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[LF.Anastasia]

EUR/USD: S&P gave Euro another ground to go down

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning after the news from S&P.

By 8.55 Moscow time the Euro is at 1.3371 against yesterday’s closing level of 1.3385.

The reason for sales was created by the International rating agency S&P which announced yesterday that rating of 17 countries of Eurozone, including Germany and France is going to be reviewed.

Statement made by Paris and Berlin that at the EU summit the countries will insist on formation of financial union could not hold back negativism.

In addition, Reserve Bank of Australia has lowered interest rate today, which was another negative ground for sales.

Most likely the pair EUR/USD will not go beyond the range of 1.3340-1.3430 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is being sold moderately

The British Pound Sterling rate is traded downward at the Forex currency market on Tuesday morning after negative news from Eurozone.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area, going down and giving a sell signal. Stochastic Oscillator is going down in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5605 the target for selling will be the levels of 1.5590 and 1.5570.

Statistics released earlier showed that PMI index in the service sector MARKIT/CIPS soared to the level of 52.1 points in November against the forecast of 50.7 points. It became known earlier that PMI index in the manufacturing industry amounted to 47.6 points in November, as per CIPS/MARKIT estimates. The index is above expectations which supported growth of the Pound.

Activity in the British construction sector declined in November, which was demonstrated by statistics released at the end last week. According to Markit estimates, PMI CIPS amounted to 52.3 points in November against 53.9 points earlier; however dynamics in new houses is positive, and it upward trend can be interpreted as an indication of the future stabilization in the sector.

In general, the latest data from Markit looks good, as it does not rule out rapid recovery of economic sectors in the future.

Representative of the Bank of England Mr. Weale believes that economy of the country will not reach pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy does not improve after the first round of stimulation. Weale also indicated that there are signs of new recession.

It became known last week that rating agency Fitch did not exclude the probability that the UK ranking could be downgraded, as national budgetary reserves have been rather depleted. The agency believes that economic growth rate in the UK will slow down and influence of the European debt crisis will increase, which eventually will put in question current rating of the country.

According to NABE, unemployment rate in the UK will be around 8.7% in 2012 against previous forecast of 8.5%; there is a chance that employment will increase up to 100 thousand in Q4 this year. It is expected that policy of the Bank of England will continue to be soft next year and GDP will amount to 2.2% in Q1 next year against predicted level of 2.5% in Q4 this year.

 

[LF.Anastasia]

CHF: Swiss Franc continues to weaken

At the Forex currency market Swiss Franc rate continues to weaken on Tuesday which reflects both negative state of affairs in Eurozone and obstructions created by SNB for speculators which could have “sit out” uneasy time in the safe currency.

Forex forecast: MACD indicator for the pair GBP/USD is in the positive area and started to go down, giving a sell signal; volumes remain above average. Stochastic Oscillator is growing in the neutral zone, maintaining a buy signal.

Forex recommendations: in case of break down at the level of 0.9235, the pair USD/CHF will go to 0.9240 and 0.9250.

Economic situation in Switzerland remains mostly unchanged this morning.

Unemployment rate in Switzerland rose to 2.9%, which had been an expected rise from 2.8%. It became known last week that trade balance in Switzerland amounted to 2.15 billion francs in October against the forecast of 2.06 billion francs. The data is good, considering global slump in demand and expensive Franc. Trade surplus in Switzerland 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.

Representative of SNB Mr. Jordan reported earlier that Swiss regulator does not need external guidance on monetary policy, as it is an independent institution and does not intend to receive instructions from business groups and politicians. SNB will continue to take appropriate measures if it is required considering the state of economic forecasts and deflation. According to him, slowdown in economic growth in Switzerland, which had taken place earlier, was caused by high exchange rate of Swiss Franc.

