LiteForex's analytics

[LF.Anastasia]

CHF: Swiss Franc is changing directions again

At the Forex currency market Swiss Franc rate is traded downward on Friday, it seems that Swiss National Bank is present at the trades again to prevent speculative management of the exchange rate of Franc.

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 0.9270, the pair USD/CHF will go to 0.9280 и 0.9295. If upward breakdown does not take place, target for sales will be the level of 0.9200.

Macro-economic situation in Switzerland remains almost unchanged.

Earlier, 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. 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.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen sticks to ascending trend

At the Forex currency market the Japanese yen rate demonstrated ability to strengthen rapidly yesterday, although it did not reach 77.20. Today, the Yen tends to rise in price again.

Forex forecast: MACD indicator for the pair USD/JPY is growing slowly 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 77.60, the pair will go to 77.50 and 77.20. If downward breakdown does not take place, the pair will consolidate at the current levels.

The fact that those investors who want to sit out uneasy time in the safe currency have come became the main catalyst for the JPY growth.

It became known today that real GDP in Japan was revised downward to +1.4% q/q (+5.6% y/y) in Q3 against preliminary +1.5% q/q (+6.0% y/y).

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). 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.

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.

It became known yesterday that preliminary index of coincident indicators in Japan rose by 1.3 points in October.

 

[LF.Anastasia]

AUD: Australian Dollar is being activity sold out

At the Forex currency market the Australian Dollar rate continues to falldown on Friday, amid risk aversion.

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 is sharply going down in the neutral zone, approaching oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0060, the pair will go to 1.0050 and 1.0030.

Investors’ aversion to risk caused by European news and factors that occurred at the end of the week are not in favour of the AUD.

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%

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.

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).

 

[LF.Anastasia]

NZD: Sale of New Zealand Dollar gathers pace

At the Forex currency market the New Zealand rate weakens at the end of the week due to investors’ risk aversion.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the negative area and is giving a buy signal; volumes are minimal. Stochastic Oscillator continues to maintain a sell signal, going down in the neutral zone.

Forex recommendations: in case of breakdown at the level of 0.7635, the pair will go to 0.7620 and 0.7600.

Statistics released in the morning showed that consumer confidence index ANZ in New Zealand decreased to 108.4 points in December against 109.0 points previously. The NZD make use of the information under pressure of sellers.

This week’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.

It became known earlier that 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. 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.

 

[LF.Anastasia]

EUR/USD: Euro is sold out again

The pair EUR/USD is going down slightly at the Forex currency market on Monday morning.

By 9.10 Moscow time the Euro is at 1.3340 against closing level of 1.3368 on Friday.

Despite favourable environment that was based on positive statistics on Friday night, this morning investors returned to sales: on the one hand agency Fitch Ratings announced that it revise forecast for the economic growth rate in Asia and on the other hand EU summit is over and new financial agreements do not supersede the old ones, but designed to make previous financial conditions to be more efficient.

It also became known at the end of last week that China can launch investment Fund for the amount of 300 billion euro; European countries regarded this positive news as favourable for them, which supported the Euro. Additional clarification has not been received.

The day is going to be quiet in terms of macro –statistics; therefore traders will be focused on the external background.

Most likely the pair EUR/USD will go beyond the range of 1.3290-1.3390.

 

[LF.Anastasia]

GBP: British Pound is slightly pessimistic at the beginning of this week

At the Forex currency the British Pound Sterling rate is declining slightly on Monday; external background is stable this morning, and the market will continue to draw conclusions from the outcome of European Summit where Great Britain firmly outlined its radical position.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5610 the target for selling will be the levels of1.5500 and 1.5580. If optimism prevails, buyers’ target will be the level of 1.5680.

Position of Great Britain played important role at the EU summit: earlier, 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.

London also demanded exceptional conditions for its economy within a new package, so that new measures tightening inspection for expenditures and the increase of financial integration will not apply to the British system. As a result 26 countries of EU have approved new conditions, and Great Britain stood aside of a new package of agreements.

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 data released earlier 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.

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.

 

[LF.Anastasia]

CHF: Swiss Franc is quiet at the beginning of this week

At the Forex currency market Swiss Franc rate almost stands still at the beginning of this week in anticipation of a large block of information during the next five sessions.

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 still in the 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 0.9270, the pair USD/CHF will go to 0.9280 и 0.9295. If upward breakdown does not take place, target for sales will be the level of 0.9200.

Today, investors are waiting for the employment data, excluding agricultural sector in Q3. A meeting of Swiss National Bank will be held this week, it is possible that the Bank will make decisions about negative rate of Libor and the rise in the exchange rate of Franc to Euro.

Earlier, 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.

Earlier, 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. 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.

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 has not abandoned idea of strengthening

At the Forex currency market the Japanese yen rate is traded upward on Monday; however the pair USDF/JPY still fails to consolidate above 77.50.

Forex forecast: MACD indicator for the pair USD/JPY is moving along the signal line in the positive area and weak buy signal.

Forex recommendations: off the market.

Feasible event scenario: in case of breakdown at the level of 77.50, the pair will go to 77.40 and 77.20. If downward breakdown does not take place, the pair will consolidate at the current levels.

The return of investors who wish to sit out uneasy times in the safe currency has become the major catalyst for the consolidation of the JPY.

In terms of macro-economic situation in Japan is stable.

It became known at the end of last week that real GDP in Japan was revised downward to +1.4% q/q (+5.6% y/y) in Q3 against preliminary +1.5% q/q (+6.0% y/y). 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).

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. It became known earlier that preliminary index of coincident indicators in Japan increased by 1.3points in October.

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: Australian Dollar started this week with a decline

At the Forex currency market the Australian Dollar rate is traded downward on Monday, since investors continue to analyze the outcome of the European Summit.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the negative area and has come up closely to the intersection with the signal line, ready to break through it from bottom to top. Stochastic oscillator goes down sharply, approaching oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0150, the pair will go to 1.0140 and 1.0020.

It became known today that trade balance in Australia fell to +A$1.60 billion in October against expectations of +A$2.0 billion. Slump in the global demand has played its part here as well.

It became known last week 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.

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.

At the last meeting, 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).

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%.

 

[LF.Anastasia]

NZD: New Zealand Dollar s losing positions

At the Forex currency market the New Zealand rate is traded downward on Monday because although external background remains moderate, flow of news is not too positive for the investors to become seriously interested in risks.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the negative area and is giving a buy signal; volumes are minimal. Stochastic Oscillator continues to maintain a sell signal, going down in the neutral zone.

Forex recommendations: in case of breakdown at the level of 0.7650, the pair will go to 0.7620 and 0.7600.
Decisions of the Reserve Bank of New Zealand last week were 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.

It became known earlier that 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. Consumer confidence index ANZ in New Zealand declined to 108.4 points in December against 109.0 points earlier. The NZD regained from this information due to pressure caused by sellers.

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. Permits to construct in new Zealand increased sharply by 10,0% in October against the fall of 1.3% y/y in September.

In general, New Zealand currency remains under pressure from external background.