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[LF.Anastasia]

JPY: Japanese Yen stands firmly in the range

At the Forex currency market the Japanese Yen rate remains in the trading range on Thursday and has not changed its position significantly.

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 is growing in the neutral zone, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.70, the pair will go to 76.90 and 77.25. If upward breakdown does not take place the pair will consolidate close to the current levels.

It became known today that leading indicators index in Japan was left unrevised, showing growth by 3.8 points against the rise of 3.4 points in May. At the same time, coincident indicators index in Japan increased by 2.7 points in June against the growth of 2.6 points in May.

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.

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 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 in the outset

The Australian Dollar rate remains in the narrow range on Thursday, demonstrating outset movement, while volumes are low.

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 has come into overbought 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.

Therefore, economic situation in Australia has not changed significantly this morning.

According to the data released this week, 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.

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.

We would remind 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”.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar is being corrected on Thursday

At the Forex currency market the New Zealand Dollar rate is being corrected on Thursday morning at the low volumes, remaining within the outset channel.

Forex forecast: MACD indicator for the pair NZD/USD has broken through singal line from top to bottom and is shaping a sell signal. Stochastic Oscillator tends to make downward reversal in the overbought zone and started to shape a sell 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 has not changed significantly.

It became known earlier 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.

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.

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.”

 

[LF.Anastasia]

EUR/USD: Euro goes down under pressure from external negative factor

The pair EUR/USD goes down at the Forex currency market on Friday morning for the reason of another round of deterioration in investors’ sentiment at the global capital markets.

By 9.50 MSK the Euro is at 1.4297 against yesterday’s closing level of 1.4332.

Situation at the global financial markets continues to deteriorate: weak U.S. statistics released yesterday had disappointed traders; then Citigroup announced downgrade of forecast for American economic growth in 2011-2013.

Investors started more actively hedge their capital against risk; which is evident due to sales volumes of the Euro.

This afternoon investors will be interested in producer price index in Germany, which is expected to be negative.

Most likely the pair EUR/USD will not go beyond the range of 1.4230-1.4340 at the trading session on Friday.

 

[LF.Anastasia]

GBP: Sales of British Pound continue

At the Forex currency market the British Pound Sterling rate continues descending trend which started last night due to deterioration of external background.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area, it reverted to outset movement and is not giving a clear signal. Stochastic Oscillator tends to go out of the overbought zone and is shaping a sell signal.

Forex recommendations: in case of break down at the level of 1.6450, the pair will go to 1.6425 and 1.6400. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Minutes of the last meeting of the Bank of England was made public 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.

Will said in the follow-up comments that policy on interest rate will entirely depend on the recovery of world economy and the economy of Eurozone

It became known earlier 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 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, if required.

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

It also 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.

 

[LF.Anastasia]

CHF: Swiss Franc is moving in the descending channel

Swiss Franc rate continues to be traded downward at the Forex currency market on Friday morning, because Swiss national Bank goes on with tracking exchange rate of Swiss Franc despite deterioration of the external background.

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 is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7970, the pair USD/CHF will go to 0.8000 and 0.8020. If upward breakdown does not take place, the pair will consolidate at the current levels.

SHF has not started to grow despite significant deterioration of external background: SNB is acting in opposition to market interests, as its target is to prevent growth in the national currency. One question arises then: how long for the regulator will be able to resist speculative interests of traders?

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

In addition, 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.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen does not change positions at the end of the week

The Japanese Yen rate is traded in the previous range at the Forex currency market on Friday: Tension which continues in the external environment makes the Yen act as protective asset, on the one hand; and on the other hand, high rate of the Yen prevents recovery of Japanese economy in such a difficult period of time.

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 started to descend in the neutral zone, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.40, the pair will go to 76.20 and 76.00. If downward breakdown does not take place the pair will consolidate close to the current levels.

Representative of the monetary authorities of Japan, Mr. Noda said this morning that government is elaborating solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures which will support economy that suffers from impact of expensive YPY. According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to full reversal of the ascending channel of the JPY.

It became known yesterday that leading indicators index in Japan was left unrevised, showing growth by 3.8 points against the rise of 3.4 points in May. At the same time, coincident indicators index in Japan increased by 2.7 points in June against the growth of 2.6 points in May.

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 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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar is still in the focus of sellers’ attention

At the Forex currency market the Australian Dollar rate continues to slide down on Friday morning: investors’ interest in high-yield and consequently, high risky currencies is very low, due to traders’ increasing concerns about global economy.

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 has come out of the overbought zone and is going into neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0340, the pair will go to 1.0310 and 1.0280. If upward breakdown does not take place, the pair will stay close to the current levels.

Thus, Australian Dollar is highly responsive to the changes in the external background.

According to the data released this week, 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 earlier 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. In addition, the document says that high exchange rate of the AUD and low level of households demand, have a restrictive effect on inflation. 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.

We would remind 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]

NZD: New Zealand Dollar timidly tries to be corrected

At the Forex currency market the New Zealand Dollar rate makes attempts to be corrected on Friday morning after yesterday’s sales; however it is hardly feasible to full extent, because investors’ interest in purchase is very low.

Forex forecast: MACD indicator for the pair NZD/USD has broken through signal line from top to bottom and is shaping a sell signal. Stochastic Oscillator goes down in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8220, the pair will go to 0.8200 and 0.8170. If downward breakdown does not take place, the pair will consolidate close to the current levels.

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%. It became known earlier 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.

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.

Last meeting of the Reserve Bank of New Zealand did not bring any surprises: it 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.”

 

[LF.Anastasia]

EUR/USD: External background still affects dynamics of the pair

The pair EUR/USD is traded slightly downward at the Forex currency market on Monday morning, amid generally peaceful background.

By 9.00 MSK the Euro is at 1.4366 against yesterday’s closing level of 1.4396.

Market is still affected by Friday sales triggered by another surge of investors’ distrust to the economy of Europe and the USA

The day is going to be uneventful in terms of macro-statistics; therefore investors will be guided by external background.

Most likely the pair EUR/USD will not go beyond the range of 1.4300-1.4450 at the trading session on Monday.