LiteForex's analytics

[LF.Anastasia]

CHF: Swiss Franc is still weak

At the Forex currency market Swiss Franc rate continues to weaken on Friday.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal, volumes are average. Stochastic Oscillator is going up moderately in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9550, the pair USD/CHF will go to 0.9560 and 0.9580.

Yesterday, the head of Swiss National Bank, Mr. Hildebrand received a vote of confidence from Swiss government: earlier market had discussed information about wife of the monetary politician, an ex- trader, who bought USD a few weeks before the Franc was pegged to the Euro.

The head of the SNB said more than once that he is not going to leave his post as he has never break any laws and has nothing to do with his wife’s business.

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.

According to the data released in the end of December leading indicators index KOF fell to 0.01 points in December against the forecast of 0.23 points and previous revised value of 0.34 points. It became known earlier that trade balance in Switzerland rose by 3.0 billion francs in November against the forecast of +2.00 billion francs and previous value of +2.15 billion francs. Index is favourable; however it is based on the efforts of the local regulator to curb the rate of the Franc.

Observers from Wells Fargo believe that economic indexes in Switzerland demonstrated slowdown all the year round; many indexes give indication that weakness will continue for the next six months. According to them, domestic demand is also getting lower which is a negative sign. As for the rate, it is most likely that SNB will adhere to the zero level, due to soft inflation. Statistics released earlier showed that business activity index PMI SVME in Switzerland increased to 50.7 points in December against 44.8 points in November.

Three-month Libor rate was left in the range of 0-0.25%, closer to zero; the Bank did not change pegging level of Franc to Euro, maintaining the actual level of 1.20. In the follow up comments the head of SNB Mr. Hildebrand stressed that the regulator will continue to maintain the target rate of CHF, with the help of purchases of foreign currency in unlimited quantities and additional package of measures if situation requires. SNB is ready to maintain high level of liquidity, as inflation growth is not expected. In general, economy of the country depends a lot on the European crisis. Apparently, SNB has adopted attitude of an onlooker, keeping in place existing management tools, being pretty confident that they always have time to start intervention. Swiss National Bank noted earlier that the regulator is prepared to take additional measures if situation at Forex deteriorates. According to SNB, strong Franc creates extra problems for the economy and the issue of negative interest rates and control over the capital movement is being thoroughly scrutinized in the Bank.

 

[LF.Anastasia]

JPY: Japanese Yen has stabilized after the fall

The Japanese Yen rate has stabilized at the Forex currency market at the end of the week after the fall during previous sessions; investors are becoming interested in the JPY again as of a “safe harbor”.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and is descending, giving a sell signal. Stochastic Oscillator has come out of the overbought zone and is steadily growing, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.30, the pair will go to 77.40 and 77.70. If upward breakdown does not take place, the pair will consolidate at the current levels. It is becoming a habit now to blame the Euro for all problems in the levels of Japanese exports: Finance Minister of Japan Mr. Azumi said on Friday that the fall of the Euro had caused significant damage to the exports levels, while financial authorities of Europe are wasting time and do not take essential measures.

Attitude of Japan to this issue is logical: EU shall create a kind of barrier to prevent expansion of the debt problems.

Important Japanese news has not been released.

We would remind that a meeting of the Bank of Japan, which was held in December, was gloomy. Thus, the regulator noted that growth of economic activity has slowed down and activity in Japanese economy is zero. The Bank has revised economic situation assessment downward in comparison with November, which is logical. Japanese economy will start to recover as soon as pressure from Europe diminishes. In addition, interest rate in the country was left unchanged at the level of 0.1%. This decision had been expected.

Minutes of the last meeting of the Bank of Japan released earlier, states that it is necessary to trace back the effect of the recent soft policy; special concern is caused by the potential impact of the expensive Yen. 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 continues to be on sale

At the Forex currency market the Australian Dollar rate continues to weaken at the end of the week, amid risk aversion in the market.

