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[LF.Anastasia]

JPY: the Japanese Yen shows reserve growth today

At the Forex currency market the Japanese Yen rate shows reserve growth on Thursday and yesterday’s interest boom to the currency was fully graded. Investors are waiting for either a change in world sentiment or BoJ interventions.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is moving along the signal line, not giving any clear signal. Stochastic Oscillator shows the same movements in the neutral zone, not giving a clear signal.

Forex recommendations: out of the market.

Feasible Forex scenario: in case of breakdown at the level of 76.60, the pair will go to 76.30 and 76.10. If breakdown does not take place, the pair will consolidate at the current levels.

By today’s morning no principal changes within the national economy occurred, and a pause took shape in USD/JPY forces’ alignment.

Tankan survey released this week showed that big manufacturing diffusion index totaled +2 points against the forecast of +3 points, big non-manufacturing diffusion index amounted to -11 points against the forecast of -14 points and -21 points seen previously.

As noted by the Head of BoJ Masaaki Shirakawa this morning, the regulator is making some serious steps towards JPY weakening buying assets. Still the national currency doesn’t notice any serious movements and enjoys demand among traders that are hedging risks. Let us remind that as it became known the day before, Japanese politicians would take a set of measures to weaken the national currency in the long term. Presumably, the measures would include using JPY in M&A and in securing electric payments. It also became known that currency intervention fund would be increased by JPY15 k, and the Finance Ministry noted that it would continue to monitor all possible speculative movements at the Forex currency market and couldn’t exclude actions to be taken.

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. A solid set of macroeconomic data was released at the end of the previous week: overall nationwide CPI totaled +0.2% y/y in August against the forecast of +0.1% y/y, Household spending totaled -4.1% y/y in August against the forecast of -2.8% y/y. Besides it became known that Unemployment Rate decreased to 4.3% in August against both the forecast and previous level of 4.7%.

 

[LF.Anastasia]

AUD: the Australian Dollar’s reserved recovery continues

At the Forex currency market the Australian Dollar rate continues showing a reserved recovery – last week the Aussie touched the local lows, that turned out to be attractive for buyers.

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

Forex recommendations: in case of breakup at the level of 0.9690, the pair will go to 0.9710 and 0.9740. If the breakup does not take place, the pair will consolidate at the current levels.

Still the Australian Dollar enjoys market calmness to recoup some of its former losses. In whole the fundamental situation remains principally unchanged.
Another RBA meeting took place this week at which the Bank decided to keep its cash rate unchanged at the level of 4.75%. So the pause in monetary policy tightening lasts for 11 months. In its minutes RBA noted that monetary policy might be eased in future if demanded by the inflation component.

RBA also added that much time might be needed to analyze current market turbulence.

As it became known the day before, AIG Services index in Australia decreased by 1.8 points to the level of 50.3 points in September against the increase by 3.3 points seen in August. Most likely it is a consequence of an overall slump in demand. As it became known in the middle of the week, Retail sales in Australia increased 0.6% m/m in August against the same increase a month before. The fact that retail sales still do not show weakness is positive and may be supportive to the Aussie in the near-term.

According to the data released earlier. Private sector credit in Australia totaled +0.2% m/m in August against +0.3% m/m in July. This became another reason for the Aussie selloff. Leading indicators index Westpac/MI in Australia increased by 1.4% in July, to the level of 284.2 points (+3.1% y/y) versus prior expectations of +2.7%. 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%.

Apparently the rate will remain unchanged until Q1 2012. Let us remind that earlier JP Morgan economists revised its opinion on the Australian rate – now they do not await its 25 bps rise in 2012, forecasting the rate to remain at the current levels till the end of the next year. In accompanying comments the economists note that financial markets are too volatile and the risks of economy’s cooling are too big to speak of the rate increase. A fall is commodities prices also plays against Australia.

 

[LF.Anastasia]

NZD: the New Zealand Dollar is trying to strengthen for the third day

The New Zealand Dollar rate continues growing slightly at the Forex currency market today.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal; volumes are still noticeable. Stochastic Oscillator rises in the neutral zone, forming a buy signal.

Forex recommendations: in case of breakup at the level of 0.7680, the pair will go to 0.7695 and 0.7720. One should note that aggressive sellers may easily return to the pair.

