LiteForex's analytics

[LF.Anastasia]

GBP: British Pound Sterling continues to consolidate however purchase volume declines

At the Forex currency market the British Pound Sterling rate continues to go up on Friday, however we can see the decline in the purchase volume today, which was caused by the lack of catalysts.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it goes up, giving a pair buy signal. Stochastic Oscillator is
giving a similar signal today, being in the overbought area.

Forex recommendations: if the current external background is maintained buyers' targets will be the levels of 1.6100 и 1.6140. Representative of the Bank of England Mr. Posen noted yesterday that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption.

According to him instruments, which available to the regulator cannot always be fully effective in combating the bubbles -Posen is convinced that inflation of the stock market bubbles would be very difficult to track. According to the report of the Confederation of British Industry industrial production in the UK will remain moderate over three months, although more and more British companies intend to expand spending to ensure clients requests.
The UK statistics released yesterday was positive in general. Unemployment rate remained at the level of 4.5% in October; while the number of unemployed reduced by 3.7 thousand (in September: +1.3 thousand). Average weekly earnings in the UK increased by 2.2% in September excluding bonuses.

In addition, the minutes of the Bank of England last meeting was released in the middle of the week, in general it did not say anything new. Thus,
Sentance is still of the opinion that the rates should be raised to 0.75%. The document also stresses that it will be wrong to start monetary policy
tightening, while having a lot of spare capacity in economy. The regulator believes that monetary committee has not assessed in full the effect of the budget expenses reduction.

 

[LF.Anastasia]

CHF: Swiss Franc rate has been traded in the narrow range for the third day

Swiss Franc rate has been trapped in the narrow range of 0.9900-0.9980 for the third day at the Forex currency market.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF, however it goes down giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.


Forex recommendations: the targets of the pair's sellers today will be the levels of 0.9880 and 0.9820.

Representatives of OECD noted yesterday that the Bank of Switzerland will raise interest rate gradually since 2011 to confront the rise of inflation.
Furthermore according to the Agency's forecast, inflation in 1012 will be slightly above 1% in Switzerland; although unemployment rate will continue
to decline. In addition it is believed that the growth of Swiss economy will slow down consolidation of the CHF. As long as the Franc is far from its highs, the SNB will not need to make rate increase decisions.

Representative of Swiss National Bank Mr. Jordan noted not once that prolonged retention of the interest rates at the low level can cause additional risks for the economy. SNB intends to closely monitor the dynamics of the real estate sector. We would remind that Dantin noted earlier that crisis in the developing countries has slowed down and almost finished and economies of Japan and the West are recovering however recovery process is very unstable. In his opinion estimation of the Swiss GDP for September is justified. Dantin noted that strong Franc and slow pace of the recovery in the world finance system have a negative impact on Switzerland.


As it became known yesterday Swiss surplus of trade balance increased to 2.102 billion francs in October while a month earlier the index amounted to 1.690 billion francs.

 

[LF.Anastasia]

JPY: Japanese Yen rate is being corrected slightly at the end of the week

The Japanese Yen rate is being corrected slightly at the Forex currency market on Friday however it is too early to speak about reversal trend.


Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it goes down, giving grounds for a pair sell signal. Stochastic
Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: correction for the pair may continue today; traders' targets at the end of the week will become the levels of 82.20 and 82.50.
No wonder that official Tokyo has been silent lately - the Yen has retreated significantly from its highs, which made it possible for the country's
government to draw attention to the other burning issues.

Statistics was not frequently published this week. It became known this morning that manufacturing activity index in Japan reduced by 0.8% m/m in
September, which once again indicates slowdown in the economic recovery. The last Japanese statistics released this week was not too impressive
(index of leading indicators was revised to -0.9 points in September against the previous level of -0.6 points; index of coincident indicators was
revised tp -2.3 points m/m in September (previous level: -1.3). In addition activity index in the Japanese service sector reduced by 0.9% m/m in September against the previous level of -0.2% m/m.

However the fall of the Yan this week at Forex gave local authorities a chance to focus their attention on the daunting problems in economy- in particular, on deflation. The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA. It was noted earlier that in accordance with the Bank of Japan expectations, domestic economy will revert to the moderate growth path in 2011; while average forecast of basic inflation amounts to 0.4% so far. Average forecast of the real level of GDP for the next fiscal year is at the level of +2.1% against the forecast of 2.6% in June. The head of the Bank, Mr. Chirakawa noted that they will carry out monetary policy easing more actively than it was before, as the economy follows the way of development.

 

[LF.Anastasia]

AUD: Australian Dollar determines movement direction

At the Forex currency market the Australian Dollar rate is traded slightly downward despite general market trend. Signals for the pair AUD/USD are
ambiguous on Friday.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD however it goes up, giving grounds for a pair buy signal. Stochastic
Oscillator is giving a pair sell signal, being in the overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9900 the pair will go to 0.9950 and further to the parity level. If the
level of 0.9840 is exceeded, traders' targets will be the levels of 0.9810 and 0.9770.

