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[LF.Anastasia]

CHF: Swiss Franc strengthens moderately on Friday

At the Forex currency market Swiss Franc rate is traded slightly upward on Friday.

Forex forecast: MACD indicator for the pair USD/CHF is ready to break through the signal line from bottom to top once again; however it is still in the negative area; Stochastic Oscillator remains positions in the 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 0.9030 and 0.9010.

Macro-economic situation in Switzerland has not changed significantly at the end of the week.

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. 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.

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 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 quarterly 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.

 

[LF.Anastasia]

JPY: Japanese Yen is slowly reverting to strengthening

At the Forex currency market the Japanese Yen rate is strengthening on Friday after a short break in the middle of this week. Investors believe that the effect of the previous currency intervention is sufficient and new intervention will not take place soon.

Forex forecast: MACD indicator for the pair USD/JPY is traded in the positive area and is going upward steadily at the volumes, which are above average now, and is giving a buy signal. Oscillator reverses quickly in the neutral zone and indicates moderate sale today.

Forex recommendations: in case of breakdown at the level of 77.35, the pair will go to 77.20 and 77.10. If downward breakdown does not take place, the pair will consolidate at the current levels.

Today, Association of Economic Planning of the Cabinet of Japan arose market’s interest in new macro statistics forecasts. Thus, as per their estimates, real GDP in Japan will rise by 0.24% in the fiscal year of 2011 against the forecast in October of +0,22%. In 2012 fiscal year GDP will increase by 2.22% (+2.30% previously). Net CPI this year will amount to -0.12% (-0.15% forecast in October), and in 2013 net inflation will be +0.18%.

It became known earlier that index of economic observers rose to 45.9 points in October versus 45.3 points in September. This has been the first growth of the index in three months, which is a positive indication for Japan, despite weakness of the economy in general.

Last week was very eventful for Japan. Thus 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%.

In addition, regulator 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.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar are still going on at the end of the week

At the Forex currency market the Australian Dollar rate is traded slightly downward on Friday keeping on dynamics prevailing in the middle of the week.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving down, giving a sell signal. Stochastic Oscillator continues to go down in the neutral zone, giving a similar signal and approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.0110, the pair will go to 1.090 and 1.0070. If downward breakdown does not take place, the pair will consolidate at the current levels.

As per the estimates of the Treasury of Australia, the Asia-Pacific region is much stronger than Europe and the USA. It is important to understand that growth of Asian economies can be not linked with Europe. According to the Treasury, Australia has all chances to change current course of monetary policy if it will be necessary.

According to the comments of Mr. Lowe, the head of RBA, serious threat to the future of the EU has faded away and world economic conditions are favourable for the development of agriculture in Australia. He believes that domestic demand of Asia is growing up at a good pace and floating rate of the AUD positively affects the cost of raw materials in the agricultural sector.

Business confidence NAB increased 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. 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 yesterday, unemployment rate in Australia declined to 5.2% in October against 5.3% a month earlier. As it became known earlier, consumer sentiment WESTPAC in Australia increased by 6.3% m/m in November, to the level of 103.4 points. According to monetary politician Evans, indicator is now at the highest level since May 2011, however this shall not stop RBA from lowering the rate again at the meeting in February.

 

[LF.Anastasia]

NZD: Brisk sale of New Zealand Dollar has subsided at the end of the week

At the Forex currency market the New Zealand Dollar rate continues to decline on Friday; however volume of sale is not very big at the moment. Apparently, investors are taking a break in advance of the coming weekend to organize their thoughts and determine the medium term trading channel.

Forex forecast: MACD indicator for the pair NZD/USD is ready to break through the signal line from top to bottom and maintains a sell signal. Stochastic Oscillator is going down in the neutral zone and is giving a sell signal, approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 0.7750, the pair will go to 0.7740 and 0.7720. If downward breakdown does not take place, the pair will consolidate at the achieved levels. It became known today that home sales REINZ in New Zealand declined by 0.3% m/m (+28.3% y/y) in October. This data was neutral for the NZD. Consumer confidence index in New Zealand amounted to 109.0 points in November against 112.2 points for the previous period. This data is another indication of the slowdown in the economy of New Zealand.

