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[LF.Anastasia]

GBP: British Pound completed Friday with growth

The British Pound Sterling was traded upward at the end of last week which was caused both by investors’ high sentiments and growing interest in risk.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it started to go up and is shaping a buy signal while volume are low. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible4 event scenario at Forex: in case of breakdown at the level of 1.5880 the pair GBP/USD will go to 1.5890 and 1.5910. If external negative factors intensify sales around 1.5700 is possible.

According to representatives of FPC, a sub-division of the Bank of England, all issues relating to financial stability of the UK are still highly uncertain. Problems of the European debts continue to put pressure on the British economy. However, measures of the ECB and especially auction LTRO had a positive effect on the banks of the country. At the same time the committee believes that the banks with more vulnerable financial structure should be more attentive to the problems of the European peripheral areas and in particular, to monitor sufficient level of capital.

Representative of British monetary authorities, Mr Osborn believes that assessment of the current budget efficiency is possible only when all indices are summed up statistically. Only after that it is be clear if the budget promotes economic growth or not. Osborn assured population of Great Britain that social programs, such as pensioners’ payments will not be affected when a new budget will be adopted; however tax burden for the well-off people will be increased.

Statistics released last week showed that retail sales in the UK fell by 0.8% m/m (+1.0% y/y) in February. At the same time sales excluding fuel decreased for the same amount last month; index in January was revised upward to +0.3% m/m.

Apparently, weak labour sector and high level of inflation continue to put pressure on the retails sales index. Unemployment rate was 5.0% in February, number of unemployed increased by 7.2 thousand. Weak employment sector prevents economic recovery of the country in general.

Other statistics demonstrates that not everything is that hopeless, for example, total volume of mortgage lending in the UK amounted to 10.7 billion pounds in February against 10.65 billion pounds in January. The data demonstrates stability in the construction market, which is favourable for the national economy in short term.

 

[LF.Anastasia]

CHF: Swiss Franc tends to grow

At the Forex currency market Swiss Franc rate completed last week upward demonstrating growing trend.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to the top and has merged with it, not giving a clear signal. Stochastic Oscillator went back to the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 0.9060 the pair USD/CHF will go to 0.9050 and 0.9030.

Swiss National Bank representative Mr. Dantin noted at the end of last week that main objective of SNB is to maintain the exchange rate of the pair EUR/CHF close to the level 1.20. In order to maintain current level and do ot let the pair go below this level the regulator at all cost is ready to do all possible including buying foreign currency unlimited quantities.

All seem fine and dandy, but readiness to curb pressure of the Franc can be seen only in word not in deed; in the last few months after resignation of Hildebrand from the post of the head of SNB, the regulator almost ceased interventions.

It became known earlier that imports increased by 0.7% y/y to the level of 14.04 billion francs in February, while imports rose only by 1.2% y/y (16.72 billion francs) last month. Balance of trade surplus amounted to 2.68 billion francs in February increasing against the previous level of 1.5 billion francs.

According to statistics released earlier, unemployment rate in Switzerland amounted to 3.4% in February-no changes.
GDP in the country rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero change (+1.1% y/y). This is good data, indicating that Swiss economy is getting used to expensive Franc. The regulator expects that inflation in 2012-2014 will be in the range of 0.6% tо +0.6%; growth of GDP will be at the level of 1.0% this year.

Manufacturing sector is still weak in Switzerland; however it demonstrates the signs of recovery. Manufacturing activity index SVME increased to 49.0 points in February against the forecast of 48.5 points. Statistics released on Monday showed that real retail sales increased by 4.4% in January against the growth by 1.7% y/y in January.

Three- month Libor rate of Swiss National Bank remained unchanged at the level of 0%. In general, SNB views on monetary policy remained unchanged.

Volume of industrial output in manufacturing sector of Switzerland declined in Q4- volume of industrial output amounted to -1.4% y/y for the reporting period against the level of -1.9% in Q3.

Orders of new industrial enterprises fell by 2% in Q4 2011.

 

[LF.Anastasia]

JPY: Japanese Yen tends to strengthen

At the Forex currency market the Japanese Yen rate grew up at the end of last week, upward trend has been observed for three consecutive days. The JPY seems quite oversold until now; therefore, it will be logical if correction in the pair USD/JPY takes place.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and is moving along the signal line, not giving a clear signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 82.30 the pair USD/JPY will go to 82.10 and 81.80.