Macroeconomic situation in New Zealand remains practically unchanged. Investors are likely to take interest in September data that will probably show economy’s cooling amid still impressive external impact.

According to Fitch economists, current account deficit in 2012 in New Zealand will only widen to 4,9%, in 2013 – to 5,5%. At the same time external debt level exceeds the upper limit for the country’s current rating. These points played the main role in rating downgrade.

As noted by the Finance Ministry of the country, rating agencies pay too much attention to the debt problems, and the uncertainty about the same actions to be taken by other rating agencies preserves. The RBNZ head said that the financing of the country’s banking sector might become a problem in 2012. According to Mr. Bollard, the New Zealand banking system now feels a great deal better than in 2008, but risks from Europe and USA are increasing. Still the NZD is too expensive, in his opinion.

It became known before that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against the level of +0.9% q/q (+1.6% y/y) in Q1. ANZ Commodities prices in New Zealand totaled -1,3% m/m in September against -1,2% m/m. It is obvious that export-oriented economy is seriously affected by the external background showing a global slump in demand. This can be proved by observers’ reaction: according to the information released last week, Fitch Ratings downgraded New Zealand to АА from АА+, outlook “stable”. Market’s reaction to the news was immediate: the NZD found itself in a selloff slumping in a downward channel.

Therefore, there is actually stagnation in the economy of New Zealand: GDP has almost stopped rising last quarter, which proves that decision of the RBNZ do not change interest rate was logical. The report has disappointed market and currently it is quite possible that regulator will keep interest rates at this level for a long time, at least until the end of spring 2012.

 

[LF.Anastasia]

EUR/USD: Euro has all chances to finish the week higher

The pair EUR/USD is being traded in a tight range at the Forex currency market on Friday morning – investors are analyzing the ECB meeting outcome.

By 9.15 MSK the Euro is at 1.3427 against yesterday’s closing level of 1.3437.

According to the ECB decision, the rate was kept unchanged at the level of 1.5% as expected. The Bank noted that it would resume buying secured bonds in November and provide banks with one-year credits. This was widely expected by the market as an “extra stimulus package”. This meeting was final for Jean-Claude Triche who would be replaced by Mario Draghi as a Head of the ECB in November.

Today investors will monitor employment statistics and continue analyzing the ECB meeting outcome.

Most likely the pair EUR/USD will not go beyond the range of 1.3370-1.3480 at the trading session on Friday.

 

[LF.Anastasia]

GBP: the British Pound shows some correctional movement after another selloff

t the Forex currency market the British Pound Sterling rate shows some correctional movement on Friday morning after touching local lows the day before.

Forex forecast: MACD indicator for the pair GBP/USD is moving along the signal line in the negative area, not giving any signal. Stochastic Oscillator rises slightly in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakup at the level of 1.5470, buyers’ targets will be the levels of 1.5480 and 1.5500. This variant is intact for the technical correction.

The Bank of England held a meeting the day before as an outcome of which it decided to keep the rate unchanged at the level of 0.50% as expected and to enlarge the QE-program to GBP275 bln from GBP200 bln

In his comments to the decision the Head of BoE Mervin King said that the QE-program enlarging was provoked by the world economy cooling and it would do good to the British economy later.

According to his speech, current measures are preventive as Great Britain is in the middle of a serious crisis at the present moment.

As a response to the BoE decision the British Pound showed more weakness and today is recouping its losses.

At the same time the housing sector goes away from hibernation: Hometrack House prices index in Great Britain declined by 0.1% m/m (-3.5% y/y) in September. The statistics released earlier showed that Nationwide house price index in Great Britain increased by 0.1% m/m (-0.3% y/y) in September. The previously released data indicated that house prices Rightmove increased by 0.7% m/m in September. Still some lack of demand and an upward pressure caused by extremely low interest rates can be noted that provoke a price increase. Plus to this low level of public confidence to economy and reluctance of people to spend money, caused by obscure economic prospects. As it became known today, BRC Retail prices index in Great Britain increased 0.2% m/m (+2.7% y/y) in September. According to the agency’s calculations, Food prices increased 0.1% m/m (+5.0% y/y) last month. As it became known earlier, Gfk Consumer Sentiment in Great Britain increased to the level of -30 points in September against the level of -31 points in August. However in spite of some positive dynamics, index is still near its historic lows and doesn’t drag to historical average. The indicator has moved away from its lows this year, but strong stabilization is still a long way off. It is worth noting that the indicator of the economic situation fell to -58 points for the last 12 months.

