LiteForex's analytics

[LF.Anastasia]

JPY: Japanese Yen continues to pursue a course of strengthening

At the Forex currency market the Japanese Yen rate is traded upward on Thursday; the JPY retains strength, amid strong interest of traders in hedging their positions.

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 76.40, the pair will go to 76.20 and 75.85. The pair might go to 77.70/78.00 as part of the rebound.

Japanese Finance Minister Noda said this morning that the JPY moves in one direction at Forex and the Bank of Japan is closely monitoring all changes. 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.

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.

The data released yesterday 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.

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.

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 is still under severe pressure

At the Forex currency market the Australian Dollar rate is slightly growing on Thursday morning; however looks more like a rebound than a trend: in addition to external factors, the AUD is under pressure from internal background.

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 goes up in the neutral zone, and started to shape a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0270, the pair will go to 1.0290 and 1.0320. If upward breakdown does not take place, the pair will consolidate close to the current levels.

According to the data released today, employment rate in Australia decreased by 0.1 thousand in July against expectations of growth by 10.3 thousand. Unemployment rate in the country rose unexpectedly, up to the highs of eight months, and amounted to 5.1%; while in June the index remained at the level of 4.9%.

Therefore, it is getting more evident that Australian economy is losing momentum to growth and is slowing down.

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. 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.

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 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 is aware of support from oil

The Canadian Dollar rate is traded upward at the Forex currency market on Thursday, because investors have diverted their attention away from the movement activator, which was based on the intensified danger of extension of the debt problems all over global economy.

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 has come out of the oversold zone and started to go down, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9920, the pair will go 0.9950 and 0.9970. If upward breakdown does not take place, the pair will aim to 0.9840.

Economic situation in Canada remains almost unchanged.

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. 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. It became known earlier 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.

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. 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.

 

[LF.Anastasia]

EUR/USD: Euro is under pressure from European news

The pair EUR/USD is declining at the Forex currency market on Friday morning; while the USD received support from statistics yesterday.

By 9.32 MSK the Euro is at 1.4185 against yesterday’s closing level of 1.4240.

The Euro is under pressure triggered by information, that France, Italy and Belgium introduced a 15 days ban for short selling in order to curb volatility. It is believed that it was done by the financial institutions of the countries, which are most vulnerable to crisis. The ban comes into force this morning and will last over 2 weeks.

In general, the situation at the trading floors remains tense, although measures taken by the global regulators should help stabilize situation.

Most likely the pair EUR/USD will not go beyond the range of 1.4100-1.4260 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound goes down on Friday

At the Forex currency market the British Pound Sterling rate is traded downward on Friday morning, affected by another deterioration of external environment.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area it is moving along the signal line, 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 1.6170, the pair will go to 1.6150 and 1.6120. If downward breakdown does not take place, the pair will consolidate close to the current levels.

British monetary politician Mr. Osborn said yesterday that collapse of the Eurozone would be economic disaster for both Europe and Great Britain. He said that the UK strictly implements the plan to reduce budget deficit; however the world politicians should act be more effective and vigorous to prevent imbalance. We would remind that rating agency S&P said yesterday that rating downgrade does not threaten Great Britain.

Prime Minister Cameron recalled the Parliament 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.

The day before 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.

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.

 

[LF.Anastasia]

CHF: Swiss Franc are tending upwards again after correction

At the Forex currency market Swiss Franc rate is traded slightly upward on Friday morning; it seems that two-day correction had been sufficient and now, when external background has become tense again, investors’ interest to Franc is rising again.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7560, the pair USD/CHF will go to 0.7530 and 0.7500. If downward breakdown does not take place, the pair will consolidate at the current levels.

Yesterday, Swiss National Bank intervened into the trades at the currency market; judging by the forwards sector, SNB continued to infuse liquidity at the trading floors to curb the growth of the Franc. 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.

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 in the future; 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.

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 indicates 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.

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. 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.

 

[LF.Anastasia]

JPY: Japanese Yen retains strong positions

The Japanese Yen rate is traded slightly upward at the Forex currency market on Friday morning, although movement in the last three days showed that deviation of the Yen has been close to zero against opening levels. External environment remains tense, increasing demand for the JPY as a “safe harbor” currency.

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 76.40, the pair will go to 76.20 and 75.85. The pair might go to 77.70/78.00 as part of the rebound.

It became known today that revised volume of industrial production in Japan increased by 3.8% m/m in June against preliminary level of +3.9% m/m. As it can be seen it is slightly below the forecast, however in general, it is a good indication, despite the fact that capacity utilization in June was twice as low as the level of May.

Japanese Finance Minister Noda said this morning that the JPY moves in one direction at Forex and the Bank of Japan is closely monitoring all changes. 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.

The data released earlier 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.

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.

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%.

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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to fall at the end of the week

At the Forex currency market the Australian Dollar rate goes down on Friday morning, reflecting another round of deterioration of the external background; this refers to Europe where four countries have banned short selling for 15 days.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0270, the pair will go to 1.0290 and 1.0320. If upward breakdown does not take place, the pair will go to 1.0250 and 1.0200.

Macro-economic situation in Australia remains almost unchanged this morning.

According to the data released yesterday, employment rate in Australia decreased by 0.1 thousand in July against expectations of growth by 10.3 thousand. Unemployment rate in the country rose unexpectedly, up to the highs of eight months, and amounted to 5.1%; while in June the index remained at the level of 4.9%.

Therefore, it is getting more evident that Australian economy is losing momentum to growth and is slowing down.

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. 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.

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%

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”.

 

[LF.Anastasia]

CAD: Canadian Dollar is being stuck in the range

The Canadian Dollar rate is being stuck in the range of 09760-1.0010 at the Forex currency market on Friday.

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 has come out of the oversold zone and started to go down, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9920, the pair will go 0.9950 and 0.9970. If upward breakdown does not take place, the pair will aim to 0.9840.

Situation in the Canadian economy has not changed significantly this morning.

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. 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.

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. 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. It became known earlier 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.

It became known yesterday that trade deficit in Canada was at the level of -$1.6 billion in June against the level of -$1 billion in May. This is probably related to the problems in the neighboring U.S.

 

[LF.Anastasia]

EUR/USD: Euro exploits the situation of external background to grow

The pair EUR/USD is traded upward at the Forex currency market on Monday morning.

By 9.32 MSK the Euro is at 1.4294 against closing level of 1.4247 on Friday.

Financial trading floors continue to take advantage of the stable statistics of the U.S. and Japan which triggered growth at the Asian markets and built up support for the Euro.

Thus, investors’ tranquility reverts after panic sales of the last week, which has been the most difficult for trading in the current year.

The day is going to be quiet in terms of macro-statistics; only the U.S. index of manufacturing activity Empire Manufacturing in August will be of investor’s interest, which is scheduled for the release in the afternoon.

Most likely the pair EUR/USD will not go beyond the range of 1.4200-1.4350 at the trading session on Monday.