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[LF.Anastasia]

CAD: Canadian Dollar retreats at the end of the week

The Canadian Dollar rate goes down at the Forex currency market at the end of the week despite stability in the domestic economy, investors do not dare purchasing due to the obscure external background.

Forex forecast: MACD indicator is below its signal line for the pair USD/CAD today however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal.

Forex recommendations: if current external background is maintained at the same level, buyers’ targets on Friday will become the levels of 1.0170 and 1.0210.

Interest rate in Canada is at the level of 1% per annum. The last increase took place in September this year (+25 basis points). 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro is still under pressure

The pair EUR/USD continues to be at the lows of eight weeks at the Forex currency market on Monday morning as investors are still concerned that Irish debts problems might spread further to the countries of Eurozone.

By 9.30 Moscow time the Euro is at 1.3242 against closing session level of 1.3249 on Friday.

Players ignore favourable statistics for Eurozone, published last week as well as the statements made by the officials – market still believes that sooner or later both Spain and Portugal will appeal for aid – these are the countries where budget deficit is as critically high as in Ireland.
Some macro-statistics is scheduled to be released today; however it is unlikely to affect trading process. External background will continue to specify trading sentiments today. Most likely the pair EUR/USD will be in the range of 1.3200-1.3400 at the trading session on Monday.

 

[LF.Anastasia]

GBP: Pound Sterling tries to resist selling, determining movement direction

At the Forex currency market the British Pound Sterling rate is traded slightly upward on Monday morning; however instability of the external background has left its mark on the trading session.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5630, the pair will go to 1.5650 and 1.5690. If the level of 1.5560 is exceeded, traders’ targets will be the levels of 1.5520 and 1.5470.

It became known today that the UK houses prices as per Hometrack, reduced by 0.8% on monthly basis (-1.1% y/y). The situation in the sector continues to be ambiguous. Earlier the LSL/Acadametrics estimations showed that houses prices in England and Wales went up by 0.3% in October, the rise is going on for the sixth consecutive month, increasing by 6.1% on annual basis; analytics in the real estate sector contradict one another: Halifax stated that houses prices in October increased by 1.8%, Nationwide insisted that the indicator fell by 0.7%. Nationwide economists stressed earlier that if the trend which had started in the early summer would continue in November and December, the prices would have a chance to drop by 1% by the end of the year. Rightmove clarified that they noticed the oddity in indicators in October; however they assumed that traders deliberately start overprice to hold the objects until better time.

Earlier several major British monetary politicians expressed their attitude to the current state of economy and outlined their vision of the future. The head of the Bank of England Mervin King stressed that authorities do not take compulsory measures to decrease the rate of the Pound and they are interested in the steady economic recovery. He also stressed that export levels in the country began to rise and there is no need to revise inflation in the country yet.

Representative of MPC Mr. Sentence said again that it is necessary to raise interest rates because next year the regulator will have to combat inflation growth. Sentence had already explained earlier this week that preservation of the interest rate at the low level for a long time undermines economy and weakens it. At the same time fiscal discipline of the banks also becomes weaker. Sentence supports the rate increase and he is convinced that the country’s economy will withstand such step of the monetary authorities. As a solid argument the politician offered the value of inflationary levels which will remain above the target level of the regulator for the next two years, if the rate is not increased.

 

[LF.Anastasia]

CHF: Growth of Swiss Franc in the morning is considered as a rebound

Swiss Franc rate is traded upward at the Forex currency market on Monday morning. However considering the global actual situation, such growth should be regarded as a rebound following the previous fall.

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: traders’ targets today will be the levels of 0.9920 and 0.9870.

Economists’ belief, that economic growth in Switzerland will slow down in QIII continue to find confirmations. Thus, KOF indicator released on Friday showed the decline to 2.12 in November against the previous level of 2.16.

Although indicator of the business expectations is still in the positive area, its decline after summer’s stabilization seems alarming. Consumer spending remains to be a strong factor that can overbalance this indicator.

Philipp Hilderbrand, the head of Swiss National Bank, said earlier that his belief in the stability of Eurozone remains unchanged. In his view, European leaders are able to adopt measures to restore financial stability which, in its turn, will reduce pressure on the CHF“. “I am convinced that European Union and Eurozone will cope with challenges. Stability of the Eurozone is an important factor which affects the Franc and economy.” –he emphasized in his speech. According to the data released on Thursday, employment in Switzerland excluding agricultural sector increased to 4.08 million people in QIII against the previous level of 3.97 million people. The data is positive for the domestic economy.

The next meeting of the National bank of Switzerland is scheduled for 16 December. We will remind that interest rate in Switzerland remains unchanged for 19 months already at the level of 0.25% per annum. The head of the Swiss national Bank Mr. Hilderbrand is convinced that current level of the interest rate is acceptable and he noted that the situation now is ideal for the rise of the risks.

