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[LF.Anastasia]

EUR/USD: Euro remains under European pressure

The pair EUR/USD goes down at the Forex currency market on Tuesday morning in anticipation of Italian news.

By 9.25 the Euro is at 1.3743 against yesterday’s closing level of 1.3780.

Investors are not in a hurry to act awaiting outcome of the vote on the financial report of the government about budget execution in Italy in the last fiscal year. It will be a kind of barometer of confidence to the current prime-minister Silvio Berluskoni; a probability of his resignation has been discussed for a several days.

Next week Italy will start discussions of the provisions of the program to reduce budget expenditures which can exacerbate market risks.

Statistics on Eurozone is weak. Today’s data on Germany will be of interest to investors and will be able to support the Euro if the released data will be above expectations.

Most likely, the pair EUR/USD will not leave the range of 1.3700-1.3800 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling continues sluggish descend

At the Forex currency market the British Pound Sterling rate continues to slide down gradually, while situation in the market remains uncertain.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator is changing direction again in the neutral zone; now it moderately goes upward, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6010, target for the sale will be the levels of 1.6000 and 1.5990. If downward breakdown does not take place, the pair will stay at the current levels.

The data released this morning showed that the UK house price balance RICS fell by 24% in October against the forecast of -23%. Consumer confidence index Lloyds reduced to -72 points in October versus the level of -67 points a month earlier. It is a negative signal reflecting among other things, negative impact of the European debt problems.

Meanwhile, Member of MPC Mr. Dale says earlier that he expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise. Representative of the Bank of England Mr. Bean has said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more significantly in the second half of the year. The head of the Bank of England, Mervyn King anticipates sharp fall in inflation in 2012. 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 creates new impediments to economy.

Debates about monetary policy are still going on in the UK. Thus, Mr. Bean noted last week, that, as the result of QE program, the level of inflation can rise by 0.5%; however positive effect of the incentive program is that GDP will get additional +0.5%.

At the meeting which is going to take place this week, the Bank of England is expected to keep interest rate unchanged at the level of 0.50% per annum. The follow-up comments of regulator about general economic situation and inflationary pressure may be of interest.

 

[LF.Anastasia]

CHF: Swiss Franc is growing weaker again

At the Forex currency market Swiss Franc rate is traded sluggishly on Tuesday as apparently Swiss national Bank continues to take measures to hold back the inflow of speculators in the currency. Statistics released yesterday was weak which favoured the rollback of the Franc.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is traded in the negative area, indicating moderate trades. Stochastic Oscillator has come into overbought zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9045, the pair USD/CHF will go to 0.9050 and 0.9075.

Unemployment rate in Switzerland rose to 2.9% which was expected rise from 2.8%, however traders were upset. According to statistics released earlier monetary reserves in Switzerland decreased to 242.7 billion francs in October against ***.4 billion in September.

Representative of Swiss National Bank Mr. Dantin said last week that strong Franc continues to exert pressure on the economy of the country and in the event of risks of deflation the SNB is prepared to take urgent measures. He reiterated that economy of Switzerland is extremely dependent on exports.

According to the annual report of the SNB, over the second half of the year economy of the country will move in the sideways, 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.

Producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly reacted to statistics.

Surplus of trade balance amounted to 1850 billion SHF in September. It became known earlier that consumption indicator UBS in Switzerland rose to 0.84 points in September against the revised level of 0.80 points in August. Taking into account that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive.

Judging by dynamics of the Franc last week, Swiss National Bank ponders about the maximum permissible rate of EUR/Franc. The news about lowering the level of currency reserves has also been unfavourable for SHF. As it became known earlier index of business activity PMI in Switzerland fell to 46.9 points in Switzerland against the forecast of 47.7 points. For the present, it is also the aftereffects of the expensive national currency.

 

[LF.Anastasia]

JPY: Japanese Yen remains stable at the beginning of the week

At the Forex currency market the Japanese Yen rate is still traded within narrow price range.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from bottom to top and is traded in the positive area; however a buy signal is very weak. Oscillator is moving sideways in the neutral zone 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 78.20, the pair will go to 78.30 and 78.50. If upward breakdown does not take place, the pair will consolidate at the current levels.

