LiteForex's analytics

[LF.Anastasia]

NZD: New Zealand Dollar continues to move very slowly

At the Forex currency market the New Zealand Dollar rate continues to move very slowly on Tuesday morning; this trend has been observed for a couple of days and it indicates instability of market interests.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD; and goes down while volumes are close to zero, and is giving a weak sell signal. Stochastic Oscillator is going up in the neutral 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 0.8330, the pair will go to 0.8350 and 0.8370. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Economic situation in New Zealand remains almost unchanged.

Two weeks earlier, the Reserve Bank of New Zealand decided to leave interest rate at the previous level of 2.5% per annum. In the follow-up comments the RBNZ said that monetary policy tightening which has been planned for the nearest future is aimed to duly curb the rise in prices in the country. As the head of the Bank, Mr. Bollard noted:”World financial risks have begun to fade out and economic growth continues to accelerate pace; therefore, there is no sense to maintain the rate at the current low level any further.”

According to the released data, consumer confidence ANZ in New Zealand increased to 114.4 points in August against preliminary level of 109.4 points. CPI in New Zealand rose by 1.0% q/q (+5.3% y/y) in Q2 against the forecast of growth by 0.8% on quarterly basis. It is one more positive characteristic of the economic status in New Zealand. It is worth noting that permits for construction in New Zealand fell by 1.4% m/m in June against the forecast of +3.0%. Trade balance in New Zealand increased by NZ$230 billion in June against the forecast of NZ$400 billion. Slowdown in surplus was logical in June: volume of growth rate in imports and exports fell last month. Thus exports increased by 4.5% in Q2, to NZ$12.2 billion; imports dropped by 1%, to the level of NZ$11.8 billion. Exports to China and Australia fell sequentially: to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (+4.7% y/y earlier) respectively.

In addition, it became known this week that unemployment rate in New Zealand amounted to 6.5% in Q2 against revised similar value in Q1. Employment rate in New Zealand has not changed on quarterly basis in Q2, showing growth by 2.0% y/y, to 2.214 million. In general the data agreed with the economists’ forecast, unemployment rate had been even below consensus forecast of 6.6%. However, this did not prevent sales of the NZD.

As long as external background remains stable, the NZD has a real chance to recover from previous losses; however it is still in the shaky position and therefore is very responsive to all changes in the market sentiments.

 

[LF.Anastasia]

EUR/USD: Euro estimates of sentiments European leaders

The pair EUR/USD is traded with slow progress at the Forex currency market on Wednesday morning; yesterday, Presidents of France and Germany did not approve the idea of issuing unified European bonds.

By 9.35 MSK the Euro is at 1.4405 against yesterday’s closing level of 1.44071.

Thus, yesterday President of France Nikolas Sarkozy and German Chancellor Angela Merkel came up with proposal of creation of the unified government in Eurozone in the nearest future, which will work for 2.5 years with the primary objective to stabilize situation in financial sector.

At the same time both countries did not adopt the decision about issuing Eurobonds of 17 countries and it this fact has worried investors.

Macro-economic background is going to be not very eventful today; investors will be interested in European data this afternoon (Final value of consumer price index in June) and the U.S. data (Producer price index in July)

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4450 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound has not determined steady movement direction yet

At the Forex currency market the British Pound Sterling rate is traded downward on Wednesday morning; the same pattern has been going on for several sessions: the GDP would decrease at the beginning of the trading session and later it would regain from losses and start to increase.

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

Forex recommendations: in case of break down at the level of 1.6240, the pair will go to 1.6260 and 1.62901. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known this week that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June. Inflationary pressure is growing and for the fragile British economy it is not the best moment.

Retail price index in the country deduced by 0.2% m/m (+5.0% y/y) in July; in June the indicator had demonstrated the same +5.0% y/y.

As it o became known earlier, 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. In addition, house prices in the UK fell by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

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 last week that rating downgrade is not a threat for Great Britain.

The head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, is required.

 

[LF.Anastasia]

CHF: Swiss Franc is getting weaker as expected

At the Forex currency market Swiss Franc rate continues to move away from historic highs of July on Wednesday morning, amid low interest of investors to “quiet harbors” and due to intent attention from SNB.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal. Stochastic Oscillator has reached oversold zone and continues to go up, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8000, the pair USD/CHF will go to 0.8020 and 0.8050. If upward breakdown does not take place, the pair will consolidate at the current levels.

The economic situation in Switzerland has not changed significantly this morning.

Long positions in Franc continue to fall at Forex market; investors fear that SNB can take more drastic measures, as it has warned earlier that it will adjust the rate of Franc to the Euro, if speculations with the exchange rate of Swiss currency will not reduce in volume. It became known this week that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released earlier showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

However, 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.

We would recall situation of last week: 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 identified the threat to economic development and stability as the major motive to do this.

 

[LF.Anastasia]

JPY: Japanese Yen is still within the trading range

The Japanese Yen rate continues to be in the range of 76.30-77.35 at the Forex currency market in the middle of the week.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is moving along the signal line, not giving a clear signal. Stochastic Oscillator has come out of the oversold zone, and is going upward, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.90, the pair will go to 77.20 and 77.45. If upward breakdown does not take place the pair will consolidate close to the current levels.

The Japanese Yen is still squeezed in the narrow trading range, because external background remains mixed. At the same time, macro-economic situation in Japan has not changed significantly.

