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[LF.Anastasia]

JPY: Japanese Yen is getting weaker

At the Forex currency market the Japanese Yen rate is getting weaker on Thursday morning, continuing the trend of last night.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow slightly, giving a buy signal, although it is very weak. Stochastic Oscillator is going up in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 77.20, the pair will go to 77.35 and 77.50. If upward breakdown does not take place the pair will consolidate close to the current levels.

Economic situation in Japan has not changed significantly this morning.

Yesterday, Rating Agency Moody's reported that rating of Japan had been downgraded to AA3. According to Moody’s the country is under the threat of high level of budget deficit, which has already reached 200% of GDP. In addition, the memorandum has mentioned aftermaths of the disaster in March and ministerial changes that take place too often in the past five years.

In addition, Japanese authorities also said this morning that they are going to invest up to $100 billion to fight against expensive Yen. In his comments Noda stated that the reserves of the fiscal year of 2011 can be used in the fight against expensive Yen and that most likely these measures will help to “weaken” the JPY. Finance Ministry explained in the comments that measures taken by regulator today shall be beneficial for the rate of the JPY in the future. It could be the truth in the future, however today the JPY does not respond to the measures and statements and remains close to the highs of March.

According to 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%. 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.

Earlier, representative of Japanese monetary authorities Mr. Noda said that government elaborates on the solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures to support economy which suffers from impact of expensive YPY. According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to complete turnaround in the ascending channel of the JPY.

 

[LF.Anastasia]

AUD: Australian Dollar is on sale on Thursday

At the Forex currency market the Australian Dollar rate continues to fluctuate sluggishly on Thursday morning; The AUD is being sold today, the same as the night before.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and started upward reversal, giving a buy signal, while volumes are below average. Stochastic Oscillator also reverses upward in the neutral zone; however its buy signal is weak at the moment.

Forex recommendations: in case of breakdown at the level of 1.0480, the pair will go to 1.0490 and 1.0510. If upward breakdown does not take place, the pair will stay close to the current levels.

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 decline in the index 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. It became known yesterday that price index for corporate services in Australia remains unchanged on monthly basis, -0.5% y/y in July against the level of -0.8% y/y in June. In addition, index of leading indicators Conference Board in Australia fell to -0.8% in June; while a month earlier it had amounted to -0.1%.

According to the Minutes of the last meeting of the Reserve Bank of Australia which was made public earlier leading economic indicators demonstrated moderate increase in employment, and if the world financial turmoil would continue, it could become a factor of pressure on 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. 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 the rate increase were suppressed by the downside risks to demand and high level of tension at the global financial sector.

External environment is still determinative for the AUD and the lack of volumes in the pair indicates that investors have adopted wait and see position.

 

[LF.Anastasia]

NZD: New Zealand Dollar is waiting for new catalysts

At the Forex currency market the New Zealand Dollar rate stands in expectation of external signals to start a new trend.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is giving a sell signal, continuing to go down. Stochastic Oscillator has pushed away from oversold zone, which it did not enter, and goes up 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 0.8300, the pair will go to 0.8320 and 0.8350. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known today that retail sales in New Zealand increased by 0.9% q/q in Q2 against the forecast of growth by 0.7% on quarterly basis. According to the details, given in the report, the growth is attributed to the sale of motor spare parts, electrical goods and medicals.

The data released in the middle of the week demonstrated that export in New Zealand was at the level of NZ$3.7 billion in July. Surplus of trade balance fell in July and amounted to +NZ$129 million versus the level of +NZ$197 million in June. Note that exports increased by 4.5% in Q2, to NZ$12.2 billion; imports fell by 1%, to the level of NZ$11.8 billion. Exports to China and Australia have been reducing gradually, up to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (previously: +4.7% y/y) 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 point 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%.

A 2-year inflation forecast released earlier showed that expectations are at the level of 2.9% in Q3 against the previous forecast of 3.0%. Although the forecast was below previous expectations it did not have a negative impact on the rate of the NZD.

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, while unemployment rate had been even below the consensus forecast of 6.6%.

 

[LF.Anastasia]

EUR/USD: Euro grows pending the data tonight

The pair EUR/USD is traded upward at the Forex currency market on Friday morning, amid stability of the markets and in advance of the U.S. Federal Reserve conference in Jackson Hole tonight.

By 9.30 MSK the Euro is at 1.4423 against yesterday’s closing level of 1.4377.

