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[LF.Anastasia]

JPY: Japanese Yen is the object of traders’ attention again

At the Forex currency market the Japanese Yen rate continues to grow although yesterday’s attempt was not successful.

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

Forex recommendations: in case of breakdown at the level of 76.60, the pair will go to 76.50 and 76.40. If downward breakdown does not take place, the pair will consolidate at the current levels.

Today the head of the Bank of Japan said that it is necessary to monitor carefully the impact of the European debt crisis on the Japanese economy, including Forex market and commodity platforms. According to him situation in Japan is stable at the moment and authorities expect revival of the economic growth soon.

Morning statistics in the Country of the Rising Sun was interesting:

- Revised index of leading indicators fell by 0.3% m/m, tо 104.3 points in August (103.8 points previously);

- Revised index of coincident indicators rose by 0.5%, to 107.6 points in August (107.4 points previously);

It became known yesterday that, final orders for industrial equipment in Japan increased by 20.1% in September against the growth of 20.3% in August. Association of machine-tool construction industry of Japan stated that last month the index had reached the lowest level since 2009. According to the data released yesterday revised industrial production in Japan rose by 0.6% m/m (+0.4% y/y) in August; below expectations.

From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen.

Business survey Tankan published earlier showed that expectations of the large industrial enterprises amounted to +2 points in September against the forecast of +3 points. Expectations of large non-industrial enterprises demonstrated decline of 11 points versus the forecast of -14 points and -21 points previously. Total current account surplus in Japan amounted to Y407.5 billion in August against the forecast of Y462 billion. In addition, consumer confidence index in Japan declined to 38.6 points in September against the forecast of 37.2 points.

 

[LF.Anastasia]

AUD: Australian Dollar is moving away from external risks

At the Forex currency market the Australian Dollar rate is traded downward on Thursday, regaing from deterioration of the external environment.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up steadily, giving a buy signal; however volumes are minimal. Stochastic has left overbought zone, and is giving a start to a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0160, the pair will go to 1.0150 and 1.0120. If downward breakdown does not take place, the pair will consolidate at the current levels.

Business confidence NAB in Q3 amounted -4 points while in Q2 the index had been at the level of +5 points. According to observers’ estimates the level of employment, sales and corporate profit in the country has dropped considerable.

Business conditions in the three- month term amounted +5 points against +10 points previously and amounted to level of +18 points on annual basis against prior +27 points.

Sharp decline in the indicator, kicked off a quarter earlier, is still going on.

According to the data released earlier consumer confidence WESTPAC in Australia rose by 0.4% m/m, to the level of 97.2 points in October. As noted by monetary politician Evans it is possible that the rate will go down in November, since low growth of the index indicates general pessimistic sentiment.

At the last regular meeting the Reserve Bank of Australia decided to leave interest rate unchanged at the level of 4.75% per annum. Thus, the pause in the process of monetary tightening policy of the RBA has been lasting for 11 months. In the follow-up comments the regulator said that monetary policy can mitigate in the future if inflation requires it. The follow-up statement said that more time can be required to analyze the impact of turbulence in the markets. Apparently, the rate of the RBA is unlikely to be raised until the first quarter of 2012.

Unemployment rate in Australia declined to 5.2% in September versus the level of 5.3% in August. This data demonstrated dynamics for the first time since this March. Employment rate rose by 20.4 thousand last month, while analytics expected the growth of not more than 10 thousand. As noted in the Bureau of Statistics in Sydney, coal mining companies hire staff to meet demand for raw materials from China and India.

 

[LF.Anastasia]

NZD: Demand for New Zealand Dollar is minimal today

The New Zealand Dollar rate is traded slightly upward at the Forex currency market on Thursday as investors’ sentiments do not help to raise interest in the high-risk currencies.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area, and started sideways movement, not giving a clear signal. Stochastic Oscillator does down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7960, the pair will go to к 0.7970 and 0.7990. If upward breakdown does not take place, target for the sales will be the level of 0.7910.