 

[LF.Anastasia]

JPY: Japanese Yen’s rate continues to remain far away from the highs

At the Forex currency market Japanese Yen’s rate has bounced slightly from its lows of November on Monday, although uneasy situation in Asia caused by the Korean conflict put pressure on the currency.

Forex currency: MACD indicator is in the positive area for the pair USD/JPY, however it s moving along the signal line not giving a clear 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 84.20, the pair will go to 84.50 and 84.80. In case of breakdown at the level of 83.80, traders’ targets on Monday will become the levels of 83.50 и 83.00.

The head of the Bank of Japan, Mr. Shirakawa said at the beginning of the week that growth in the Yen had both positive and negative sides.
Thus, strong Yen had an impact on the export levels, however it stabilized International trading situation in the medium terms as it also affected the reduction of the import prices.
Friday’s data demonstrated that deflation level began its recession in Japan. Thus, consumer prices continued to decline in October which became the twentieth consecutive reduction of the index although its pace has obviously slowed down.

Economists noted that deflationary spiral began to unwind following the introduction of high taxes on tobacco products in the country. CPI reduced by 0.6% y/y last month against the fall by 1.1% y/y in September. Nevertheless, Japanese economy will suffer from the consequences of deflation for a long time, which will result in slow pace of the GDP growth in the country and in the levels of exports too. Note, it is not clear yet whether this trend will consolidate or not.

The following Japanese news was released today:
– Retail sales level in Japan fell by 0.2% y/y in October against the growth by 1.4% in September;
– Level of confidence in small business in Japan decreased to the level of 45.8 in November against the previous level of 46.4.
The rates of the Bank of Japan have been maintained in the target level of 0-0.1% per annum. In addition at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA.

 

[LF.Anastasia]

AUD: Australian Dollar froze at the lows of eight weeks; however, the currency has prospects to grow

The Australian Dollar rate went down at the Forex currency market on Monday in Asia; however it is on the plus side by the mid trading day.
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 similar signal, being n the neutral zone.

Forex recommendations: if bullish sentiments for the pair are maintained, buyers’ targets today will become the levels of 0.9770 and 0.9800.
The situation in the Australian economy has remained unchanged at the beginning of new week, although conflict between South Korea and DPRK has left a mark on the trades; however the intervention of China and a call for a truce smoothed over the situation.

Current level of the interest rate in Australia is 4.75%. According to the average forecast of economists and analytics the RBA is unlikely to raise interest rate before QIV of 2011. Earlier Australian Minister of Finance updated its budget forecast. 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.

On Friday the head of the Reserve Bank of Australia Glenn Stevens stressed that GDP growth in 2011 and 2012 amounted to about 3.5%. At the same time he foresees overheating risks in Asian economy; therefore it is urgently required to reduce growth rate.
The politician explained that the world economic growth in his opinion will exceed 4% this year and current policy of Australia in the field of credit and monetary relations is quite adequate so far.

The level of capital expenditures in Australia increased by 6.2% on quarterly basis in QIII as per Capex estimations against the previous reduction by 4%. Economists’ forecast amounted to +3.1%, which confirmed high level of confidence to the Australian economy. However the data released earlier is not that unambiguous – index of leading indicators CB reduced by 0.1% n September against +0.2% in August; volume of completed construction in QIII declined by 2.1% against the forecast of growth by 2.0%.

 

[LF.Anastasia]

NZD: The decline of the New Zealand Dollar can be suspended

At the Forex currency market the New Zealand Dollar rate continues to fall on Monday, however sales are low already. Signals indicate the beginning of rebound in the currency.

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

Forex recommendations: if the rebound trend is maintained and in case of breakdown at the level of 0.7540 the pair will go to 0.7570 and 0.7650.
Nothing fundamentally new has happened in the New Zealand economy lately, the factor of pressure is the same as that on the Australian Dollar: difficult situation in the conflict area between South and North Koreas, which had worsened due to the military exercises conducted at the weekend. However the fact that China began to promote peaceful solution of the armed conflict contributes to the stabilization of the situation.

As it was reported earlier unemployment rate in New Zealand decreased to 6.4% in QIII against the previous level of 6.7% in QII. At the same time the change in the employment rate in QIII amounted to +1% against expectations of +0.5%.

In the mid of November the head of the Reserve bank of New Zealand Mr. Bollard emphasized that growth in NZD can affect future prospects of the interest rate increase and the New Zealand Dollar rate has been slightly overvalued for quite a long time. Monetary politician also expressed his opinion that currency rates in a number of countries are in such state now that they prevent from eliminating unbalance at the currency market. According to him minimization of economic stimulation measures bears risks for the global economy. However the US FR decision to start a new stage of stimulation had a positive effect at the global capital markets, although it puts pressure on the currency rates in the developing countries.

Reserve Bank of New Zealand continues to adhere to the policy of non-intervention and peace – the regulator is convinced that strong NZD prevents better balanced national economy, and recent research demonstrates that pace recovery in the domestic economy has slowed down. In addition the regulator stressed that banking system in New Zealand is good state, while real estate sales is reducing, which can be a signal for a new rebound in the sector.