Thus, at 18.00 MSK, the most anticipated event of the week will take place; this will be a speech of the Federal Reserve chairman Ben Bernanke in Jackson Hole. A year earlier at a similar meeting monetary politician outlined the idea of the second round of quantitative easing and market expects that it can happen again. However, the FR did not drop any hints at QE3.

The data in the U.S. GDP in Q2 will be released today; which is expected to be weak and revised from 1.3% to 1.1%.

Therefore, all attention is focused on the Unites States.

Most likely the pair EUR/USD will not go beyond the range of 1.4320-1.4550 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound regains losses of two days

At the Forex currency market on Friday morning the British Pound Sterling rate tries to regain losses of two days, correlating with Euro/Dollar

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has returned to the sideways trend and is not giving a clear signal. Stochastic Oscillator has come into the oversold zone and maintains a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6350, the pair will go to 1.6365 and 1.638. If upward breakdown does not take place, the pair will aim to 1.6245.

Yesterday, MPC member, former “hawk” of the Bank of England noted that regulator will take measure when British economy will need help. According to him neither the forecast of the bank of England nor recent dynamics of the market can be the reason to continue quantitative easing policy, as economic situation is very different from that of 2008.

It seems that Wil has radically changed his view on British economy, joining the camp of “Doves” led by King in August.

We would remind that 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 the need be.

As it became known earlier net volume of borrowing in the public sector of Great Britain was at the level of -stg1.961 billion in July against the value of stg1.350 billion in June. In addition, other indices also showed that volumes of various public borrowings also went down, indicating fairly high level of effectiveness of the current economic programs.

According to the data released yesterday, British consumers continue to lose confidence in the economy. As per Nationwide estimates, assessment indicator of the current economic conditions in July remained at the low levels, reducing to 49 points against the previous 51 points. Thus, the growth of the indicator in May was temporary and was provoked by the royal wedding and since that time it is successively going down.

It is worth noting 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.

House prices in Great Britain reduced by 2.1% m/m (-0.3% y/y) in August, according to Rightmove estimates; index of retail prices in the country fell by 0.2% m/m (+5.0% y/y), as per RPI estimates; while in June the indicator was at the same level of +5.0% y/y.

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. CPI in the UK fell by 0.1% m/m (4.2% y/y) In June 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.

 

[LF.Anastasia]

CHF: Swiss Franc maintains stability

At the Forex currency market Swiss Franc rate maintains stability on Friday morning, which seems everlasting and boringly predictable. On the one hand, stability of the Franc is based on the aggressive policy of the Swiss national Bank, on the other hand, on the investors’ wait and see attitude. If tonight’s conference of the U.S. Federal Reserve in Jackson Hole disappoints investors, demand in Franc will rise.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal, while volume are low. Stochastic Oscillator is moving sideways in the neutral zone and is not giving any signals.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7960, the pair USD/CHF will go to 0.7970 and 0.7970. If upward breakdown does not take place, the pair will consolidate close to the current levels.

On Friday, investors will be interested in leading indicators index KOF in Switzerland in August.

According to the data released yesterday, index of economic expectations ZEW fell to -71.4 points in August against the previous level of -58.9 points.

In general economic situation in Switzerland remains unchanged. There is still high risk that SNB will intervene into the currencies trading once again to prevent Franc’s strengthening.

It became known earlier 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. 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.

Authorities of the country stated earlier 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 pour 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. Weighty argument of the SNB was that there is a threat to economic development and price stability.

 

[LF.Anastasia]

JPY: Japanese Yen is growing again at the end of the week

At the Forex currency market the Japanese Yen rate is growing again on Friday morning, after two days of correction in the pair.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow slightly, giving a buy signal, although it is very weak. Stochastic Oscillator goes up in the neutral zone, approaching to the overbought zone and is giving a similar signal, which is also weak.

Forex recommendations: in case of breakdown at the level of 77.30, the pair will go to 77.45 and 77.60. If upward breakdown does not take place the pair will consolidate close to the current levels.

Today, Prime minister of Japan Naoto Khan announced his resignation as a Prime Minister and leader of Democratic Party of Japan (DPJ). Now, all further policy of the country, including the issue of currency intervention will depend on the new head of the government. It is assumed that ex Minister of Foreign Affairs Seiji Maehara can take over position of Prime-Minister.

According to 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%. 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.

Representative of Japanese monetary authorities Mr. Noda said earlier that government elaborates on the solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures to support economy which suffers from impact of expensive YPY. According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to complete turnaround in the ascending channel of the JPY.