We would remind that the Bank of Japan has conducted currency intervention earlier this week in order to relieve pressure of JPY on the national economy. Mr. Adzumi, Finance Minister of Japan, confirmed the fact of infusion into the currency market, which became especially important when the Yen had reached historical highs in pairing with the USD last week. Therefore, Central Bank of Japan has ventured to carry out the third currency intervention since the beginning of the year, which resulted in decline of the Yen by 5%.

It became known today that preliminary index of coincident indicators in Japan fell by 1.4% m/m in September against the decline of 0.1% m/m last month. It is a negative signal for the Japanese economy, indicating sluggish rate of economic growth if there is any growth at all.

According to the minutes of the meeting of the Bank of Japan of 6-7 October, which were released earlier, some members of the regulator are convinced that downside risks are increasing and it is important for the Central Bank to take prompt actions. One of the members of the Central Bank suggested that additional stimulation of the credit policy can be required.

Last week, the Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected; at the same time, asset purchase program was increased up to Y50 trillion from Y55 trillion. In the follow-up comments Japanese regulator stressed that risks to economy shall be thoroughly considered as well as downside risks to price forecasts in the future. According to the estimates of the Bank of Japan, exchange rate of the Yen will remain high for a while; the Bank has not clarified whether currency intervention threatens the JPY or not.

As statistics released last week showed, number of begun housing construction in Japan fell by 10.8% y/y in September against the forecast of growth by 7.6% y/y. In addition, orders in construction sector of Japan declined by 9.3% y/y in September against the growth of 9.3% y/y in August.

 

[LF.Anastasia]

AUD: Sale of Australian Dollar continues at moderate pace

The Australian Dollar rate continues to decline moderately at the Forex currency market on Tuesday as investors’ sentiments are not too cheerful at the global capital markets.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is moving in a similar way in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0300, the pair will go to 1.0290 and 1.0270. If downward breakdown does not take place, the pair will consolidate at the current levels.

Sales of the AUD have been observed for the third consecutive session; however the volume of sales is not too big. Perhaps, some investors held wait and see attitude to see some certainty in the global economy.

Statistics could not help the situation, as it showed that business confidence NAB in Australia rose to 2 points in October against preliminary level of -1 points. According to NAB, the growth has been triggered by expectations that the Reserve Bank of Australia will continue to soften monetary policy in the future.

This week, the Reserve Bank of Australia announced lowering in the interest rate up to 4.50% per annum, by 25 basis points which in general, agreed with expectations. In the follow-up comments the RBA noted that now inflation is being curbed with the help of the high rate of the currency and low demand of population; regulator expects that in 2012 inflation will be at the level of 2-3%. The Bank also recorded deterioration of the conditions in the labour market and decrease in prices for the raw materials. Concerns about developments in Eurozone are still high, and it seems that growth rate of the national economy is going to be moderate. According to RBA, lending rates are now slightly higher than the average level, despite softening of general conditions. It also worth noting, that RBA hinted at further lowering of the rates if general conditions do not improve.

It is interesting that business confidence NAB in Q3 amounted to -4 points in Q3; while the index had been at the level of +5 points in Q2. According to estimates of the observers, the level of employment, sales and corporate profit in the country has dropped considerably.

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. Monetary politician, Mr. Evans pointed to a chance that the rate might go down in November, since low growth of the index indicates general pessimistic sentiment.

It became known at the beginning of the week, productivity index in the construction sector of Australia rose to 34.7 points in October against 30.0 points in September. However, the AUD has not responded to statistics, because external background remains mixed and investors’ trading sentiment are close to consolidation.

 

[LF.Anastasia]

CAD: Canadian Dollar has not determined movement direction

At the Forex currency market the Canadian Dollar rate is traded downward on Tuesday in response to the uncertainty of the external background.