 

[LF.Anastasia]

EUR/USD: Negative external factor gives Euro a lead to a descend

The pair EUR/USD continues to descend at the Forex currency market on Tuesday morning despite attempts of slight recovery in Asia.
By 10.35 Moscow time the Euro is at 1.3104 after closing session level of 1.3125 yesterday.

Fears regarding debt problems of Eurozone and their further extension in the peripheral countries of the area keep market participants on their toes, which is resulted in the lack of interest in risks. Furthermore expectations that China will introduce new measures to cool its economy remain an additional factor of pressure.

All these factors are taking the Euro away to the lows of eleven weeks.

Data on unemployment rate in Eurozone will be released today; morning news from Germany where employment rate growth begun to show in October has been ignored so far.

Markets’ attention is still focused on the external background.
Most likely the pair EUR/USD will not go beyond the level of 1.3075-1.3290 on Tuesday trading session.

 

[LF.Anastasia]

GBP: The British Pound Sterling rate continues to be pressurized by a number of factors

The British Pound Sterling continues to be under the pressure from investors’ European fears. Nevertheless sales volume in the pair GBP/USD is not too big, which indicates the possibility of the Pound reversal trend.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down, confirming a previous sell signal for the pair. Stochastic Oscillator is not giving a clear signal today, being in the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5575 the pair will go to 1.5610 and 1.5650. If the level of 1.5525 is exceeded, traders’ targets will become the levels of 1.5450 and 1.5400.

The UK GFK consumer confidence data released today showed that the index fell to the lows of four months in November to the level of -21 against the previous level of -19. While economists did not expect changes in the index, which seems to be impacted by the reduction of the British budget expenditures that is being implemented by the local monetary authorities currently.

It is possible that indicators will continue to be low – efforts to reduce public expenditures are in full swing in the UK at the moment.
It became known yesterday that the UK houses prices as per Hometrack, reduced by 0.8% on monthly basis (-1.1% y/y). The situation in the sector continues to be ambiguous. Earlier the LSL/Acadametrics estimations showed that houses prices in England and Wales went up by 0.3% in October, the rise is going on for the sixth consecutive month, increasing by 6.1% on annual basis; analytics in the real estate sector contradict one another: Halifax stated that houses prices in October increased by 1.8%, Nationwide insisted that the indicator fell by 0.7%.

Earlier Nationwide economists stressed that if the trend which had started in the early summer would continue in November and December, the prices would have a chance to drop by 1% by the end of the year. Rightmove clarified that they noticed the oddity in indicators in October; however they assumed that traders deliberately start overprice to hold the objects until better time.

Several major British monetary politicians expressed their attitude to the current state of economy and outlined their vision of the future. The head of the Bank of England Mervin King stressed that authorities do not take compulsory measures to decrease the rate of the Pound and they are interested in the steady economic recovery. He also stressed that export levels in the country began to rise and there is no need to revise inflation in the country yet.

 

[LF.Anastasia]

CHF: Swiss Franc regains from the previous fall

At the Forex currency market Swiss Franc rate regains from the previous fall on Tuesday using a chance that investors fled to the safe assets.

Forex forecast: MACD indicator is in the positive area however it moves along the signal line and does not give a clear signal. Stochasic Oscillator is in the neutral zone, giving a pair sell signal.

Forex recommendations: if current external background is maintained, bearish sentiments might intensify for the pair and then traders’ targets will become the levels of 0.9925 и 0.9880.

It became known on Tuesday that consumption indicator rose to 1.716 in October against the preliminary estimation of 1.695 in Switzerland.
Otherwise the situation in Swiss economy remains the same.

Economists’ belief, that economic growth in Switzerland will slow down in QIII continue to find confirmations. Thus, KOF indicator released on Friday showed the decline to 2.12 in November against the previous level of 2.16. Although indicator of the business expectations is still in the positive area, its decline after summer’s stabilization seems alarming. Consumer spending remains to be a strong factor that can overbalance this indicator.

Philipp Hilderbrand, the head of Swiss National Bank, said earlier that his belief in the stability of Eurozone remains unchanged. In his view, European leaders are able to adopt measures to restore financial stability which, in its turn, will reduce pressure on the CHF“. “I am convinced that European Union and Eurozone will cope with challenges. Stability of the Eurozone is an important factor which affects the Franc and economy.” –he emphasized in his speech. According to the data released last Thursday, employment in Switzerland excluding agricultural sector increased to 4.08 million people in QIII against the previous level of 3.97 million people. The data is positive for the domestic economy.

The next meeting of the National bank of Switzerland is scheduled for 16 December. We will remind that interest rate in Switzerland remains unchanged for 19 months already at the level of 0.25% per annum. The head of the Swiss national Bank Mr. Hilderbrand is convinced that current level of the interest rate is acceptable and he noted that the situation now is ideal for the rise of the risks.