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[LF.Anastasia]

Forex Analytics of LiteForex of 12.10.10: GBP: British Pound Sterling goes down indicators however are not unambiguous

At the Forex currency market the British Pound Sterling rate started to descend on Tuesday although the pair had risen in the morning.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD today however it is descending giving grounds for a pair sell signal. Stochastic Oscillator is not giving a clear signal today being in the neutral zone.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.5925 the pair will go to 1.5980 and 1.6000. If the pair exceeds the level of 1.5860, traders’ targets will be the levels of 1.5820 and 1.5740.

The following UK data was released today:

– Retail sales volume (BRC) in September: +0.5% y/y, (+2.2% y/y);
– Orders balance in the domestic market in QIII: -4% against +5% in Q II;
– Houses prices RICS in September: -36% against -32% in August.

According to the British Commerce Chamber (BCC) national economy once again gives warning to the Bank of England about slowing down of the recovery rate which is also indicated in the today’s statistics.
A week earlier the BCC applied with a request to the regulator to expand the UK economic incentives program as economic system recovery needs a recharge. According to the BCC experts recent data indicates of the coming recession even if a previous GDP rise in Q II is being ignored.
We would remind that the regulator decided to leave the interest rate unchanged at the level of 0.5% per annum last week; 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 and there are no plans to change it so far.
The UK employment data released earlier 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).

 

[LF.Anastasia]

Forex Analytics of LiteForex of 12.10.10: CHF: Franc continues to retreat at Forex

At the Forex currency market Swiss Franc rate continues to give ground in pairing with the USD on Tuesday.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it goes up creating favourable conditions for a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: in case of breakdown at the level of 0.9700 buyers’ targets will be the levels of 0.9780 and 0.9825.
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 that CHB risks of excess liquidity can increase in the current economic situation and at the current rate level. The largest banks of the country 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.
The Franc looks stable compared with other currencies and its medium term growth is not excluded.
Switzerland continues to be a stronghold of stability and confidence even despite some imbalance in the macro-economic news: data on Swiss GDP level in QII was released earlier: GDP rose by 0.9% on quarterly basis (+3.4% y/y) 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 12.10.10: JPY: Yen continues to grow however the Bank of Japan keeps silence

At the Forex currency market today the Japanese Yen continues to grow however by the mid-day purchase volume dropped amid traders’ discussions of the U.S. FR position at the market.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and has not formed a clear signal yet as it moves along the signal line. Stochastic Oscillator is giving a pair sell signal today.
Forex recommendations: if bearish sentiments maintain traders’ targets today will be the levels of 81.70 and 81.35.
There are no any fundamental changes in the Japanese situation.
Stock exchanges were closed in the country due to the public holiday on Monday; on Friday 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. Deputy Minister of Finance in Japan Mr. Igarashi noted on Friday that intentions of Japan to put an end to currency fluctuation have not changed however unsupervised Japanese intervention into the market has not been crowned with success. He also stressed that devaluation of the currency in order to gain trading preferences affects global economy.
The Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1% last week. 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 last 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 last 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 12.10.10: AUD: Australian Dollar continues to decline from the highs

At the Forex currency market the Australian Dollar rate continues to go down today after reaching 27-years highs in pairing with the USD last week.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD however it is descending giving a pair sell signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: if the pair breaks down at the level of 0.9730, traders’ targets will be the levels 0.9680 and 0.9630.

The Australian Finance Minister Swan thinks that current growth in the Australian Dollar against the USD is a challenge to the national economy as it can affect the levels of tax collection and create complications in the management of the country’s economy. Agriculture, tourism and manufacturing divisions were indicated as the most vulnerable sectors of economy. “There is no doubt that the AUD growth will impact on corporate profits while there is also downside risk to earnings” –stressed Swan. According to him global growth outlooks still remain vague as economic growth in the developing countries is anemic and growth prospects in these countries are delusive.
Swan noted today that the strength of the Australian Dollar reflects the strength of the national economy and Australia is not going to introduce any restrictions on the growing AUD. Swan says that the Australian banking system excellent service is obvious
We would remind that 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. Worth noting 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 12.10.10: CAD: Canadian Dollar rate continues to go down

At the Forex currency market the Canadian Dollar rate keeps up its descending trend started earlier. The talk is very much in evidence at the market that the U.S. FR does not give any indications of its urgent actions therefore changes in the volume of the quantitative easing policy might not take place.
Forex forecast: MACD indicator is in the negative area for the pair USD/CAD however it goes up conforming a pair previous buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: in case of breakdown at the level of 1.0190, the pair USD/CAD will go to 1.0240 and 1.0290.
Yesterday trading floors of Canada were closed due to the Thanksgiving Day celebration.
The Bank of Canada next meeting will be held only on 19 October and market thinks that the interest rate increase is probable. At the meeting two weeks ago the Bank of Canada decided to raise interest rate level to 1% per annum (+25 basis points). Although the decision was entirely predictable Forex market responded to this by buying up CAD, ignoring monetary politicians accompanying comments that the situation in the economy is vague and uncertain.
Number of began constructions in Canada reduced by 3% m/m at the same time number of new houses foundations totaled to 183 thousand. If the situation does not improve in the nearest 3-4 months, the CAD will be under significant pressure. The Canadian trade balance deficit increased to 2.7 billion CAD in August against 1.8 billion in July. It was caused by the exports volume reduction which traditionally supports economy. Leading indicators index in Canada increased by 0.5% in August, retail sales reduced by 0.1% in July.
Last week was quiet for the Canadian economy as all investors’ attention was focused on the countries which had meetings with regulators. Canada reported on the foreign exchange reserves in September which rose to 1.621 billion dollars.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 13.10.10: EUR was supported by the U.S. FR minutes of meeting and strong Asia