Forex forecast: MACD indicator for the pair USD/CAD has broken through the signal line from top to bottom and is traded in the negative area, moving along the signal line, and not giving a clear signal. Stochastic Oscillator is in the neutral zone, and had started to go up but then shifted into sideways, not giving a clear signal either. The pattern is similar to what we had yesterday.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0165 the pair will go to 1.0180 and 1.0200. If upward breakdown does not take place, the pair will remain at the current levels.

Canadian Dollar like all other commodity currencies continues to be responsive to the changes in the external background.

According to information received earlier, Canadian companies are going to continue effective work in the future, by increasing volume of investments and creating new jobs; however not as fast as it had been announced earlier. The forecast for sales in 2012 has been lowered in the country; as a result, local producers had to temper their personal forecasts. According to the estimates of the Bank of Canada, sentiment of the leaders of the large companies fell down compared with the summer period, since top management expects the decrease in the U.S. GDP and conservation of uncertainty in respect to global economic outlooks.

CPI in Canada rose by 0.2% m/m (+3.2% y/y) in September against the forecast of growth by 0.1% m/m. At the same time base inflation showed growth of 0.5% m/m (+2.2% y/y) versus the forecast of growth by 0.2% m/m. At the moment the rise in inflation is within acceptable limits and is not harmful to economy. Leaders of the large Canadian companies indicate decline in inflationary expectations; it is predicted that in 2012 CPI will be in the range of 1-3%.

The Bank of Canada believes that GDP growth will amount to about 2.8% in 2011 (decline by 0.1% from the forecast in April); in 2012: 2.6% and in 2013: 2.1%. According to the Bank exports performance in Canada is weak because low demand in the USA impedes progress of the indicator and expensive CAD also makes its contribution. The rise in the interest rate will directly depend on the stability of economic growth.

Statistics released last week showed that decline in the Canadian employment sector; unemployment rate increased by 0.2% in October, up to the level of 7.3% versus the level of 7.1% in September. Full employment reduced by 71.7 thousand, part- time employment increased by 17.7 thousand. Overall rate of employment in Canada fell by 54 thousand last month against the growth of 60.9 thousand in September. After the release of this statistics representative of the Bank of Canada Harper noted that employment statistics fully reflects low confidence both in Canada and in the world; however labour sector is very volatile.

 

[LF.Anastasia]

EUR/USD: European news obstructed further growth of Euro

The pair EUR/USD is traded slightly downward at the Forex currency market on Wednesday morning.

By 9.35 the Euro is at 1.3830 against yesterday’s closing level of 1.3837.

After information released yesterday that Prime-Minister of Italy Silvio Berluskoni is going to resign as soon as a plan of actions for budget saving will be developed, market begun to grow, however this positive impact did not last long.

Political uncertainty still persists in Greece; news from China is not very cheerful- inflation has demonstrated the biggest deceleration the in October since 2009.

The day is not going to be very eventful in terms of macro-statistics; therefore attention of the market will be again focused on the external background.

Most likely, the pair EUR/USD will not leave the range of 1.3750-1.3870 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound is not active on Wednesday

At the Forex currency market the British Pound Sterling rate is traded with minimal deviation in the middle of the week, while external background remains mixed.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator is changing direction again in the neutral zone; now it moderately goes upward, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6090, target for the sale will be the levels of 1.6100 and 1.6120. If upward breakdown does not take place, the pair will remain close to the current levels.

According to statistics released today, retail price index BRC in the UK decreased by 0.3% m/m (+2.1% y/y) in October.

In addition, it was also reported that Confederation of British Industry, CBI, has reduced the forecast for the UK GDP up to 0.9% this year, and up to 1.2% in 2012, noting that most likely British economy will remain unchanged this quarter.

At the meeting which is going to take place this week, the Bank of England is expected to keep interest rate unchanged at the level of 0.50% per annum. The follow-up comments of regulator about general economic situation and inflationary pressure may be of interest.

Meanwhile, Member of MPC Mr. Dale said earlier that he expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise. Representative of the Bank of England Mr. Bean has said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more significantly in the second half of the year. The head of the Bank of England, Mervyn King anticipates sharp fall in inflation in 2012. 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 creates new impediments to economy.

