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[LF.Anastasia]

EUR/USD: Euro is being sold out moderately in Asia

The pair EUR/USD traded slightly down ward at the Forex currency market on Wednesday morning.

By 8.50 Moscow time the Euro is at 1.3221 against yesterday’s closing level of 1.3236.

Japanese investors had resumed trading today and took advantages of the Australian news. Later, investors from those European countries, where Labor Day was celebrated yesterday, will be back in the market.

It is unlikely that there will be sharp market fluctuations today: investors’ attention will be turned towards the end of the week when important American reports will be made known.

Most likely the pair EUR/USD will not go beyond the range of 1.3180-1.3260 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound came to a stop in the range

The British Pound Sterling rate is going up slowly at the Forex currency market on Wednesday; however it is still in the oversold range of 1.6152-1.6301.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it goes up, while volumes are high, and is maintaining a buy signal. Stochastic Oscillator has come out of the overbought zone and is shaping a sell signal.

Forex recommendations in case of breakdown at the level of 1.6220, the pair GBP/USD will go to 1.6205 and 1.6180. Consolidation at the reached levels is possible.

The fact that the pair is overbought is negative for the Pound Sterling; therefore, pullback from the current levels is required in order to continue growth.

Latest statistics showed that levels of manufacturing activity in the UK were still close to stagnation in April. The index grew up to 50.5 points against the forecast of 51.5 points which is the weakest growth since December 2011.

Indicators for March have been revised to 51.9 points from 52.1 points, which proves that economy of Eurozone is still having significant impact and prevents economic recovery in Britain.

According to representative of the Bank of England Mr. Posen, there is evidence, indicating positive momentum of growth. Monetary politician believes that inflation will not exceed target level of 2% until the end of this year. At the same time, levels of consumer confidence, affected by weak data on GDP, is a cause for concern. It became known earlier that unemployment rate in the UK amounted to 4.9% in March. Level of unemployed people rose by 3.6 thousand. Volume of retail sales rose by 1.8% m/m (+3.3% y/y) in March against the forecast of growth of 0.4% m/m. This is much higher than expected.

British economic statistics released earlier was weak: GDP in Q1 fell by 0.2% in the first reading against decline of 0.3% on quarterly basis (+0.5% y/y) a quarter earlier. It proves that country’s economy has been in recession for the second quarter. Favourable external background was able to brighten this pessimism; however in general this factor is negative.

It became known at the end of the week that consumer confidence index GfK in the UK amounted to -31 points in April against the forecast of -30 points. Consumer confidence Nationwide rose to 53 points in March against the level of 44 points in February. This is a positive indicator, since the index at the highs of nine months.

 

[LF.Anastasia]

CHF: Swiss Franc is being corrected

At the Forex currency market Swiss Franc rate is being corrected in the middle of the week.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator has come out of the overbought zone and is shaping a buy signal.

Forex recommendations in case of breakdown at the level of 0.9090, the pair USD/CHF will go to 0.9100 and 0.9120.

Macro-economic background is stable in Switzerland today; market was closed in the country yesterday due to celebration of the Labour Day.

Today, investors will await publication of Swiss PMI for April and the data on retail sales in March.

Swiss National Bank left a three-month Libor rate unchanged at the level of 0%. at the last meeting. In general, SNB’s views on monetary policy have remained unchanged. Despite strong determination of SNB to maintain the level of 1.20, talk, that pegging level of Franc to Euro will probably go up to 1.25, is getting louder in the market.

So, after three -month break Swiss National Bank has a new governor now- this is Mr. Jordan who has performed the duties since January when Mr. Hildebrand left his post. Jordan has already stated that he would continue to adhere to the old monetary policy and is going to preserve the level of 1.20 in the pair EUR/ CHF. According to him, Franc is still overvalued. In general, views of the new governor found support in SNB. The Bank believes that considering problems in Eurozone, it is still required to maintain a peg of Franc with the Euro.

Last Friday Jordan said that the regulator is not going to shift into negative interest rate and will make all efforts to maintain the level at 1.20 in the pair EUR/Franc.

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). The data is quite good and indicates that Swiss economy is getting used to expensive Franc. Thus, the regulator expects that inflation will be in the range of: -0.6% to +0.6% in 2012-2014, GDP growth will be at the level of 1.0% this year. It became known earlier that consumption indicator UBS in Switzerland rose to 1.22 points in March against provisional estimate of 0.9 points. Currency reserves rose to 237.5 billion in March against previous level of 224.9 billion francs. PMI SVME in Switzerland increased to 51.1 points in March against the forecast of 49.5 points.

