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[LF.Anastasia]

CAD: Canadian Dollar managed to be corrected

At the Forex currency market the Canadian Dollar rate continues to be corrected on Tuesday after the previous sales. The situation with the CAD is very interesting because commodity currency has grown yesterday and is growing today despite external negative factors.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD; however it is moving along the signal line and is not giving a clear signal. Stochastic Oscillator is also moving along the signal line in the neutral zone, and is giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9920, the pair will go 0.9900 and 0.98701. If downward breakdown does not take place, the pair will stay at the current levels.

The pair failed to maintain parity, because support from oil has interfered.

The CAD hardly receives any support from macro-statistics which demonstrates mixed data. It became known earlier that unemployment rate in Canada increased to 7.3% in August against the forecast of 7.2% and previous level of 7.2%. In addition, labour productivity fell by 0.9% on quarterly basis in Q2 against the forecast of decline by 0.7% q/q. It also became known that number of begun construction in Canada fell to 184.7 thousand in August against the forecast at 200 thousand.

Slowdown in the key indicators, which is obvious at the moment, was caused by the state of the global economy and proximity to the Unites States.

The Bank of Canada believes that GDP of the country will amount to about 2.8% in 2011 (reduction by 0.1% versus forecast of April); in 2012 it will be 2.6% and 2.1% in 2013. According to the evaluation of the Bank, exports performance in Canada is negative because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation even more complicated. The growth in the interest rate in Canada will directly depend on stability in economic development. The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

As it became known earlier, number of begun construction in Canada increased to 205.1 thousand in July, which is higher than the forecast of 194.5 thousand and above the previous level of 196.6 thousand. In addition, trade deficit in Canada was at the level of -$1.6 billion in June against the level of -$1 billion in May, which is probably related to the problems in the neighboring U.S.

We should not disregard the fact that net CPI in Canada increased by 0.2% m/m (+1.6% y/y) in July. The indicator fell by 0.7% m/m (+3.1% y/y) in June.

 

[LF.Anastasia]

EUR/USD: Euro goes down again due to fears about Greece

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, which is caused by the resumed talk about potential default in Greece.

By 9.00 MSK the Euro is at 1.3645 against yesterday’s closing level of 1.3677.

Authorities of Germany and France are going to make another attempt to convince markets that Athens will not declare a default in the coming weeks; a teleconference will be held this afternoon where Prime Minister of Greece Mr. Papandreou will take part. It is assumed that the parties will express their readiness to fight against Greek problems all together.

Meanwhile, investors’ confidence in the Eurozone continues to decline.

Most likely the pair EUR/USD will not go out of the range of 1.3580-1.3690 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to be sold out

At the Forex currency market the British Pound Sterling is still sold out on Wednesday, as external background does not provide a chance to regain at least part of the losses.

Forex forecast: MACD indicator for the pair GBP/USD continues to go down in the negative area, giving a sell signal; volumes are increasing. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5710, the target for sale will become the levels of 1.5700 and 1.5680. If a downward breakdown does not take place, the pair will consolidate at the current levels.

Traders were not disinterested in the Pound statistics on Tuesday. Index of retail sales in the UK amounted to +0.6% m/m (+5.2% y/y), which agreed with expectations. In addition, consumer price index CPI rose by 0.6% m/m (+4.5% y/y) in August against the forecast of growth by 0.6% m/m.

Inflation was fueled by the rising prices for textiles and clothes. Thus, inflationary pressure on the British economy still persists and is not going to retreat.

It became known earlier that balance of house price RICS in the UK amounted to -23% in August which agreed with the forecast.

It seems that Great Britain will continue to reform the banking sector, with the main objective of protecting investors and consumers from the consequences of financial crisis.

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.

According to the data released earlier retail price index 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.

Visit of British Prime Minister Davis Cameron has not influenced on the position of the currency – it is more a political issue, although during the meeting with Russian authorities some commercial contracts have been signed.

 

[LF.Anastasia]

CHF: Swiss Franc preserves positions in the narrow range

Position of Swiss Franc has not changed significantly at the Forex currency market in the middle of the week. The currency remains within extremely narrow range and is not going to leave it.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area and maintains a buy signal. Stochastic Oscillator is in the overbought zone and is giving a similar signal; however it tends to go out of the zone.

Forex recommendations: in case of breakdown at the level of 0.8850, the pair USD/CHF will go to0.8860 and 0.8880. If upward breakdown does not take place, the pair will consolidate at the current levels.

At the meeting, which will be held this week, Swiss National Bank is going to make a decision on the three-month Libor rate and also give comments on the current economic situation.

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.

Last 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 earlier showed that 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. 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.

 

[LF.Anastasia]

JPY: Japanese Yen continues to grow, amid negative external background

At the Forex currency market on Wednesday the Japanese Yen rate continues to grow on for the third consecutive day in response to the traders’ desire to hedge their risks and wait out with the help of the safe asset until the time of turbulence is over; which is naturally brings closer the time of new intervention of the Bank of Japan. However, there has not been any indications from regulator about it yet.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal; volumes are decreasing. Stochastic Oscillator continues to go down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.70, the pair will go to 76.60 and 76.35. If downward breakdown does not take place, the pair will consolidate at the current levels. In addition, we would like to stress that the risk of currency intervention from the Bank of Japan is very high.

It became known today that revised industrial production increased by 0.4% m/m in July against preliminary level of +0.6% m/m. It is logical because the slump is taking place in all directions, due to the world- wide slowdown in economy.

