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[LF.Anastasia]

EUR/USD: All investors’ attention is focused on statistics

The pair EUR/USD is traded slightly upward at the Forex currency market on Wednesday morning because investors believe, that drawdown yesterday was needless. Meanwhile the Euro is still at the lows of three weeks.

By 9.40 Moscow time the Euro is at 1.3144 against closing session level of 1.3101 yesterday.

Today will be the most important day of the shortened week. Data on Italian and German economies and the UK GDP statistics for QIII will be released in the morning; in the afternoon investors expect publications of data on the revised GDP value in the U.S. in QIII.

Worth noting that in advance of important statistics publication, activity in the market can decline.

Most likely the pair EUR/USD will not go beyond the range of 1.3070-1.3280 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: A day is going to be challenging for British Pound today

At the Forex currency market the British Pound Sterling rate is traded upward after the sharp fall yesterday caused by the pressure from macro-economic data.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and continues to go down, confirming a previous sell signal for the pair. Stochastic Oscillator is still in the oversold zone and does not give a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5500 the pair will go to 1.5580 and 1.5610. If bearish sentiments for the pair will dominate, traders’ targets will be 1.5440 and 1.5410.

Yesterday investors were upset by the weak data on the levels of public sector needs in cash, which turned out to be at the level of 16.8 billion pounds. At the same time tax revenues grew by 3.1% y/y which became an annual minimum. Furthermore the level of net borrowing in the public sector amounted to 23.3 billion pounds in November against 17.4 billion pounds for the same period a year earlier.

The day is going to be strenuous for the GBP – in the middle of the trading session the UK statistics will be released, including final GDP data of the country for QIII.

The UK unemployment rate in QIII increased to 7.9% against the previous level of 7.8% and the forecast of 7.7%. Number of unemployed reduced in Great Britain only by 1.2 thousand in November against expected reduction by 3 thousand.

The data released earlier proved to be mixed. Inflation in the UK increased by 0.4% (+3.3% y/y) in November against the growth by 3.2% y/y in October. The fact, that the rate has been growing for the ninth consecutive month made economists worried. It is possible that the Bank of England will have to raise interest rate earlier to demonstrate that the inflation is under control. Interest rate is at the level of 0.50% per annum currently, the decision to leave it unchanged was made a week ago.

 

[LF.Anastasia]

CHF: Swiss Franc Tendency to rise never ceases to amaze

At the Forex currency market Swiss Franc rate continues to rise in pairing with the USD on Wednesday attracting investors as a protective asset.


Forex forecast: MACD indicator is in the negative area for the pair and it continues to descend, confirming a previous sell signal for the pair. Stochastic Oscillator has come into oversold zone today and has not identified a clear signal.

Forex recommendations: if current market sentiments will be maintained and in case of breakdown at the level of 0.9550, traders’ targets will be the levels of 0.9510 and 0.9450.

It became known yesterday that positive trade balance in Switzerland declined to the level of 1928 billion Swiss francs in November; while the growth to the level of 2173 billion francs had been projected.

Important statistics on Eurozone countries and the USA will be released today due to which activity in the pairs can decline in advance of the publication.

In other respect, the situation in Switzerland still remains unchanged.

At the meeting which was held last week, Swiss National Bank decided to maintain three months rate Libor in the previous target range of 0-0.75. This decision of the Bank was expected by the market. Index was revised in March 2009 the last time when it was reduced by 0.25%.
In addition, according to KOF estimates, Swiss institute of research on economic cycles, Swiss Franc will retain the status of a protective asset and a refuge as long as the period of tension will be maintained in Europe.

KOF has also revised its forecast for GDP growth upward in 2011; is it projected that Swiss economy will increase by 1.9% in 2011 against the previous forecast of 1.8%. In 1012 national economy is expected to rise by 2%. This year, GDP growth in Switzerland can amount to 2.7%.
Market believes that SNB will carry out intervention on a unilateral basis next year if the Franc will continue to grow rapidly.

 

[LF.Anastasia]

JPY: Japanese Yen has failed to escape from narrow range

At the Forex currency market the Japanese Yen rate continues to stay in the narrow range on Wednesday.

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

Forex recommendations: if bullish sentiments prevail for the pair, buyers’ targets will be the levels of 3.90 and 84.30. If of upward breakdown will not take place, the pair will continue to consolidate close to the current levels.

Statistics released today showed that export volume in Japan increased by 9.1% y/y and 7.8% m/m in November, which indicates the rise in demand for products from both Europe and China. The demand was able to neutralize the negative impact caused by Japanese Yen growth, which used to put considerable pressure on macro-economic indicators.

