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[LF.Anastasia]

JPY: Japanese Yen weakens under pressure from USD

At the Forex currency market the Japanese Yen rate is getting slightly weaker on Thursday, most likely due to the pressure from the USD.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal. Stochastic Oscillator has shifted to the sideways 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 77.40, the pair will go to к 77.60 and 77.75. If upward breakdown does not take place, the target for the pair will still be the level of 77.00.

Japanese statistics released today showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

At the meeting which was held yesterday, the Bank of Japan decided to leave interest rate unchanged at 0.1% per annum. Changes in the monetary policy are not planned: program of buying assets and lending program will remain unchanged along with the exchange rate. In the follow-up comments the Central Bank noted that situation in Europe requires thorough attention and Japanese economy maintains the tendency to recover.

As it became known earlier number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier. The data was weak, which was to the advantage of the growing Yen, which normally moves in the direction opposite to the markets’ sentiment. The fight against expensive JPY is one of the three objectives of a new Cabinet. It is possible that in the coming weeks, the new government will present a plan to stabilize the JPY.

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 next quarter Japan will demonstrate the rise of economy.

 

[LF.Anastasia]

AUD: Australian Dollar goes down again

At the Forex currency market the Australian Dollar rate goes down again on Thursday, as investors do not want to take risk in advance of the news release scheduled for today. Statistics which was made public earlier does not contribute to purchases of the AUD either.

Forex forecast: MACD indicator for the pair AUD/USD has merged with the signal line and is not giving a signal. Stochastic Oscillator has pushed away of the oversold zone and is going up, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0570, the pair will go to 1.0550 and 1.0520. If downward breakdown does not take place, the pair will consolidate at the current levels.

The Australian data which became known this morning was not very positive: unemployment rate rose to 5.3% in August versus the level of 5.1% in July. It is possible labour market is affected by the situation with exports.

Statistics released today showed that GDP in Australia rose by 1.2% q/q (+1.4% y/y) in Q2 against the forecast of growth by 1.0% on quarterly basis. The data was above expectations; however uncertainty in the external economy is very high, which prevents growth in the exchange rate. According to the governor of the RBA Mr. Glen Stevens, as long as markets are panic-stricken it is better to keep rates steady.

At the meeting last week, the Reserve Bank of Australia decided to leave the cash rate unchanged at 4.75% per annum, as expected. In the follow-up comments the head of the RBA Glen Stevens noted that “medium term economic prospects look worse that it had been expected a few months earlier. Global financial markets demonstrated severe instability”. The situation with the rate seems logical amid such background. “The RBA Committee decided that the most viable option will be to maintain current course of the monetary policy. At the next meeting the RBA will continue to carefully analyze both the prospects for economic growth and inflation in Australia, –said Stevens.

The pause in the policy of monetary tightening, maintained by the RBA, has been already going on for 9 months.

 

[LF.Anastasia]

NZD: New Zealand Dollar awaits external signal to start movement

The New Zealand Dollar rate almost stands still at the Forex currency market on Thursday, waiting for the external catalysts; which are going to be more than plenty at today’s session.

Forex forecast: MACD indicator for the pair NZD/USD has merged with the signal line and is not giving a clear signal. Stochastic Oscillator has reached oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8300, the pair will go to 0.8280 and 0.8250.

According to the data released today activity in the construction sector of New Zealand was at the level of -6.6% q/q which agreed with the revised index in Q1.

The NZD did not respond to the data too much.

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. This was another positive feature in the outline of New Zealand economy. It is worth noting that number of permits to construct in New Zealand increased by 13.0% in July against the fall of 1.3% in June. It is too early to speak about tendency in the indicator; nevertheless current results are quite good.

As it was made public earlier, 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 medicine.

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.”

A speech of the U.S. President Barack Obama before Congress is scheduled for tonight; therefore volatility in the pairs with the USD can increase significantly.

 

[LF.Anastasia]

EUR/USD: Euro is being technically corrected; however it is fundamentally weak

The pair EUR/USD is traded upward again at the Forex currency market on Friday morning as part of technical rebound after yesterday’s collapse.

By 9.10 MSK the Euro is at 1.3905 against yesterday’s closing level of 1.3881.

The outcome of the meeting of the European Central Bank was predictable. The rate was left at the level of 1.5% per annum. The head of the ECB Trichet downgraded the forecast for GDP in Eurozone for the current year, without saying anything fundamentally new.