According to statistics released at the beginning of the week, real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2. GDP fell less than expected, and Minister of Finance of the country of the rising sun said that Japan will demonstrate the rise of economy next quarter. Monetary politician regards the fall in Q2 as a temporary phenomena; he said that it is required to monitor risks, caused by expensive Yen. In addition, it is not possible to resolve the issue of deflation immediately and prices in the country will recover gradually. 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.

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 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 became known also that revised volume of industrial output in Japan increased by 3.8% m/m in June against preliminary value of +3.9% m/m. As it can be ssen, 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.

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 traded at low volumes

At the Forex currency market the Australian Dollar rate is traded at low volume because external background remains ambiguous for the high- risk currencies.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, while volumes are average, and is giving a sell signal. Stochastic Oscillator goes up; it has come into 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 1.0500, the pair will go to 1.0510 and 1.0540. If upward breakdown does not take place, the pair will stay close to the current levels or will tend to rollback to 1.0430.

It became known today that index of leading indicators Westpac in Australia increased by 0.2% m/m (+1.6% y/y) in June against the growth of 3.0% y/y in May. However, the rate of index’s decline is minimal, considering that the index has been steadily decreasing since 2010. This index indicates prospects for economic activity for the next 3-9 months and judging by its dynamics, rapid growth can be hardly expected.

Minutes of the last meeting of the Reserve Bank of Australia which were made public yesterday showed that leading economic indicators demonstrated moderate increase in employment, and if the world financial turmoil would continue, it could become a factor of pressure to household spending and sentiments in the business circles, which in its turn, would have a negative impact on the general projections of the Central Bank. At the same time expensive raw material in the world pushes the level of inflation upward.

Among other things at the last meeting, arguments in favour of rate increase were suppressed by the downside risks to demand and high level of stress at the global financial exchanges.

Recall that 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 moving slowly on Wednesday morning

The Canadian Dollar rate is traded with slight deviation at the Forex currency market on Wednesday morning, although oil prices are increasing today. Investors’ interest in risky assets is low at the moment, which affects trading.

Forex forecast: MACD indicator is moving in the positive area for the pair USD/CAD, giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9830, the pair will go 0.9950 and 0.9970. If upward breakdown does not take place, the pair will aim to 0.9780.

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.

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.

In addition, 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.

As it became known yesterday, number of begun construction in Canada increased to 205.1 thousand in July which is higher than the forecast at 194.5 thousand and above the previous level of 196.6 thousand. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth. 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.

 

[LF.Anastasia]

EUR/USD: Euro gives way to USD in anticipation of statistics tonight

The pair EUR/USD has subsided at the Forex currency market on Thursday morning because investors are waiting for the data on American inflation, suggesting that indicator will be positive and will not create another prerequisite for talk about third round of quantitative easing of FR.

By 9.35 MSK the Euro is at 1.44990 against yesterday’s closing level of 1.4425.

It is assumed that CPI index in the U.S. increased by 0.2% m/m (+3.3% y/y) in July and if this data agrees with the forecast, it will become an indication for the market that American economy does not need QE3

In addition, technical factors were unfavourable for the Euro: yesterday’s growth slowed down near the significant resistance level above 1.45; the Euro failed to exceed it and went down.

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4470 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound still strives to soar up

At the Forex currency market the British Pound Sterling rate is being corrected slightly on Thursday morning which is natural after five days of growth and the leap to the local highs, which we witnessed yesterday.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and started to go up, giving a buy signal. Stochastic Oscillator remains in the neutral zone, and is giving a buy signal; however, it tends to make reversal and go out of the zone.

Forex recommendations: in case of break down at the level of 1.6530, the pair will go to 1.6545 and 1.65601. If upward breakdown does not take place, the pair will consolidate close to the current levels and there is also a chance of correction to 1.6340.

It became known yesterday that unemployment rate in the UK was at the level of 4.9% in July. At the same time, level of unemployed increased by 37.1 thousand.

In addition, minutes of the last meeting of the Bank of England became known in the middle of the week, which took players by surprise: all 8 members of MPC voted to keep the rate unchanged. It means that balance of power between “doves” and “hawks” has changed significantly. Wil and Dale who had been previously set belligerently have joined the camp of conservatives. Posen voted for the increase in the volume of securities repurchase from market for stg500 billion.

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 head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, is required.

In addition, house prices in the UK fell by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

It became known this week that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June. Inflationary pressure is growing and for the fragile British economy it is not the best moment.

According to RPI estimates, index of retail prices in the country fell by 0.2% m/m (+5.0% y/y) in July; while in June the indicator had demonstrated the same level of +5.0% y/y.

 

[LF.Anastasia]

CHF: Swiss Franc continues to weaken

Swiss Franc rate is traded downward at the Forex currency market on Thursday morning, keeping up previous dynamics, despite slight correction yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal. Stochastic Oscillator remains in the overbought zone and continues to go up, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8000, the pair USD/CHF will go to 0.8020 and 0.8050. If upward breakdown does not take place, the pair will consolidate at the current levels.

Yesterday, Swiss National Bank held a round of talks with Ministry of Finance, which resulted in the declaration of complete mutual understanding of economic issues. Thus, Ministry of Finance intends to spend 2 billion francs to support economy, as exchange rate of the national currency is too overvalued which is harmful for economic system.

Authorities of the country stated that decision on the target level of Franc will be made by the CNB. We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwarding sector, SNB continued to infuse liquidity at the trading floors to curb the growth of the Franc. Swiss National Bank had also 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 identified the threat to economic development and stability as the major reason for this.

At the moment chances of another intervention by the CNB is low.

It became known this week that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released earlier showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

However, 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.