The situation in the Australian economy still remains unchanged; and indistinct dynamics of the pair AUD/USD at the Forex currency market can be
explained by the ambiguity actions of the nearest neighbor and partner-China.

According to the average forecast of economists and analytics the RBA is unlikely to raise interest rate before QIV of 2011. Current level of the interest rate is 4.75% per annum. The Australian Minister of Finance updated its budget forecast this week. Thus, GDP in 2011 is expected to be at the level of 3.5% (growth), in 2012 - 3.75% (unchanged). Net debt will amount to 6.4% by 2012. As for the employment sector- unemployment rate is expected to
be at the level of 4.75% in 2011 and at the level of 4.5% in 2012.

It became known earlier that index of leading indicators remained unchanged in September which indicates some uncertainty in the producers and
investors' sentiments after the release of the minutes of the RBA meeting of 2 October, when the interest rate was raised unexpectedly. The document
noted that interest rate was raised in order to facilitate the curb in the inflation rise, as mass investments in the mining sector, together with the
increase in the employment sector supported the recovery of the national economy. The minutes of meeting emphasized that the balance of risks has
shifted and in the current spectrum moderate tightening of the monetary policy seems reasonable.

 

[LF.Anastasia]

EUR/USD: Euro started this week with steady growth

The pair EUR/USD is growing on Monday morning amid positive factor from Ireland which will receive assistance from European Union, IMF and ECB. By 9.05 Moscow time the Euro is at 1.3751 against closing session level of 1.3685 on Friday.

It became known at the weekend that Ireland made an formal request for financial help and the request was approved. The country will receive aid
package in the amount of 80-90 billion euro, exact conditions yet to be agreed. Due the fact that solution has been found for such a pressing problem the Euro began to grow steadily at the beginning of the week. Meanwhile the country expected assistance amounting to 100 billion euro (formerly Greece received 110 billion euro).

Macro-economic calendar for today is not eventful therefore market will regain external background. Most likely the pair UR/USD will not go beyond the range of 1.3680-1.3790 on Monday trading session.

 

[LF.Anastasia]

GBP: British Pound determines movement direction at the beginning of the week

At the Forex currency market the British Pound Sterling is traded languidly on Monday morning however with a slight increase.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it goes up slightly which gives ground for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if external background is maintained positive, buyers' targets will be the levels of 1.6110 and 1.6155.

If favourable scenario is not implemented, consolidation of the pair around the current levels can take place. Macro-economic calendar is not eventful today; therefore external background will have basic effect on trades.

The UK statistics released last week was positive in general. Unemployment rate remained at the level of 4.5% in October; while the number of unemployed reduced by 3.7 thousand (in September: +1.3 thousand). Average weekly earnings in the UK increased by 2.2% in September excluding bonuses. In addition, the minutes of the Bank of England last meeting was released in the middle of last week, in general it did not say anything new. Thus, Sentance is still of the opinion that the rates should be raised to 0.75%.

The document also stresses that it will be wrong to start monetary policy tightening, while having a lot of spare capacity in economy. The regulator believes that monetary committee has not assessed in full the effect of the budget expenses reduction. Representative of the Bank of England Mr. Posen noted earlier that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption. According to him instruments, which are available to the regulator cannot always be fully effective in combating the bubbles -Posen is convinced that inflation of the stock market bubbles would be very difficult to track.

According to the report of the British Industry Confederation, industrial production in the UK will remain moderate over three months, although more and more British companies intend to expand spending to ensure clients requests.

 

[LF.Anastasia]

CHF: Further movement of Swiss Franc is yet undetermined

At the Forex currency market Swiss franc is traded without specific direction on Monday.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF however it goes down, giving grounds for a pair sell signal. Stochastic Oscillator has not identified a clear signal, being in the neutral zone. Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0000 the pair will go to 1.0040 and 1.0090. If the level of 0.9860 is exceeded, traders' targets will become the levels of 0.9820 and 0.9780. All investors' attention last week and today was focused on the Irish situation; the decision to provide assistance to the banking sector of the country has already been taken. Further statements will show investors' attitude to risk, which can affect dynamics of the currency market.

The situation in Switzerland still remains almost unchanged. We will reiterate our opinion that while Franc is far from its highs, the SNB will not need to make rate increase decisions. Representative of Swiss National Bank Mr. Jordan noted not once that prolonged retention of the interest rates at the low level can cause additional risks for the economy. SNB intends to closely monitor the dynamics of the real estate sector. We would also remind that Dantin noted earlier that crisis in the developing countries has slowed down and almost finished and economies of Japan and the West are recovering however recovery process is very unstable.

In his opinion estimation of the Swiss GDP for September is justified. Dantin noted that strong Franc and slow pace of the recovery in the world finance system have a negative impact on Switzerland. As it became known earlier Swiss surplus of trade balance increased to 2.102 billion francs in October while a month earlier the index amounted to 1.690 billion francs.

