LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar is still in demand at the market

At the Forex currency market the Australian Dollar rate continues to grow steadily; ascending trend for the pair AUD/USD has been observed for the fourth consecutive session. At the same time weather conditions can encourage rise in coal prices, which will also provide support to the country’s currency.

Forex forecast: MACD indicator for the pair AUD/USD is in the positive area and continues to go up, which confirms a previous buy signal for the pair. Stochastic oscillator has come into overbought zone today and is not giving a clear signal.

Forex recommendations: buyers’ targets today will be the levels of 1.0050 and 1.0090.

This year the Australian Dollar has grown by 11.3% in pairing with the USD and increased by 21% in pairing with the Euro.
In general, the situation in the Australian economy remains unchanged.

According to 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.

The minutes of the RBA meeting of 7 December which were made public earlier, 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.

 

[LF.Anastasia]

USD: Euro continues to remain in the range

The pair EUR/USD continues to be traded slightly upward at the Forex currency market on Monday morning, it can be seen that in general the pair got stuck in the range amid thin market in advance of the New Year.

By 9.50 Moscow time the Euro is at 1.3156 against closing session level of 1.3121 on Friday.

The negative factor for the Euro today became the news about the increase of the base interest rates in China; this measure was taken to hold inflation in the maximum permissible rates.

However, market’s muted reaction to this measure comes under notice; it appears that these risks have already been incorporated in the current prices.

The trading session today is going to be tranquil in terms of macro-statistics, and most of the trading floors will be closed today.

Most likely the pair EUR/USD will be in the range of 1.3100-1.3250 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound will determine movement direction

At the Forex currency market the British Pound Sterling rate on Monday is close to the opening levels, determining movement direction.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it continues to descend, confirming a pair sell signal. Stochastic Oscillator has come out of the oversold zone and is forming a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5450 the pair will go to 1.5475 and 1.5500. In case of breakdown at the level of 1.5405, traders’ targets will become the levels of 1.5380 и 1.5350.

Trading floors are closed in Great Britain due to the Christmas holidays.

Note that a week before the New Year can be marked by especially high volatility; therefore trading should be conducted with due diligence.
Looking at the technical picture of the trades it becomes clear that as long as debts of the Eurozone’s peripheral countries will put pressure on the Euro it will pull along the Pound. Macro-statistic calendar is almost empty this week and the data on the housing market, scheduled for the release this week is unlikely to support the Pound.

We would remind that 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%. Number of unemployed in the UK decreased only by 1.2 thousand against the expected reduction by 3 thousand.

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, public sector needs in cash, turned to be low - 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.

 

[LF.Anastasia]

CHF: Swiss Franc started to grow again, signals are ambiguous

At the Forex currency market Swiss Franc rate continues to grow on Monday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to descend, which confirms a previous sell signal for the pair. 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 0.9618 the pair will go to 0.9635 and 0.9650. In case of breakdown at the level of 0.9560, traders’ targets will become the levels of 0.9530 and 0.9500.

It became known last week that monetary aggregate M3 in Switzerland rose by 6.4% y/y in November; M3 growth amounted to 6.3% y/y in October. The index includes amount of all currency and liquid funds, available to public.

The situation in Swiss economy remains unchanged in the pre-New Year week.
At the meeting of the Swiss National Bank which was held earlier. It was decided to maintain three -month rate Libor in the previous target range of 0-0.75, as 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%.

We would also remind that debates have intensified at the market in regards to how soon the SNB will start currency intervention, because high rate of Swiss Franc seriously obstructs country’s economic recovery.

 

[LF.Anastasia]

JPY: Japanese Yen continues to consolidate

At the Forex currency market the Japanese Yen rate continues to grow on Monday.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it goes down, giving grounds for a pair sell signal. Stochastic Oscillator is still in the oversold zone and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.00 the pair will go to 83.20 and 83.50. If the level of 82.60 is exceeded, traders’ targets will become the levels of 82.40 and 82.10.

The following Japanese data was released today:
– Prices for corporate services in November: -1.1% y/y against -1.3% in November;
– Number of begun construction in November: +6.8% y/y;– Confidence in small business in December: 45.9 against preliminary level of 45.8.
In addition, minutes of the two last meetings of the Bank of Japan, held on 28 of October and 5 of November were made public.

The documents emphasized that the effect of the strong yen alarmed the members of the Bank and it was stated that it is required to monitor downside risks in economy. In addition, the Central bank believes that it is also necessary to monitor the effect of the currency exchange rates on the world economy.

At the meeting which was held this week, the Bank of Japan announced the 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.

