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[LF.Anastasia]

Australian Dollar goes down at the end of the week

At the Forex currency market the Australian dollar rate traded with significant decline on Friday

Forex forecast: MACD indicator for the pair AUD/USD has slowed down growth in the negative area, however is still giving a moderate buy signal. Stochastic Oscillator has come into oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0250 the pair will go back to 1.0240 and 1.0220.

Positions of the AUD are still weak - currency has declined significantly over the past 5 days.

The RBA released a quarterly monetary policy report today, which upset made investors anxious: the regulator has lowered projections for economic growth and inflation, as weak employment sector and uncertainty in the housing sector impedes performance in other sectors.

The data released earlier confirmed traders’ hypothesis that economy of the Green Continent is undergoing a very difficult period: index of business activity AI Group/CBA в in the service sector of Australia dropped by 7.4 points to the level of 39.6 points, which is three-year lows.

Market has many reasons to continue sales of the AUD. A meeting of the Reserve Bank of Australia, which was held earlier, 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 serious difficulties.

According to RBA projections, inflation will become 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).

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 is waiting for external signal

At the Forex currency market the Canadian dollar rate traded with slight deviation at the end of the week in anticipation of publications tonight.

Forex forecast: MACD indicator for the pair USD/CAD goes down in the negative area, maintaining a sell signal. Stochastic Oscillator has shifted into sideways movement in the neutral zone and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9880 the pair will go to 0.9910 and 0.9930.

The Canadian dollar stands still in advance of the data release on the U.S. labour market tonight, ignoring some rise in the oil sector.

According to projections 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.

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 Canadian economy will demonstrate moderate growth, which will gain momentum throughout the year of 2013.

The head of the Bank of Canada Mr. Carney said earlier 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 increase chances of monetary tightening. Meanwhile, stimulus measures will be maintained.

It became known in the middle of the week that the Bank of Canada 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.

 

[LF.Anastasia]

EUR/USD: Euro is alarmed by news

The pair EUR/USD traded slightly downward at the Forex currency market on Thursday morning after sales last night.

By 8.40 Moscow time the Euro is at 1.2911 against yesterday’s closing level of 1.2928.

The pair got under the target of “bears” since it became known that Syriza party in Greece was unable to form new government. Now, PASOK got to do it in case of failure, ‘Golden Age” will be next. Ongoing problems with formation of new cabinet in the country add tension in the issue of expediency of Greece in the European area.

In addition, situation in Spanish financial sector is deteriorating. It became known that at least one of the largest banks will soon receive state help.

Thus, gloomy external background is still the main driver for currency pairs today.

Most likely the pair EUR/USD will not go beyond the range of 1.2880-1.2990 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound traded sluggishly in advance of decisions of the Bank of England

The British Pound Sterling rate traded slightly upward at the Forex currency market on Thursday; however volumes of trade are insignificant- investors expect that changes in the monetary policy will be made at today’s meeting of the Bank of England.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area, it goes down, while volumes are decreasing as well, and is giving a sell signal. Stochastic Oscillator pushed away from oversold zone earlier and is giving a sluggish buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6150 the pair GBP/USD will go to к 1.6160 and 1.6170. The pair may go down to 1.6100 if negative factors if negative factors increase.

Major news for the Pound will be the outcome of the meeting of the Bank of England which promises to be interesting in terms of comments on cutting back program of economic stimulus. In addition, the data on industrial output and trade balance will be released on Thursday and the figures may suggest new insight into prospects for British economic development.

It became known yesterday that sales at the similar trading floors BRC in the UK fell by 3.3% y/y in April against the forecast of growth of 0.6%. The Pound has almost not reacted to this statistics, as it is completely focused on external background and negative sentiment of investors who are moving away from risks. House price index RICS in the UK fell to -19 points in April against the level of -11 points in March. This is a negative signal as the decline is rather significant.

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.

Levels of manufacturing activity in the UK are coming up to the state of 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. British 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.

