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JPY: Japanese Yen reverted to growth

At the Forex currency market the Japanese Yen rate is traded upward on Friday. Market temporarily distracted from the idea of global economic collapse which immediately affected trades.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area, volumes are increasing, which all together gives a sell signal. Stochastic Oscillator is going down again, giving a similar signal.

Forex recommendations: : in case of breakdown at the level of 76.65, the pair will go to 76.50 and 76.45.

Macro-economic background in Japan is calm on Friday, although Mr. Azumi keeps reiterating that it is necessary to monitor external influence and the Yen. Statistics released this morning showed that diffusional index of consumer sentiments increased by 4.9 points and amounted to -57.5 points versus to -62.4 points in September.

Statistics released earlier showed that trade balance in Japan was at the level of -Y496.5 billion in December. In addition, bank lending increased by 0.5% y/y in December against the growth of 0.2% y/y in November.

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

Mr. Shirakawa, the head of the Bank of Japan 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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar tends to go upward

At the Forex currency market the Australian Dollar rate continues to tend upward at the end of the week, the rise in the pair AUD/USD has been going on for the fifth session in a row.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, giving a buy signal. Stochastic Oscillator is also rising up in the neutral zone, also giving a buy signal.

Forex recommendations: In case of breakdown at the level of 1.0355, the pair will go to 1.0360 and 1.0380. A chance of profit taking is possible before the weekend.

Market is becoming interested in risky positions again and the AUD looks attractive among other similar currencies, taking into account stability of the local economy and positive outlook for 2012.

Macro-economic background in Australia is tranquil.

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 increase of jobs by 10 thousand. The indicator reflects the impact of European debt problems on the Australian economy. 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. 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.

Statistics released today showed that number of construction permits in Australia increased by 8.4% m/m (-10.0% y/y) in November. Expected rise had been of 7%. Retail sales 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.

 

[LF.Anastasia]

CAD: Canadian Dollar continues to grow moderately

At the Forex currency market the Canadian dollar rate is still growing at the end of the second week of January.

Forex forecast: MACD indicator for the pair USD/CAD is going down in the negative area and is giving a sell signal. Stochastic Oscillator continues to decline in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at 1.0170, the pair will go to 1.0160 and 1.0140.

No fundamental changes took place in the pair. Activity decreased last night after decline in the oil prices; however market’s optimism about risk gives the CAD a chance to grow.

It became known yesterday that house price index in Canada rose by 0.3% in November against the growth of 0.2% in October and expectations of the same level.

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.

CPI in Canada increased by 0.1% m/m (+2.9% y/y) in November which agreed with the forecast. The growth is within the ball park, which meets with expectations and does not involve risk for the economy. The regulator had kept interest rate unchanged at the level of 1% per annum. The news did not take players by surprise, as investors assumed that the rate would 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 platforms has worsened sharply through the fault of the Euro.

The data released last week showed that 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.

 

[LF.Anastasia]

EUR/USD: Euro rushes downward

The pair EUR/USD is traded downward in the currency Forex market on Monday morning, continuing the trend which started on Friday night.

By 9.05 MSK the Euro is at 1.2642 against сlosing level of 1.2683 on Friday.

Several catalysts have caused massive sales of the Euro. First of all Greece suspended talks with private capital about writing off part of the debts due to lack of constructive proposals; secondly, rating agency S&P downgraded rating of 9 large European countries and forecasts for 7 countries were put for downward revision. Only Germany stands aside from general downgrade, while France and Austria were deprived of their highest rating of AAA.

Market remains tense this morning; on Monday France is going to place bonds in the debt market and it is possible that yield of bonds will indicate increasing risks.

Most likely the pair EUR/USD will not go beyond the range of 1.2590-1.2690 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound remains under pressure

The British Pound Sterling rate is traded downward at the Forex currency market on Monday, following some negative European news.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the negative area and is going down moderately, while volumes are increasing, and is giving a sell signal. Stochastic Oscillator tends to go out of the oversold zone, giving a weak buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5330, buyers’ targets will be the levels of 1.5345 and 1.5350 as part of correction. There is a high chance that aggressive sellers will be back in the pair, aiming to 1.5270.

A lot of negative information from Eurozone and rating agencies prevented the Pound to continue correction and a surge of sales, which was caused by risk aversion, has led the pair to the local lows. It is quite possible that sales, which are of emotional nature, have not yet completed.

The data released today showed that house prices Rightmove in the UK dropped by 0.8% m/m (+0.4% y/y) in January. Research Group stated that asking prices fell three times this month; however interest to the British real estate sector is still preserved. Meanwhile, according to experts’ estimate, situation in the sector remains “complex” in 2012, as unemployment rate is increasing and impact from European problem is not waning.

According to the data released earlier, house prices in the UK fell by 16% in December, as per RICS estimates. The Pound has neglected this statistics, concentrating on the external background.

At the meeting which was held last week, the Bank of England left interest rate at 0.50% per annum, volume of securities repurchase was also kept unchanged at 275 billion pounds. In other respects, views of MPC remained unchanged: there is no need to revise interest rate; therefore the Bank will continue to monitor economy and inflation.

It is worth noting that the Bank of England expects economic stagnation in Q4 2011 and GDP growth in Q1 2012. Revised GDP in the UK rose by 0.6% q/q (+0.5% y/y) in Q3.

Statistics released earlier showed that the UK retail price index BRC increased by 1.7% m/m in December against the rise of 2.0% a month earlier. Thus, the index fell to 16-month lows, largely due to Christmas sales, when retailers reduced prices. Prices declined by 0.1% on monthly basis.

