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[LF.Anastasia]

EUR/USD: Euro is weak after massive sales

At the Forex currency market the pair EUR/USD stands still on Tuesday morning after yesterday’s collapse.

By 9.20 Moscow time the Euro is at 1.31890 against yesterday’s closing level of 1.3189.

Agency Moody's announced on Monday that they are going to review ratings of all sovereign issuing banks in the EU early next year largely due to the fact that Europe practically does not have measures for financial stability in the short-run prospects. This in its turn can mean that Eurozone and European Union are not secured from financial shocks.

A meeting of the U.S. Federal Reserve will start today; interest rate is going to be left unchanged; however the regulator’s comments about the increase in transparency of his work might be of interest

Nevertheless, the developments in Europe are still in the focus of the market.

Most likely the pair EUR/USD will not go beyond the range of 1.3150-1.3250 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is being technically corrected

At the Forex currency the British Pound Sterling rate is growing on Tuesday due to rebound after yesterday’s sales.

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 in the neutral zone 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 negativism maintains in the market. If optimism geminates buyers’ target will be the level of 1.5680.

Meanwhile the British Pound is under pressure from external background.

At the meeting last week, 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. Yesterday, 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 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.

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 required 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.

 

[LF.Anastasia]

CHF: Swiss Franc has weakened dramatically

At the Forex currency market Swiss Franc rate has dramatically weakened; apparently Swiss regulator took part in trades at the beginning of the week fighting off attacks of speculators.

Forex forecast: MACD indicator for the pair GBP/USD begun to grow in the positive area, giving a buy signal. Stochastic Oscillator is still in the overbought zone and maintains a similar signal.

Forex recommendations: in case of break down at the level of 0.9380, the pair USD/CHF will go to 0.9390 and 0.9410. If upward breakdown does not take place, the pair will consolidate at the current levels.

Judging by the currencies quotes, yesterday’s negative sentiments at the market promoted to the increase of those who want to sit out uneasy time in the quiet harbor, aiming at Franc’s rate, and CHB firmly protects its interests. As a result, Franc has weakened more significantly.

Today, SECO released economic forecast according to which economic growth in Switzerland will amount to 0.5% in 2012 against the previous expectations of growth of 0.9%.

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.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen was not allowed to continue its growth

At the Forex currency market the Japanese yen rate is traded downward on Tuesday. It is interesting that the Yen has weakened in pairing with the USD; while in pairing with other currencies the Japanese currency consolidated its positions due to ambiguous market.

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

Forex recommendations: in case of breakdown at the level of 77.90, the pair will go to 78.00 and 78.20. If upward breakdown does not take place, the pair will consolidate at the current levels.

The data released this week showed that consumer confidence index in Japan fell for the first time in 7 months in November (38.1 against 38.6 previously), as global economy significantly affects Japan and its expensive Yen as well.

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.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar have suspended

At the Forex currency market the Australian Dollar rate suspended its decline for a while as external background stabilized slightly after yesterday’s panic.

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 1.0070, the pair will go to 1.0060 и 1.00301. As part of technical correction the pair can regain up to 1.0100.

According to statistics released this morning, business confidence index NAB in Australia increased to 1 point in November against zero level in October. This data is positive at the moment as current conditions have stabilized; however levels of business confidence are still unvaried. It became known yesterday 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.

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%

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.

 

[LF.Anastasia]

NZD: “Bears” in New Zealand Dollar took a break

At the Forex currency market the New Zealand rate has been traded with slight deviation on Tuesday; however sales were interrupted.

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: Off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7630, the pair will go to 0.7620 and 0.7600. As part of technical rebound the pair can go to 0.7735.

Macro-economic background in New Zealand is stable. The most impact on the NZD is caused by investors’ aversion to risk, as they do not believe in stability in Eurozone or in prevention 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 from sellers.

GDP 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.

Decision of the Reserve Bank of New Zealand last week did not amaze 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.

 

[LF.Anastasia]

EUR/USD: Euro dipped to the lows of January

The pair EUR/USD is traded downward at the Forex currency market on Wednesday, still being under strong pressure.

By 9.15 Moscow time the Euro is at 1.3028 against yesterday’s closing level of 1.3027.

Yesterday’s collapse was caused by the opinion of German Chancellor Angela Merkel who said that she is against the idea of increasing upper permissible level of lending by using facilities of ESM and a new fund which will be launched six months later.

The U.S. Federal System left everything unchanged: interest rate was kept in the target range of 0-0.25% per annum, however FR did not dwell on the issue of increasing transparency of its work, putting off discussion until better days.

The day is going to be strenuous largely due to the situation in the EU where rating agencies became very active again, adding oil into the fire.

Most likely the pair EUR/USD will not go beyond the range of 1.2990-1.3090 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound remains at the local lows

At the Forex currency the British Pound Sterling rate is traded slightly upward in the middle of the week, after massive sales yesterday. Europe was a catalyst once again.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is sliding down in the neutral zone and giving a sell signal, approaching closely oversold zone.

Forex recommendations: in case of breakdown at the level of 1.5470 the target for selling will be the levels of 1.5460 and 1.5450 if unfavourable situation in the market will be preserved.

The British Pound is still under complete influence of the external background. Negative factors from Europe consequently affect the status of the Pound.

It became known yesterday that CPI in the UK increased by 0.2% m/m (+4.8% y/y) in November, as expected. British inflation slows down its pace, however the index is still too far from the target level of the Bank of England.

At the meeting last week, 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. Yesterday, 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.

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 required 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.

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

 

[LF.Anastasia]

CHF: Swiss Franc suspended its decline

At the Forex currency market Swiss Franc rate is stable on Wednesday and suspended its three-day decline, while Swiss Bank successfully fights off attacks of speculators.

Forex forecast: MACD indicator for the pair GBP/USD begun to grow in the positive area, giving a buy signal. Stochastic Oscillator is still in the overbought zone and maintains a similar signal.

Forex recommendations: in case of break down at the level of 0.9450, the pair USD/CHF will go to 0.9460 and 0.9470. If upward breakdown does not take place, the pair will consolidate at the current levels.

In terms of macro-economic perspectives, situation in Switzerland remains unchanged. Swiss data on investor economic expectations ZEW in December will become public in the middle of the week.

Judging by the currencies quotes, negative sentiments in the market boosted a number of those who want to sit out uneasy time in the quiet harbor, aiming at Franc’s rate, and CHB firmly protects its interests. As a result, Franc has weakened more significantly.

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.

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.

SECO released economic forecast this week, according to which economic growth in Switzerland will amount to 0.5% in 2012 against the previous expectations of growth of 0.9%.

A meeting of Swiss National Bank will be held this Thursday; it is possible that the Bank will make decisions about negative rate for 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.

 

[LF.Anastasia]

AUD: Australian Dollar dropped to three-week lows

Sales of the Australian Dollar rate suspended at the Forex currency market on Wednesday, since external background is tranquil and neutral this morning. Nevertheless information that has been released since the beginning of the week is sufficient to keep the currency under pressure.

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 went to the oversold zone and is maintaining a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0025, the pair will go to 1.0020 and 1.0000. As part of technical correction the pair can regain up to 1.0070.

It became known today that index of consumer sentiment Westpac-MI fell to 94.7 points, -8.3% m/m in December against the value of 103.4 points in November. Business confidence index NAB in Australia increased to 1 point in November against zero level in October. This data is positive at the moment as current conditions have stabilized; however levels of business confidence are still unvaried. It became known yesterday 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.

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%

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).