Still the British Pound remains under strong external pressure.

 

[LF.Anastasia]

CHF: the Swiss Franc stands still at the end of the week

At the Forex currency market the Swiss Franc rate stands still on Friday amid the external background stabilization.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, starts going down, ready to form a sell signal. Stochastic Oscillator moves downward in the neutral zone having left the overbought zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9200, the pair USD/CHF will go to 0.9190 and 0.9170. If breakdown does not take place, the pair will stay near the current levels.

As it became known today, Unemployment rate in Switzerland remained unchanged at the level of 2.8% in September as expected. Still labor sector is stable but it cannot be excluded that an expensive national currency will affect it.

It is worth noting that last week SNB made some signs that may indicate that the regulator looses power to keep the Swiss Franc stable. Besides there is increasing talk among investors in the market that SNB can review its position on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Meanwhile, no grounds have been found to confirm this rumor. The SNB looks like doing everything possible to weaken the national currency rate, as the latest data indicated the consequences of the expensive CHF. For example, PMI SVME in Switzerland decreased to 48.2 points in September against 51.7 points seen in August. Besides, retail sales decreased by 1.9% y/y in August against +1.9% y/y a month earlier.

Released before SNB quarter report turned out to be pessimistic – according to the bank the economy will not show any signs of growth in 2H 2011 mostly because of expensive national currency and a sharp fall in demand. According to Swiss National Bank, GDP will amount to 1.5-2% in 2011, besides the first half of the year will bring the main growth. The SNB noted separately that without firm actions the economy could enter a recession. CPI will be at the level of +0.4% in 2011, next year – at +0.5%. Still pessimism and the SNB are synonyms.

According to SNB representative Mr. Dallas, that spoke before, Swiss Franc’s reserves should be grown to prevent CHF from excessive strengthening, and SNB used all measures to protect the target level of the currency. He also added, that if no actions were to be taken, the Swiss Franc would grow to above the parity in pairing with Euro. Mr. Dallas didn’t comment on the possible rise of the target level.

 

[LF.Anastasia]

JPY: the Japanese Yen paid no attention to the BoJ meeting

At the Forex currency market the Japanese Yen rate is traded upward on Friday paying no attention to the BoJ meeting held the day before.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and rises slightly, giving a weak buy signal. Stochastic Oscillator is sliding in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.60, the pair will go to 76.30 and 76.10. If breakdown does not take place, the pair will consolidate at the current levels.

The two-day BoJ meeting finished today as an outcome of which the Bank decided to keep the rate unchanged at the level of 0.10% as expected. In its comments to the decision the BoJ said that it would move on with the credit program till April, 30. At the same time the Bank didn’t provide any extra stimulus waiting for more sound results. The volume of assets’ purchase was kept unchanged at JPY50 trln.

Fundamentally the national economy is stable to the extent possible after the March quake. Still the expensive JPY influence is likely to provoke some talks of fiscal easing.

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. A solid set of macroeconomic data was released at the end of the previous week: overall nationwide CPI totaled +0.2% y/y in August against the forecast of +0.1% y/y, Household spending totaled -4.1% y/y in August against the forecast of -2.8% y/y. Besides it became known that Unemployment Rate decreased to 4.3% in August against both the forecast and previous level of 4.7%.

Tankan survey released this week showed that big manufacturing diffusion index totaled +2 points against the forecast of +3 points, big non-manufacturing diffusion index amounted to -11 points against the forecast of -14 points and -21 points seen previously.

 

[LF.Anastasia]

AUD: the Australian Dollar’s moves higher

At the Forex currency market the Australian Dollar rate stays positive – looks like another ray of hope occurred for the Aussie.

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

Forex recommendations: in case of breakup at the level of 0.9820, the pair will go to 0.9830 and 0.9840. If the breakup does not take place, the pair will consolidate at the current levels.

According to the statistics released today, AIG Performance of Building Index in Australia decreased by 2.1 points in September to the level of 30.0 points. Still the Australian Dollar enjoys market calmness to recoup some of its former losses. In whole the fundamental situation remains principally unchanged.