Representative of the Federation of Steel and Metal said last week, that the rate of Yen is still quite high and Japanese currency should go down at least to the level 90.00, in such case economic recovery process will be much easier.

The Bank of Japan stated earlier that rules of Volkner should be reviewed more than once, as in case of Japan, adoption of this rule will mean that all profits from Japanese state bonds will be abated. The Regulator will advance his opinion at the meeting of Big Twenty.

Statistics released earlier showed that real revised GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. In addition, current account balance amounted to -Y437.3 billion against the forecast of +Y322.3 billion; while private consumption increased by 0.4% q/q last quarter against the forecast of 0.3% q/q.

Minutes of the February meeting of the Bank of Japan showed that some members of the Bank think that it would be expedient to establish threshold for inflation target at the level of 1-2%, while one vote was given for the target at 2%. The head of the Bank of Japan Mr. Shirakawa noted earlier that the regulator intends to ease monetary policy until inflation reaches the target of 1%. Statistics released last week showed that trade balance in the Country of the Rising Sun amounted to -0.31 trillion yen in February against -0.49 trillion yen. This is a negative signal.

The key factor of growth for the Yen is repatriation of the Japanese capital at the end of the fiscal year in the Country of the rising Sun. (The end of the fiscal year is on 31 March in Japan). Country’s GDP has been revised upward although it is still in the negative zone. Trade balance of the country remains in deficit.

 

[LF.Anastasia]

AUD: Australian Dollar remains close to local lows

At the Forex currency market the Australian Dollar rate completed last Friday with the rise; however it is still under some pressure from Chinese news, therefore it has been maintained near local lows.

Forex forecast: MACD indicator for the pair AUD/USD went into negative area, breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator pushed away from the neutral zone and is giving a buy signal now.

Forex recommendations: in case of breakdown at the level of 1.0470 the pair will aim to 1.0480 and 1.0510. In case of breakdown at 1.0430, sellers’ target will be the level of 1.0380.

This week is going to be quiet for the economy of Australia: country’s statistics will be released only on Friday; this will be the data on the volume of mortgage lending in February and lending rate of the private sector over the same period.

Local trading floors are still under pressure from Chinese news and continue to respond to the ongoing slowdown in Chinese economy, which caused significant sales in the AUD last week. Oil to the fuel was added by the report of the Australian government on commodity market which stated that export prices for energy resources (coal) will grow very slowly which will put pressure on the currency. Indeed, there are all grounds to believe that demand for iron ore in China will slow down.

Inflation in Q4 showed zero growth in the country against the forecast of rise of 0.4% on quarterly basis. Retail sales fell by 0.1% m/m in December versus the forecast of growth of 0.2%.

Such data can trigger the revise of the interest rate in ARB next month.

П Statistics released earlier showed that unemployment rate amounted to 5.2% in January against 5.1% earlier. Number of employed reduced by 15.4 thousand against the forecast of growth of 5 thousand. Index of leading indicators WESTPAC rose by 0.6% m/m in January against revised growth of 0.7% m/m in December.

Meeting of the RBA last week has neutral outcome: interest rate was kept unchanged at the level of 4.25% per annum. Comments of the Bank’s Governor Mr. Stevens were just plain: he said that the state of Australian economy enables to keep monetary policy unchanged.

Earlier investors reacted negatively to the latest comments of the company BNR. Company’s management circulated press- release expressing dissatisfaction with the tax on royalties. The AUD traders were quick to close positions.

 

[LF.Anastasia]

CAD: Canadian Dollar tries to rehabilitate

At the Forex currency market the Canadian Dollar rate tried to rehabilitate last Friday after dramatic fall earlier.

Forex forecast: MACD indicator for the pair USD/CAD goes up in the negative area and is giving a buy signal. Stochastic Oscillator has slowed its ascend in the neutral zone; however maintains a moderate signal for buying.

Forex recommendations: in case of breakdown at 0.9980 the pair will go to 1.0000 and 1.0030.

The rise above the parity level on Friday can be regarded as a chance that buyers will be back in the pair.

