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[LF.Anastasia]

Japan: Japanese Yen accelerates its growth

At the Forex currency market the Japanese Yen rate continues to grow due to the support from macro-economic indicators today.

Forex forecast: MACD indicator is still in the positive area for the pair USD/JPY and it still continues to descend, confirming a previous sell signal for the pair. Stochastic oscillator is still in the oversold zone.

Forex recommendations: if the current external background is maintained traders’ targets today will be the levels of 82.10 and 81.80.

We should not forget that the market is thin today and currencies movement can be unpredictable.
The following Japanese data was released today:
– Net CPI in November -0.5% y/y against -0.6% y/y in October;
– Household spending in November: -0.4% y/y against expectation of +0.3% y/y and -0.4% y/y in October;
– Changes in the employment rate in November: -80 thousand y/y;
– Preliminary volume of industrial output in November: +0.8% m/m and -2.0% m/m a month earlier;
– Preliminary volume of retail sales in November: +1.3% y/y against revised level of -0.2% m/m in October;
– Unemployment rate in November: 5.1% against 5.1% in October.

Worth noting fact is that although deflation started it retreat; nevertheless its effect is still quite strong. The levels of industrial output showed positive rise for the first time over a few months which can became an indication of the recovery in the sector, which will lead to the recovery of the entire Japanese economy.

Unemployment remained in the previous level as expected.

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.

 

[LF.Anastasia]

AUD: Ascending trend for the Australian Dollar continues for the seventh session

At the Forex currency market the Australian Dollar rate continues to grow steadily amid high oil prices and tranquil external environment. Australian trading floors are closed today.

Forex forecast: MACD indicator is in the positive area and continues to go up (look at the straight line on the graph), which confirms previous buy signals for the pair AUD/USD. Stochastic Oscillator is still in the overbought zone today.

Forex recommendations: if current developments will be maintained, buyers’ targets for the pair will be the levels of 1.0105 and 1.0145 on Tuesday.

As trading floors are closed in Australia due to the Catholic Christmas celebrations, macro-economic data had not been published.
As trading floors in Australia are still closed on Tuesday, due to Catholic Christmas celebrations, macro-economic news was not released.

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.

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 rise in the AUD seems as normal; however we should not forget that market is thin and currencies’ movement is unpredictable.

 

[LF.Anastasia]

NZD: Growth of New Zealand Dollar is supported by external background

At the Forex currency market the New Zealand Dollar rate continues to grow for the fourth consecutive session supported by the tranquility at the world capital markets and consolidation of oil prices.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is moving along the signal line, preventing from forming a clear signal. Stochastic Oscillator is in the overbought zone today, not giving a signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7550 the pair will go to 0.7580 and 0.7600. If the level of 0.7505 is broken down, traders’ targets will be the levels of 0.7470 and 0.7450.

Market in New Zealand is closed today, therefore dynamics of trading session for the NZD/USD is similar to those of GBP/USD and AUD/USD where trend is set by the external background.Interest rate of the Reserve Bank of New Zealand is now at the level of 3.0% per annum. Commenting the last RBNZ meeting the regulator noted that the rate of the monetary policy tightening is expected to be moderate in the next two years, since the earthquake which happened in the country recently (and which was the strongest over the last 80 years) had a significant impact on the state of the national economy.

According to the head of the RBNZ Mr. Bollard: “The most reasonable at the moment will be to keep rates low until the moment when economic recovery becomes steadier and inflationary pressures will start to demonstrate sings of consolidation. In the next two years interest rate will rise in a more moderate pace than it had been expected earlier”.

Earlier Ministry of Finance brought down economic growth forecast for the current and the next fiscal years. In particular, estimate of GDP growth for the next fiscal year which starts on 1 June was brought down to 2.2% against the previous target level of 3.2%. In 2012 monetary politicians expect economic growth to 3.4%; however later, in 1015, economic growth in New Zealand will slow down again to - 2.7%
In addition, it is assumed that there will be a budget deficit in the country, which is predicted to increase from the current 14.1% of GDP to 28.5% of GDP by June 2015.

 

[LF.Anastasia]

EUR/USD: Euro regains from yesterday’s losses

The EUR/USD is traded upward at the Forex currency market on Wednesday morning following sales last night.

By 8.20 Moscow time the Euro is at 1.3125 against closing session level of 1.3115 yesterday.

Sale of the Euro in the thin market yesterday was triggered by the reduction of the cross-rate of the Euro, which affected the rate of the EUR/USD. However, the fact that the Euro did not fall below 1.3100 indicates the weakness of the USD at the end of the year.

It is not excluded that in the nearest future the major pair will still test the level of 1.31.

Today is going to be another quiet trading day because macro-economic calendar is almost empty.

Most likely the pair EUR/USD will not go beyond the range of1.3090-1.3250 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound Sterling remains within narrow range

At the Forex currency market the British Pound Sterling continues to be traded in the narrow range of 1.5330-1.5460 on Wednesday morning for the fifth consecutive session. Trading floors in Great Britain will resume work today; however activity in the market is unlikely to be higher due to upcoming New Year holidays.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and began to decline again which gives a pair sell signal. Stochastic Oscillator is still in the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5390 the pair will go to 1.5360 and 1.5340. If the level of 1.5440 is exceeded, buyers’ targets will be the levels of 1.5460 and 1.5480.

The economic situation in Great Britain remains unchanged – trading floors were closed this week due to the Catholic Christmas celebrations.
According to the technical pattern of the trades the Pound awaits when traders will be back at the market and meanwhile it is correlated with the pair EUR/USD. The market is still thin and volatile.

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.

К 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.

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.

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.