Market believes that total exports will decline in QIV; however in the early months of 2011 it is projected to recover.
We would remind that at the meeting yesterday the Bank of Japan announced decision to leave interest rate unchanged in the target range of 0-0.1% per annum. The vote was unanimous.

In the follow-up comments the regulator emphasized that assessment of economic situation remained unchanged and economic growth will be slow and small for some time. Nevertheless, Japanese economy continues to demonstrate signs of moderate recovery. In addition, the Bank of Japan lowered its forecasts for industrial output and drew attention to the need to keep track of the downward risks to the national economy.

In general, the Yen can demonstrate illogical movement in the coming days at the thin market due to Christmas holydays and falling trading volumes.

 

[LF.Anastasia]

AUD: Australian Dollar is steadily approaching parity

At the Forex currency market the growth of the Australian Dollar rate which started earlier still continues.

It is interesting that at the Asian session the AUD fell down in the thin market; signals were multidirectional. By mid-afternoon the AUD came into the positive area.

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

Forex recommendations: if bullish sentiments for the pair will be maintained, buyers’ targets will be the levels of 1.0015 и 1.0045/50. Otherwise, consolidation close to the current levels will continue.

External background is tranquil for Australia today; macro-economic news will not be published.
The minutes of the RBA meeting of 7 December which were made public yesterday, showed that the rate was left unchanged, since the regulator believes that current situation can be described as moderately restrictive, because consumers are cautious, while inflation pressure does not intensify. The interest rate in Australia is now at the level of 4.75% per annum.

The document reported that households might continue to rein in spending and in this case it will lead to rise in inflation in short term and also to the lack of aggregate demand in economy.

In general monetary policy according to RBA estimates can be regarded as moderately restrictive.

We would remind that according to the statistics released earlier, GDP in Australia increased by 0.2% on quarterly basis in QIII; while analytics had 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. It became known earlier that retail sales in October amounted to-1.1% m/m against +0.1% in September and trade balance surplus in October was $2.625 billion. It also became known earlier that current account balance amounted to -А$7.83 billion in QIII against the forecast of -А$6.60 billion.

 

[LF.Anastasia]

CAD: Canadian Dollar is corrected after drawdown earlier

At the Forex currency market the Canadian Dollar rate is rising as part of technical correction after the fall that has lasted for the four sessions.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD, however it goes up, giving grounds to a pair buy signal. Stochastic oscillator is in the overbought area today and is forming an antipodal signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0165 the pair will go to 1.0175 and 1.0200. In case of breakdown at the level of 1.0130, traders’ targets will be the levels of 1.0100 and 1.0096.

The following Canadian statistics was released yesterday which, in general, turned out to be ambiguous:
Level of retail sales, excluding cars, rose by 0.9%, to the level of $28.5 billion in October; therefore, the indicator has been increasing for the fifth month in a row. Sale of gasoline still remains the main catalyst for the growth.

In addition, the core consumer price index in Canada remained unchanged in Canada in November, following the growth by 0.4% in October; at the same time growth on annual basis has declined to 1.4% against the previous level of 1.8%.

Therefore, inflation demonstrated minimal increase last month for over then 2 years. It became an indication for the Bank of Canada that interest rates will remain unchanged for quite a long time.

Interest rate in Canada is at the level of 1% per annum. The last increase which took place in September this year was by +25 basis points. There is an opinion at the market now that the Bank of Canada will not change the interest rate until QII next year as economic recovery rate has slowed 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.

 

[LF.Anastasia]

EUR/USD: Euro is rising amid external positive factor

The pair EUR/USD is traded upward at the Forex currency market on Thursday morning, supported by external positive factor and continuation of rally at the capital markets.

By 9.40 Moscow time the Euro is at 1.3131 against closing session level of 1.3098 yesterday.

Such long-awaited statistics on the U.S. GDP for QIII, released yesterday, was weaker than predicted, demonstrating the growth of revised value by 0.1%, to the level of 2.6% (market expected 2.7%), which caused reduction of traders’ interest in the USD.

Due to the shortened work week (trading floors will be closed tomorrow in many countries) the major statistics data will be released today, therefore market volatility can increase.

Most likely the pair EUR/USD will be in the range of 1.3100-1.3280 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound tries to recover

At the Forex currency market the British Pound Sterling rate demonstrates intention to recover this morning, using positive external background as a support.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and continues to go down, which confirms a Pound sell signal. Stochastic Oscillator still remains in the oversold zone today.

