LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar remains in the narrow trading range

At the Forex currency market the Australian Dollar rate is slightly increasing with the help of positive statistics, however still remains in the narrow trading range.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up, while volumes are low, shaping a buy signal. Stochastic Oscillator is moving sideways towards the overbought 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 1.0285, the pair will go to 1.0290 and 1.0300. If upward breakdown does not take place, the pair will go to 1.0200.

It became known today that GDP in Australia rose by 1.0% q/q (+2.5% y/y) in Q3 against the forecast of growth of 0.8% on quarterly basis. The data has supported the AUD, which declined yesterday due to monetary decisions of the RBA.

The data on economic growth in Australia was based on the rise in consumer expenditures and investments in the mining industry. The results in GDP reassured investors and now a chance of another, the third in a row decrease in the interest rate is receding.

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

At the yesterday’s meeting, 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).

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 continues to grow

At the Forex currency market the Canadian Dollar rate continues to grow in the middle of the week. High oil prices and general positive sentiments in the market provide support to the currency.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and continues to go down, volumes are decreasing. Stochastic Oscillator is in the neutral zone and is returning to the overbought zone, indicating that sales will prevail.

Forex recommendations: in case of breakdown at the level of 1.0070, the pair will go to 1.0060 and 1.0050.

It became known yesterday that the Canadian regulator left interest rate unchanged at the level of 1% per annum. The news did not become a surprise for the players, as investors had assumed that interest rate would be kept at the current levels for a least another 12 months.

In the follow-up comments the Bank of Canada said that the impact of recession in the global economy can be projected onto the Canadian economic system and that through the fault of Eurozone conditions at the global financial platforms have deteriorated sharply.

According to observers from the agency Standard & Poor's, economy of Canada is in the favourable position now, since exports grow, despite strengthening of the CAD and consumer spending remains at the high levels.

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%. 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.

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

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 awaits European decisions

The pair EUR/USD is traded in the narrow range on Thursday morning awaiting important developments in Eurozone.

By 9.10 Moscow time the Euro is at 1.3406 against yesterday’s closing level of 1.3401.

A two-day summit of the European Union will start today; it is expected that Germany and France will propose to Eurozone new mechanisms for resolution of the European debt problems in the region. In addition a meeting of the European Central Bank will be held on Thursday where interest rate can be lowered by 25 basis points to 1%.

Due to expectations of a large number of important news the Euro/Dollar will be traded in the narrow range which, however does not rule out decline of the Euro if the rates will actually be lowered.

Tonight investors will be interested in statistics on the U.S. labour market.

Most likely the pair EUR/USD will not go beyond the range of 1.3350-1.3450 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound came to a standstill in anticipation

At the Forex currency the British Pound Sterling rate is traded with only slight deviation on Thursday in advance of plenty of information and a meeting of the Bank of England.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area and is going up and is prepared to give a buy signal. Stochastic Oscillator is changing direction again in the neutral zone and is now strengthening, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.5720 the target for buying will be the levels of 1.5740 and 1.5750. If upward breakdown does not take place, target for sale will be the level of 1.5580.

It is expected that at a regular meeting of the Bank of England will take place today the interest rate will be kept unchanged at the level of 0.50% per annum. Comments of the regulator on inflationary prospects will be of interest.

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.

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.

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 economy.

 

[LF.Anastasia]

CHF: Swiss Franc tends to moderate grow

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

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 has come into overbought zone and maintains a buy signal.

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.

Statistics of this week showed that unemployment rate in Switzerland remained at the level of 3.1% in November. In addition, CPI fell by 0.2% m/m in November, while expected growth had been of 0.1%. Inflation is clearly affected by external background.

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 week 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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen is strengthening slowly

The Japanese yen rate almost stands still at the Forex currency market on Thursday due to general tension of investors; nevertheless it still tends to strengthen.

Forex forecast: MACD indicator for the pair USD/JPY is growing in the positive area and is giving a buy signal. Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 77.60, 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.

New block of statistics showed that surplus of current account in Japan amounted to Y562.4 billion in October, demonstrating a fall of 62.4% y/y. Morning statistics also showed that volume of credit outstanding in the country increased by 0.2% y/y last month. It indicates the increase in demand for corporate financing and can be perceived positively.

Level of bank lending is also growing steadily (+0.2% y/y in November: +0.1% y/y in October; -0.3% y/y in September).

It became known yesterday 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.

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.

However, practical steps 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.