It became known last week that inflation in Canada increased by 0.4% m/m (+2.6% y/y) in February against expectations of growth of 0.5% m/m. At the same time net CPI grew by 0.4% m/m as well.

Prices for electric power and food became a catalyst for the rise in inflation levels.

It became known last week that unemployment rate in Canada fell from 7.4% to 7.6% in February, number of jobs declined by 2.8 thousand.

According to the data released earlier economic growth in Canada slowed down in Q4: real GDP in Canada amounted to +0.4% m/m in December against the forecast of +0.4% m/m. In general Canadian economy grew by 0.4% in the last quarter last year against +1.0% in Q3, which was caused by strong external impact and decline in interest to energy resources in the world at the end of the year.

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.

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%. Oil prices became the main driver for growth.

 

[LF.Anastasia]

EUR/USD: Euro is lacking new drivers for movement

The pair EUR/USD is traded slightly upward at the FOrex currency market on Monday.

By 8.15 Moscow time the Euro is at 1.3262 against closing session level of 1.3268 on Friday.

There have not been new grounds for the rise in the major pair; this week is going to be quiet in terms of macro-statistics, as well as external background.

In general, the pair Euro/USD is prepared to remain in the oversold area for some more time, as “bulls” and “bears” need more incentives for movement.

External environment will remain the main basis for determining movement direction at trades today, since there is not much new macro-statistics on Monday.

Most likely the pair EUR/USD will not go beyond the range of 1.3205-1.3295 at the trading session on Monday.

 

[LF.Anastasia]

EUR/USD: Euro stands still after the rise

The pair EUR/USD goes down slightly at the Forex currency market on Tuesday morning after the rally last night.

By 8.20 Moscow time the Euro is at 1.3344 against yesterday’s closing level at 1.3357.

Positive factor at the end of yesterday’s session was provided by the chairman of the U.S. Federal Reserve Ben Bernanke who noted in his speech before representatives of the Bank association that the regulator is going to continue accommodative policy even provided that labour market statistics will be positive.

This news cheered up investors who expected more reserved comments.

Apart from this, there have not been any new reasons to continue rally in the pair EUR/USD this morning.

Macro-economic background will not be too eventful today; therefore the players will be guided by the external developments.

Most likely the pair EUR/USD will not go beyond the range of 1.3270-1.3350 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound might continue to strengthen

At the Forex currency market the British Pound Sterling rate stands still on Tuesday, estimating market sentiment after the rally in the afternoon on Monday.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it started to go up and is shaping a buy signal, while volume are increasing. Stochastic Oscillator is still in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5970 the pair GBP/USD will go to 1.5990 and 1.6010. Consolidation is possible at the current levels.

Mr. Miles, representative of the Bank of England believes that the main essence of the assets repurchase program primarily is to achieve targeted inflation level but not to finance deficit in state budget and withdrawal from QE will completely depend on inflationary forecast.

Miles also stressed yesterday that process of standardization of monetary policy will probably begin with the rise in rates.

Representative of British monetary authorities, Mr. Osborn believes that it will be possible to assess efficiency of the current budget only when all indices are summed up statistically. Then, it will be clear whether the budget contributes to economic growth or not. Osborn assured population of Great Britain that social programs, such as pensioners’ payments, will not be affected when a new budget will be adopted; however tax burden for the well-off people will be increased.

According to representatives of FPC, a sub-division of the Bank of England, all issues relating to financial stability of the UK are still highly uncertain. Problems of the European debts continue to put pressure on the British economy. However, measures of the ECB and especially auction LTRO had a positive effect on the banks of the country. At the same time the committee believes that the banks with more vulnerable financial structure should be more attentive to the problems of the European peripheral areas and in particular, to monitor sufficient level of capital.

Statistics released last week showed that retail sales in the UK fell by 0.8% m/m (+1.0% y/y) in February. At the same time sales, excluding fuel, decreased for the same amount last month; index in January was revised upward to +0.3% m/m. Apparently weak labour sector and high level of inflation continue to put pressure on the index of retails sales. Unemployment rate was 5.0% in February, number of unemployed increased by 7.2 thousand. Weak employment sector prevents economic recovery of the country in general.