 

[LF.Anastasia]

JPY: Japanese Yen is moving away from annual highs

At the Forex currency market the Japanese Yen rate is moving away from annual highs on Wednesday since most Asian investors are back in the market.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area and, and maintains a signal for moderate sales. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 80.60 the pair USD/JPY will go to 80.70 and 80.90. Consolidation near the current levels is possible.

The yen has managed to strengthen significantly during the time when the Japan was on holiday; now it is time for correction, as high rate of the JPY is harmful for the “new shoots” that turned up in the economy of the Country of the Rising Sun.

Macro-economic background in Japan is stable at today’s trading session.

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 in Q4 against the forecast of +Y322.3 billion. Personal consumption rose by 0.4% q/q last quarter against the forecast of growth of 0.3% q/q.

Unemployment rate remained at the level of 4.5% in March; preliminary retail sales fell by 1.2% m/m (+10.3% y/y) last month against the forecast of decline of 0.5% m/m. In addition, preliminary industrial production rose by 1.0% m/m (+13.9% y/y) in March against expectations of growth of 2.3% m/m.

Activity index in all sectors fell by 0.1% in February versus expectations of decline of 0.2%. Trade deficit amounted to Y82.6 billion in March against the level of Y226.3 billion in February. The data is positive and plus to this, other sections of the report showed that exports rose by 5.9%y/y last month and imports grew by 10.5% y/y.

According to representative of the Bank of Japan Mr. Nasimury, measures taken by the Bank of Japan in February helped to stabilize exchange rate of the Yen and stimulate stock market; therefore, the regulator is ready to take more actions if required. Monetary politician stressed yesterday that Central Bank is going to make vigorous efforts in the sphere of monetary policy in order to achieve planned inflation target at 1%, while the major risk factor is still the same - overall slowdown in the world economy.

Meeting of the Bank of Japan last week was neutral: interest rate was left in the narrow range of 0-0.1% per annum, however the regulator decided to expand economic stimulus program up to 40 trillion yen (+10 trillion yens). The bank plans to buy bonds with maturities of 3 years, whereas earlier the regulator bought only securities with two year maturity.

 

[LF.Anastasia]

AUD: Sales for Australian Dollar has been suspended

At the Forex currency market the Australian dollar rate traded slightly upward on Wednesday; however sales for the Australian dollar has been suspended.

Forex forecast: MACD indicator for the pair AUD/USD goes up moderately in the negative area and is giving a buy signal while volumes are average. Stochastic Oscillator is going 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 1.0320 the pair will go back to 1.0300 and 1.0280. Technical recovery at 1.0360 is possible.

The AUD has many reasons for continuing sales. Yesterday’s meeting of the Reserve Bank of Australia has astonished and alarmed the market. Interest rate was reduced by 50 basis points to the level of 3.75% per annum. The head of RBA Mr. Stevens has referred to inflation in his comments, saying that slowdown in inflation raises concerns of the government of the country. It is logical that the rate of lending has been reduced to 3.75% from 4.25% in order to create more flexible lending conditions. However it is obvious that Australian economic system faces difficulties.

According to the forecast made by RBA, inflation will be lower in the next two years; however it will remain in the range of 2-3%. Note that CPI rose by 0.1% q/q (+1.6% y/y) in Q1 against expectation of growth of 0.6% q/q (+2.2% y/y).

Statistics released earlier showed that lending to the private sector of Australia rose by 0.4% m/m in January against the forecast of growth of 0.3% m/m.

Leading indicators index Westpac in Australia rose by 0.2% in February, up to the level of 284.2 points against provisional expectations of growth of 0.6%. Growth rate amounted to 2.4% against the forecast of 2.5%. Representatives of Westpac clarified in the comments that negative dynamics in the growth rate, which has been preserved for the past six months, does not help to instill enthusiasm about prospects; experts do not expect that the rate will rise in the nearest future either. At the same time, economic development performance complies with forecasts for Australian economy for 2012 (3%); nevertheless, pace of growth in GDP remains below trend.