In general, fundamental changes in the economy New Zealand did not take place this morning.

As it was made public earlier, house prices QV in New Zealand increased by 0.7% y/y in September against the rise of 0.1% y/y in August. Meanwhile, the AUD is closely monitoring the situation in China, since potential trade war between China and the USA does not look promising to high-yielding currencies.

Prior statistics showed that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against +0.9% q/q (+1.6% y/y) in Q1. Commodity prices ANZ in New Zealand fell by 1.3% m/m in September against -1.2% m/m. It is obvious that economy of the country, which is focused on exports, suffers from significant external impact: we are speaking here about global reduction in demand all over the world. Therefore, economy of New Zealand has actually fallen into stagnation: GDP almost stopped growing in the last quarter, which only proves that the decision of the RBNZ not to change the levels of the interest rate was logical. The report 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.

Business activity index in the service sector of the country decreased to 53.2 points in September against preliminary level of 53.8 points. At the same time, 4 out of 5 components of the index have increased, and only one component (warehouse stock) has decreased. Index shows ambiguous data: there have been too many mixed external factors lately.

According to Fitch economists, current account surplus in New Zealand will expand in 1012 and amount to 4.9%, in 2013-5.5%. At the same time net level of foreign debt of New Zealand is above the level corresponding to its ranking. Finance Ministry of the country noted that rating agencies in the world are too cautious about debt problems and it is still unknown whether the similar actions should be expected from other players in the ranking sector. Earlier the head of the Reserve Bank of New Zealand said that probably financing of the banks in the country can become a problem in 1012. According to Bollard banking system of New Zealand is in a better state now that it was in 2008; however risks from Europe and the U.S. are still there. The rate of NZD is still overvalued.

 

[LF.Anastasia]

EUR/USD: Euro is still waiting for news

The pair EUR/USD is growing moderately at the Forex currency market on Friday morning awaiting new portion of forecasts on when debt problems of Eurozone will be resolved.
By 9.45 MSK the Euro is at 1.3803 against yesterday’s closing level of 1.3779.
There is no new fundamental information this morning, however there are new rumors: market talks over that Eurozone might forgive 50% of Greece’s debt and the crisis management plan will be made public not at the coming weekend, but next Wednesday.
Therefore, players are moderately cautious.
Movement in the major pair is unlikely to be active today; the Euro finishes this week in the red.
Most likely the pair EUR/USD will not leave the range of 1.3750-1.3830 on Friday.

 

[LF.Anastasia]

GBP: British Pound is being corrected at the end of the week

At the Forex currency market the British Pound rate is traded downward on Friday after two days of growth. Market received too much ambiguous news today to continue purchases.

Forex forecast: MACD indicator for the pair GBP/USD started to grow in the negative area, shaping a buy signal; however volumes minimal. Stochastic Oscillator is moving along the signal line in the neutral zone and is not giving a any signals.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5780, target for the purchase will become the levels of 1.5790 and 1.5810. However, if external negative factor intensifies, selling target will be the level of 1.5700.

Macro-economic situation in the UK remains unchanged this morning.

CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which affects economy. We would remind that in the outcome of the meeting in October, the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time increasing volume of the assets repurchase program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the assets repurchase program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the drastic crisis now.

As it became known earlier retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. Volume of retail sales BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear fell despite the seasonality. Therefore, basic demand is minimal at the moment. The data released earlier showed that volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

The head of the Bank of England Mr. King said earlier that additional measures to stimulate British economy are fully justified currently and slowdown of economic pace was caused by global imbalance. According to him, decline in exports volumes is harmful for the British economy. In addition, European problems have a negative impact on the pace of development of British economy.

Great Britain reiterates that it is Europe that impedes its recovery. This week, representative of the Bank of England Mr. Bean said that the Bank of England is now focused on medium- term inflation prospects; however the country is still affected by the developments in Eurozone. Recent data, which showed the rise in inflation, had been triggered by number of factors of temporary nature.