At the end of last week Switzerland arose interest of players to a block of statistics. Thus, retail sales decreased by 0.2% y/y in October against a decline of 1.4% y/y earlier. GDP rose by 0.2% q/q (+1.3% y/y) in Q3 against the forecast of growth of 0.1% q/q (1.7% y/y). ). The data was positive on quarterly basis indicating that efforts of the Central Bank to curb the rates of the Franc are effective. Last Thursday Swiss government stated that they are prepared to lower interest rate to negative levels in order to use all available means to fight against the rise of Franc. At the same time, politicians noted that the most effective tools are in the hands of SNB.

According to the estimates of Swiss National Bank, GDP in Switzerland will amount to 1.5%-2.0% this year; main growth will be 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 tends to grow

At the Forex currency market rates of the Japanese Yen tends to grow, because due to increasing global instability, especially in Eurozone, demand for “safe harbor” is going upward.

Forex forecast: MACD indicator for the pair USD/JPY is growing in the positive area and is giving a buy signal. Oscillator is moving along the signal line in the neutral zone and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.50 and 77.30. If downward breakdown does not take place, the pair will consolidate at the current levels.

So, investors’ interest in JPY, as a safe harbor, is increasing because external background is clearly not favourable to risks.

Statistics of the last week showed that orders in the construction sector of Japan amounted to+24.3% y/y in October. In addition, preliminary industrial output rose by 2.4% m/m (+0.4% y/y) in October against the forecast of +1.1% m/m. nevertheless not everything is so positive: PMI in the manufacturing industry declined to 49.1 points in November, as per Markit/JMMA estimates, against the level of 50.6 points in October. It became known earlier that unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy.

The head of the Bank of Japan Mr. Shirakawa noted earlier that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective.

A week ago Japanese agency R&I forwarded AAA rating of country for the review with a chance of lowering the ranking. Rating agency S&P said earlier that Japanese rating is going to be revised soon, as financial situation in the country is worsening every day. According to the economists of the Agency it is hardly probable that Japan will be able to avoid debt problems.

 

[LF.Anastasia]

AUD: Australian Dollar is being sold out following decision of RBA

At the Forex currency market the Australian Dollar rate is being sold out on Tuesday, following the decision of the Reserve Bank of Australia to decrease interest rate

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up, while volumes are low, giving a buy signal. Stochastic Oscillator is going down in the neutral zone, giving 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.

Thus, at the meeting today, the Reserve Bank of Australia reported that interest rate was decreased by 25 basis points, to 4.25% per annum. In the follow-up comments the RBA said that currently, inflationary forecast enables to decrease the rate gradually because in 2012-2013 CPI will be probably in the range of 2-3%.

The RBA also stressed that crisis in Eurozone and slow down in the Chinese economy adversely affect Australia; in addition, probability of further slowdown in the world economy also intensifies.

The next meeting of the Reserve Bank of Australia will be held only in February, so lowering of the rate can be partly explained by the fact that the regulator wanted to secure the situation before summer holidays (according to Australian seasons).

It became known earlier that Australian authorities have revised forecast of GDP growth downward, to 3.5% in 2012. Previously, forecast had been at 3.75%

Financial situation in the country is ambiguous: previous statistics showed that lending in the private sector of Australia increased by 0.2% m/m (+3.5% y/y) in October against the forecast of growth of 0.4% m/m. Previous block of statistics demonstrated that leading indicators index CB in Australia increased by 0.1% m/m in September against a previous decline of 0.2% m/m. Corporate profit and exports of agricultural products were among the main drivers of the increase in the index. New statistics does not cancel downward pressure, and the main reason for this was caused by changes in prices for securities at the stock market. Retail sales in Australia increased to the minimum value of +0.2% m/m over 4 months in October. In September the index rose by 0.4%, and by 0.6% in August.

 

[LF.Anastasia]

CAD: Canadian Dollar is retreating

At the Forex currency market the Canadian Dollar rate is traded downward on Tuesday, as investors do not rush to enter into risky assets due to ambiguous external background.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and started to go down in the positive area, volumes are decreasing. Stochastic Oscillator is going up in the neutral zone, giving a buy signal. Earlier it has left oversold zone.