 

[LF.Anastasia]

CHF: Swiss Franc is being slightly corrected

At the Forex currency market Swiss Franc rate is being slightly corrected on Thursday after the dip to lows of March.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to top and is going up rapidly in the positive area, giving a buy signal. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at 0.9280 the pair USD/CHF will go to 0.9290 and 0.9300.

There have not been changes in the macro-economic background of Switzerland.

Such drastic decline in Franc at the beginning of the week was caused by disturbances in Europe, driven by outcome of political elections in France and Greece.

Mr. Jordan became the governor of Swiss National Bank in April; he has been performing the duties since Mr. Hildebrand left his post. Jordan has already stated that he would continue to implement existing monetary policy. He is going to protect current level of 1.20 for the pair EUR/ CHF. According to him, Franc remains 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 peg of Franc with the Euro. Jordan said a week earlier that the regulator was not going to turn to negative interest rate and would make all efforts to maintain the level of 1.20 in the pair EUR/Franc.

Recall that GDP rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero changes (+1.1% y/y). The data indicates that Swiss economy has adjusted to expensive Franc. Thus, the regulator expects that inflation in 2012-2014 will be in the range of -0.6% to +0.6% and GDP growth will be at the level of 1.0% this year.

Statistics released last week was not very positive: 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. 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. It also became known that unemployment rate in Switzerland fell to 3.1% in April against 3.2% earlier.

 

[LF.Anastasia]

JPY: Japanese Yen remains in the range

The Japanese Yen rate traded slightly downward at the Forex currency market on Thursday morning after another rise last night; however the pair USD/JPY remains in the oversold range.

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

Forex recommendations: in case of breakdown at the level of 79.60 the pair USD/JPY will go to 79.50 and 79.30. Consolidation at the current levels is possible.

Interest to JPY is explained by preservation of external tension at the global capital markets.

Statistics released this morning brought only good news: balance of current account in Japan amounted to +Y1.589 trillion in March against forecast of +Y1.449 trillion. At the same time, bank lending rose by 0.4% y/y in April. Therefore, the Country of the Rising Sun demonstrates surplus of current account for the second consecutive month which is a very good indication.

Stabilization in the European economy would have been good support for Japan; however there is no chance of it so far.

Preliminary index of leading indicator in Japan rose to the level of 96.6 points in March versus previous level of 96.0 points (growth has been observed for three consecutive months).

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 has stressed earlier 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- that is overall slowdown in the world economy.

Information which makes rather frequent appearances in press shows that the Bank of Japan can give up additional stimulation, largely due to inflationary risks. Minutes of the meeting of the Bank of Japan of 9-10 April state that it is still required to track the effect of the monetary easing, which took place in February and also monitor international prices for raw materials. Apart from that the regulator did not make radical propositions.

We would remind that 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). At the same time, the bank informed about plans to buy bonds with maturities of 3 years, whereas earlier the regulator bought only securities with two year maturity.

Real revised GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. 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 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.

 

[LF.Anastasia]

AUD: Australian Dollar makes attempts to recover

At the Forex currency market the Australian dollar rate traded upward on Thursday as it received support from positive statistics, nevertheless it is still very weak because of external pressure.

Forex forecast: MACD indicator for the pair AUD/USD started to descend in the negative area and is giving a sell signal. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1. 0090 the pair will go back to 1.0070 and 1.0050.

Statistics released today showed that unemployment rate in Australia fell to the lows of the year in April, reaching 4.9% against 5.2% a month earlier. Number of new jobs rose by 15 thousand last month against expectations of decline of 0.5 thousand.

Report illustrated that employment increased due to the rise in the part- time jobs (+26 thousand); however number of full time jobs fell by 10.5 thousand.

Such indicator on unemployment rate reduces chances that interest rate will be lowered in the near future.