Forex recommendations: if current external background will be maintained and bullish sentiments intensify, buyers’ targets today can be the levels of 1.5500 and 1.5560. It a breakdown will not take place the pair will continue to consolidate close to the current levels.

A lot of UK statistics was released today which proved to be disappointing for the Pound.
Thus, balance of payment in QIII amounted to -9.6 billion pounds against -5.2 billion pounds; final data on GDP growth rates showed the level of 2.7% y/y against 2.8% y/y earlier.

In addition, the Bank of England representative Mr. Fisher noted today that British economy can continue to decline next year. At the same time the Bank still anticipates the risks of strengthening of inflationary pressure.

So, a series of negative statistics on the UK has not terminated yet. Yesterday, investors were upset by weak data on levels of public sector needs in cash, which turned to be at the level of 16.8 billion pounds. At the same time tax revenues rose by 3.1 % y/y, which became an annual maximum; furthermore, the level of net public borrowing in November amounted to 23.3 billion pounds against 17.4 billion pounds for the same period a year earlier.

Moreover the situation in employment sector still remains complicated. Unemployment rate in the UK increased to 7.9% in QIII against the previous level of 7.8% and the forecast of 7.7%. A number of unemployed in the UK decreased only by 1.2 thousand instead of the expected reduction by 3 thousand.

 

[LF.Anastasia]

CHF: Swiss Franc firmly secured a status of protective asset

At the Forex currency market Swiss Franc continues to consolidate on Thursday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it continues to descend, confirming a pair sell signal. Stochastic oscillator is approaching oversold zone today and does not give a clear signal.

Forex recommendations: if current level of external environment will be maintained, traders’ targets will be the levels of 0.9450 и 0.9410 today.
Yesterday Swiss Finance Minister Mrs Widmer-Schlumpf noted that Swiss National Bank has no plans to abrupt collapse of the Euro in pairing with the USD. Therefore, the politician denied rumours that have appeared due to the publication in Sonntag regarding secret talks of the head of the CHB Hildebrand with the Swiss authorities about the prospects of decline of the Unified European currency to the rate of 0.50 francs.

Meanwhile, domestic situation in Switzerland remains unchanged. Debates at the market regarding how soon the SNB will start currency intervention, has intensified, because high rate of Swiss Franc seriously obstructs country’s economic recovery.

At the meeting which was held last week, Swiss National Bank made a predictable decision to maintain three months rate Libor in the previous target range of 0-0.75. This decision of the Bank was expected by the market. Index was revised in March 2009 last time when it was reduced by 0.25%.
According to KOF estimates, Swiss institute of research on economic cycles, Swiss Franc will retain the status of a protective asset and a refuge as long as the period of tension will be maintained in Europe.

KOF has also revised its forecast for GDP growth upward in 2011; is it projected that Swiss economy will increase by 1.9% in 2011 against the previous forecast of 1.8%. In 1012 national economy is expected to rise by 2%.

 

[LF.Anastasia]

JPY: Japanese Yen rapidly regains strength

At the Forex currency market the Japanese Yen rate continues to grow steadily. Downward slide of the pair USD/JPY has been observed for the fourth consecutive session and it is difficult to find a logic explanation to the rapid growth of JPY, except for the fact that players drifted to the safe harbor after the yesterday’s publication of the U.S. statistics, which did not meet expectations.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY however it continues to slide down, confirming a previous sell signal for the pair. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.
Forex recommendations: if investors’ current bearish sentiments will be maintained traders’ targets on Thursday will become the levels of 82.80 and 82.50.

At the same time the situation in Japan is far from being tranquil; macro-economic forecasts for QIV are gloomy and current growth of the Yen only aggravates economic situation in Japan.

Market believes that total exports will decline in QIV; however in the early months of 2011 it is projected to recover.
We would remind that at the meeting yesterday the Bank of Japan announced decision to leave interest rate unchanged in the target range of 0-0.1% per annum. The vote was unanimous. In the follow-up comments the regulator emphasized that assessment of economic situation remained unchanged and economic growth will be slow and small for some time. Nevertheless, Japanese economy continues to demonstrate signs of moderate recovery. In addition, the Bank of Japan lowered its forecasts for industrial output and drew attention to the need to keep track of the downward risks to the national economy.

Meanwhile, yesterday’s statistics showed that Japanese economy has learnt to develop even in the conditions of the expensive national currency. Thus, export volume in Japan increased by 9.1% y/y and 7.8% m/m in November, which indicates the rise in demand for products from both Europe and China. The demand was able to neutralize the negative impact caused by Japanese Yen growth, which used to put considerable pressure on macro-economic indicators.