It is moving along the signal line, not giving a clear signal, while volumes are below average. Stochastic Oscillator remains in the oversold zone, and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0190, the pair will go to 1.0210 and 1.0240. The rate of the CAD remains under pressure since last Friday when investors’ interest in risk begun to decline.

At the end of last week it became known that unemployment rate in Canada increased by 0.1% in November, up to 7.4%, while the number of employees reduced by 18 thousand. Moreover, share of labour force decreased by 0.1%, to 66.6% last month. GDP in Canada rose by 3.5% y/y in Q3 against the revised decline of 0.5% in April-June. Economists predicted growth of 3%.

Earlier the head of the Bank of Canada Mr. Carney said that the regulator will maintain the rate at the level of 1% due to the influence of European developments. He believes that situation with European debt has deteriorated prospects of the global economy and spread panic in the financial markets. Taking into account the foregoing it is obvious that the program of providing help to the banks will be continued. The Bank of Canada along with other largest world’s banks supported the idea of the U.S. FR to lower swop interest rates which will enable to increase liquidity of the USD at the market and stabilize monetary situation.

Canadian monetary politician Mr. Flaherty noted this week that situation in the world economy would not change until Europe allocates more resources to fight against crisis. He shares point of view of German politicians and IMF that lost time will cost expensive price to Eurozone.

The Bank of Canada believes that country’s GDP will amount to 2.8% in 2011 (decline by 0.1% against the forecast in April), in 2012 it will be: 2.6% and in 2013: 2.1%. According to the Bank, export performance in Canada is weak, because low demand in the U.S. impedes progress in the index and expensive CAD also offers a challenge. The rise in the interest rate in Canada will directly depend on stability in economic growth.

CPI rose by 0.2% (+2.9% y/y) in October against the forecast of growth of 0.1% (+2.7% y/y). The indicator happened to be lower than the previous level of 3.1% y/y, however, it is still within the range of 1-3% specified by the Bank of Canada. Last month, prices in Canada increased mostly for gasoline and food.

 

[LF.Anastasia]

EUR/USD: Euro is strengthening in anticipation of European initiatives

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

By 9.00 Moscow time the Euro is at 1.3419 against yesterday’s closing level of 1.3399.

Players are buying the Euro in anticipation that initiatives of European monetary politicians in resolving debt problems of Eurozone will be efficient.

There was information in the market today that representatives of European countries can address the EU summit, which will begin tomorrow, with the idea of another mechanism of support, European Stability Mechanism, which can operate in parallel with EFSF.

In general, investors are focused on expectations of the final of the week, as important events are going to take place then, which are ECB meeting and the EU summit.

Most likely the pair EUR/USD will not go beyond the range of 1.3390-1.3450.

 

[LF.Anastasia]

GBP: British Pound tends to recover

The British Pound Sterling rate is growing moderately at the Forex currency market on Wednesday, since positive factors are back in the market in advance of the European events scheduled for the end of the week.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area; it has started to go up and is shaping a buy signal. Stochastic Oscillator is going down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.5630 the target for buying will be the levels of 1.5640 and 1.5650. If upward breakdown does not take place, target for sale will be the level of 1.5580.

The Bank of England announced about introduction of an additional instrument ensuring liquidity –ECTR. The objective of a new monetary mechanism is to reduce the levels of risk caused by European debt problems. With the help of this method the Bank of England can guarantee the sufficiency of the capital for commercial financial structures.

The data released yesterday showed that retail sales BRC in the similar trading floors of the UK fell by 1.6% y/y in November against the forecast of -0.5%. It was the lowest level of the index since May this year.

Statistics released earlier this week showed that PMI index in the service sector MARKIT/CIPS soared to the level of 52.1 points in November against the forecast of 50.7 points. It became known earlier that PMI index in the manufacturing industry amounted to 47.6 points in November, as per CIPS/MARKIT estimates. The index is above expectations which supported growth of the Pound.