 

[LF.Anastasia]

CHF: Swiss Franc slowed down rates of growth

At the Forex currency market Swiss Franc rate is traded slightly downward on Tuesday after steady rise at the beginning of the week.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to the top, however it did not go further above, but merged with the line, not giving a clear signal. Stochastic Oscillator has come back into oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 0.9030 the pair USD/CHF will go 0.9020 and 0.9000.

Perresentative of Swiss Finance Ministry said on Monday that the rate of the pair EUR/CHF shall be pegging in the range of 1.35-1.40 but not at 1.20 as it is now. Finance Minister said in his interview to the local TV that he would welcome strengthening of the pair; however this matter is under control of SNB.

Disagreement about the levels rates of the pair is natural: Mr. Dantin noted recently that the main objective of SNB is to maintain exchange rate of the pair EUR/CHF around the level of 1.20. In order to maintain current level and prevent dipping of the pair below this level, the regulator is ready to do all possible, including buying foreign currency unlimited quantities.

All seem fine and dandy, but readiness to curb the rise of Franc is demonstrated in word only, but not in deed; during the last few months after resignation of Hildebrand from the post of the head of SNB, the regulator almost ceased interventions.

GDP in the country rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero change (+1.1% y/y). This is the favourable data showing that Swiss economy is getting used to expensive Franc. The regulator expects that inflation in 2012-2014 will be in the range of 0.6% tо +0.6%; growth of GDP will be at the level of 1.0% this year. Manufacturing sector is still weak in Switzerland; however it demonstrates the signs of recovery. Manufacturing activity index SVME increased to 49.0 points in February against the forecast of 48.5 points. Statistics released on Monday showed that real retail sales increased by 4.4% in January against the growth by 1.7% y/y in January.

Three- month Libor rate of Swiss National Bank remained unchanged at the level of 0%. In general, SNB’s position on monetary policy has remained unchanged.

Production in the industrial sector of Switzerland fell again in Q4; volume of industrial output amounted to -1.4% y/y for the reporting period against the level of -1.9% in Q3.

It became known earlier that imports increased by 0.7% y/y to the level of 14.04 billion francs in February, while exports rose only by 1.2% y/y (16.72 billion francs) last month. Balance of trade surplus amounted to 2.68 billion francs in February. It is the increase against previous level of 1.5 billion francs. According to the data released earlier, unemployment rate amounted to 3.4% in February- no changes.

 

[LF.Anastasia]

JPY: Interest in Japanese Yen decreased again

At the Forex currency market the Japanese Yen rate goes down on Tuesday, as market is relishes for risk and investors are not interested in safe currency.

Forex forecast: MACD indicator for the pair USD/JPY goes down in the positive area and is giving a sell signal. Stochastic Oscillator has pushed away from the oversold zone and is now increasing in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at 82.90 the pair USD/JPY will go to 83.00 and 83.20.

Finance Minister of Japan Mr. Azumi said this morning that the country has been observing over the process of negotiations in Europe on establishment of the so-called protective barrier- the comment was made in response to expectations whether Japan will participate in the fight against European debt crisis through contribution to IMF.

Statistics released earlier showed that real revised GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. In addition, current account balance amounted to -Y437.3 billion against the forecast of +Y322.3 billion; while private consumption increased by 0.4% q/q last quarter against the forecast of 0.3% q/q.

Minutes of the February meeting of the Bank of Japan showed that some members of the Bank think that it would be expedient to establish threshold for inflation target at the level of 1-2%, while one vote was given for the target at 2%. The head of the Bank of Japan Mr. Shirakawa noted earlier that the regulator is going to keep on easing monetary policy until inflation reaches the target of 1%. Statistics released last week showed that trade balance in the Country of the Rising Sun amounted to -0.31 trillion yen in February against -0.49 trillion yen. This is a negative signal.

Country’s GDP has been revised upward although it is still in the negative zone. Trade balance of the country remains in deficit. Representative of the Federation of Steel and Metal said at the end of last week, that the rate of the Yen is still quite high and Japanese currency should go down at least to the level 90.00, which will make economic recovery process much easier.

The Bank of Japan stated earlier that rules of Volkner should be reviewed and discussed more than once, since in case of Japan, adoption of this rule will mean that all profits from Japanese state bonds will be abated. The Regulator will express his opinion at the meeting of Big Twenty.