Forex forecast: MACD indicator for the pair AUD/USD has returned to the position below the signal line on the side of the negative zone and is not giving a clear signal. Stochastic Oscillator is leaving overbought zone and is shaping a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0210, the pair will go to 1.0200 and 1.0180. Situation in Australia remains almost unchanged in terms of macro-economic background.

External background is not in favour of the AUD, as due to the expansion of European debt crisis, investors are moving away from the risky positions. According to statistics released yesterday, business activity index AiG in the service sector of Australia rose to 49.0 points in November against the level of 47.7 points in October. In addition, trade balance amounted to +А$1.38 billion against expectations of +А$2.0 billion.

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 expected the the increase of jobs by 10 thousand. The indicator reflects the impact of European debt problems on the Australian economy. 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. It became known earlier that private sector lending in Australia increased by 0.3% m/m (+3.5% y/y) in November against the growth of 0.2% m/m in October.

Australian Central Bank noted last week, that the country has been fighting against repercussions of European debt crisis with the help of investment boom: minutes of the last meeting of the Reserve Bank of Australia showed that there is no urgent need at the moment in lowering rate and current steps directed to ease monetary policy is sufficient to support economy.

Observers believe that lowering of the rate by RBA in December was just a safeguard against external negative factors.

Consumer sentiment index 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 earlier 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.

 

[LF.Anastasia]

EUR/USD: Euro was given rise to panic again

At the Forex currency market the pair EUR/USD is traded slightly upward on Monday morning, although it is still close to critical levels.

By 9.45 MSK the Euro is at 1.2704 against s closing level of 1.2720 on Friday.

Today the pair has already gone below the level of 1.27 and reached local lows at 1.2665. News is also unfavourable for the pair: representative of IMF Mr. Blanchard did not rule out today that Europe can sink into recession again, which has intensified risk aversion.

A meeting of President of France Nikolas Sarkozy and Chancellor of Germany Angela Merkel will launch at the beginning of the week; parties plan to discuss number of steps to increase economic integration in Europe.

Meanwhile, investors are clearly not inclined to trust anti-crisis plans of European Union.

Most likely the pair EUR/USD will not go beyond the range of 1.2630-1.2750 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound is going up after the fall

The British Pound Sterling rate is traded upward at the Forex currency market on Monday after the fall to local lows earlier.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the negative area and is going down while volumes are average, and maintains a sell signal. Stochastic Oscillator continues to go down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.5420, targets for selling will be the levels of отметки 1.5410 and 1.5390. If downward breakdown does not take place, the pair will consolidate at the current levels. As part of correction the pair can go to 1.5470.

British Prime Minister Mr. Cameron noted earlier that rebalancing of economy is well within expectations: 2012 promises to be a real challenge for the major economies: although inflation in the UK will go down this year.

It is also worth noting that the Bank of England expects stagnation in the economy in the next quarter and GDP growth in Q1 next year. Revised GDP in the UK rose by 0.6% q/q (+0.5% y/y) in Q3, statistics released earlier has supported buyers. The index is above preliminary assessment, which was appreciated in the market. It became known earlier that CPI in Great Britain increased by 0.2% m/m (+4.8% y/y), as expected. Therefore, British inflation is slowing down its pace; however the index is still too far from the target level for the Bank of England.

Meanwhile, PMI in the UK rose to 53.2 points in December against the level of 51.2 points in November.

According to the data released yesterday, PMI in the construction sector rose to 53.2 points against expectations of 52 points. In addition it became known in the middle of the week that net consumer lending amounted to 0.394 billion pound in November against the forecast of 0.3 billion pounds. Number of approved mortgage applications in the same month increased to 52.854 thousand against the previous level of 52.786 thousand. It became the maximal level since December 2009.