The pair EUR/USD is going up at the Forex currency market on Wednesday morning – the main activator today was the growth at the Asian market; another positive aspect for the Euro became the release of the of U.S. FR minutes of September meeting which showed opposing views of the Committee members.
BY 10.25 Moscow time the Euro is at 1.3959 against closing session level of 1.3924 yesterday.
As noted in the FR minutes of meeting released on Tuesday most of the Committee members were inclined to make additional incentives of the U.S economy. In fact, Federal Reserve is ready to take steps however no one knows when and what kind of steps. It is possible that the monetary authorities will start boosting economy in the second part of November after the FR meeting.
Positive news came from China today which reported the 25.1% exports growth in September.
During the day traders’ attention will be focused on the data from Eurozone and Great Britain, in the evening the U.S. population income and expenditure statistics will be released.
Most likely the pair EUR/USD will be in the channel of 1.3900-1.4020 on Wednesday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 13.10.10: GBP: British Pound tends to grow in the mid-week; signals however are contradictory

At the Forex currency market the British Pound Sterling rate is consolidating on Wednesday amid positive external background and the USD weakness.
Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it is going down confirming a pair previous sell signal. Stochastic Oscillator is giving a pair buy signal today being in the oversold area.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.5830 the pair will go to 1.5890 and 1.5930. If the level of 1.5770 is exceeded, traders’ targets will be the levels of 1.5710 and 1.5680.
It is a surprise that the Pound feels so confident especially amid the poor statistics released yesterday and BCC warnings. According to the British Commerce Chamber (BCC) national economy once again gave warning to the Bank of England about a slowdown in the recovery rate which is also indicated in the today’s statistics. A week earlier the BCC applied with a request to the regulator to expand the UK economic incentives program as economic system recovery needs a recharge. According to the BCC experts recent data indicates of the coming recession even ignoring the previous GDP rise in Q II.
We would remind that the regulator decided to leave the interest rate unchanged at the level of 0.5% per annum last week; 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 and there are no plans to change it so far.
The UK employment data released earlier 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). It seems that the Pound responds exclusively to the external background.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 13.10.10: CHF: Swiss Franc grows slowly however with confidence

At the Forex currency market on Wednesday Swiss Franc has refreshed its historical highs reaching the level of 0.9544 in pairing with the USD taking advantage the weakness of the latter.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to go down confirming a pair sell signal. Stochastic Oscillator is giving a similar signal in the mid-week being in the oversold zone.
Forex recommendations: if the current external background and current trends maintain traders’ targets today will be the levels of 0.9510 and 0.9450.
Earlier this week Finance Minister of Switzerland Mr. Mertz said that currency intervention against the Franc is unlikely but not completely excluded. In his view deflation does not threaten Switzerland however the talk about so called “currencies wars” undermine investors’ confidence in the global economy which is already weak.
Deputy Chairman of the Swiss National Bank Mr. Jordan noted that CHB risks of excess liquidity can increase in the current economic situation and at the current rate level. 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.
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 obvious 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.
We would remind that GDP in Switzerland rose by 0.9% on quarterly basis (+3.4% y/y) 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).

 

[LF.Anastasia]

Forex Analytics of LiteForex of 13.10.10: JPY: Japanese Yen gives USD a chance to regain slightly

At the Forex currency market the Japanese Yen rate goes down today – there is a necessity of a slight correction which arises after yesterday’s trading close to the level of 81.66 although the Yen is strong potentially especially considering that the Bank of Japan is in no hurry to resume intervention.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 82.00 the pair will go to 82.50 and 82.90. If there is a breakdown at the level of 81.70, traders’ targets will become the levels of 81.35 and a new minimum 81.10.
The head of the Bank of Japan Mr. Shirakawa noted today that monitor the Yen’s movement with great interest as its high level affects economy. If the rate of the Yen will becomes dangerous government is prepared to take actions.
We would remind that the Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1% last week. 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 last 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 last 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.
. Deputy Minister of Finance in Japan Mr. Igarashi noted last Friday that intentions of Japan to put an end to currency fluctuation have not changed however unsupervised Japanese intervention into the market has not been crowned with success. He also stressed that devaluation of the currency in order to gain trading preferences affects global economy.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 13.10.10: CAD: Canadian Dollar growth is supported by the external background and oil

At the Forex currency market the growth of the Canadian Dollar rate continues for the second consecutive session due to the positive environment at the global finance market and the USD weakness caused by the ambiguity of the Federal Reserve position.
Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and it continues to go down which confirms yesterday’s sell signal for the pair. Stochastic Oscillator is giving a similar signal being in the oversold zone.
Forex recommendations: in case of breakdown at the level of 1.0060 the pair will go to the level of 1.0010 and further to 0.9970.
Finance Minister of Canada Mr. Flaherty said on Wednesday that Canada intends to balance its budget by 2015 and become the first country in the Big Seven to cope with the task successfully. The monetary politician noted that authorities’ stance on the income outlooks and new incentives measures remains cautious.
Flaherty believes that in the fiscal year which starts on 1 April 1015 the budget of Canada will show a surplus; and the return to the surplus will require much more efforts amid the U.S. slow recovery.
As the released document (Ministry of Finance financial forecast) showed - Canadian economy growth in 2010 will amount to 3% (2.6% earlier); in 2011 – 2.5% (3.6% earlier)
The Bank of Canada next meeting will be held only on 19 October and market thinks that the interest rate increase is probable. At the meeting two weeks ago the Bank of Canada decided to raise interest rate level to 1% per annum (+25 basis points). Although the decision was entirely predictable Forex market responded to this by buying up CAD, ignoring monetary politicians accompanying comments that the situation in the economy is vague and uncertain.