Final PPI in Australia rose by 0.3% q/q (+1.4% y/y) in Q1 against the forecast of growth of 0.4% on quarterly basis. Employment rate in Australia rose by 44 thousand against expectations of growth of 6.5 thousand. Unemployment rate was 5.2% versus the 5.3% earlier.

 

[LF.Anastasia]

CAD: Canadian Dollar traded in the range

At the FOrex currency market the Canadian dollar rate remains in the oversold range of 0.9801-0.9898 in the middle of the week.

Forex forecast: MACD indicator for the pair USD/CAD goes down in the negative area, maintaining a sell signal. Stochastic Oscillator goes up in the neutral zone giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9870, the pair will go to 0.9880 and 0.9910. It is possible that the pair will fall to 0.9825.

According to Finance Minister of Canada Mr. Flaherty growth rate in the CAD reflects current situation in the economy of the country and no one expects that the CAD can fall sharply. This year economy of Canada will demonstrate moderate growth which will gain strength throughout the year of 2013.

The head of the Bank of Canada Mr. Carney said yesterday that monetary tightening is justified if it progresses gradually. Discussion on this subject has started recently: a week earlier Carney said that economic recovery would raise probability of monetary tightening. Meanwhile, stimulus measures will be maintained.

We would remind that, it became known in the middle of April that the Bank of Canada is going to gradually raise interest rate throughout the year 2014; in general, it is consistent with the policy that the regulator has outlined earlier. Meeting of the Bank of Canada was rather brisk despite the fact that the Regulator had left interest rate at the level of 1% per annum, as expected. However, comments which were made by the Governor of the Bank of Canada Mr. Carney were unexpected for the market. Thus, monetary politician noted that the rise in the interest rate could be a reasonable decision in the future, since both, inflation and economic growth might accelerate.

According to the forecasts made by the Bank of Canada, economy of the country will regain its full capacity in the first half of 2013. The head of the Bank of Canada Mr. Carney noted earlier that economy of the country is growing slightly above the forecast and government has number of tools in order to protect housing market from overheating. However, monetary policy instruments will be used only as the last resort.

Inflation in Canada rose by 0.4% m/m (+1.9% y/y) in March. At the same time, base CPI grew by 0.3% m/m (+1.9% y/y) last month. Unemployment rate decreased to 7.2% (-0.2%) in March. Employment rate went up by 82 thousand.

 

[LF.Anastasia]

EUR/USD: Trades are sluggish for Euro on Friday

The pair EUR/USD traded with slight deviation at the Forex currency market on Friday morning.

By 9.00 Moscow time the Euro is at 1.3147 against yesterday closing session level of 1.3151.

Market has already made use of the outcome of yesterday’s meeting of the European Central Bank: interest rate was left unchanged at the level of 1.0% per annum, however the head of ECB Mr. Mario Graghi noted in the comments that economic outlooks are worsening and there are problems in the employment sector in the region.

Investors will watch for statistics on Eurozone this afternoon and the data on the U.S. employment sector tonight.

Most likely the pair EUR/USD will not go beyond the range of 1.3090-1.3190 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound tends to have correction after a week of sales

The British Pound Sterling rate traded slightly upward at the Forex currency market after sales which lasted almost a week.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it goes up, while volumes are high, and is maintaining a buy signal. Stochastic Oscillator has come out of the overbought zone and is shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at ht level of 1.6180 the pair GBP/USD will go to 1.6170 and 1.6160. Consolidation at the reached levels is possible.

Yesterday CBI reported downgrade of economic growth outlook to 0.6% for this year against prior estimate of 0.9% in February. Forecast for 2013 was remained unchanged at +2.0%.

CBI believes that inflationary levels will remain above expectations due to increasing energy prices.

Index of business optimism Lloyds fell to 26 points in April against preliminary estimate of 31 points. This is one of the minor indexes; however it is very informative as it illustrates that business sector does not wait for good in regards to the economy of the country. Statistics released earlier showed that consumer confidence index GfK in the UK amounted to -31 points in April against the forecast of -30 points.

According to representative of the Bank of England Mr. Posen, there is evidence, indicating positive momentum of growth. Monetary politician believes that inflation will not exceed target level of 2% until the end of this year. At the same time, levels of consumer confidence, affected by weak data on GDP, is a cause for concern. It became known earlier that unemployment rate in the UK amounted to 4.9% in March. Level of unemployed people rose by 3.6 thousand. Volume of retail sales rose by 1.8% m/m (+3.3% y/y) in March against the forecast of growth of 0.4% m/m. This is much higher than expected.

