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[LF.Anastasia]

GBP: British Pound Sterling is still under pressure

At the Forex currency market the British Pound Sterling is still on sale at the beginning of the week, because external background remains tense and does not favour risk.

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 is in the neutral zone and is traded along the signal line, not giving a clear signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of break down at the level of 1.5650, the target for sale will be the levels of 1.5620 and 1.5600.

If downward breakdown does not take place, the pair will aim to 1.5830.In the morning at the beginning of the week, it became known that house prices Rightmove increased by 0.7% m/m in September. The data on the real estate sector from other leading agencies will be known soon, which will provide a clearer outlook. In general, there is no trend to risk, therefore the Pound continue to have a downward potential, which does not cancel short term upward correction, that will again lead to sales in case of negative developments It became known earlier that retail sales in the UK fell by 0.2% m/m, in August; the index has not changed on annual basis.

In addition, Mr. Cable said this morning that program QE will enable economy to regain both consumer and business confidence if they press ahead with a program in the same volumes. 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. 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.

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 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 unable to grow

Swiss Franc rate is traded downward at the Forex currency market on Monday: attempt to rebound which Franc made on Friday was not successful, as the pair has been carefully monitored by regulator.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area, maintaining a buy signal. Stochastic Oscillator is moving along the signal line 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 0.8810, the pair USD/CHF will go to 0.8830 and 0.8850.

If upward breakdown does not take place, the pair will consolidate at the current levels.SNB maintains unvaried position: any attempt of the Franc to be corrected and act as a safe asset is smoothed over at the very beginning.It became known earlier that volume of industrial production in Switzerland grew by 2.3% y/y in Q2 against the forecast of +2.7% y/y.


According to the data released earlier 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.As the data released earlier showed 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 last week, Swiss National decided to leave the three-month Libor rate at the zero level, as expected. In the follow up comments SNB noted that it would continue to protec the target exchange rate of EUR/CHF at 1.20. In addition Regulator stated that Swiss GDP will grow by 1.5-2% in 2011 (previously it was the level of 2%); inflation will not exceed the level of 0.4% this year. CPI will be at the level of -0.3% next year and will be +0.5% in 2013. CNB also confirmed its intention to buy foreign currency in unlimited volume in order to prevent growth of the Franc.

 

[LF.Anastasia]

JPY: Japanese Yen is of interest to investors again

At the Forex currency market the Japanese Yen rate is traded upward on Monday after two days of correction. Demand for the currency is increasing as external background remains tense and investors need to hedge their positions in the “safe harbor.”

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

Forex recommendations: in case of breakdown at the level of 77.00, the pair will go to 77.10 and 77.35.

If upward breakdown does not take place, the pair will go to 76.30. Recent correction in the pair slightly reduced risks of a new round of currency intervention from the Bank of Japan.

However, looking at the latest dynamics of the pair a thought that regulator is involved in trades does not seem too weird.It became known earlier that revised industrial production in July increased by 0.4% m/m versus preliminary level of +0.6% m/m; which is quite natural because slump, which is evident in the economy, was caused by slowdown in the global economy.

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.According to the data released earlier revised industrial output in July rose by 0.4% m/m. 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.

 

[LF.Anastasia]

AUD: Australian Dollar is under pressure again after slight correction

At the Forex currency market the Australian Dollar rate is on sale again at the beginning of the week, two –day correction last week was just a technical rebound and as soon as external background deteriorate, the AUD failed to continue recovery. Investors’ interest to risky positions is still low.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area after breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator left the oversold zone and is giving a buy signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 1.0240, the pair will go to 1.0220 and 1.0190.

If downward breakdown does not take place, the pair will consolidate at the current levels. As we expected aggressive sellers have come back in the pair. New Australian statistics has not been released so far; therefore trades for the pair are guided by external environment which is getting more complicated every day. It became known earlier that consumer inflation expectations in Australia rose to 2.8% in September, as per estimates of Melbourne Institute against provisional estimate of 2.7%.