As it became known before, AIG Services index in Australia decreased by 1.8 points to the level of 50.3 points in September against the increase by 3.3 points seen in August. Most likely it is a consequence of an overall slump in demand. As it became known in the middle of the week, Retail sales in Australia increased 0.6% m/m in August against the same increase a month before. The fact that retail sales still do not show weakness is positive and may be supportive to the Aussie in the near-term.

According to the data released earlier. Private sector credit in Australia totaled +0.2% m/m in August against +0.3% m/m in July. This became another reason for the Aussie selloff. Leading indicators index Westpac/MI in Australia increased by 1.4% in July, to the level of 284.2 points (+3.1% y/y) versus prior expectations of +2.7%. 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%.

Another RBA meeting took place this week at which the Bank decided to keep its cash rate unchanged at the level of 4.75%. So the pause in monetary policy tightening lasts for 11 months. In its minutes RBA noted that monetary policy might be eased in future if demanded by the inflation component.

RBA also added that much time might be needed to analyze current market turbulence. Apparently the rate will remain unchanged until Q1 2012. Let us remind that earlier JP Morgan economists revised its opinion on the Australian rate – now they do not await its 25 bps rise in 2012, forecasting the rate to remain at the current levels till the end of the next year.

In accompanying comments the economists note that financial markets are too volatile and the risks of economy’s cooling are too big to speak of the rate increase. A fall is commodities prices also plays against Australia.

 

[LF.Anastasia]

NZD: the New Zealand Dollar recoups losses

The New Zealand Dollar rate continues growing slightly from local lows reached on Tuesday at the Forex currency market at the end of the week.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal; volumes are still noticeable. Stochastic Oscillator rises in the neutral zone, forming a buy signal.

Forex recommendations: in case of breakup at the level of 0.7750, the pair will go to 0.7765 and 0.7780.

Macroeconomic situation in New Zealand remains practically unchanged. Rather stable external background allows the NZD to recoup its former losses.

As noted by the Finance Ministry of the country, rating agencies pay too much attention to the debt problems, and the uncertainty about the same actions to be taken by other rating agencies preserves. The RBNZ head said that the financing of the country’s banking sector might become a problem in 2012. According to Mr. Bollard, the New Zealand banking system now feels a great deal better than in 2008, but risks from Europe and USA are increasing. Still the NZD is too expensive, in his opinion.

It became known before that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against the level of +0.9% q/q (+1.6% y/y) in Q1. ANZ Commodities prices in New Zealand totaled -1,3% m/m in September against -1,2% m/m. It is obvious that export-oriented economy is seriously affected by the external background showing a global slump in demand. This can be proved by observers’ reaction: according to the information released last week, Fitch Ratings downgraded New Zealand to АА from АА+, outlook “stable”.

Therefore, there is actually stagnation in the economy of New Zealand: GDP has almost stopped rising last quarter, which proves that decision of the RBNZ do not change interest rate was logical. The report has disappointed market and currently it is quite possible that regulator will keep interest rates at this level for a long time, at least until the end of spring 2012.

According to Fitch economists, current account deficit in 2012 in New Zealand will only widen to 4,9%, in 2013 – to 5,5%. At the same time external debt level exceeds the upper limit for the country’s current rating. These points played the main role in rating downgrade.

 

[LF.Anastasia]

EUR/USD: Euro has been inspired by the new European plan

The pair EUR/USD is traded upward at the Forex currency market on Monday morning in anticipation of prompt assistance in resolution of the European problems.

By 9.30 MSK the Euro is at 1.3479 against closing level of 1.3377 on Friday.

Last weekend Europe has been given another hope: German Chancellor Angela Merkel and French President Nicolas Sarkozy conducting another round of talks promised that before the end of October a package of new measures to solve European debt problems will be adopted.

In addition, buyers for the troubled Belgian Bank Dexia have been found which also relieves fears that this financial institution could become the second Lehman Brothers.

Today American trading floors are closed due to celebrations of Columbus Day, therefore markets will be guided exclusively by European information.

Most likely the pair EUR/USD will not go beyond the range of 1.3400-1.3520 at the trading session on Monday.