Other statistics is alarming: trade balance amounted to –A$1.6 billion in March against the forecast of –A$1.2 billion. Growing deficit is not the best indication for Australian economy. It became known earlier that retail sales in Australia rose by 0.9% m/m in March against expectations of +0.2% m/m. In addition, business confidence index NAB increased to 4 points in April versus the level of 3 points in March.

Meeting of the Reserve Bank of Australia, which was held at the beginning of May, 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 give cause for government’s concern. It is logical that the lending rate 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 serious difficulties in development. According to RBA projections, inflation will become 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).

RBA released a quarterly monetary policy report at the end of last week, which disappointed investors again: the regulator has lowered projections for economic growth and inflation, as weak employment sector and uncertainty in the housing sector impedes performance in other sectors. The data released earlier has provided convincing proof of traders’ supposition that economy of the Green Continent is undergoing a very difficult period: index of business activity AI Group/CBA в in the service sector of Australia dropped by 7.4 points to the level of 39.6 points that is the three-year lows.

 

[LF.Anastasia]

NZD: New Zealand Dollar tries to regain from previous sales

At the FOrex currency market the New Zealand Dollar goes up on Thursday hoping to regain partly from previous sales which had already led the NZD to the lows of the year.

Forex forecast: MACD indicator for the pair NZD/USD is going down in the negative area, and maintains a sell signal. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.7870 the pair will go to 0.7850 and 0.7830.

Statistics released on Thursday showed that manufacturing PMI in New Zealand fell to 48 points in Aprol against revised level of 53.8 points in March.

The head of the Reserve Bank of New Zealand Mr. Bollard said yesterday that exchange rate of the NZD may remain high even in case of decline in commodity prices; recent weakening of the national currency is directly linked with fundamental basis.

Financial system of New Zealand is very vulnerable to external influence, therefore, the RBNZ is prepared to pour liquidity into economy if situation in Europe deteriorates.

Business sentiment index NZIER was at the level of 13.0 points in Q1 this year against the level of 0 points in Q4 2011. House price index REINZ fell by 1.4% m/m (+25.2% y/y) in January against preliminary expectations of decline of 0.1% m/m. Unemployment rate in the country dropped to 6.3% in Q4 2011 against the level of 6.6% a quarter earlier. Business confidence NBNZ in New Zealand rose to 35.8 points in April against preliminary expectations of 33.8 points. In addition, trade balance declined to +NZ$134million against the level of +NZ$202 million in February.

Statistics released earlier showed that, business confidence rose to 33.8 points in March, as per NBNZ estimates, versus the level of 28.0 points in February. Boom in the construction sector of the country remains the main catalyst for the rise in business confidence. According to the data released earlier activity in production sector NZ fell to 54.5 points in March against the level of 57.7 points in February.

At the meeting in April the Reserve Bank of New Zealand left interest rate unchanged at the level of 2.5% per annum, which agreed with market expectations. The head of RBNZ Mr. Bollard said in the comments that inflationary pressure is limited and CPI is not going to exceed specified framework. He believes that New Zealand economy demonstrates recovery, and at the same time activity in the real estate sector is increasing. GDP in New Zealand increased by 0.8% q/q (+1.9% y/y) in Q3 2011 against forecast of +0.6% on quarterly basis. GDP in Q2 rose by 0.1% q/q (+1.5% y/y) versus the level of +0.9% q/q (+1.6% y/y) in Q1. Actually there is stagnation in the economy of New Zealand. GDP had almost stopped its growth, however started to revive later.

 

[LF.Anastasia]

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[LF.Anastasia]

EUR/USD: There is a new motive for sales in Euro

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

By 8.00 Moscow time the Euro is at 1.2922 against yesterday’s closing level of 1.2935.

The major pair tried to carry out technical correction last night; however gloomy external background prevented from doing it properly.

There are more motives for sale today: Chinese statistics showed slowdown of inflation in the country in April which is an indication of inhibition of the system

Political risks in Greece are still preserved.

Most likely the pair EUR/USD will not go beyond the range of 1.2890-1.2990 at the trading session on Friday.