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[LF.Anastasia]

Forex Analytics of LiteForex of 06.10.10: CHF: Swiss Franc breaks new price records

Swiss Franc rate continues to go up at the Forex currency market in the middle of the week - amidst Dollar’s weakness the currency breaks new price records.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it goes down confirming a pair previous sell signal. Stochastic Oscillator is giving a similar signal today being in the oversold area.
Forex recommendations: traders’ targets today will be the levels of 0.9600 and 0.9570.
It should be noted that the pair’s bearish trend is still quite strong.
Deputy Chairman of the Swiss National Bank Mr. Jordan noted yesterday that CHB risks of excess liquidity level can increase in the current economic situation and at the current rate level. The largest banks of the county such as UBS and Credit Suisse Group can also represent a threat although their interests do not intersect. Jordan stressed that the regulator is aware of the risk of keeping interest rate at the low level for a long period. Earlier the Bank of Switzerland representatives noted that economic incentives have almost no effect on the situation in the country and it is time now to return to the issues of bankruptcies of major players in the financial sector.
GDP level in Switzerland rose by 0.9% on quarterly basis (+3.4% y/y) in QII against the forecast of +0.8% (+2.6% y/y) and private consumption index in Switzerland increased to 1.86 in July against the previous value of 1.81 (revised data:1.80). Index is calculated on the basis of the several indicators and the fact that it is above 1.50 is an indication of the favourable economic development in the country. Thus Franc has become a serene harbor once again amid dollar’s instability.
Citigroup believes that GDP in Switzerland will increase by 3% this year which is significantly higher than the average forecast in comparison with the other countries. At the same time inflation levels are still close to the lows.
It is clear that in the light of such forecast the SNB will keep the rate low for a long time since there is no need to tighten monetary policy any more.
Thus current monetary policy of the SNB is advantageous to the Franc as investors highly appreciate stability while buying the currency.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 06.10.10: JPY: Japanese Yen consolidates despite authorities’ measures; however it can form outset
At the Forex currency market the Japanese Yen rate continues to grow on Wednesday although yesterday the JPY was under pressure caused by the Bank of Japan actions when they unexpectedly reduced the rate to 0%.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it moves along the signal line not giving a clear signal. Stochastic Oscillator has not identified a signal either being in the oversold area.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 83.40 the pair will go to 83.90 and 84.40. If the level of 82.90 is exceeded, traders’ targets will become the levels of 82.60 and 82.00.
Japanese Finance Minister Noda stated on Tuesday that the country’ s policy should change in regard to deflation and expensive Yen– currency fluctuation in the long term should stabilize and deflation should retreat. As for the rising price of the Yen- it should not be the sole responsibility of the Bank of Japan as authorities also have leverage over currencies rates.
The Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1%. This decision was a surprise to the market as although traders were prepared for the actions to mitigate monetary policy they could not expect it to turn this way.
The head of the Bank of Japan Shirakawa said in the comments that 2-years rates would be also reduced which would help to widespread the effect of soft policy. At the same time the Bank of Japan representative Suda noted later that economy is still in danger of bubbles in the government bonds sector.
It also became known on Tuesday that a new fund is going to be founded in the amount of 5 trillion yens to pour liquidity into the Japanese financial system – and in particular for the purchase of the government bonds and other assets.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 06.10.10: AUD: Australian Dollar got over its weakness

At the Forex currency market the Australian Dollar rate is traded upward on Wednesday getting over its yesterday’s weakness caused by the RBA decision to keep the interest rate at the previous level. High oil prices and the USD weakness also serve to the benefit of the Aussie.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it is going up giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today being in the overbought area.
Forex recommendations: buyers’ targets today will be the levels of 0.9800 and 0.9850.
Yesterday the RBA left the interest rate unchanged while market expected the rate increase to 4.75% - Stevens, the head of the Bank, noted in his comments later that at some moment in the future the economy may require higher interest rates. In principle such a clause should contain the AUD’s fall however the currency descending movement deprives buyers of the hope for parity with the USD.
Interest rate has been at the current level for half a year already.
According to the data released earlier leading indicators index in Australia increased by 0.4% to 269.5 in July as per Westpac-Melbourne estimation; at the same time its annual growth rate reduced to 6.8% against the previous level of 7.4%. As the chief Westpac economist Bill Evans noted current forecast assumes that average growth in 2010 will amount to 3.5% and it will be steady until the end of the year despite sudden changes in some sectors. Coincident indicators index also increased by 0.4% (+4.3% y/y) in July; Evans stressed that such data can encourage the RBA to raise interest rate to 4.75% at the next meeting.
The other statistics shows that GDP level in Australia rose to the maximum value of the last three years in QII demonstrating increase by 1.2% against the forecast of 0.9%. Previous index value was at the level of 0.7%. Economists believe that Chinese demand for iron ore is an activator of the Australian economic growth.
Probably this was the data that put constraint on the rate growth on Tuesday.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 07.10.10: Trading range for EUR/USD today is 1.3850-1.3990