The data released earlier showed that PMI CIPS in manufacturing sector increased to 49.6 points in December against 47.7 points in November. The data is definitely positive; however the fact that the index is below the level of 50 points proves that downward risks are still preserved. The Bank of England announced earlier that average inflationary expectations reduced to 4.1% in November against the level of 4.2% in August. At the same time, the level of two-year inflationary expectations was around 3.4% (3.5% previously).

 

[LF.Anastasia]

CHF: Swiss Franc regains after previous sales

At the Forex currency market Swiss Franc rate is traded upward on Monday: sales of the last week were of the emotional nature and now external background enables the CHF to regain slightly.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and standing still, volumes are average, and is not giving a clear signal. Stochastic Oscillator continues to go up in the overbought zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9550, the pair USD/CHF will go to 0.9560 and 0.9580. The pair can go to 0.9510/0.9505 as part of correction.

It became known today that unemployment rate in Switzerland increased to 3.3% in December against expectations of 3.2% and the level of 3.1% in November. Obviously, slowdown in the national economy still goes on.

The head of Swiss National Bank, Mr. Hildebrand received a vote of confidence from Swiss government: earlier market had discussed information about wife of the monetary politician, an ex- trader, who bought USD a few weeks before the Franc was pegged to the Euro.

The head of the SNB reiterated that he is not going to leave his post as he has never break any laws and has nothing to do with his wife’s business.

Observers from Wells Fargo believe that economic indexes in Switzerland demonstrated slowdown all the year round; many indexes give indication that weakness will continue for the next six months. According to them, domestic demand is also getting lower which is a negative sign. As for the rate, it is most likely that SNB will adhere to the zero level, due to soft inflation. Statistics released earlier showed that business activity index PMI SVME in Switzerland increased to 50.7 points in December against 44.8 points in November. Three-month Libor rate was left in the range of 0-0.25%, closer to zero; the Bank did not change pegging level of Franc to Euro, maintaining the actual level of 1.20. In the follow up comments the head of SNB Mr. Hildebrand stressed that the regulator will continue to maintain the target rate of CHF, with the help of purchases of foreign currency in unlimited quantities and additional package of measures if situation requires. SNB is ready to maintain high level of liquidity, as inflation growth is not expected.

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.

According to the data released in the end of December leading indicators index KOF fell to 0.01 points in December against the forecast of 0.23 points and previous revised value of 0.34 points. It became known earlier that trade balance in Switzerland rose by 3.0 billion francs in November against the forecast of +2.00 billion francs and previous value of +2.15 billion francs. Index is favourable; however it is based on the efforts of the local regulator to curb the rate of the Franc.

 

[LF.Anastasia]

JPY: Japanese Yen is rising in price

The Japanese Yen rate continues to rise at the Forex currency market at the beginning of the week.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from top to bottom and is traded downward; volumes are increasing which in overall gives a sell signal. Stochastic Oscillator has come out of the overbought zone and is steadily growing, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.90, the pair will go to 77.10 and 77.40. If upward breakdown does not take place, the pair will aim to76.50.

Japanese market is closed today.

We would remind that a meeting of the Bank of Japan, which was held in December, was gloomy. Thus, the regulator noted that growth of economic activity has slowed down and activity in Japanese economy is zero. The Bank has revised economic situation assessment downward in comparison with November, which is logical. Japanese economy will start to recover as soon as pressure from Europe diminishes. In addition, interest rate in the country was left unchanged at the level of 0.1%. This decision had been expected.

Minutes of the last meeting of the Bank of Japan released earlier, states that it is necessary to trace back the effect of the recent soft policy; special concern is caused by the potential impact from the expensive Yen.

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.

The fall in the exports levels can be easily attributed to the Euro: Finance Minister of Japan Mr. Azumi said last Friday that the fall of the Euro had caused significant damage to the exports levels, while financial authorities of Europe are wasting time and do not take essential measures. Attitude of Japan to this issue is logical: EU shall create a kind of barrier to prevent expansion of the debt problems.