 

[LF.Anastasia]

CHF: Swiss Franc continues to be in demand among investors

At the Forex currency market Swiss Franc rate continues to rise on Wednesday, however volume of its purchase declines.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going 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 0.9540 the pair will go to 0.9580 and 0.9610. In case of breakdown at the level of 0.9500, traders’ target will be the levels of 0.9480 and 0.9450.

While the market is still thin currencies movement can be unpredictable, therefore, it is wise to exercise caution.

This afternoon the data on the leading indicators index KOF in Switzerland for December is scheduled for publication (13.30 Moscow time).
In general, the economic situation in Switzerland remains unchanged in advance of the New Year Holidays.
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%.

At the meeting of the regulator 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%.

 

[LF.Anastasia]

JPY: Japanese Yen continues to soar

At the Forex currency market the Japanese yen continues to grow on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY; however it goes down confirming a previous sell signal for the pair. Stochastic Oscillator started forming a pair buy signal today.

Forex recommendations: if current external background will be maintained and investors’ bearish sentiments intensify, traders’ targets will be the levels of 82.00 and 81.80.

New Japanese economic statistics was not published in the mid-week; therefore external background remains the main driver.
A lot of macro-economic statistics was published yesterday which was assessed mostly as positive by investors (unemployment rate in November: 5.1% against 5.1 % in October; a change in the employment rate in November: -80 thousand y/y; net CPI in November: -0.5% y/y against -0.6% y/y in October; preliminary volume of retail sales in November: +1.3% y/y against revised to -0.2% m/m in October; preliminary volume of industrial output in November: +1/0% m/m against expectations of _0.8% m/m and -2.0% m/m a month earlier.

Unemployment remained in the previous level as expected.
Worth noting fact is that although deflation started it retreat; nevertheless its effect is still quite strong. The levels of industrial output showed positive rise for the first time over a few months which can became an indication of the recovery in the sector, which will lead to the recovery of the entire Japanese 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.

 

[LF.Anastasia]

AUD: Australian Dollar came to the local highs again

At the Forex currency market the Australian Dollar rate continues to move in the ascending trend on Wednesday. Worth noting that the currency growth has been observed for the eighth session already with no rollbacks; which increases chances of correction at the slightest deterioration in the external background.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it goes up, confirming a previous buy signal for the pair. Stochastic oscillator continues to be in the overbought zone on Wednesday.

Forex recommendations: if investors’ bullish sentiments will be maintained, traders’ targets will become the levels of 1.0150 and 1.0175.

The economic situation in Australia has not changed fundamentally; markets were closed yesterday. The rise in the AUD seems to be normal; however we should not forget that market is thin and currencies’ movement is unpredictable.

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.

As a whole, the latest statistics was mixed. Thus, employment rate in November increased by 54.6 thousand jobs in November, at the same time unemployment rate decreased to the level of 5.2% against the previous level of 5.4%. Although retail sales fell by 1.1% m/m in October against +0.1% in September and trade balance surplus in October amounted to $2.625 billion. Balance of current account in QIII amounted to -А$7.83 billion against the forecast of -А$6.60.

 

[LF.Anastasia]

NZD: New Zealand Dollar goes upward on Wednesday

At the Forex currency market the New Zealand Dollar rate continues to grow on Wednesday- the situation resembles the AUD/USD trading.
External background and stably high oil prices continue to support New Zealand currency. Worth remembering that market is thin and volatility is high at the moment.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is going up, which gives a pair buy signal. Stochastic Oscillator remains in the overbought zone.

Forex recommendations: if investors’ current bullish sentiments will prevail, buyers’ targets today will be the levels of 0.7620 and 0.7660.
Meanwhile, internal situation in the New Zealand economy has remained unchanged, markets were closed on Tuesday, therefore, important macro-economic statistics was not published

We would remind that earlier Ministry of Finance brought down economic growth forecast for the current and the next fiscal years. In particular, estimate of GDP growth for the next fiscal year which starts on 1 June was brought down to 2.2% against the previous target level of 3.2%. In 2012 monetary politicians expect economic growth to 3.4%; however later, in 1015, economic growth in New Zealand will slow down again to - 2.7%
In addition, it is assumed that there is a budget deficit in the country, which is expected to increase from the current 14.1% of GDP to 28.5% of GDP by June 2015.

Interest rate of the Reserve Bank of New Zealand is now at the level of 3.0% per annum. Commenting the last RBNZ meeting the regulator noted that the rate of the monetary policy tightening is expected to be moderate in the next two years, since the earthquake which happened in the country recently (and which was the strongest over the last 80 years) had a significant impact on the state of the national economy.

According to the head of the RBNZ Mr. Bollard: “The most reasonable at the moment will be to keep rates low until the moment when economic recovery becomes steadier and inflationary pressures will start to demonstrate sings of consolidation. In the next two years interest rate will rise in a more moderate pace than it had been expected earlier”.

 

[LF.Anastasia]

EUR/USD: Euro continues to rise, supported by investors’ optimism

The EUR/USD is traded upward at the Forex currency market on Thursday morning- investors believe that world economy is recovering steadily; therefore there is no need in the protective assets at the moment.

By 10.30 Moscow time the Euro in at 1.3233 against closing session level of 1.3225 yesterday.

Investors’ attention today will be attracted by the data on the business confidence in Italy (which is expected to rise to the two-year highs).

The market awaits publication of the U.S. statistics tonight – data on the unemployment benefit requests (the rate is expected to decline) and also information on the U.S. reserves of oil and oil products for a week.

In general, the market is optimistic- raiders are confident that the world economy is recovering. Therefore, the year ends in high spirits.

Most likely the pair EUR/USD will be in the range of 1.3150-1.3290 at the trading session today.