The pair EUR/USD continues to grow at the Forex currency market on Thursday – investors are still waiting for actions from the Federal Reserve to continue quantitative easing policy.
By 10.30 Moscow time the Euro is at 1.3940 against the closing session level of 1.3929 yesterday.
The meetings of the English Bank and Central European Bank are scheduled for today. The U.S. data will be released and it is expected that a number of unemployment benefit applications increased by 2 thousand last week to 455 thousand.
Another important piece of the U.S. news will be released on Friday – Labour Ministry statistics which is expected to report on the growth of jobs in the U.S. economy.
As for the rates in Great Britain and Eurozone –market is positive that they will be kept at the previous levels.
Presumably the pair EUR/USD will be in the range of 1.3850-1.3990 on Thursday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 07.10.10: GBP: Pound continues to grow even in advance of the Bank of England meeting

At the Forex currency market the British Pound Sterling rate continues to grow – as a whole ascending trend has been going on for the fifth consecutive session.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD today however it goes down giving grounds for a pair sell signal. Stochastic Oscillator is not giving a clear signal so far being in the neutral zone.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.5810 the pair will go to 1.5750 and 1.5700. If the level of 1.5930 is exceeded, buyers’ targets will be the levels of 1.5960 and 1.5990.
The meeting of the Bank of England will be held today; it is expected that the interest rate will be kept at the previous level of 0.5% which has been maintained since 5 March 2009.
The UK employment data released yesterday showed that labor market in the country is still weak, jobs are not created as companies still cannot estimate exactly the prospects (temporary jobs index is 52.8 in September against 54.0 in August; permanent jobs index is 54.6 in September against 56.3 in August).
The Bank of England representative Posen noted earlier that one should not underestimate the potential for economic growth in the UK; measures to increase incentives are perfectly logical in this situation. According to him there are evident reasons now for buying British bonds and it would be better if Central Banks coordinated their efforts. The Bank of England representative Bean noted before that the main purpose of the regulator’s soft policy is to stimulate consumer spending which will support the country’s economy in the medium-term. Bean described MRS current approach as aggressive and directed exclusively.
We cannot ignore the data of the early week. Monday PMI in the construction sector increased to 53.8 in September against the previous level of 52.1 and market forecast of 51.4. Thus statistics showed that the state of the UK industry did not become worse but it has improved instead. However housing market is still a weak point of the UK economy. We would remind that as it became known last week mortgage lending in Great Britain increased by 1.7 billion pounds in August; consumer lending level in the country rose by 1.5 billion pounds in August.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 07.10.10: CHF: Swiss Franc continues to upgrade historical records

Swiss Franc rate soared up to the new highs at the Forex currency market – now the top standard for the currency is the level of 0.9598.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it demonstrates slight growth giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: in general after five days of active growth and overheating of the pair following the new records the Franc is in long-standing need of the technical correction. If bulls of the pair USD/CHF wake up buyers’ targets can become the levels of 0.9625 и 0.9650.
However it is worth remembering that the bearish impact on the pair is still quite high which can push it further to 0.9550 и 0.9500.
GDP level in Switzerland rose by 0.9% on quarterly basis (+3.4% y/y) in QII against the forecast of +0.8% (+2.6% y/y) and private consumption index in Switzerland increased to 1.86 in July against the previous value of 1.81 (revised data:1.80). Index is calculated on the basis of the several indicators and the fact that it is above 1.50 is an indication of the favourable economic development in the country. Thus Franc has become a serene harbor once again amid dollar’s instability.
Citigroup believes that GDP in Switzerland will increase by 3% this year which is significantly higher than the average forecast in comparison with the other countries. At the same time inflation levels are still close to the lows.
It is clear that in the light of such forecast the SNB will keep the rate low for a long time since there is no need to tighten monetary policy any more.
Deputy Chairman of the Swiss National Bank Mr. Jordan noted yesterday that CHB risks of excess liquidity level can increase in the current economic situation and at the current rate level. The largest banks of the county such as UBS and Credit Suisse Group can also represent a threat although their interests do not intersect. Jordan stressed that the regulator is aware of the risk of keeping interest rate at the low level for a long period. Earlier the Bank of Switzerland representatives noted that economic incentives have almost no effect on the situation in the country and it is time now to return to the issues of bankruptcies of major players in the financial sector.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 07.10.10: JPY: Yen continues to grow; Dollar is at 15-years low