 

[LF.Anastasia]

AUD: Australian Dollar makes attempts to recover

At the Forex currency market the Australian Dollar rate makes attempts to recover on Monday with the help of the external background, however these attempts have not been successful so far.

Forex forecast: MACD indicator for the pair AUD/USD has broken through the signal line from bottom to top and is traded upward, giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0215, the pair will go to 1.0220 and 1.0250. If upward breakdown does not take place and aggressive sellers will be back in the pair, AUD/USD will have a chance to go to 1.01.70.

It became known today that retail sales in Australia showed a zero change in November against the growth of 0.2% m/m in October. In addition, sales of new houses HIA grew by 6.8% m/m in November against revised level of +2.8% m/m in October.

Statistics released on Monday was not able to fully support the AUD and it is obvious that sellers dominate over buyers in the market, sellers are quiet at the moment; however, it is clearly not for long.

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 expected the the increase of jobs by 10 thousand. The indicator reflects the impact of European debt problems on the Australian economy. 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. It became known earlier that private sector lending in Australia increased by 0.3% m/m (+3.5% y/y) in November against the growth of 0.2% m/m in October.

Australian Central Bank noted last week, that the country has been fighting against repercussions of European debt crisis with the help of investment boom: minutes of the last meeting of the Reserve Bank of Australia showed that there is no urgent need at the moment in lowering rate and current steps directed to ease monetary policy is sufficient to support economy.

Consumer sentiment index 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. According to the data released earlier, Business activity index AiG in the service sector of Australia increased to 49.0 points in November against the level of 47.7 points in October. In addition, trade balance amounted to +А$1.38 billion in November against expectations of +А$2.0 billion.

 

[LF.Anastasia]

CAD: Canadian Dollar is waiting for new signals

At the Forex currency market the Canadian Dollar rate stands still in the beginning of new week, waiting for new, significant catalysts for movement.

Forex forecast: MACD indicator for the pair USD/CAD is going down in the negative area and is giving a sell signal. Stochastic Oscillator is going up in the overbought zone giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0290, the pair will go to 1.0300 and 1.0340. In case of alternative scenario of trades the pair will have a chance to break through to 1.0270 and move to 1.0250 and 1.0240.

According to the data released last week, unemployment rate rose to 7.5% in December against the forecast of 7.4%, employment rate increased by 175 thousand versus expectations of growth of 15 thousand.

Thus, invariably negative pattern in the Canadian employment market, which took shape in the last six months of 2011, still persists. Meanwhile, significant rise in jobs in the production sector is obvious.

GDP in Canada rose by 3.5% y/y in Q3 against revised decline of 0.5% in April-June. Economists predicted growth of the index 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.

It became known recently that CPI in Canada increased by 0.1% m/m (+2.9% y/y) in November which agreed with the forecast. The growth is reasonable, which meets with expectations and does not involve risk for the economy

It became known in December that the regulator maintained the rate unchanged at the level of 1%. The news did not take players by surprise, as investors assumed that the rate will be maintained at the current levels for at least another 12 months. The Bank of Canada said in the comments that negative factor, which was caused by deceleration of the global economy, can affect Canadian economic system as well, especially now when situation in the world financial trading floors has worsened sharply through the fault of the Euro.

 

[LF.Anastasia]

EUR/USD: Euro tends to continue moderate growth

At the Forex currency market the pair EUR/USD is traded upward on Tuesday morning, maintaining the trend which started at the beginning of the week.

By 8.50 MSK the Euro is at 1.2777 against yesterday’s closing level of 1.2771.

Investors’ optimism regarding the Euro is supported by external background which can be called neutral, as other facts only speaks about potency of future sales: spread on Greek bonds is increasing, indicating risks from this part; in addition, significant placement of Italian, Spanish and French bonds is expected.

In this regard, current growth should not be considered as a steady tendency.

Most likely the pair EUR/USD will not go beyond the range of 1.2720-1.2810 at the trading session on Tuesday.