 

[LF.Anastasia]

CHF: Swiss Franc is growing again

At the Forex currency market Swiss Franc rate is being traded upward on Friday for the second consecutive day: Franc started to grow last night when those willing to sit out troubled time with the help of Franc increased in number.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal. Stochastic Oscillator is in the neutral zone, and started to give a similar signal.

Forex recommendations: Feasible event scenario at Forex: in case of breakdown at the level of 0.8900, the pair USD/CHF will go to 0.8980 and 0.8970. If downward breakdown does not take place, the pair will remain close to the current levels.

According to the data released this week, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly reacted to statistics. Statistics released earlier showed that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however repercussion of the expensive national currency is possible. Index of PMI SVME fell to 48.2 points in September against the level of 51.7 points in August. In addition retail sales in Switzerland fell by 1.9% y/y in August against +1.9% y/y a month earlier. It became known yesterday that trade surplus in Switzerland amounted 1850 billion SHF in September.

We would remind that kick-start for consolidation was triggered last week when the pair USD/CHF went down, following EUR/CHF, which had been actively sold out by one of the Swiss Banks and British Clearing Bank, as dealers explained. It is worth noting that SNB gave indications in September that could be interpreted as follows: regulator’s power to maintain the Franc is fading away. We would remind that according to the rumors which grow louder among investors in the market, SNB can revise its stand on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Therefore, reserves of the CNB seem to disappear before our eyes along with determination of the Bank to curb the Franc.

Earlier trade union of Switzerland urged authorities and the Bank to toughen the fight against expensive Franc suggesting to increase minimum allowable exchange rate of the pair EUR/CHF in order to avoid recession. Representative of the Trade Union believe this measure will also support employment sector. According to the annual report of the SNB, over the next 6 month economy of the country will come to a standstill due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year.

 

[LF.Anastasia]

JPY: Demand for Japanese Yen does not go down

At the Forex currency market the Japanese Yen rate remains high, due to traders’ interest to the currency, caused by obscure external background.

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

Forex recommendations: in case of breakdown at the level of 76.60, the pair will go to 76.50 and 76.40. If downward breakdown does not take place, the pair will consolidate at the current levels.

Anti-inflation strategy is nearly ready in Japan; the country is prepared to announce additional infusion of 2 trillion yen to help companies-exporters which suffered from overvalued national currency. Another 2 trillion yen will be used in the employment sector.

Thus, government will use currency reserves that are in the Japanese Bank of International Cooperation at the moment.

Yesterday the head of the Bank of Japan said that it is necessary to monitor carefully the impact of the European debt crisis on the Japanese economy, including Forex market and commodity platforms. According to him situation in Japan is stable at the moment and authorities expect revival of the economic growth soon.

From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen.

Final orders for industrial equipment in Japan increased by 20.1% in September against the growth of 20.3% in August; Association of machine-tool construction industry of Japan stated that last month the index had reached the lowest level since 2009. According to the data released yesterday revised industrial production in Japan rose by 0.6% m/m (+0.4% y/y) in August; below expectations.

Government has to take measures as the Yen increased by 6% this year.

 

[LF.Anastasia]

AUD: Australian Dollar is waiting for support to strengthen

At the Forex currency market the Australian Dollar rate is traded with the minimum increase today because external background remains ambiguous.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up steadily, giving a buy signal; however volumes are minimal. Stochastic has left overbought zone, and is giving a start to a sell 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 1.0250 and 1.0260. If upward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic situation in Australia is neutral this morning.

According to the data released earlier consumer confidence WESTPAC in Australia rose by 0.4% m/m, to the level of 97.2 points in October. As noted by monetary politician Evans it is possible that the rate will go down in November, since low growth of the index indicates general pessimistic sentiment.