At the same time the USD received considerable support. Barack Obama, U.S. President in his speech before Congress yesterday has offered a package of measures to support employment sector in the amount of $440 billion, noting that current crisis in the country requires urgent measures. “The question is whether we will be able to stop political farce in the face of national crisis and actually do something to help economy”- said the U.S. leader.

The package was called American Jobs Act.

Therefore the U.S. once again showed its intention to fight against the crisis using all efforts, which encouraged supporters of the USD.

Most likely the pair EUR/USD will not go beyond the range of 1.3870-1.3990 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is at the lows of several weeks

At the Forex currency market the British Pound Sterling is traded evenly on Friday morning, evaluating external background.

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

Forex recommendations: in case of break down at the level of 1.5930, the target for sale will become the levels of 1.5910 and 1.5880. If a breakdown does not take place at the end of the week, the pair will consolidate at the current levels.

At the meeting of the Bank of England which was held yesterday, it was decided to leave interest rate unchanged at the level of 0.50% per annum; volume of assets purchase was also left unchanged.

Apparently, the Bank of England is not going to intensify stimulation of the economy, assuming that inflation will reduce by itself. It is interesting that a hawk has showed up again in the horizon of the British financial field; Andrew Sentence, ex-member of MPC said in the interview with “The Times” that he continues to adhere to the view that the rise of the interest rate by 50 basis points is necessary for the country. He also finds arguable expectations of the Bank of England that inflation will move away from the level of 4.50% in the near future.

It also became known this week that retail sales BRC in the UK fell by 0.6% y/y in August. Low level of consumption in Great Britain, along with the low consumer confidence and poor state of the real estate market has become the main reasons of the decline in the index. Demand is obvious only for food, while demand for clothes and household goods goes down sharply,- reported British Retail Consortium.

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 the data released the day before yesterday showed index of retail prices BRC in Great Britain increased by 0.1% m/m (+2.7% y/y) in August against the fall of 0.2% m/m a month earlier. However, annual gain amounted to 2.8% in July; obviously the CR continues to decrease. Expensive raw material puts pressure on consumer inflation, which is reflected in the indicator. According to Nielsen estimates about 40% of purchases were the goods involved in various promotions, which proves that the British do not want to spend money.

 

[LF.Anastasia]

CHF: Swiss Franc finishes the week at the six-month lows

At the Forex currency market Swiss Franc rate remains at the lows of six months on Friday, despite the second attempt of being slightly corrected.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to the top and came into the positive area, maintaining a buy signal. Stochastic Oscillator has reached overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8730, the pair USD/CHF will go to 0.8750 and 0.8770. If upward breakdown does not take place, the pair will consolidate at the current levels.

This week was extremely stressful for Franc and deprived traders of “safe harbor”. We would remind that Swiss National Bank fixed exchange rate of the Euro in pairing with Franc at the minimum permissible level of 1.20, causing a rally in the market. SNB noted in the comments that it is going to buy foreign currency in unlimited quantities to prevent growth of the Franc, as the CHF adversely affects economy of Switzerland. Therefore, now the SNB will carefully monitor the situation at the currency market and carry out interventions without warning.

The data released yesterday showed that unemployment rate in Switzerland remained at the level of 2.8% in August, the same as in July. It is good that “long arms” of the Franc has not reached this important sector. Statistics which was made public before this decision showed that Switzerland slides down to deflation: CPI in August fell by 0.3% m/m against the forecast of decline by 0.2% m/m.

According to the data released earlier, unemployment rate in Switzerland remained at the level of 3.0% in July. Statistics released earlier showed that the level of retail sales in Switzerland increased by 7.4% in June against the revised level of -3.9% in May. In addition, index of PMI SVME rose to 53.5 points in July against the forecast of 52.5 points.

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. Statistics released earlier showed that indicator of consumption UBS fell to 1.29 points in July against the level of 1.52 points in June. The indicator has been sliding down not for the first month, showing negative tendencies in the economy; therefore, tough position of the SNB will be most welcome.

 

[LF.Anastasia]

JPY: Japanese Yen concludes this week being in the previous medium- term range

At the Forex currency market the Japanese Yen rate remains within the medium-term range of 76.40-77.75 on Friday, shifting to the upper limit.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal. Stochastic Oscillator is moving from the sideways to the gradual fall 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 77.40, the pair will go to к 77.60 and 77.75. If upward breakdown does not take place, the target for the pair will still be the level of 77.00.