This data is of general nature and the AUD did not respond to it; however it is obvious that inflationary pressure will continue to grow. The data released earlier showed that 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. According to the data released earlier 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. At the meeting in the beginning of September, 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. If the RBA contemplates reduction of the rate from the current levels in response to the external background, interrupting a nine-month pause, it will become an indication for the AUD to continue its fall.

 

[LF.Anastasia]

NZD: Statistics prevents New Zealand Dollar from sale

At the Forex currency market on Monday morning the New Zealand Dollar rate almost stands still: on the one hand the currency is under pressure from external background, leaving no chance of interest in risky positions; on the other hand, statistics released this morning provides some support to the AUD.

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

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 0.8250, the pair will go to 0.8265 and 0.8280.

According to statistics released this morning, activity index on the service sector of New Zealand fell by 0.6 points in August, to the level of 53.9 points. At the same time, consumer confidence Westpac in New Zealand remained at the level of 112.0 points in Q3 versus similar level in Q2. It is the latest data that keeps the NZD afloat, showing that consumers believe in the best.As it became known on Friday, consumer confidence index ANZ in New Zealand fell to 112.6 points in September against the level of 113.3 points in August. It is clear that macro-economy does not provide any support to the NZD.

In addition, it became known that purchasing manager index PMI BNZ in New Zealand fell to 52.9 points in August against the previous level of 53.2 points. The index had been declining for the third consecutive month which demonstrates slowdown in the sector. 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 decreased by 1.4% m/m in July against the forecast of +3.0%. 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.

Outcome of the meeting of the Reserve Bank of New Zealand which was held earlier, was predictable, however investors felt disappointed. Thus, interest rate was left at the previous level of 2.50% as expected. The RBNZ noted in the comments that a pause in revision of the rate has lasted so long, due to poor economic prospects of the countries which are commercial partners of New Zealand.

In particular, the Central Bank is concerned about the situation in the USA and in Europe as a whole. At the same time, previous high level of exchange rate of the AUD exerted pressure on the national economy. According to RBNZ it seems reasonable at the moment to leave the rate unchanged at the previous level so as to take into account risks of the global economy.

 

[LF.Anastasia]

EUR/USD: News from Italy knocked Euro down

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning due to aggravation of the European debt problems.By 8.45 MSK the Euro is at 1.3612 against yesterday’s closing level of 1.3685.

It became known last night that rating agency S&P downgraded ranking of Italy by one step, to A from A+, maintaining “negative” forecast. Agency forwarded ranking for review three months ago saying that risks for the country are increasing amid escalation of the debt problems and due to inactivity of the national authorities.

The news knocked the Euro down, although it had been expected.Most likely markets today will shift to wait and see attitude: a two-day meeting of the U.S. Federal Reserve will start tonight as the outcome of the meeting, important declarations will be probably made. Most likely the pair EUR/USD will be in the channel of1.3570-1.3650 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to decline

At the Forex currency market the British Pound Sterling continues to decline on Tuesday morning – the pair has nothing to catch hold in order to be corrected at least partially and external background continues to add negative factors.

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 is in the neutral zone and finished trades being along the signal line and started to go down, giving a sell signal.

Forex recommendations: in case of break down at the level of 1.5650, the target for sale will be the levels of 1.5620 and 1.5600. If downward breakdown does not take place, the pair will aim to 1.5830. It became known this week that house prices Rightmove increased by 0.7% m/m in September. The data on the real estate sector from other leading agencies will be known soon, which will provide a clearer outlook.

Meanwhile, we can see the lack of offers as it emphasized by Rithmove and upward pressure from the very low interest rates, which encourage the growth of the house prices; plus to this low level of public confidence to economy and reluctance of people to spend money, caused by obscure economic prospects. In other respects economic situation in the UK remains stable.It became known earlier that retail sales in the UK fell by 0.2% m/m, in August; the index has not changed on annual basis.