According to previous data, GDP in New Zealand rose 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. Thus New Zealand economy is actually in the state of 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.

At the meeting in the end of October, the Reserve Bank of New Zealand decided to leave interest rate unchanged at the level of 2.5%. The RBNZ clarified that rate was left at the record-low level largely, because of debt crisis in Europe and slow down in inflation in New Zealand. According to the head of the regulator Alan Bollard, there is no point to raise the rate considering existing economic and financial risks. However, Bollard admitted that “if global developments will slightly affect the economy of New Zealand, it is possible that increasing pressure on domestic resources will gradually force us to raise the rate”

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.

 

[LF.Anastasia]

EUR/USD: Euro started week with decline

The pair EUR/USD is traded downward at the Forex currency market on Monday morning after it favourable rise last Friday.

By 9.12 the Euro is at 1.3762 against closing level of 1.3754 on Friday.

As it became known last weekend, Italian Prime-Minister Silvio Berlusconi has left office and President of Italy Nepolitano appointed Mario Manti, a 68 years old economist, ex-member of European Commission.

Monti will have to do a hard job to implement a package of anti-crises measures in economy.

The day is going to be uneventful in terms of macro-statistics- only in the middle of the session investors’ attention will be drawn to the data on industrial output in Eurozone in Q3, which can affect the dynamics of the major pair.

Most likely, the pair EUR/USD will not leave the range of 1.3720-1.3810 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound launched new week with decline

At the Forex currency market the British Pound Sterling rate is traded downward on Monday, as investors are assessing news flow after the weekend.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the positive area along the signal line and is not giving a clear signal. Stochastic Oscillator is changing direction again in the neutral zone; it is going upward at the moment and is giving a buy signal.

Forex recommendations: in case of break down at the level of 1.6040, target for the sale will be the levels of 1.6030 and 1.6010. If downward breakdown does not take place, the pair will remain close to the current levels.

According to British Prime Minister Cameron, there is severe turbulence in the market now while Europe is experiencing hard time. The rise in the rates will be disastrous in the current situation especially for households; so, government’s sympathies are obviously not in favour of bankers.

As statistics of last week showed, volume of industrial output in the construction sector of the UK was revised upwards in Q3 (it reduced by 0.2% against preliminary -0.6%). It is difficult to overestimate importance of this data: construction sector contributes about 7% of the country’s GDP and sooner or later positive dynamics of this sector will support economy.

At the meeting which was held earlier, the Bank of England kept interest rate unchanged at the level of 0.50% per annum as expected. The rate of the Bank of England is at the current record-breaking low level since March 2009, largely due to the weak economic growth and rapid rise in inflation. Follow-up comments did not add anything new, the Bank of England remained loyal to the conservative policy and left previous size of QE in the amount of 275 billion pounds. It will take regulator another three months to finalize purchases as part of an additional package to QE and after that he can revert to revision of its volume.Nevertheless, Central Bank increased QE package only in October, therefore it is hardly realistic to expect any serious monetary measures from British regulator.

Statistics released earlier showed that retail price index BRC in the UK decreased by 0.3% m/m (+2.1% y/y) in October. 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 tends to continue strengthening

At the Forex currency market Swiss Franc rate is traded upward on Monday, continuing the trend of the last week.

Forex forecast: MACD indicator for the pair USD/CHF has merged with the signal line and is not giving a clear signal. Stochastic Oscillator aims at going out of the overbought zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8990, the pair USD/CHF will go to 0.8070 and 0.8960.

Macro-economic situation in Switzerland has not changed significantly this morning.

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 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 quarterly 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. 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.

While market has not decided on the situation with medium- term channel, Franc has a chance to strengthen moderately.

 

[LF.Anastasia]

JPY: Japanese Yen is growing due to support from statistics

At the Forex currency market the Japanese Yen rate is traded upward at the beginning of the week, retaining ascending trend.

Forex forecast: MACD indicator for the pair USD/JPY is traded in the positive area and is going upward steadily at the volumes, which are above average, and is giving a buy signal. Oscillator reverses quickly in the neutral zone and indicates moderate sales today.