Levels of manufacturing activity in the UK were still close to stagnation in April. The index grew up to 50.5 points against the forecast of 51.5 points which is the weakest growth since December 2011. Indicators for March have been revised to 51.9 points from 52.1 points, which proves that economy of Eurozone is still having significant impact and prevents economic recovery in Britain. GDP in Q1 fell by 0.2% in the first reading against decline of 0.3% on quarterly basis (+0.5% y/y) a quarter earlier. It proves that country’s economy has been in recession for the second quarter.

 

[LF.Anastasia]

CHF: Sales for Swiss Franc has slowed down

At the Forex currency market Swiss Franc rate stops declining and traded sluggishly on Friday.

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

Forex recommendations in case of breakdown at the level of 0.9140, the pair USD/CHF will go to 0.9150 and 0.9170.

At the last meeting Swiss National Bank left a three-month Libor rate unchanged at the level of 0%. In general, SNB’s views on monetary policy have remained unchanged. Despite strong determination of SNB to maintain the level of 1.20, talk, that pegging level of Franc to Euro will probably go up to 1.25, is getting louder in the market.

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). The data is quite good and indicates that Swiss economy is getting used to expensive Franc. Thus, the regulator expects that inflation will be in the range of: -0.6% to +0.6% in 2012-2014, GDP growth will be at the level of 1.0% this year.

Mr. Jordan who became the governor of Swiss National Bank in April, and has also performed the duties since Mr. Hildebrand left his post. Jordan has already stated that he would continue to adhere to the old monetary policy and is going to preserve the level of 1.20 in the pair EUR/ CHF. According to him, Franc is still overvalued. In general, views of the new governor found support in SNB. The Bank believes that considering problems in Eurozone, it is still required to maintain a peg of Franc with the Euro. Jordan said a week earlier that the regulator is not going to shift into negative interest rate and will make all efforts to maintain the level at 1.20 in the pair EUR/Franc.

This week statistics was not too good: PMI in the manufacturing sector of Switzerland fell to 46.9 points in April against the level of 51.1 points in March. Earlier, Ministry of Finance reiterated approval of pegging of the rate of Franc to the Euro. It will mean that the level of 1.20 will be preserved for a long time.

It became known earlier that consumption indicator UBS in Switzerland rose to 1.22 points in March against provisional estimate of 0.9 points. Currency reserves rose to 237.5 billion in March against previous level of 224.9 billion francs. PMI SVME in Switzerland increased to 51.1 points in March against the forecast of 49.5 points.

 

[LF.Anastasia]

JPY: Activity Japanese Yen is minimal

Japanese Yen rate traded sluggishly at the Forex currency market at the end of the week.

Forex forecast: MACD indicator for the pair USD/JPY is moving along the signal line in the negative zone and is not giving a clear 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 80.20 the pair USD/JPY will go to 80.30 and 80.50. Consolidation near the current levels is possible.

Market is discussing warning made by agency S&P about possibility of downgrade of the Japanese rating.

In general, activity in the “safe” currency is low; it seems that investors are going to bide time until American key reports on employment will be made known.

Unemployment rate remained at the level of 4.5% in March; preliminary retail sales fell by 1.2% m/m (+10.3% y/y) last month against the forecast of decline of 0.5% m/m. In addition, preliminary industrial production rose by 1.0% m/m (+13.9% y/y) in March against expectations of growth of 2.3% m/m.

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 in Q4 against the forecast of +Y322.3 billion. Personal consumption rose by 0.4% q/q last quarter against the forecast of growth of 0.3% q/q.

Meeting of the Bank of Japan last week had predictable outcome: interest rate was left in the narrow range of 0-0.1% per annum, however the regulator decided to expand economic stimulus program up to 40 trillion yen (+10 trillion yens). The bank plans to buy bonds with maturities of 3 years, whereas earlier the regulator bought only securities with two year maturity.

According to representative of the Bank of Japan Mr. Nasimura, measures taken by the Bank of Japan in February helped to stabilize exchange rate of the Yen and stimulate stock market; therefore, the regulator is ready to take more actions if required. Monetary politician stressed yesterday that Central Bank is going to make vigorous efforts in the sphere of monetary policy in order to achieve planned inflation target at 1%, while the major risk factor is still the same - overall slowdown in the world economy.