LiteForex's analytics

[LF.Anastasia]

JPY: Yen gathers strength on Tuesday

Japanese Yen rate is traded upward at the Forex currency market on Tuesday – the pair USD/JPY looks overbought for a couple of days, therefore technical correction is relevant.

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 on Tuesday, being in the neutral zone.

Forex recommendations: traders’ targets today will be the levels of 83.50 and 82.75.

A lot of Japanese statistics was released today:
– Orders in the construction sector in October: -5.6% y/y against: -15% y/y in September;
– PMI in the manufacturing industry with the account of seasonal fluctuation increased to 47.3 in November against 47.2 in October;
– Preliminary volume of industrial production in October: 1.8% m/m against the forecast of -3.5% and -1.6% m/m in September;
– Unemployment rate in October: 5.1% against 5.0% in September;
– Real household spending in October: -0.4% y/y.

Another important factor is that unemployment rate began to grow again – while the efforts of the local authorities are aimed at solving deflation problem and we were able to witness its initial results last week; however Japanese economy is in a difficult position, which will affected the fundamental indicators at least until the end of the QI next year.

We would remind that consumer prices continued to decline in October that became the twentieth consecutive reduction of the indicator; however the pace of decline has apparently 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.

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.The rate of the Bank of Japan has 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 continues free fall; however rebound can take place soon

At the Forex currency market the Australian Dollar rate on Tuesday continues to fall on Tuesday; however volume of sale is not big already which suggests the possibility of consolidation at the achieved levels and subsequent rebound.

Forex forecast: MACD indicator for the pair AUD/USD has merged with its signal line and does not give a clear signal. Stochastic Oscillator demonstrates intention to grow on Tuesday, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: if bullish sentiments will emerge at the market, the pair AUD/USD will start to regain from the decline; while buyers’ targets will be the levels of 0.9770 and 0.9810. If it does not happen, we will see the outset close to the current values.

The following Australian news was released today:

– Construction permits in October: +9.3% m/m against -6.6% in September;
– Currenct account balance in QIII: -А$7.83 billion against the forecast of -А$6.60 billion.
Otherwise the situation in Australia remains unchanged.

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.

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: New Zealand Dollar continues to decline amid external negative factor

At the Forex currency market the New Zealand Dollar rate continues to move in the descending channel on Tuesday, being under the pressure of the negative external factor and also affected by the fall of the Euro bellow 1.30.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD; and it is moving along the signal line not giving a clear signal. Stochastic Oscillator does not give a clear signal either, being in the oversold area.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7475 the pair will go to 0.7500 and 0.7550. If the level of 0.7400 is exceeded, traders’ targets will become the levels of 0.7350 and 0.7310.

It became known today that money supply M3 in New Zealand rose by 1.8% in October against the fall by 2.0% in September.

Catalysts for the pair are exactly the same as that of the Australian Dollar. Difficult situation in the conflict area between South and North Koreas had been worsened due to the military exercises conducted at the weekend.

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%.

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 in good state, while real estate sales is reducing, which can be a signal for a new rebound in the sector.

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 are not able to prevent elimination of unbalance at the currency market. According to him minimization of economic stimulation measures bears risks to the global economy. However the last 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.

 

[LF.Anastasia]

EUR/USD: Euro’s growth this morning is only technical correction

The pair EUR/USD is traded slightly upward at the Forex currency market on Wednesday morning; however it is too early to rejoice at the trend reversal as the growth is not more than correction.

By 10.00 Moscow time the Euro is at 1.3034 against closing session level of 1.2982 yesterday.

Yesterday was another day of trial for the Euro – the ease of the currency while exceeding psychologically important level of 1.30 put investors on the alert. In principle if bearish sentiments will be maintained, the pair may very well go to 1.26; however currently the pair looks too oversold, consequently slight upward correction seems relevant.

Market participants did not take notice of Tuesday’s statistics, although it demonstrated some stability in Eurozone and in Germany.

The day again will not be very eventful with today and it is quite possible that the Euro will discover a fundamental support.

Most likely the pair EUR/USD will not go beyond the range of 1.2930-1.3200 on Wednesday trading session.

 

[LF.Anastasia]

GBP: The British Pound Sterling expects correction on Wednesday

The British Pound Sterling rate hovers near the closing levels at the Forex currency market on Wednesday, although steady external background can make upward correction possible for the Pound.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD; however it goes up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal in the middle of the week, being in the neutral zone.

Forex recommendations: if the current external background is preserved, buyers’ targets today will become the levels of 1.5650 и 1.5680.

As it became known today real estate prices in the UK reduced by 0.3% m/m (+0.4% y/y) in November as per Nationwide estimations against the forecast of reduction by 0.4% m/m.

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 started in the early summer will continue in November and December; there is a chance that the prices will drop by 1% by the end of the year. Rightmove clarified that they noticed the oddity in indicators in October already; however they assumed that traders deliberately start overpricing in order to keep back property until better time.

Therefore, real estate sector in Great Britain is still in a tricky situation.

Data on the UK consumer confidence GFK released yesterday 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.

 

[LF.Anastasia]

CHF: Swiss Franc still remains in the same range

Swiss Franc rate is traded in the same price range as in the last four days at the Forex currency market on Wednesday. The graph shows that the price for the pair USD/CHF has come close to the strong resistance level therefore medium trend can be identified soon.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF; however it moves along the signal line and does not give a clear signal. Stochastic Oscillator has merged with the signal line and did not form a signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case if breakdown at the level of 1.0050 the pair will go to 1.0075 and 1.0120. If the level of 0.9970 is exceeded, traders’ targets will be the levels of 0.9925 and 0.9870.

