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[LF.Anastasia]

EUR/USD: Market is subdued for Euro at the end of the week

The pair EUR/USD is traded downward at the Forex currency market on Friday.

By 9.00 Moscow time the Euro is at 1.3300 against yesterday’ level of 1.3306.

Market does not have motives for determining movement direction: on the one hand, Greece has piloted through Parliament all financial commitments, on the other hand the state of affairs in the country and generally in Eurozone remains complex.

A speech of the chairman of the U.S. Federal Reserve Ben Bernanke given for the second time in a row was taken quetly, as market has not learnt anything fundamentally new; opinion of the monetary politician that there is still no need in QE3, supports positions of the USD.

It is hardly probable that market will start moving to either of directions at the trades today, as the data flow is going to be insignificant today.

Most likely the pair EUR/USD will not go beyond the range of 1.3260-1.3350 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound stands still on Friday

At the Forex currency market the British Pound Sterling rate traded mildly amid neutral external background.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has shifted to sideways movement, and is not giving a clear signal. Stochastic Oscillator maintains positions in the overbought zone and is shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5950, the pair GBP/USD will go to 1.5960 and 1.5970. If tendency to correction prevails, the pair will aim at 1.5850.

It seems that representatives of the Bank of England have become more enthusiastic in spring in their evaluation of economic situation. Thus, Mr. Miles noted that inflation in Britain will continue to decline, which will be triggered by reduction in a number of jobs and reserve capacity. At the same time, policy of quantitative easing will promote the rise in assets price and increase in demand. Miles found it difficult to assess the impact of assets purchase; however he believes that if it were not for QE, domestic demand would have been significantly affected.

Mr. Weale noted earlier that the rates could be raised before the regulator would roll back stimulus measures. At the same time, Weale does not think that easy attitude to inflation for the sake of economic stimulus is a good idea. Minutes of the meeting of the Bank of England which was made public in February, did not bring any surprises. Thus, two of its members, Posen and Miles voted for expansion of the assets repurchase program for 75 billion pounds, while other seven monetary politicians were for expansion of the volume of QE for 50 billion. All members of MPC were unanimous in regards to interest rate. The minutes showed that some members of MPC expressed opinion that further stimulation should be discontinued. So, “hawks” are back again in the pure “dove-like” MPC.

Consumer sentiment index GFK/NOP was at the level of -29 points in February. House prices Hometrack have not changed on monthly basis (-1.4% y/y). The Pound has ignored this statistics. We would remind that at the regular meeting in February the Bank of England increased asset repurchase program by 50 billion pounds, to the level of 325 billion pounds, as expected. Mr. Osborn stated commenting this decision that the increase of QE will help achieve inflation target (official target is 2% and it has not been changed for about two years.) According to Osborn, current monetary policy is still the primary instrument of influence on economic changes. Analysis of the Bank of England proved efficiency of QE.

 

[LF.Anastasia]

CHF: Swiss Franc slowly retreats

At the Forex currency market Swiss Franc rate continues to weaken on Friday, maintaining previous trend. Market just does not have new trading drivers; therefore current decline can be regarded as a technical pullback in the passive market.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving along the signal line again, not giving a clear signal. Stochastic Oscillator has left oversold zone and is going up, giving a buy signal.

Forex recommendations: in case of breakdown at 0.9075 the pair USD/CHF will go to 0.9090 and 0.9110.

Manufacturing sector in Switzerland is still weak; nevertheless it began to demonstrate tendency to recovery- index of manufacturing activity SVME increased to 49.0 points in February against the forecast of 48.5 points.

According to the data released earlier, GDP in Switzerland rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero change (+1.1% y/y). The data is good and proves that Swiss economy is getting used to expensive Franc. It is still unclear why Swiss National Bank does not take any steps; probably the reason is that the regulator does not have official leader.

According to the previous data, inflation in Switzerland fell by 0.4% m/m (-0.8% y/y) in January against expectations of decline of 0.2% m/m. This is the fourth consecutive drop in the index and at the same time it is maximal fall since October 2009. Expensive Yen seriously has a serious impact on economic progress: at the beginning of the year import of consumer goods fell by 1.8% m/m (-3.2% y/y), however the goods of Swiss production rose in price by 0.1% m/m. Therefore, inflation threat is becoming more tangible in Switzerland. Index of economic expectations ZEW rose to -21.2 points in February against the level of -50.1 points in January. Trade balance in Switzerland amounted to -1.553 billion francs in January against the forecast of -2.50 billion francs. The report showed that exports decreased by 3.4% last month against preliminary estimate of growth of 6.1%; imports increased by 3.6% (preliminary forecast: +7.6% m/m).The data is not too positive, since levels of exports are in the red again.