We would remind that date released earlier 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 rise in Japanese Yen, which used to put considerable pressure on macro-economic indicators.

 

[LF.Anastasia]

AUD: Australian Dollar tends to rise

At the Forex currency market the Australian Dollar rate continues to grow steadily for the sixth consecutive session, remaining above parity level in pairing with the USD.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to consolidate which confirms a previous buy signal for the pair. Stochastic oscillator remains in the oversold zone today and is not giving a signal.

Forex recommendations: in case of breakdown at the level of 1.0045 the pair will go to 1.0060 and 1.0080. More distant goal is 1.0100.

It is worth noting that market remains thin in advance of the New Year. Trading floors in Australia are closed today.

Statistics released earlier showed that 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.

The minutes of the RBA meeting of 7 December which were made public earlier, 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 the short term rise in inflation and also to the lack of aggregate demand in economy.

 

[LF.Anastasia]

CAD: Canadian Dollar continues to consolidate, however the reversal is possible

At the Forex currency market the Canadian Dollar rate continues to rise at the beginning of the last week of this year –oil prices remain close to the highs, while the market is thin.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is going up, which makes it possible a pair buy signal possible. Stochastic Oscillator has come into oversold zone and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0085 the pair will go to the key levels of 1.0096 and 1.0100. If the level of 1.0055 is exceeded, traders’ targets will be the levels of 1.0040 and 1.0010.

Last week Finance Minister of Canada Mr. Flaherty noted that the budget for 2011 will contain measures to support economic growth of the country, with significant spending on infrastructure, education and retraining programs, which will become nearly the main items.

According to Flaherty there is no need to extend economic incentives program at the moment; however its reduction is not provided for either, as economic upturn is required in the country.

However, economists are still concerned by the fact of Canada’s proximity to the USA and endless pressure on the Canadian economy in the issues of export. 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.

We would remind that core consumer price index in Canada remained unchanged 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 indicator for the Bank of Canada that interest rates will remain unchanged for quite a long time.

 

[LF.Anastasia]

EUR/USD: Euro grows in absentia of external negative factor

The EUR/USD is traded upward art the Forex currency market on Tuesday in expectation of the release of weak statistics on the U.S. real estate market later this week.

By 10.00 Moscow time the Euro is at 1.3215 against closing session level of 1.3164 yesterday.

Trading is quiet today again, external background is stable. The world is prepared for the New Year celebrations.

Worth paying attention statistics of today is the U.S. index of consumer confidence data for December which is scheduled for the release at 18.00; however surprises are not expected.

Thus, as long as there are no evident negative factors for the Euro, the currency will consolidate gradually. It should be also considered that the market is thin.

Most likely the pair EUR/USD will be in the range of 1.3120-1.3290 at the trading session today.

 

[LF.Anastasia]

GBP: British Pound got stuck in the range

At the Forex currency market the British Pound Sterling seems to get stuck in the range; the currency has failed to go beyond it for the fourth session already. Activity of the Pound is not expected to be high today, as trading floors in London are still closed.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it continues to go down, confirming a pair sell 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 1.5450 the pair will go to 1.5480 and 1.5510. In case of breakdown at the level of 1.5400, traders’ targets will become the levels of 1.5380 and 1.5350.

It became known yesterday that according to Hometrack estimate houses prices in the UK has been declining for the six consecutive months. This had a negative impact on the Pound and resulted in sale at the thin market.

At the same time 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%. Number of unemployed in the UK decreased only by 1.2 thousand against the expected reduction by 3 thousand

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, public sector needs in cash, turned to be low - 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.

At the moment according to the technical pattern of the trades the Pound is waiting when the traders will be back at the market and meanwhile it is being correlated in pairing with the pair EUR/USD.

 

[LF.Anastasia]

CHF: Swiss Franc continues to attract buyers

At the Forex currency market Swiss Franc rate continues to grow in pairing with the USD on Tuesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it goes down, confirming a previous sell signal for the pair. 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 0.9572 the pair will go to 0.9595 and 0.9640. Otherwise, the pair will consolidate close to the current levels. Worth reminding that the market is thin in advance of the New Year celebrations.

As it became known on Tuesday, an indicator of consumption in Switzerland decreased to 1.630 in November as per UBS estimates against the level of 1.708 in October.

In other respects the economic situation in Switzerland has remained unchanged.

At the meeting which was held last week the Swiss National Bank decided to maintain three -month rate Libor in the previous target range of 0-0.75, as 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%.

Market is still thin; currencies movement is hardly predictable, therefore, it is wise to exercise caution.