At the last regular meeting the Reserve Bank of Australia decided to leave interest rate unchanged at the level of 4.75% per annum. Thus, the pause in the process of monetary tightening policy of the RBA has been lasting for 11 months. In the follow-up comments the regulator said that monetary policy can mitigate in the future if inflation requires it. The follow-up statement said that more time can be required to analyze the impact of turbulence in the markets. Apparently, the rate of the RBA is unlikely to be raised until the first quarter of 2012.

Unemployment rate in Australia declined to 5.2% in September versus the level of 5.3% in August. This data demonstrated dynamics for the first time since this March.

Employment rate rose by 20.4 thousand last month, while analytics expected the growth of not more than 10 thousand. As noted in the Bureau of Statistics in Sydney, coal mining companies hire staff to meet demand for raw materials from China and India.

Business confidence NAB in Q3 amounted -4 points while in Q2 the index had been at the level of +5 points. According to observers’ estimates the level of employment, sales and corporate profit in the country has dropped considerable.

Business conditions in the three- month term amounted +5 points against +10 points previously and amounted to level of +18 points on annual basis against prior +27 points.
Sharp decline in the indicator, kicked off a quarter earlier, is still going on.

 

[LF.Anastasia]

NZD: New Zealand Dollar quietly awaits the end of the week

The New Zealand Dollar rate almost stands still at the Forex currency market on Friday, investors are not in a hurry to conduct transactions, due to contradictory external news and considering the fact that the week is coming to the end.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area, and started sideways movement, not giving a clear signal. Stochastic Oscillator does down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7930, the pair will go to 0.7940 and 0.7950. If upward breakdown does not take place, target for sales will be the level of 0.7890.

There have not been any fundamental changed in the economy of New Zealand this morning.

Prior statistics showed that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against +0.9% q/q (+1.6% y/y) in Q1. Commodity prices ANZ in New Zealand fell by 1.3% m/m in September against -1.2% m/m. It is obvious that economy of the country, which is focused on exports, suffers from significant external impact: we are speaking here about global reduction in demand all over the world. Therefore, economy of New Zealand has actually fallen into stagnation: GDP almost stopped growing in the last quarter, which only proves that the decision of the RBNZ not to change the levels of the interest rate was logical. The report 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. As it was made public earlier, house prices QV in New Zealand increased by 0.7% y/y in September against the rise of 0.1% y/y in August. Meanwhile, the AUD is closely monitoring the situation in China, since potential trade war between China and the USA does not look promising to high-yielding currencies.

According to Fitch economists, current account surplus in New Zealand will expand in 1012 and amount to 4.9%, in 2013-5.5%. At the same time net level of foreign debt of New Zealand is above the level corresponding to its ranking. Finance Ministry of the country noted that rating agencies in the world are too cautious about debt problems and it is still unknown whether the similar actions should be expected from other players in the ranking sector. Earlier the head of the Reserve Bank of New Zealand said that probably financing of the banks in the country can become a problem in 1012. According to Bollard banking system of New Zealand is in a better state now than in 2008; however risks from Europe and the U.S. are still there. He also believes that the rate of NZD is still overvalued.

Business activity index in the service sector of the country decreased to 53.2 points in September against preliminary level of 53.8 points. At the same time, 4 out of 5 components of the index have increased, and only one component (warehouse stock) has decreased. Index shows ambiguous data: there have been too many mixed external factors lately.

 

[LF.Anastasia]

EUR/USD: Euro continues to grow steadily

The pair EUR/USD is traded upward at the Forex currency market on Monday morning.

By 10.30 MSK the Euro is at 1.3927 against closing level of 1.3895 on Friday.

Despite uncertainty in the outcome of the EU Summit last weekend, market is hopeful that on Wednesday Germany and France will unveil their plan to rescue Eurozone from debt problems which will be implemented and will give results before the end of the year. Actually EU Summit was ineffectual, as no statement was made about real actions.

Therefore, major European information is pending until the middle of the week; meanwhile volatility will dictate movement direction in the market.

Most likely the pair EUR/USD will be in the range of 1.3870-1.3940 on trading session.