At the Forex currency market the Japanese Yen rate on Thursday is traded at the 15-years lows in pairing with the USD, close to the level of 82.37 due to the USD weakness.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go down confirming a pair previous sell signal. Stochastic Oscillator is giving a similar signal today being in the oversold zone.
Forex recommendations: traders’ targets today will be the levels of 82.40 and 81.80.
Japanese Finance Ministry reported on the weekly capital movement. Thus Japanese investors sold oversees shares for Y119.0 billion and bought bonds for Y679.5 billion; average volume of purchases amounted to Y557.5 billion.
The Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1%. This decision was a surprise to the market as although traders were prepared for the actions of monetary policy easing they could not expect it to turn this way. The head of the Bank of Japan Shirakawa said in the comments that 2-years rates would be also reduced which would help to widespread the effect of soft policy. At the same time the Bank of Japan representative Suda noted later that economy is still in danger of bubbles in the government bonds sector.
It also became known this Tuesday that a new fund is going to be founded in the amount of 5 trillion yens to pour liquidity into the Japanese financial system – and in particular for the purchase of the government bonds and other assets.
Japanese Finance Minister Noda stated this week that the country’ s policy should change in regard to deflation and expensive Yen– currency fluctuation in the long term should stabilize and deflation should retreat. As for the rising price of the Yen- it should not be the sole responsibility of the Bank of Japan as authorities also have leverage over currencies rates.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 07.10.10: AUD: Australian Dollar soared up to historic highs

At the Forex currency market on Thursday the Australian Dollar rate soared up to the historic highs reaching the level of 0.9915.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it continues to go up confirming a pair previous buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: buyers’ targets today will be the levels of 0.9910 and 0.9950.
The following Australian data was released today:
– Employment rate in September: +49.5 thousand to 11.35 million;
– Unemployment rate in September: 5.1%, unchanged.
Apparently the situation in the labor market in Australia is becoming more favourable.
Leading indicators index in Australia increased by 0.4% to 269.5 in July as per Westpac-Melbourne estimation; at the same time its annual growth rate reduced to 6.8% against the previous level of 7.4%. As the chief Westpac economist Bill Evans noted current forecast assumes that average growth in 2010 will amount to 3.5% and it will be steady until the end of the year despite sudden changes in some sectors. Coincident indicators index also increased by 0.4% (+4.3% y/y) in July; Evans stressed that such data can encourage the RBA to raise interest rate to 4.75% at the next meeting.
The other statistics shows that GDP level in Australia rose to the maximum value of the last three years in QII demonstrating increase by 1.2% against the forecast of 0.9%. Previous index value was at the level of 0.7%. Economists believe that Chinese demand for iron ore is an activator of the Australian economic growth.
Probably this was the data that put a constraint on the rate growth on Tuesday.
Earlier the RBA left the interest rate unchanged while market expected the rate increase to 4.75% - Stevens, the head of the Bank, noted in his comments later that at some moment in the future economy may require higher interest rates. In principle such a clause should contain the AUD’s fall however the currency descending movement deprives buyers of the hope for parity with the USD.
Interest rate has been maintained at the current level for half a year already.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: Traders are waiting for publication of the last night data on the U.S employment sector

At the Forex currency market on Friday morning the pair EUR/USD is traded with no initiative regaining from the statistics and news from yesterday and awaiting today’s data on the U.S. labor market and also comments from the IMF meeting.
By 10.35 Moscow time the Euro is at 1.3938 against closing session level of 1.3925 yesterday.
Today in the afternoon the U.S. employment market data will be released; it is assumed that unemployment rate increased to 9.7% in September (7.6% previously) and a number of jobs declined by 5 thousands.
Investors are still convinced that the Federal Reserve will assume measures at the next meeting for the further monetary easing policy which puts pressure on the USD exchange rate.
Most likely the pair EUR/USD will be in the range of 1.3850-1.4040 on Friday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: GBP: Correction approached the British Pound

At the Forex currency market the British Pound rate is traded downward at the end of the week amid profit taking by investors after almost two weeks of growth.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD however it goes down giving grounds for a pair sell signal. Stochastic Oscillator has not formed a clear signal today.
Forex recommendations: if the current trend maintains traders’ targets will be the levels of 1.5780 and 1.5740.
Yesterday the Bank of England left the interest rate unchanged at the level of 0.5% per annum; no accompanying documents have been issued which indicates that monetary politicians keep their intentions in force. The rate has been maintained at this level since 5 March 2009.
We cannot ignore the data of the early week. Thus PMI in the construction sector increased to 53.8 in September against the previous level of 52.1 and market forecast of 51.4. Statistics showed that the state of the UK industry did not become worse but it has improved instead. However housing market is still a weak point of the UK economy. We would remind that as it became known last week mortgage lending in Great Britain increased by 1.7 billion pounds in August; consumer lending level in the country rose by 1.5 billion pounds in August.
The UK employment data released the day before yesterday showed that labor market in the country is still weak, jobs are not created as companies still cannot estimate exactly the prospects (temporary jobs index is 52.8 in September against 54.0 in August; permanent jobs index is 54.6 in September against 56.3 in August).
The Bank of England representative Posen noted earlier that one should not underestimate the potential for economic growth in the UK; measures to increase incentives are perfectly logical in this situation. According to him there are evident reasons now for buying British bonds and it would be better if Central Banks coordinated their efforts. The Bank of England representative Bean noted before that the main purpose of the regulator’s soft policy is to stimulate consumer spending which will support the country’s economy in the medium-term. Bean described MRS current approach as aggressive and directed exclusively to combat financial crisis.