At the meeting last 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.

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%. 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.

Statistics released earlier 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.

A meeting of G7 last weekend showed that member countries are concerned about the fate of Japan and large countries are willing to participate in consultations; however joint actions are not yet expected.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar are increasing

At the Forex currency market in the middle of the week sales of the Australian Dollar are increasing; high-risky currency has neither fundamental nor technical basis to seize upon in order to suspend its decline.

Forex forecast: MACD indicator for the pair AUD/USD has merged with the signal line and is not giving a signal, tending to break down. Stochastic Oscillator goes down the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0200, the pair will go to 1.0180 and 1.0160. If downward breakdown does not take place, the pair will consolidate at the current levels.

Morning statistics did not save the AUD from downfall: consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. Statistics released earlier showed that index of business conditions NAB in Australia fell by 3 points in August against the level of -1 point in July. The index declined to the lows since April 2009, indicating slump in the sentiments and prospects. National Australian Bank Ltd, noted commenting this outcome that it reflects increased level of uneasiness and concern that debt crisis will spread further. As long as external background remains negative, the pair will continue to lose positions.

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.

It became known earlier that trade balance in Australia was at the level of +A$1.83 billion in July against the forecast of +A$1.9 billion, which is slightly better than the data in June, however weaker than predicted. Obviously, external background puts pressure on the economy of the Green Continent. Currently, the pair AUD/USD will have downward trend in the medium term.

 

[LF.Anastasia]

NZD: New Zealand Dollar failed to maintain stability

At the Forex currency market in the middle of the week, the New Zealand Dollar rate is getting weaker following the trend of the major currency pairs, due to reluctance of traders to take risk, while prospects remain rather vague.

Forex forecast: MACD indicator for the pair NZD/USD gradually breaks through the signal line from top to bottom, giving a sell signal. Stochastic Oscillator goes up slightly in the neutral zone and is giving a buy signal, shifting smoothly into the movement along the signal line.

Forex recommendations: in case of breakdown at the level of 0.8150, the pair will go to 0.8130 and 0.8110.

Exchange rate of the New Zealand Dollar weakens, similar to most high-risky currencies, because current situation at the currency market does not help encourage risk.

A meeting of the Reserve Bank of New Zealand will be held tomorrow. It will be devoted to the interest rate and interesting comments on the current environment can be made during the meeting. Most likely the rate will be left unchanged, as deceleration in the global economy is obvious, which has its impact on the situation in every country.

The data released earlier 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro needs strong catalysts to continue recovery

The pair EUR/USD has subsided slightly on Thursday morning after the growth last night.

By 9.00 MSK the Euro is at 1.3717 against yesterday’s closing level of 1.3754.

So, yesterday teleconference of representatives of France, Germany and Greece took place and outcome of the meeting was predictable: European countries once again expressed readiness to support Athens in its fight against impending default and also stated that Greece will retain its membership in Eurozone despite current complicated situation.

New proposals have not been made and markets calmed down briefly; later, however, previous trend of trades resumed in advance of IMF decision on Greece and the U.S. FR meeting next week.

The U.S. news, which is scheduled for the release tonight, is worth noting.

Most likely the pair EUR/USD will not go out of the range of 1.3670-1.3750 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is still weak

At the Forex currency market the British Pound Sterling continues to weaken on Thursday, as there are no catalyst to regain losses of this week at least partially.

Forex forecast: MACD indicator for the pair GBP/USD continues to go down in the negative area, giving a sell signal; volumes are increasing. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5720, the target for sale will become the levels of 1.5700 and 1.5680. If downward breakdown does not take place, the pair will consolidate at the current levels.

The data released in the middle of the week showed that as per MOT estimates, unemployment rate in the UK remained at the previous level of 7.9% in July. In addition, the level of unemployed increased by 80 thousand for the reporting period. Official statistics demonstrates that unemployment rate in the UK remained at the level of 4.9% in August and level of unemployed increased by 20.3 thousand.

The data released earlier was interesting: index of retail sales in the UK amounted to +0.6% m/m (+5.2% y/y), which agreed with expectations. In addition, consumer price index CPI rose by 0.6% m/m (+4.5% y/y) in August against the forecast of growth by 0.6% m/m. Inflation was fueled by the rising prices for textiles and clothes. Thus, inflationary pressure on the British economy still persists and is not going to retreat.

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.

It became known earlier that balance of house price RICS in the UK amounted to -23% in August which agreed with the forecast.

It seems that Great Britain will continue to reform the banking sector, with the main objective of protecting investors and consumers from the consequences of financial crisis.

 

[LF.Anastasia]

CHF: Swiss Franc is not going to leave its usual range

At the Forex currency market Swiss Franc is traded in its usual range on Thursday, not even trying to go beyond in one direction or another.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area, maintaining a buy signal. Stochastic Oscillator has left overbought zone and is going down, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8800, the pair USD/CHF will go to 0.8820 and 0.8850. If upward breakdown does not take place, the pair will consolidate at the current levels.

Apparently, SNB can maintain the exchange rate of the pair EUR/CHF fixed at a particular level for long and it will deprive Franc of the status of protective currency. 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.

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.

The data released earlier showed that 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. 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.

At the meeting, which will be held this week, Swiss National Bank is going to make a decision on the three-month Libor rate and also give comments on the current economic situation. It is going to be interesting considering recent actions of SNB.