Forex recommendations: in case of breakdown at the level of 77.05, the pair will go to 77.00 and 76.80. If downward breakdown does not take place, the pair will consolidate at the current levels.

As it became known today, revised volume of industrial output in Japan amounted to -3.3% m/m (-3.3% y/y) in September against preliminary level of -4.0% m/m. In addition, preliminary real GDP in Japan rose by 1.5% q/q (+6.0% y/y) in Q3 against the forecast of growth by 5.9% y/y. Plus to this, according to the data released last week, index of economic observers rose to 45.9 points in October versus 45.3 points in September. This has been the first growth of the index in three months. Judging by statistics Japanese economy has fully recovered from disaster in March. However, negative impact of the expensive national currency is still very strong and it is not clear yet how long current balance in economy will persist.

Last week, Association of Economic Planning of the Cabinet of Japan arose market’s interest in new macro statistics forecasts. Thus, as per their estimates, real GDP in Japan will rise by 0.24% in the fiscal year of 2011 against the forecast in October of +0,22%. In 2012 fiscal year GDP will increase by 2.22% (+2.30% previously). Net CPI this year will amount to -0.12% (-0.15% forecast in October), and in 2013 net inflation will be +0.18%.

Earlier, 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%. In addition, regulator 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.

 

[LF.Anastasia]

AUD: Trading is still unstable for Australian Dollar

At the Forex currency market the Australian Dollar rate is traded downward on Monday after Friday’s recovery. The AUD traders have not have specific trading ideas so far, however, they cannot rely on the external background, as it does not help any more either.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving down, giving a sell signal. Stochastic Oscillator started to go up in the neutral zone, giving a signal for moderate buying.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0290, the pair will go to 1.0280 and 1.0250. If downward breakdown does not take place, the pair will consolidate at the current levels.

Australian macro-economic situation has not changed significantly on Monday morning.

As it became known yesterday, unemployment rate in Australia decreased to 5.2% in October against 5.3% a month earlier. According to the data released yesterday, consumer sentiment WESTPAC in Australia increased by 6.3% m/m in November, to the level of 103.4 points. According to monetary politician Evans, indicator is now at the highest level since May 2011, however this shall not stop RBA from lowering the rate again at the meeting in February.

As per the estimates of the Treasury of Australia, the Asia-Pacific region is much stronger than Europe and the USA. It is important to understand that growth of Asian economies can be not linked with Europe. According to the Treasury, Australia has all chances to change current course of monetary policy if it will be necessary. This opinion agrees with general outline of the previous views of the politician. According to the comments of Mr. Lowe, the head of RBA, serious threat to the future of the EU has faded away and world economic conditions are favourable for the development of agriculture in Australia. He believes that domestic demand of Asia is growing up at a good pace and floating rate of the AUD positively affects the cost of raw materials in the agricultural sector.

Business confidence NAB increased 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. 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar has not determined movement direction yet

At the Forex currency market the New Zealand Dollar rate is traded downwards on Monday; however activity in the pair NZD/USD is not too high, as investors do not rush to determine medium-term prospects.

Forex forecast: MACD indicator for the pair NZD/USD has broken through the signal line from top to bottom and maintains a sell signal. Stochastic Oscillator has pushed away from the oversold zone and is now growing in the neutral zone, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7860, the pair will go to 0.7840 and 0.7820. If downward breakdown does not take place, the pair will consolidate at the achieved levels.

It became known on Monday morning that volume of retail sales in New Zealand increased by 2.2% q/q in Q3 against preliminary level of growth of 1.0%. In addition, activity index in the service sector BNZ decreased to 50.6 points in October against preliminary level of 52.9 points.

Statistics is still mixed which it the reflection of strong impact of the developments both in Europe and in China. According to the data released earlier, home sales REINZ in New Zealand declined by 0.3% m/m (+28.3% y/y) in October. This data was neutral for the NZD. Consumer confidence index in New Zealand amounted to 109.0 points in November against 112.2 points for the previous period. This data is another indication of the slowdown in the economy of New Zealand.

According to previous data, GDP in New Zealand rose 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. Thus New Zealand economy is actually in the state of 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.

According to economists from Fitch, 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. These have been the key in the issue of lowering of the rating. 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.