen earlier). Economic evaluation of the Central Bank was raised again in July, because regulator believes that activity in the economy is growing fast, so economy of Japan is on the way to gradual recovery. Meanwhile, the Central Bank of Japan had carried out currency intervention to reduce pressure which Yen exerts on the economy. The volume of the intervention amounted to about 5 trillion yen and the Yen had soared up above 80.0, for the first time since July.

Statistics released earlier was mixed: unemployment rate in June was at the level of 4.6%; household spending fell by 4.2% y/y in June; net national CPI increased by 0.4% in June against the forecast of +0.5%. Exports in Japan decreased by 1.6% y/y in June against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been of 11.0% y/y.

According to the previous estimates of the Bank of Japan, 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%.

 

[LF.Anastasia]

AUD: Australian Dollar regains from the downfall to the local lows

The Australian Dollar rate is traded upward at the Forex currency market on Wednesday after testing local bottom at 0.9927, investors’ interest in the currency has partly revived, although to some extent, it is speculative.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, while volumes are low, and is giving a sell signal. Stochastic Oscillator tends to go out of the oversold zone, and started to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0360, the pair will go to 1.0375 and 1.0400. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Internal situation in the country’s economy remains almost unchanged.

Price index of houses in Australia fell by 0.1% q/q in Q2 against the forecast of reduction by 0.9% on quarterly basis.

According to the decision of the Reserve Bank of Australia, interest rate in the country was left at the previous level of 4.75% per annum. In the follow-up comments, the head of the RBA, Mr. Stevens said that external uncertainty prevents the rise in the interest rate in Australia at the moment. He said that “it was agreed that it was reasonable to maintain current course of monetary policy especially taking into account acute sense of uncertainty at the financial markets recently. At the next meeting the RBA will continue to estimate varying prospects for growth and inflation”.

It became known earlier that business activity index in the construction sector AIG in Australia fell by 0.3 points in July, to the level of 36.1 points.

Index of PPI in Australia increased by 0.8% on quarterly basis in Q2 against the growth of 1.2% in Q1. Business confidence NAB in Australia amounted to +6 points in Q2 against the prior value of +11 points. At the same time index of current conditions rose by 3 points against preliminary +2 points and assessment of business conditions in the three-month term increased by 10 points (forecast had been the growth of 15 points). CPI in Australia increased by 0.9% q/q ((+3.6% y/y) in Q2 against the forecast of growth by 0.7% q/q. This data turned out above expectations and supported growth in the pair AUD/USD. It is worth noting that business conditions index in Australia increased by 2 points in July, 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%

The Australian Dollar has quickly responded to the deterioration of the external background, which partly explains sales of the AUD. Position of the RBA has become an additional factor of pressure when it raised inflation forecast and lowered forecast of economic growth. Now the AUD is becoming a barometer of external instability- investors are unwilling to risk making purchases under instability of the market.

The Australian currency has reached levels that are very attractive for the purchase in the course of the ongoing sales, however one cannot be too careful, considering external environment.

 

[LF.Anastasia]

CAD: Canadian Dollar started to rehabilitate

The Canadian Dollar rate became weak at the Forex currency market lately along with the interest to risk; however the CAD has demonstrated attempts to recover.

Forex forecast: MACD indicator is moving in the negative area for the pair USD/CAD and is going up, giving a buy signal. Stochastic Oscillator tends to come out of the oversold zone earlier and started to go down, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9770, the pair will go to 0.9750 and 0.97300. If downward breakdown does not take place, the pair will consolidate near the current level.

It became known yesterday that number of begun construction in Canada increased to 205.1 thousand in July, which had been above of forecast of 194.5 thousand and previous value of the indicator at 196.6 thousand.

Statistics released earlier showed that Canadian economy had demonstrated the most significant decline over two years in May: growth of GDP in Canada decreased by 0.3% m/m (C$1.26 trillion) in May against zero changes in April and +0.3% of growth in March. Slowdown this time was caused by decrease of production in the leading economic sectors: oil and gas industry and mining sector. It is clear that some negative factor should be attributed to the developments in the U.S, which is the largest trading partner of Canada.

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 Q4 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.

Earlier, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast. According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the nearest future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); and it will be: 2.6% in 2012 and 2.1% in 2013. According to the Bank evaluation, export performance in Canada is negative, because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation more complicated. The growth in the interest rate in Canada will directly depend on stability in the economic development. The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy.

Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

CPI in Canada decreased by 0.7% m/m (+3.1% y/y) in June. This became a negative signal for the CAD.
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[LF.Anastasia]

EUR/USD: Euro is growing steadily in the middle of the week

The pair EUR/USD is traded upward at the Forex currency market on Wednesday, due to decisions of the U.S. Federal Reserve.