In addition, Mr. Cable said this morning that program QE will enable economy to regain both consumer and business confidence if they press ahead with a program in the same volumes. 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. 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.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.In general, there is no trend to risk, therefore the Pound continue to have a downward potential, which does not cancel short term upward correction, that will again lead to sales in case of negative developments.

 

[LF.Anastasia]

CHF: Swiss Franc continues to weaken

Swiss Franc rate continues to weaken downward at the Forex currency market on Tuesday; it seems that due to the traders’ interest in safe currencies, Swiss National Bank strengthened control over the Franc.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area, maintaining a buy 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 0.8870, the pair USD/CHF will go to 0.8890 and 0.8920. If upward breakdown does not take place, the pair will consolidate at the current levels.SNB maintains firm position: any attempt of the Franc to be corrected and act as a safe asset is smoothed over at the very beginning.

It became known in the morning that trade balance in Switzerland amounted to +0.81 billion in August against the forecast of +1.97 billion: effect of the expensive currency and external background is obvious. As it was made public earlier volume of industrial production in Switzerland grew by 2.3% y/y in Q2 against the forecast of +2.7% y/y.

Accoring to the data released earlier showed 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.

The data released earlier showed 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.

At the meeting last week, Swiss National decided to leave the three-month Libor rate at the zero level, as expected. In the follow up comments SNB noted that it would continue to protect the target exchange rate of EUR/CHF at 1.20. In addition Regulator stated that Swiss GDP will grow by 1.5-2% in 2011 (previously it was the level of 2%); inflation will not exceed the level of 0.4% this year. CPI will be at the level of -0.3% next year and will be +0.5% in 2013.In addition, the CNB also confirmed its intention to buy foreign currency in unlimited volume in order to prevent growth of the Franc.

 

[LF.Anastasia]

JPY: Japanese Yen has gone over to the attack

At the Forex currency market the Japanese Yen rate is rising in price on Tuesday morning; investors’ demand for “quiet harbour’ is increasing in proportion to the deterioration of the external background, which causes strengthening of the JPY.

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

Forex recommendations: 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 at the current levels.

According to the released information, Finance Ministry of Japan is going to address to the “Big Twenty” with the question of how exactly the countries are planning to resolve European debt problems and raise the issue of negative pressure of the expensive Yen on the economy of Japan. This can weaken the JPY for some time; however significant rollback can only take place if regulator will interfere with the market.It became known earlier that revised industrial output in July rose by 0.4% m/m against preliminary value of +0.6% m/m, which is logical since the decline which is being observed in all sections was caused by the slowdown of the world 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. There are no risks for the Yen at the moment if only Central Bank of the country would not start another currency intervention.

 

[LF.Anastasia]

AUD: Australian Dollar goes lower and lower

At the Forex currency market the Australian Dollar rate is traded downward on Tuesday, continuing to feel impact from the sellers.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area after breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator is changing direction again, going down and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0180, the pair will go to 1.0160 and 1.0145. If downward breakdown does not take place, the pair will consolidate at the current levels.

As we expected aggressive sellers have come back in the pair. Minutes of the last meeting of the Reserve Bank of Australia which was made public this morning says that current levels of the rates correspond to the existing situation, while medium term outlooks for economic growth continue to be optimistic. Companies are ready to hire employees and it is a positive factor, however expensive AUD has forced them to review their business strategies and plans.

The minutes look weird, considering that Australian economy suffers huge losses now due to the decrease in exports levels and particularly for coal. New Australian statistics has not been released so far; therefore trades for the pair are guided by external environment which is getting more complicated every day. It became known earlier that consumer inflation expectations in Australia rose to 2.8% in September, as per estimates of Melbourne Institute against provisional estimate of 2.7%.

This data is of general nature and the AUD did not respond to it; however it is obvious that inflationary pressure will continue to grow. The data released earlier showed that 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. According to the data released earlier 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.