Statistics released this morning showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. Statistics released yesterday showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

As it became known earlier number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier. The data was weak, which was to the advantage of the growing Yen, which normally moves in the direction opposite to the markets’ sentiment. The fight against expensive JPY is one of the three objectives of a new Cabinet. It is possible that in the coming weeks, the new government will present a plan to stabilize the JPY.

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 next quarter Japan will demonstrate the rise of economy.

At the meeting this week, the Bank of Japan decided to leave interest rate unchanged at 0.1% per annum. Changes in the monetary policy are not planned: program of buying assets and lending program will remain unchanged along with the exchange rate. In the follow-up comments the Central Bank noted that situation in Europe requires thorough attention and Japanese economy maintains the tendency to recover.

 

[LF.Anastasia]

AUD: Australian Dollar has not established unambiguous trend

At the Forex currency market the Australian Dollar rate is traded slightly upward on Friday; however overall trend for the pair AUD/USD has not been established; external influence is too high at the moment.

Forex forecast: MACD indicator for the pair AUD/USD has merged with the signal line and is not giving a signal. Stochastic Oscillator is going 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 1.0625, the pair will go to 1.0650 and 1.0670. If upward breakdown does not take place, the pair will consolidate at the current levels.

This week was very eventful for the AUD in terms of statistics, which was mixed and did not contribute to establishing a specific direction of movement.

Thus, Australian data which became known yesterday was not very positive: unemployment rate rose to 5.3% in August versus the level of 5.1% in July. It is possible labour market is affected by the situation with exports. Statistics released before that showed that GDP in Australia rose by 1.2% q/q (+1.4% y/y) in Q2 against the forecast of growth by 1.0% on quarterly basis. The data was above expectations; however uncertainty in the external economy is very high, which prevents growth in the exchange rate. According to the governor of the RBA Mr. Glen Stevens, as long as markets are panic-stricken it is better to keep rates steady.

At the meeting last week, the Reserve Bank of Australia decided to leave the cash rate unchanged at 4.75% per annum, as expected. In the follow-up comments the head of the RBA Glen Stevens noted that “medium term economic prospects look worse that it had been expected a few months earlier. Global financial markets demonstrated severe instability”. The situation with the rate seems logical amid such background. “The RBA Committee decided that the most viable option will be to maintain current course of the monetary policy. At the next meeting the RBA will continue to carefully analyze both the prospects for economic growth and inflation in Australia, –said Stevens.

The pause in the policy of monetary tightening, maintained by the RBA, has been already going on for 9 months and it is possible that it will continue for a couple of months.

 

[LF.Anastasia]

NZD: New Zealand Dollar tries to regain at the end of the week

At the Forex currency market the New Zealand Dollar rate rises on Friday; while technical rebound is taking shape in the world financial markets.

Forex forecast: MACD indicator for the pair NZD/USD has merged with the signal line and is not giving a clear signal. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8360, the pair will go to 0.8380 and 0.8400.

Economic situation in New Zealand has not changed significantly this morning.

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. This was another positive feature in the outline of New Zealand economy. It is worth noting that number of permits to construct in New Zealand increased by 13.0% in July against the fall of 1.3% in June. It is too early to speak about tendency in the indicator; nevertheless current results are quite good.

The data released yesterday showed that activity in the construction sector of Australia was at the level of -6.6 q/q in Q2, which agreed with the revised data in Q1. The NZD did not respond to the data too much. As it was made public earlier, 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 medicine.

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.”

 

[LF.Anastasia]

EUR/USD: Euro continues free fall

The pair EUR/USD continues to fall at the Forex currency market on Monday morning.

By 8.50 MSK the Euro is at 1.3541 against closing level of 1.3655 on Friday.

Market has received new grounds for sales: Juergen Stark resigned his post in the board of the ECB, reportedly because of disagreements over control of the regulator’s program to repurchase bonds. The Euro fell to the lows of 2011 in pairing with the Yen, amid increasing risk aversion.

Talks between Greece, IMF and EU shall resume this week; the outcome of the dialogue will show if the Euro will be able to test 1.30 this week. Meanwhile the situation demonstrates that traders’ confidence to a unified currency is decreasing rapidly.

Most likely the pair EUR/USD will not go beyond the range of 1.3480-1.3610 at the trading session on Monday.