The data released earlier showed that the UK house price balance RICS fell by 24% in October against the forecast of -23%. Consumer confidence index Lloyds reduced to -72 points in October versus the level of -67 points a month earlier. It is a negative signal reflecting among other things, negative impact of the European debt problems.

 

[LF.Anastasia]

CHF: Swiss Franc weakens after a short break

At the Forex currency market Swiss Franc rate is traded downward on Wednesday after yesterday’s rise caused by movement in the markets.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is traded in the negative area, indicating moderate trades. Stochastic Oscillator has come into overbought zone, and is giving a buy signal, continuing movement along the signal line.

Forex recommendations: in case of breakdown at the level of 0.8975, the pair USD/CHF will go to 0.8990 and 0.9010.

According to the head of Swiss national Bank Mr. Hildebrand, current crisis has a devastating effect, and price stability which has been achieved through monetary policy is not a guarantor of financial stability.

Therefore, the main goal of SNB is to ensure price stability.

Representative of Swiss National Bank Mr. Dantin said earlier that strong Franc continues to exert pressure on the economy of the country and, and SNB is prepared to take urgent measures in the event of deflation risks. He reiterated that economy of Switzerland is extremely dependent on exports.

According to the annual report of SNB, economy of the country will move in the sideways in the second half of the year, largely, 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 is attributed 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.

Surplus of trade balance amounted to 1850 billion SHF in September. It became known earlier that consumption indicator UBS in Switzerland rose to 0.84 points in September against the revised level of 0.80 points in August. Taking into account that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive. Producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly reacted to statistics. According to statistics released earlier unemployment rate in Switzerland remained at the level of 2.8%, as expected. Employment sector is stable so far; however repercussion of the expensive national currency is not excluded.

Unemployment rate in Switzerland rose to 2.9% which was expected rise from 2.8%, however traders were upset. According to statistics released earlier monetary reserves in Switzerland decreased to 242.7 billion francs in October against ***.4 billion in September.

 

[LF.Anastasia]

JPY: Japanese Yen is shifting to growth

At the Forex currency market the Japanese Yen rate is traded upward after movement in the sideways during few last sessions.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from bottom to top and is traded in the positive area. Oscillator is going down sharply in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 77.55, the pair will go to 77.30 and 77.10. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that index of economic observers in Japan rose to 45.9 points in October against the level of 45.3 points in September. The index has grown for the first time in three months, which is a positive indication for Japan, despite weakness of the economy in general.

We would remind that the Bank of Japan has conducted currency intervention earlier this week in order to relieve pressure of JPY on the national economy. Mr. Adzumi, Finance Minister of Japan, confirmed the fact of infusion into the currency market, which became especially important when the Yen had reached historical highs in pairing with the USD last week. Therefore, Central Bank of Japan has ventured to carry out the third currency intervention since the beginning of the year, which resulted in decline of the Yen by 5%.

As it became known yesterday, preliminary index of coincident indicators in Japan fell by 1.4% m/m in September against the decline of 0.1% m/m last month. It is a negative signal for the Japanese economy, indicating sluggish rate of economic growth if there is any growth at all.

Last week, the Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected; at the same time, asset purchase program was increased up to Y50 trillion from Y55 trillion. In the follow-up comments Japanese regulator stressed that risks to economy shall be thoroughly considered as well as downside risks to price forecasts in the future. According to the estimates of the Bank of Japan, exchange rate of the Yen will remain high for a while; the Bank has not clarified whether currency intervention threatens the JPY or not.

Statistics released last week showed that number of begun housing construction in Japan fell by 10.8% y/y in September against the forecast of growth by 7.6% y/y. In addition, orders in construction sector of Japan declined by 9.3% y/y in September against the growth of 9.3% y/y in August.

It is interesting that surplus of trade balance in Japan has been going down for the third consecutive month; in September it amounted to Y1.585 trillion, which is 21,4% lower than the previous level.