 

[LF.Anastasia]

AUD: Activity in Australian Dollar is low

At the Forex currency market the Australian Dollar rate almost stands still on Thursday- investors are waiting for important news from Eurozone before making decisions about buying or selling of the high- risk assets.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up shaping a buy signal, while volumes are low. Stochastic Oscillator tends to go out of the overbought zone and is prepared to shape a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0285, the pair will go to 1.0290 and 1.0300. If upward breakdown does not take place, the pair will go to 1.0200.

It became known on Thursday that unemployment rate increased to 5.3% in November against the forecast of 5.2%. Employment rate fell by 6 thousand against the growth of 16.8 thousand earlier. Economists had expected increase in jobs by 10 thousand.

The indicator reflects the impact of European debt problems on the Australian economy. And although the data on GDP somehow reassured investors yesterday, traders started to worry again about possible lowering of the interest rate.

GDP in Australia rose by 1.0% q/q (+2.5% y/y) in Q3 against the forecast of growth of 0.8% on quarterly basis. The data has supported the AUD, which declined yesterday due to monetary decisions of the RBA. The data on economic growth in Australia was based on the rise in consumer expenditures and investments in the mining industry. The results in GDP reassured investors and now a chance of another, the third in a row decrease in the interest rate is receding. Note that earlier Australian authorities have revised forecast of GDP growth downward, to 3.5% in 2012. Previously, forecast had been at 3.75%

At the meeting yesterday, the Reserve Bank of Australia reported that interest rate was lowered 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). 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]

NZD: New Zealand Dollar is growing due to stable interest rate

At the Forex currency market the New Zealand rate is growing moderately taking advantage of the stable external background and the decision of the Reserve Bank of New Zealand.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the negative area and is giving a buy signal; volumes are maximal. Oscillator has left oversold zone and is giving a clear buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7615, the pair will go to 0.7620 and 0.7640. There is a high probability that aggressive sellers will be back in the pair.

Today’s decision of the Reserve Bank of New Zealand was of no surprise to anyone. Interest rate was left at the level of 2.5% per annum, since its level has already been revised last month.

In addition, the data released on Thursday showed that activity in the manufacturing industry fell by 1.4% q/q and remained unchanged on annual basis in Q3, against the fall of 0.7% in Q2, which is the consequence of slowdown in the world economy.

Permits to construct in new Zealand increased sharply by 10,0% in October against the fall of 1.3% y/y in September. The data is positive; however the NZD has ignored this information.

trade balance in New Zealand was at the level of –NZ$*** million in October against the level of NZ$784 million in September. The index remained in deficit last month although higher than the forecasts of economists. Volumes of export increased by 5.3% (NZ$3.9 billion on annual basis in October and imports rose by 8.9% y/y due to demand for industrial production.

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.

 

[LF.Anastasia]

EUR/USD: Euro is being sold out due to negatives factors

The pair EUR/USD is traded in the red on Friday after outcome of the ECB meeting and EU summit has been analyzed.

By 9.05 Moscow time the Euro is at 1.3331 against yesterday’s closing level of 1.3338.

So, yesterday the European Central Bank has lowered interest rate by 25 basis points, to 1% per annum, as expected. However, the main flow of negative factors fell upon the Euro after press-conference of the head of the regulator Mario Draghi. Monetary politician noted that previously the market has misinterpreted the indications of possible aggressive buying of bonds by ECB. Draghi stressed that the Bank not going to finance the European economy by uncontrolledly buying bonds. Besides, the ECB is not ready to discuss and set the maximum permissible level of bonds yields.

Position of Draghi was a complete surprise for the market, because it was assumed that ECB will act in full accordance with European countries.

Now investors’ attention is focused on the EU summit which will finish today, although there are still a lot of unsettled issues.

Most likely the pair EUR/USD will not go beyond the range of 1.3280-1.3380 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is still in the power of sellers

At the Forex currency the British Pound Sterling rate continues to decline on Friday morning amid traders’ pessimistic sentiments in the world capital markets.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area and is going up, ready to give a buy signal. Stochastic Oscillator is changing direction again in the neutral zone and is going down gradually and giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.5610 the target for selling will be the levels of1.5500 and 1.5580.

The EU summit is still going on in Europe and position of the UK plays an important role in it. Previously, the UK opposed revision of the document about European Union, thus refusing to sign a financial package. Prime Minister of the country David Cameron said that proposals of the summit are not in the sphere of interest of the UK and opt-out to take part in the package will not impact on the country. Meanwhile the UK will continue to try stay away from the problems of the Euro and European crisis.

At a regular meeting yesterday, the Bank of England decided to keep interest rate unchanged at the level of 0.50% per annum, as expected.

The British regulator did not bring any surprises: program of asset purchase remained unchanged and the rate is the lowest level since May 2009.

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.

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.

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.