According to representative of SNB Mr. Jordan, situation in Europe has arisen concern at the moment; nevertheless it is feasible to overcome difficulties associated with debt crisis. He also noted that budget costs shall be reduced first of all, after that anti-crisis measures will be implemented automatically. Earlier monetary politician Jordan acting as a head of SNB said that the regulator is firmly determined to maintain the level of 1.20 in the pair Euro/Franc. He is also prepared to adopt additional measures if economic situation requires. He also confirmed that economic growth rate slowed down this year in Switzerland, although there is no risk of the rise in inflation. He believes that Franc is still too strong and reduction in its price is urgently required.

 

[LF.Anastasia]

JPY: Japanese Yen maintains positions in the range

Japanese Yen rate is traded downward at the Forex currency market on Friday, maintaining in the previous oversold range of 80.01-81.66.

Forex forecast: MACD indicator is going up in the positive area for the pair USD/JPY and maintains a buy signal. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 81.45 the pair will go to 81.50 and 81.60.

The head of the Bank of Japan Mr. Shirakawa said today that the regulator is going to continue monetary easing policy until inflations reaches targeted 1%.

Statistics released this morning showed that economic recovery process in the country of the Rising Sun is complicated: unemployment rate amounted to 4,6% in January which agreed with the forecast. Job creation process in Japan is complex as well: unemploymentrate amounted to 4.2% in September and reached 4.5% in December. Employment fell by 350 thousand in January (-0.6%).

However, other indexes show that financial infusion of the Bank of Japan into economy has had its effect. According to statistics released in the morning, capital expenditures rose by 7.6% y/y in Q4 against the forecast of decline of 6.4% and preliminary expectations of -9.8%. The data showed the highest increase since 2007, which is more than favourable for the global outlooks of the Japanese economy.

Representative of the Bank of Japan Mr. Kamedzski believes that in case of loss of confidence, Japanese government bonds will not be able to act as safe assets. The politician thinks that the regulator shall take preventive steps to avoid such a scenario.

In general, these were comments of the Bank of Japan that triggered sales of JPY. At the meeting this week, the Bank of Japan left interest rate at the level of 0.1% per annum; however the Bank has made a step, unexpected for the market increasing volume of the asset repurchase program to 65 trillion yen versus 55 trillion yen previously. This decision was unanimous, as well as the other one: program of purchases of long-term bonds was expanded to Y19 trillion from Y9 trillion. In addition, Central Bank surprised market again, by stating that according to the bank it will be reasonable to set inflation target at 1%, as economic forecasts are extremely hazy. It was Bank’s view on the CPI target that forced the market to revise trading strategies for the Yen. Radical measures of the Central Bank are just a continued reaction to statistics: GDP in Japan fell by 2.3% y/y in Q4 2011, since European crisis and slowdown in the global economic rate have prevented recovery after natural disaster.

 

[LF.Anastasia]

AUD: Australian Dollar is subdued on Friday

The Australian Dollar rate does not demonstrate significant fluctuations at the Forex currency market at the end of the week. Foreign trading floors are tranquil today.

Forex forecast: MACD indicator for the pair AUD/USD is in the positive area, it goes down and is shaping a sell signal. Stochastic Oscillator reverses in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0780 the pair will go to 1.0770 and 1.0750.

Macro-economic situation in Australia is stable.

It became known yesterday that index of industrial activity AiG in Australia fell by 51.3 points in February against preliminary expectations of 51.6 points. In addition, number of permits to construct rose by 0.9% m/m in January against the forecast of growth of 0.2% m/m (-14.6% y/y).

Aggregate activity index Aig in the service sector increased to 51.9 points in January (+2.9 points) against growth of 1.3 points a month earlier. The index has been growing for the third month in a row, while major growth in activity is associated with households. Nevertheless, AiG noted in the comments, that revival in the index is evident only in three out of nine components.

According to statistics released earlier, index of wages rise has increased by 1.0% on quarterly basis in Q4 against the previous growth of 0.7%. Growth amounted to 3.6% on annual basis. Statistics released earlier showed that lending in the housing sector of Australia rose by 2.4% in December against the forecast of growth of 1.8%. Inflation in the country showed zero growth in Q4 against the forecast of growth of 0.4% on quarterly basis. Retail sales in January fell by 0.1% m/m against forecast of growth of 0.2%. Statistics released earlier showed that activity index in the manufacturing sector rose by 1.4% in January, up to 51.6 points, as per AI GROUP estimates.

 

[LF.Anastasia]

CAD: Canadian Dollar is being corrected after rapid growth

At the Forex currency market the Canadian Dollar rate is being corrected on Friday after four day of steady growth.