 

[LF.Anastasia]

CHF: Swiss Franc retreats once again

At the Forex currency market Swiss Franc rate is traded downward on Monday in pairing with the USD. Anti-risk sentiment still dominates in the market.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, has gradually shifted sideways, not giving a clear signal. Stochastic Oscillator is going up slightly in the neutral zone, and is giving a clear buy signal.

Forex recommendations: in case of breakdown at 0.9555 USD/CHF will go to 0.9560 and 0.9570.

Activity in Swiss Franc is still high despite general pessimistic sentiment in the market.

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. 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.

Earlier, Swiss authorities said that government does not have tools for direct influence on SNB. Representatives of the Finance Ministry of the country stated that politicians have no ground to doubt the Bank’s strategies; however the issue with Hildebrand requires special consideration. Ministry also stressed that new head of SNB will be appointed only after further discussion.

We would remind that the head of Swiss National Bank Phillip Hildebrand resigned this week. The name of successor is still unknown and it is also not clear if new governor of the Bank will adhere to the same policy as his colleague in monetary issues. Swiss government noted that search for the head of SNB will take several months.

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. It became known earlier 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.

 

[LF.Anastasia]

JPY: Japanese Yen is gaining in strength again

At the Forex currency market the Japanese Yen rate reverted to growth again at the beginning of the week.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area, volumes are increasing, which, all together, gives a sell signal. Stochastic Oscillator is going sideways in the neutral zone and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 76.80, the pair will go to 76.70 and 76.50. It is also possible that the pair will consolidate at the current levels.

The data released on Monday showed that composite index of consumer confidence in Japan increased to 38.9 points in December against the level of 38.1 points in November.

At the same time, the head of the Bank of Japan Mr. Shirakawa said today that economic recovery in the Country of the Rising Sun has suspended and situation in Europe presents the most dangerous risk for the economy. Local companies have no problems with credits in the current conditions; however the situation can become more complicated due to external influence.

It is worth noting that according to the Bank of Japan 7 out of 9 regions of the country downgraded assessments of the economic situation in comparison the state of affairs in October. In two regions assessment has remained stable.

Statistics released earlier showed that trade balance in Japan was at the level of -Y496.5 billion in December. In addition, bank lending increased by 0.5% y/y in December against the growth of 0.2% y/y in November. Minutes of the last meeting of the Bank of Japan released earlier, stated that it is necessary to trace back the effect of the recent soft policy; potential impact from the expensive Yen also causes special concern.

Mr. Shirakawa, the head of the Bank of Japan 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.

 

[LF.Anastasia]

AUD: Interest in Australian Dollar is waning

At the Forex currency market the Australian Dollar rate is going down on Monday due to decline in investors’ interest to risky positions, caused by the flow of negative European news.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, giving a buy signal. Stochastic Oscillator started to decline shifting from sideways movement in the neutral zone and shaping a moderate sell signal.

Forex recommendations: In case of breakdown at the level of 1.0290, the pair will go to 1.0280 и 1.0270.

Statistics released today showed that mortgage lending in Australia increased by 1.4% m/m in November against the growth of 0.8% in October, which is a positive indicator.

It is interesting that the AUD did not fall too low on the surge of general sales which are of emotional nature. It is possible that this is an indication of stability in the currency and its positive prospects for the future.

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 increase of jobs by 10 thousand. The indicator reflects the impact of European debt problems on the Australian economy.

Statistics released earlier showed that number of construction permits in Australia increased by 8.4% m/m (-10.0% y/y) in November. Expected rise had been of 7%. Retail sales showed a zero change in November against the growth of 0.2% m/m in October.

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]

NZD: New Zealand Dollar is slowly sold out

At the Forex currency market the New Zealand rate has declined on Monday following decrease in the interest to risky assets in the market. However, sales in the pair NZD/USD are not significant.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the positive area and continues to go up and is giving a buy signal. Stochastic Oscillator tends to go out of the overbought zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7925, the pair will go to 0.7920 and 0.7900. There is a high chance that a pair will consolidate at the current levels.

Last week was quiet in New Zealand in terms of macro-statistics. The rate of the NZD responded mostly to the external background and the fact that only few sellers have been left in the current situation, speaks about instability in the currency.

It became known earlier that GDP in New Zealand increased by 0.8% q/q in Q3 (+1.9% y/y) against the forecast of +0.6% on quarterly basis. Significant support to the economy of New Zealand was provided by Rugby Championship which attracted a lot of investment into the country. 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 had almost stopped growing, however revived later. Most likely the index will be weaker in Q4.

We would remind that New Zealand statistics is published far too behindhand.

Trade balance in New Zealand was–NZ$*** million in October against NZ$784 million in September. The index remained in deficit last month although it was higher than forecasts of economists. Volume of exports 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.

According to the data released last week, business activity index in the service sector amounted to 56.6 points in November, as per BNZ estimates, against preliminary level of 51 points; thus the index has reached twenty-month highs now. The report also showed that new orders with companies and enterprises, as well as sales became a catalyst for activity. In addition, the rise in activity was recorded in the four major regions of the country for the first time this year.

 

[LF.Anastasia]

EUR/USD: Euro strives for recovering

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

By 9.15 MSK the Euro is at 1.2727 against yesterday’s closing level of 1.2664.

Market has regained very fast from the news about mass downgrade of the rating of large European countries by agency S&P and is restoring positions now. At the same time, players today has ignored information that the agency lowered long-term credit rating of the EU Financial Stability Fund down to AA+.

Traders rely on the successful in general auction of France which was held yesterday; despite downgrade of the rating in the country from the highest level of AAA, the yield of bonds fell.

American investors will be back in the market today; therefore activity is going to rise up in the afternoon.

Most likely the pair EUR/USD will not go beyond the range of 1.2680-1.2790 at the trading session on Tuesday.