Activity in the British construction sector declined in November, which was demonstrated by statistics released at the end last week. According to Markit estimates, PMI CIPS amounted to 52.3 points in November against 53.9 points earlier; however dynamics in new houses is positive, and it upward trend can be interpreted as an indication of the future stabilization in the sector.

It became known last week that rating agency Fitch did not exclude the probability that the UK ranking could be downgraded, as national budgetary reserves have been rather depleted. The agency believes that economic growth rate in the UK will slow down and influence of the European debt crisis will increase, which eventually will put in question current rating of the country.

According to representative of the Bank of England Mr. Weale, economy of the country will not reach pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy does not improve after the first round of stimulation. Weale also indicated that there are signs of new recession.

 

[LF.Anastasia]

CHF: Swiss Franc has suspended downfall for a little while

At the Forex currency market Swiss Franc rate is moderately increasing on Wednesday after four days of weakness.

Forex forecast: MACD indicator for the pair GBP/USD is going down in the positive area, giving a sell signal; volumes remain above average. Stochastic Oscillator is growing in the neutral zone, still maintaining a buy signal and is approaching overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 0.9250, the pair USD/CHF will go to 0.9260 and 0.9270. If upward breakdown does not take place, target for sales will be the level of 0.9200.

As per estimates of Swiss National Bank, GDP in Switzerland will amount to 1.5%-2.0% this year; main growth will be 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.

Unemployment rate in Switzerland rose to 2.9%, which had been an expected rise from 2.8%. It became known last week that trade balance in Switzerland amounted to 2.15 billion francs in October against the forecast of 2.06 billion francs. The data is good, considering global slump in demand and expensive Franc. Trade surplus in Switzerland 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.

At the end of last week, interest of players was drawn to the block of statistics from Switzerland. Thus, retail sales decreased by 0.2% y/y in October against a decline of 1.4% y/y earlier. GDP rose by 0.2% q/q (+1.3% y/y) in Q3 against the forecast of growth of 0.1% q/q (1.7% y/y). ). The data on quarterly basis was positive, indicating that efforts of the Central Bank to curb the rates of the Franc are effective. Last Thursday Swiss government stated that they are prepared to lower interest rate to negative levels in order to use all available means to fight against the rise of Franc. At the same time, politicians noted that the most effective tools are in the hands of SNB. Representative of SNB Mr. Jordan reported earlier that Swiss regulator does not need external guidance on monetary policy, as it is an independent institution and does not intend to receive instructions from business groups and politicians. SNB will continue to take appropriate measures if it is required considering the state of economic forecasts and deflation. According to him, slowdown in economic growth in Switzerland, which had taken place earlier, was caused by high exchange rate of Swiss Franc.

 

[LF.Anastasia]

JPY: Japanese Yen stands still

Trades for the Japanese Yen rate maintain almost unchanged at the Forex currency market in the middle of the week. On the one hand, interest in safe currency is low now, on the other hand, the Bank of Japan has not confirmed its plans to conduct new round of currency intervention.

Forex forecast: MACD indicator for the pair USD/JPY is growing in the positive area and is giving a buy signal. Oscillator is moving along the signal line in the neutral zone and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.50 and 77.30. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that preliminary index of coincident indicators in Japan rose by 1.3 points in October. The Yen ignored this data, as well as the news that preliminary leading indicators index remained unchanged.

The head of the Bank of Japan Mr. Shirakawa noted earlier that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective.

However, practical actions to support the words have not been made: apparently the Japanese regulator is in the “fly-through mode” presently moreover, the Yen does not give grounds for intervention due to its moderate activity.

Statistics of the last week showed that orders in the construction sector of Japan amounted to+24.3% y/y in October. In addition, preliminary industrial output rose by 2.4% m/m (+0.4% y/y) in October against the forecast of +1.1% m/m. nevertheless not everything is so positive: PMI in the manufacturing industry declined to 49.1 points in November, as per Markit/JMMA estimates, against the level of 50.6 points in October. It became known earlier that unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy.