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[LF.Anastasia]

CAD: The year started very successfully for Canadian Dollar

At the Forex currency market the Canadian Dollar rate is going up on Monday starting the day at the highs of the many weeks.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and continues to go down giving a pair sell signal. Stochastic Oscillator remains in the oversold zone.

Forex recommendations: if traders’ bearish sentiments will maintain for the pair USD/CAD, traders’ targets will be the levels of 0.9930 and 0.9900. If downward breakdown will not take place the pair will consolidate close to the current levels.

We should keep in mind that the market is thin and volatility of trades is high.

Basis consumer prices index in Canada remained unchanged in November after the growth by 0.4% in October, the growth has slowed down to 1.4% on annual basis 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.

According to Flaherty, Finance Minister of Canada, 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. Flaherty also thinks that 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.
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.
Schedule of the Bank of Canada meetings for 2011 is as follows: 18 January, 1 March, 12 April, 31 may, 19 July, 7 September, 25 October, 6 December.

 

[LF.Anastasia]

EUR/USD: Euro determines movement direction

The pair EUR/USD determines movement direction at the Forex currency market on Tuesday morning amid low activity of investors on the trading floors.

By 10.45 Moscow time the Euro is at 1.3361 against closing session level of 1.3360 yesterday.

In the course of the Asian session however, the Euro became in sale due to the rumors that there will be complications with payment on the debt coupon of Eurozone. Sales were mainly carried by American banks.

Statistics that will attract investors today is as follows: data on CPI index in Eurozone for December; at 18:00 Moscow time levels of manufacturing orders in the USA for November will become known.

Most likely the pair EUR/USD will not go beyond the range of 1.3280-1.3390 at the trading session on Tuesday.

 

[LF.Anastasia]

CHF: Technical correction started for Swiss Franc

At the Forex currency market Swiss Franc rate began technical pullback from historical highs on Tuesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving down, giving a pair sell signal. Stochastic oscillator is giving a pair buy signal, coming out of the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9420 the pair will go to 0.9450 and 0.9470. If the level of 0.9370 is exceeded, traders’ targets will become the levels of 0.9350 and 0.9330.

It became known yesterday that index of business activity in Swiss industries declined to 59.6 points in December against the forecast of 61 points and the previous index value of 61.8 points.

It is worth noting that investors’ withdrawal from high- yielding currencies yesterday had been in some way provoked by the U.S. statistics (business activity index in productive sector demonstrated growth which inspired traders) and the factor of oversold in the pair USD/CHF which has been continuing for a long time has become another factor that triggered technical pullback.

In other respects situation in Swiss economy remained unchanged.
Interest rate in Switzerland (Libor) is currently in the target level of 0-0.75%; the next meeting of the Swiss National Bank is scheduled for 17 March. Subsequent meeting of 2011 will be held on 16 June, 15 September, 15 December.

According to the data released at the end of December, KOF indicator in Switzerland fell to the level of 2.10 in December against its previous value of 2.13; however it still remains at a high level, confirming the belief that country’s economy continues to recover.

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 continue to withdraw from local highs under pressure from USD

The Japanese Yen rate continues to withdraw from the local highs at the Forex currency market on Tuesday following the publication of the favourable data on the U.S. economy which inspired investors with the idea of rapid recovery of the American economy. However, it is still too early to speak about trend reversal in the pair.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go down, confirming a previous sell signal for the pair. Stochastic Oscillator has left the oversold zone and is giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 82.50 and amplification of the bullish sentiments for the pair, buyers’ targets will become the levels of 82.70 and 82.90. If an upward breakdown will not take place, the pair will consolidate close to the current levels.
There were no publications of Japanese important macro-statistics today therefore, the main factor for the pair’ movement will continue to be external background.

The pair USD/JPY started rebound from the many weeks lows of 80.93 – we would remind that the lows of 31 October 2010 was the level of 80.29 which the pair has not reached this time.

At the meeting which was held at the end of December, 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.