Forex forecast: MACD indicator for the pair USD/CAD is in the negative area and is going up slightly, giving a buy signal. Stochastic Oscillator pushes away from oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at 0.9875 the pair will go to 0.9890 and 0.9910.

Current account balance in Canada amounted to –CAD$10.33 billion in Q4 against expectations of -CAD$9.6 billion.

Prices for industrial goods in Canada rose by 0.3% in January against the forecast of growth of 0.1%. The CAD has ignored this statistics.

Oil prices became the main driver for growth.

According to the data released earlier, real GDP in Canada fell by 0.1% m/m in November (+2.0% y/y) against expectations of 0.2% m/m. New orders in the manufacturing sector fell by 2.8% in December against prior expectations of +3.6%. Number of outstanding orders in this sector fell by 1.6% (versus +1.2% previously); Sales in this sector were low: growth amounted 0.6% in December against expected +1.9%. Leading indicator index rose by 0.8% m/m in December against the forecast of +0.6% m/m.

CPI fell by 0.6% m/m (+2.3% y/y) in December against the forecast of -0.1% m/m. Despite this obvious fact, the data requires some clarification. Annual growth of CPI has been minimal since February 2011, and inflation reduced due to decline in prices for gasoline and other fuel. Therefore, basing on the current inflationary situation, the Bank of Canada can keep inflation at the existing level for some more time with no damage for its monetary policy.

The head of the Bank of Canada Mr. Carney believes that current rates comply with monetary situation. Recall that in the middle of the week, the Bank of Canada kept interest rate at the level of 1.0% per annum, which was not a surprise for the market.The Bank of Canada expressed concern about the state of the housing sector; according to the regulator 10% -decline in the sector can lead to reduction in consumption by 1% although the bulk of credits on property were used to finance consumption.

 

[LF.Anastasia]

GBP: British Pound to be sold actively

At the Forex currency market trading of the British Pound Sterling ended on Friday by massive sales.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has shifted to sideways movement, and is not giving a clear signal. Stochastic Oscillator decreases in the neutral zone and indicates sales and is shaping a sell signal.

Forex recommendations: in case of breakdown at 1.5830 GBP / USD the pair will go to 1.5810 and 1.5790.
Macroeconomic environment is calm by Monday in the UK.

It seems that representatives of the Bank of England have become more enthusiastic in spring in their evaluation of economic situation. Thus, Mr. Miles noted that inflation in Britain will continue to decline, which will be triggered by reduction in a number of job sand reserve capacity. At the same time, policy of quantitative easing will promote the rise in assets price and increase in demand. Miles found it difficult to assess the impact of assets purchase; however he believes that if it were not for QE, domestic demand would have been significantly affected.

Mr. Weale noted earlier that the rates could be raised before the regulator would roll back stimulus measures. At the same time, Weale does not think that easy attitude to inflation for the sake of economic stimulus is a good idea. Minutes of the meeting of the Bank of England which was made public in February, did not bring any surprises. Thus, two of its members, Posen and Miles voted for expansion of the assets repurchase program for 75 billion pounds, while other seven monetary politicians were for expansion of the volume of QE for 50 billion. All members of MPC were unanimous in regards to interest rate. The minutes showed that some members of MPC expressed opinion that further stimulation should bed is continued. So, "hawks" are back again in the pure "dove-like" MPC.

We would remind that at the regular meeting in February the Bank of England increased asset repurchase program by 50 billion pounds, to the level of 325billion pounds, as expected. Mr. Osborn stated commenting this decision that the increase of QE will help achieve inflation target (official target is 2% and it has not been changed for about two years.) According to Osborn, current monetary policy is still the primary instrument of influence on economic changes. Analysis of the Bank of England proved efficiency of QE.
Consumer sentiment index GFK/NOP was at the level of -29 points in February. House prices Hometrack have not changed on monthly basis (-1.4% y/y).

 

[LF.Anastasia]

CHF: temporarily the market lost interest in the Swiss franc

At the Forex currency market Swiss Franc rate last week was closed by sales, and the weakness of the CHF was continued in three sessions in a row. While sales of currency are directly related to the external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving along the signal line again, not giving a clear signal. Stochastic Oscillator grows in the neutral zone, indicating the relevance of buy and gets ready to enter into the overbought zone.

Forex recommendations: in case of breakdown at 0.9150 the pair USD/CHF will go to 0.9160 and 0.9190. Consolidation is near of current values.
Swiss National Bank still maintains neutrality regarding the conduct of the franc.