Sovereign risk in Europe has more negative sides than positive ones for the CHF at the moment, as investors have not figured out completely future expectations. In general, November was quite favourable for Swiss currency and it increased by 3.25%.

Otherwise economic situation in Switzerland has not changed significantly.

According to the data released earlier, 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 has remained 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.

It became known on Tuesday that consumption indicator rose to 1.716 in October against the preliminary estimation of 1.695 in Switzerland.

Meanwhile 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 stabilization in the summer seems alarming. Consumer spending remains to be a strong factor that can overbalance this indicator.

 

[LF.Anastasia]

JPY: Corrective sentiment for the pair USD/JPY is still strong

At the Forex currency market on Wednesday the Japanese Yen rate continued to rise at the Asian trading session, however it came to a halt by mid –day. Although the currency has high chances to resume upward movement.

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

Forex recommendations: traders’ targets today will be the levels of 82.80 and 92.50.

Board member of the Bank of Japan Mr. Suda noted today that recession in the country’s economy can be prolonged because the growth in the Yen in the past has significant impact on the export levels. According to him consumer sentiments also goes down as well as corporate sentiments.

Suda also believes that financial market remains volatile due to the large number of risks in the world. At the same time the Bank of Japan just need to be vigilant and monitor the situation in the economies of Eurozone and the USA.

Among other things monetary politician did not rule out that program of assets redemption can be expanded if required.
The data released yesterday showed that unemployment rate (5.1%) began to grow again – while the efforts of the local authorities are aimed at solving deflation problem and we were able to witness its initial results last week; however Japanese economy is in a difficult position, which will affected the fundamental indicators at least until the end of the QI next year.

We would remind that consumer prices continued to decline in October which became the twentieth consecutive reduction of the indicator; however the pace of decline has apparently slowed down. Economists noted that deflationary spiral began unwinding, 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.

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. Although strong Yen had an impact on the export levels, it stabilized International trading situation in the medium terms as it had an effected on the reduction of the import prices.

 

[LF.Anastasia]

AUD: Australian Dollar tends to recover in the mid-week

The Australian Dollar rate is traded upward at the Forex currency market on Wednesday following the recovery of the major currency pair after a steep drop earlier. Investors nevertheless continue to ignore macro-economic indicators.

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 today.

Forex recommendations: in case of breakdown at the level of 0.9700 and if traders’ positive sentiments are maintained, traders’ targets will be the levels of 0.9770 and 0.9800.

It became known today that GDP in Australia increased by 0.2% on quarterly basis; while analytics has expected the rise by 0.5%. The growth over last quarter positioned as the lowest over the last two years, therefore GDP dynamics seems to be descending. At the same time the Australian Dollar rate can resume the decline in the medium term because investors’ concern about problems in Eurozone is still strong and the Euro is still too weak. The AUD has become “lost weight” by 3.6% last week in pairing with the USD. It became known yesterday that current account balance amounted to -А$7.83 billion in QIII against the forecast of -А$6.60 billion. All these factors will buck against the AUD.

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 was not so 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%.

Interest rate in Australia is at the level of 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 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.

 

[LF.Anastasia]

EUR/USD: Euro continues to grow moderately

The pair EUR/USD is traded upward at the Forex currency market on Friday continuing ascending movement following the ECB decisions yesterday

By 10.00 Moscow time the Euro is at 1.3225 against closing session level of 1.3209 yesterday.

The European Central Bank meeting was held on Thursday, where it was decided to keep interest rate unchanged at the level of 1% per annum. In addition the ECB announced the revision of GDP growth forecast upward for the Eurozone for the current and next year which supports purchase interest to the Euro.

However let’s not forget how strong was investors panic while Irish problems had been resolved and market predicted the same fate for Spain and Portugal. Therefore, potential risks for the Euro still remain at the high level.

A lot of statistics of the Eurozone’ countries will be published today including the levels of retail sales in the region. The latest data of the week will be the U.S news.

Most likely the pair EUR/USD will not go beyond the range of 1.3170-1.3290 on Friday trading session.

 

[LF.Anastasia]

GBP: British Pound goes up at the end of the week still staying within the range

At the Forex currency market The British Pound Sterling rate is going up on Friday amid favourable external environment.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it is moving along the signal line not forming a clear signal. Stochastic Oscillator is giving a pair buy signal, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5650 the pair will go to 1.5700 and 1.5730. If the level of 1.5500 is exceeded, traders’ targets will be the levels of 1.5460 and 1.5400.

The economic situation in Great Britain has not changed significantly today.

Note, that the Pound has been moving reluctantly since the beginning of this week – it seems that the currency is basically strong due to which it does not respond very actively to the current background. However it is worth remembering that the situation in Great Britain is far from being stable.

The data on Wednesday showed that real estate prices in the UK reduced by 0.3% m/m (+0.4% y/y) in November as per Nationwide estimations against the forecast of reduction by 0.4% m/m.

It became known earlier 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 started in the early summer will continue in November and December; there is a chance that the prices will drop by 1% by the end of the year. Rightmove clarified that they noticed the oddity in indicators in October already; however they assumed that traders deliberately start overpricing in order to keep back property until better time.

Interest rate of the Bank of England is at the level of 0.5% per annum. The next meeting of the regulator is scheduled for 9 December.