By 0.30 Moscow time the Euro is at 1.4368 against yesterday’s closing level of 1.4350.

Thus, yesterday the U.S. Federal Reserve left interest rate unchanged in the target range of 0-0.25% per annum, and specified for the first time in a long while what lies behind the definition of maintaining soft policy for a “long time”: the rate is not going to be raised before mid-2013; although some monetary politicians in the U.S. believe that this plank has been lifted too high in terms of time period.

In the follow-up comments FR clarified that downward risks are increasing in the American economy and if required, regulator will activate additional financial instruments to stabilize the situation.

Meanwhile, the USD remains in a disadvantageous position, although no one speaks about QE3.

Most likely the pair EUR/USD will not go beyond the range of 1.4300-1.4410 at the trading session on Wednesday.

 

[LF.Anastasia]

EUR/USD: Euro is undergoing through strength test

The pair EUR/USD is traded upward at the Forex currency market on Thursday morning, after dipping at the Asian session, when it tested local lows.

By 9.30 Moscow time the Euro is at 1.4247 against yesterday’s closing level of 1.4177.

New serge of panic sales at the world financial markets yesterday was triggered by the investors’ fears that large French Banks would face lack of liquidity, which could have become the beginning of the next large-scale debt problem, this time in France.

Meanwhile, markets did not receive information, whether the rating of France has been confirmed in the high-ranking investment level.

Traders today will continue to be guided by the external information, given that the data on the number of applications for unemployment benefits in the U.S. for a week will become known tonight.

Most likely the pair EUR/USD will not go beyond the range of 1.4130-1.4280 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound Sterling is rising slightly after yesterday’s sales

At the Forex currency market the British Pound Sterling rate is making attempts to recover on Thursday morning after the surge of sales yesterday, when investors closed positions in fear that debt crisis could spread to the economy of France and do more harm to Great Britain. As a result, the Pound fell to the lows of July.

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

Forex recommendations: in case of break down at the level of 1.6150, the pair will go to 1.6130 and 1.6100. If downward breakdown does not take place, the pair can be corrected up to 1.6210.

Yesterday the head of the Bank of England, Mervyn King stressed in his speech that current anxiety in the markets is the result of the irritable situation with the debts in the U.S and Eurozone. Regulator downgraded his forecast for the world economic growth and noted that outlooks for the growth in the British GDP are also decreasing.

According to him, downside risks dominate in the British economy now; in 2012 the country can only expect modest economic growth, because economic problems aggravate nearly every day. British economy has already faced downfall in the volume of lending and free financing and regulator does not rule out that the rate might be increased “one day”, however monetary policy shall remain flexible.

Prime Minister Cameron called for Parliament to cut short vocation in order to proceed to work this Thursday, mainly because of the escalating situation in the country. This is a precedent. Parliament had been summoned from vocation only twice in the last decade in 2001, when there was a terrorist attack in the U.S. and in 2002 when Britain joined military campaign against Iraq.

It also became known last week, that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m.

Earlier, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.

The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds.

No special comments have been made: British regulator continues to adhere to the old monetary policy.

Rating agency S&P said yesterday that rating downgrade does not threaten Great Britain.

 

[LF.Anastasia]

CHF: Swiss Franc moves away from historic highs

At the Forex currency market Swiss Franc rate moves away from historic highs on Thursday morning, in a large extent due to verbal intervention by the representatives of Swiss monetary authorities.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator tends to come out of the oversold zone and is going to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7315, the pair USD/CHF will go to 0.7330 and to new highs of 0.7360. If upward breakdown does not take place, the pair will consolidate at the current levels. High oversold level is being observed at the moment.

According to the representative of SNB Mr. Jordan, Central Bank of the country is prepared to take proactive measures to maintain financial stability in the market; however the issue of the interest rate increase is not going to be discussed at the moment. In addition, short- term risks to price stability have a downward trend.

At the same time Mr Dantin stressed that Franc is still significantly overvalued; however the idea of pegging of Franc to the USD is difficult to implement, and therefore is not feasible at the moment.

According to Dantin, present accommodative policy is completely justified.

We would remind that earlier, Swiss national Bank had restricted three- month Libor rate to 0-0.25% (it had amounted to 0-0.75% previously). They also stated that increasing rate of the Franc is a negative factor for the national economy; therefore Libor rate will tend to zero and the SNB is going to infuse liquidity into the market in the nearest future to “chill out” the Franc. SNB named the threat to economic progress and price instability as main arguments.

It became known this week that consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

Talk that intensifies at the market says that as far as measures of the CNB did not succeed and the rate tends to zero, regulator can choose a different option guided by the experience in Brazil, and introduce a negative rate or tight control over capital movement.

According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9% y/y in May. In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.

Current data shows that the data released previously has been of a seasonal character and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11. The data released earlier showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.