According to the data released earlier, GDP in Switzerland rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero change (+1.1% y/y). The data is good and proves that Swiss economy is getting used to expensive Franc. Manufacturing sector in Switzerland is still weak; nevertheless it began to demonstrate tendency to recovery- index of manufacturing activity SVME increased to 49.0 points in February against the forecast of 48.5 points.

According to the previous data, inflation in Switzerland fell by 0.4% m/m (-0.8% y/y) in January against expectations of decline of 0.2% m/m. This is the fourth consecutive drop in the index and at the same time it is maximal fall since October 2009. Expensive Yen seriously has a serious impact on economic progress: at the beginning of the year import of consumer goods fell by 1.8% m/m (-3.2% y/y), however the goods of Swiss production rose in price by 0.1% m/m. Therefore, inflation threat is becoming more tangible in Switzerland. Index of economic expectations ZEW rose to -21.2 points in February against the level of -50.1 points in January.

According to representative of SNB Mr. Jordan, situation in Europe has arisen concern at the moment; nevertheless it is feasible to overcome difficulties associated with debt crisis. He also noted that budget costs shall be reduced first of all, after that anti-crisis measures will be implemented automatically. Earlier monetary politician Jordan acting as a head of SNB said that the regulator is firmly determined to maintain the level of 1.20 in the pair Euro/Franc. He is also prepared to adopt additional measures if economic situation requires. He also confirmed that economic growth rate slowed down this year in Switzerland, although there is no risk of the rise in inflation. He believes that Franc is still too strong and reduction in its price is urgently required.

Trade balance in Switzerland amounted to -1.553 billion francs in January against the forecast of -2.50 billion francs. The report showed that exports decreased by3.4% last month against preliminary estimate of growth of 6.1%; imports increased by 3.6% (preliminary forecast: +7.6% m/m).The data is not too positive, since levels of exports are in the red again.

 

[LF.Anastasia]

CAD: Canadian Dollar broke the growth

At the Forex currency market Canadian dollar broke the growth. Trading day was closed by fall on background's decrease of interest to all high profitable currencies without exception in the market last Friday.

Forex forecast: MACD indicator for the pair USD/CAD is in the negative area and is going up slightly, giving a buy signal. Stochastic Oscillator pushes away from oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at 0.9890 the pair will go to 0.9910 and 0.9930.

Friday statistics showed that, Canada's economic growth slowed down in the IV quarter of 2011 - the real GDP in December up to 0.4% m / m vs. 0.3% m / m, but in general, Canadian economy grew by 0.4% only in the last quarter of previous year against 1.0% in the III quarter.

Here affects a strong external influence and the decline of interest to energy in the world last year.

Current account balance in Canada amounted to -CAD$10.33billion in Q4 against expectations of -CAD$9.6 billion.

Prices for industrial goods in Canada rose by 0.3% in January against the forecast of growth of 0.1%. The CAD has ignored this statistics. Oil prices became the main driver for growth.

According to the data released earlier, real GDP in Canada fell by0.1% m/m in November (+2.0% y/y) against expectations of 0.2% m/m. New orders in the manufacturing sector fell by 2.8% in December against prior expectations of +3.6%. Number of outstanding orders in this sector fell by 1.6% (versus +1.2% previously); Sales in this sector were low: growth amounted 0.6% in December against expected +1.9%. Leading indicator index rose by 0.8% m/m in December against the forecast of +0.6% m/m.

The head of the Bank of Canada Mr. Carney believes that current levels of the rates comply with monetary situation. Recall that in the middle of the week, the Bank of Canada kept interest rate at the level of 1.0% per annum, which was not a surprise for the market. The Bank of Canada expressed concern about the state of the housing sector; according to the regulator 10%-decline in the sector can lead to reduction in consumption by 1% although the bulk of credits on property were used to finance consumption.

CPI fell by 0.6% m/m (+2.3% y/y) in December against the forecast of -0.1% m/m. Despite this obvious fact, the data requires some clarification. Annual growth of CPI has been minimal since February 2011, and inflation reduced due to decline in prices for gasoline and other fuel. Therefore, basing on the current inflationary situation, the Bank of Canada can keep inflation at the existing level for some more time with no damage for its monetary policy.

 

[LF.Anastasia]

EUR/USD: Euro continues to sell

The EUR/USD on Monday morning in the Forex currency trading on the downside.

By 8.15 Moscow time the euro is at 1.3192 against the closing of trading on Friday at 1.3203.

The main couple is still under pressure, as the market continues to assess the prospects for solutions to Greece and saw no new drivers for your purchase.

During the day the players' attention will be focused on European statistics - in particular, the index of business activity in the service sector in February. In the afternoon, will be published on the U.S. economy.

This week, as expected, the final decision on allocation of the second package of financial aid to Greece - this factor into account in the same market prices.

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