 

[LF.Anastasia]

JPY: Yen makes attempts to recover

At the Forex currency market the Japanese Yen is traded with some uncertainty at the beginning of the new week, making sluggish attempts to recover despite the general positive external background.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it goes down giving grounds for a pair sell signal. Stochastic
Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: in case of breakdown at the level of 83.00 the pair will go to 82.80 and 82.50. It breakdown will not take place the pair will consolidate close to the current levels.

Japanese Finance Minister Mr. Noda stressed this morning that authorities intend to take decisive measures when required and if the Yen starts to grow rapidly. He also noted that the Bank of Japan shall provide full support to the country's economy. Noda also expressed hope that consumer prices in Japan will begin to grow in the new fiscal year which starts in April 2012.

The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA. As was noted earlier in accordance with the Bank of Japan expectations, domestic economy will revert to the moderate growth path in 2011; while average forecast of basic inflation amounts to 0.4% so far. Average forecast of the real level of GDP for the next fiscal year is at the level of +2.1% against the forecast of 2.6% in June. The head of the Bank Mr. Chirakawa noted that they will carry out monetary policy easing more actively than it was before, as the economy follows the way of development.

The last Japanese statistics released last week was not too impressive (index of leading indicators was revised to -0.9 points in September against
the previous level of -0.6 points; index of coincident indicators was revised to -2.3 points m/m in September (previous level: -1.3). In addition activity index in the Japanese service sector reduced by 0.9% m/m in September against the previous level of -0.2% m/m. However the fall of the Yan this week at Forex gave local authorities a chance to focus their attention on the daunting problems in economy- in particular, on deflation.

 

[LF.Anastasia]

AUD: Growth of Australian Dollar is supported by external background today

The Australian Dollar rate is supported by the external background and news that Ireland will receive assistance from EU and IMF in the amount of 80-90 billion euro, which relieves stress at the market.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it goes up, giving a apir buy signal. Stochastic Oscillator is giving a similar signal today, being in the overbought zone.

Forex recommendations: if external background is maintained and in case of breakdown at the level of 0.9970, buyers' targets will be the levels of 1.0000 and 1.0050.

Since oil prices began to recover this morning following the fall by 4% last week, the AUD has also received support from the raw material market as
well. The situation in the Australian economy still remains unchanged; and indistinct dynamics of the pair AUD/USD at the Forex currency market can be explained by the ambiguity actions of the nearest neighbor and partner-China.
According to the average forecast of economists and analytics the RBA is unlikely to raise interest rate before QIV of 2011. Current level of the interest rate is 4.75% per annum. The Australian Minister of Finance updated its budget forecast this week. Thus, GDP in 2011 is expected to be at the level of 3.5% (growth), in 2012 - 3.75% (unchanged). Net debt will amount to 6.4% by 2012. As for the employment sector- unemployment rate is expected to
be at the level of 4.75% in 2011 and at the level of 4.5% in 2012. It became known earlier that index of leading indicators remained unchanged in September which indicates some uncertainty in the producers and investors' sentiments after the release of the minutes of the RBA meeting of 2 October, when the interest rate was raised unexpectedly. The document noted that interest rate was raised in order to facilitate the curb in the inflation rise, as mass investments in the mining sector, together with the increase in the employment sector supported the recovery of the national economy. The minutes of meeting emphasized that the balance of risks has shifted and in the current spectrum moderate tightening of the monetary policy seems reasonable.

Note that China increased the level of reserve requirements for the banks for the fifth time this year, which suggests that the Celestial Empire intends to raise the level of the interest rate further. This is a negative signal for Australia and AUD.

 

[LF.Anastasia]

CAD: Canadian Dollar continues to grow at the beginning of the week

The Canadian Dollar demonstrates growth again at the Forex currency market on Monday, which is the third session of the ascending trend for the currency. Supportive factor today is increasing oil prices.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and it goes down, confirming a previous sell signal for the pair. Stochastic
Oscillator is giving a similar signal today, being in the oversold zone.

Forex recommendations: in case of breakdown at the level of 1.0100 the pair will go to 1.0080 and 1.0050. The state of American economy continues to influence profoundly on the situation in Canada due to the close proximity.

There is an opinion at the market that the Bank of Canada will not change the interest rate until QII next year, as economic recovery rate slows down in the country. The rate was increased 3 times in a row this year and at the last meeting of 19 October the regulator decided not to change it again. Interest rate in Canada is at the level of 1% per annum. The last increase took place in September this year (+25 basis points). Close proximity to the USA with QE2 is unlikely to bring positive factor to Canada. Therefore it is too early to speak about the rate growth. It is possible that while policy of easing is being conducted in America, Canadian rate will remain unchanged.

The head of the Bank of Canada Mr. Carney noted earlier that economy needs regulation system reforms, as the risk of collapse of the financial institutions "which are too large to become bankrupt"' is still too high at the moment.

He also stressed that the banks themselves should comply with market discipline and currencies' rates should reflect the fundamentals. According to Carney increasing tension at the currency market bears risks for Canada itself.