Earlier this week, Rating Agency Moody's reported that rating of Japan had been downgraded to AA3. According to Moody’s the country is under the threat of high level of budget deficit, which has already reached 200% of GDP. In addition, the memorandum has mentioned aftermaths of the disaster in March and ministerial changes that take place too often in the past five years.

In addition, Japanese authorities also said that they are going to invest up to $100 billion to fight against expensive Yen. Noda stated in his comments that the reserves of the fiscal year of 2011 can be used in the fight against expensive Yen and that most likely these measures will help to “weaken” the JPY. Finance Ministry explained in the comments that current measures taken by regulator shall be beneficial for the rate of the JPY in the future. It could be the truth in the future, however today the JPY does not respond to the measures and statements and remains close to the highs of March.

 

[LF.Anastasia]

AUD: Australian Dollar keeps on downward trend

At the Forex currency market the Australian Dollar rate increases slightly on Friday morning, following after the dynamics of the major pairs; however it is still in the range of the channel, which has been maintained for almost two weeks.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and started upward reversal, giving a buy signal, while volumes are below average. Stochastic Oscillator reverses downward in the neutral zone; however its buy signal is weak at the moment.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0495, the pair will go to 1.0510 and 1.0535. If upward breakdown does not take place, the pair will stay close to the current levels.

External environment is still determinative for the AUD and the lack of volumes in the pair indicates that investors have adopted wait and see position.

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 decline in the index 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. It became known yesterday that price index for corporate services in Australia remains unchanged on monthly basis, -0.5% y/y in July against the level of -0.8% y/y in June. In addition, index of leading indicators Conference Board in Australia fell to -0.8% in June; while a month earlier it had amounted to -0.1%.

According to the Minutes of the last meeting of the Reserve Bank of Australia which was made public earlier, leading economic indicators demonstrated moderate increase in employment, and if the world financial turmoil would continue, it could become a factor of pressure on 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. In addition, the document says that high exchange rate of the AUD and low level of households demand has a restrictive effect on inflation. Among other things at the last meeting, arguments in favour of the rate increase were suppressed by the downside risks to demand and high level of tension at the global financial sector.

 

[LF.Anastasia]

NZD: New Zealand Dollar reluctant to leave the range it got accustomed to

At the Forex currency market the New Zealand Dollar rate remains in the range of 0.8160-0.8370 on Friday morning.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is giving a sell signal, continuing to go down. Stochastic Oscillator is moving along the signal line in the neutral zone, and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8300, 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.

The situation in the economy of New Zealand remains almost unchanged this morning; expectations of the annual conference of the U.S. Federal Reserve in Jackson Hole tonight will be the main activator for the NZD/USD.

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

As it was made public earlier 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, while unemployment rate had been even below the consensus forecast of 6.6%.

It became known yesterday that retail sales in New Zealand increased by 0.9% q/q in Q2 against the forecast of growth by 0.7% on quarterly basis. According to the details given in the report the growth is attributed to the sale of motor spare parts, electrical goods and medicals.

The data released in the middle of the week demonstrated that export in New Zealand was at the level of NZ$3.7 billion in July. Surplus of trade balance fell in July and amounted to +NZ$129 million versus the level of +NZ$197 million in June. Note that exports increased by 4.5% in Q2, to NZ$12.2 billion; imports fell by 1%, to the level of NZ$11.8 billion. Exports to China and Australia have been reducing gradually, up to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (previously: +4.7% y/y) respectively.

 

[LF.Anastasia]

EUR/USD: Euro is going up due the expected actions from FR in September

On Monday morning, the pair EUR/USD keeps on ascending trend which started on Friday night at the Forex currency market.

By 9.20 MSK the Euro is at 1.4518 against closing level of 1.4498 on Friday.

Thus, at the conference in Jackson Hole on Friday the chairman of the U.S. Federal Reserve Ben Bernanke announced no new economic stimulus measures during his speech. The only new announcement was that FR meeting in September will last one day longer than it normally takes and that economic prospects and stimulus are going to be discussed there. Bernanke said that extended meeting will enable to have “deeper discussion” of the current problems. Market took it as the reason for speculation as it believes that having more time for analyses the FR will arrive to the idea about necessity of the quantitative easing once again.

The head of the ECB Mr. Trichet is going to give a speech before the European parliament this afternoon which deserves attention.

Most likely the pair EUR/USD will not go beyond the range of 1.4450-1.4550 at the trading session on Monday.