The next meeting of the Bank of Japan is scheduled for 26 January. Subsequent meetings of the Regulator will be held on 18 February, 16 March, 8 April, 23 May, 15 June, 16 August, 15 September, 14 October, 14 November, 13 December.

 

[LF.Anastasia]

AUD: Fall of Australian Dollar accelerates due to external news

The Australian Dollar rate accelerated its fall at the Forex currency market on Tuesday, as soon as the news about flooding in Queensland, which seemed to cause massive damage, became known. Although exact numbers are not known yet, traders expect reaction from the Reserve Bank of Australia. The fact that the pair is locally oversold has become another catalyst of such rapid rollback of the pair.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to ascend, confirming a previous buy signal for the pair. Stochastic oscillator has come out of the overbought zone today and is giving a pair sell signal.

Forex recommendations: if bearish sentiments among investors will intensify for the pair and in case of breakdown at the level of 1.0060, traders’ targets will become the levels of 1.0040 and 1.0020. More distant target is the parity level.

Thus, flooding which took place in Australian Queensland which is rich in natural resources, prompted sale of the pair AUD/USD as investors now await the reaction from RBA.

Now the prospects of the regulator’s actions are quite vague; if earlier accuracy of the forecast was obscure due to the upcoming rise in the raw materials prices, caused by crop damage, now a fact of natural disaster was added to this list.

The minutes of the RBA meeting of 7 December which was made public last week, 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.

The RBA meetings in 2011 are scheduled for: 31 January, 28 February, 4 April, 2 may, 6 June, 4 July, 1 August, 5 September, 3 October, 31 October, 5 December.

Note that correction for the AUD had started twice already, however both times it did not extend, due to the investors’ demand for the high-yielding currencies. It is quite possible that (if the RBA reaction to the natural disaster will be adequate) later the AUD will continue moderate consolidation.

 

[LF.Anastasia]

GBP: British Pound continues to descend, however signals indicate that growth will be resumed

At the Forex currency market the British Pound Sterling rate continues to descend, however main traders are back at the market after the holidays and they will determine strategies for the incoming year.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, however it started to go up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: if bullish sentiments intensify will among investors and in case of breakdown at the level of 1.5500 buyers’ targets will become the levels of 1.5520 and 1.5550. Otherwise the pair will continue to consolidate close to the current levels.

According to the British financial press all those measures on budget savings adopted by the authorities of Great Britain earlier will be continued in order to reduce the level of budget deficit in the country. Observers believe that the risk of repeated recession is low and the reduction of government expenditures along with the rise of taxes does not give grounds for this.

However, many experts continue to assess reduction of budget spending in Great Britain as an excessively risky step.
In general, at least first half of the year 2011 will be complicated for the British economy.
CIPD, the UK Institute of Personnel Development believes that the situation in the employment sector can be complicated for UK economy in 2011, because unemployment rate can rise to 9% and employment can reduce to 200 thousand jobs.

According to CIPD estimates reduction in the public sector will amount to about 120 thousand jobs and about 80 thousand in the private sector. We would remind that British Government plans to reduce the number of staff in public sector by 330 thousand by 2015.
However, OBR, Committee on Budget Responsibility claimed that dismissal will be compensated by creation more that 1.5 million jobs in private sector. Anyhow, the year 2011 is not going to be easy for the UK economy.

Note that 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 expected reduction by 3 thousand.

 

[LF.Anastasia]

CAD: Canadian Dollar consolidates in narrow range

At the Forex currency market the Canadian Dollar rate consolidates in the narrow range of 0.9910-0.9950 on Tuesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is going down, confirming a pair sell signal. Stochastic Oscillator is planning to leave the oversold zone today and is ready to form a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9950 the pair will go to 0.9965 and 0.9980. If the level of 0.9910 is exceeded, traders’ targets will become the levels of 0.9900 and 0.9875.

Canadian economy has not changed fundamentally.
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.
Schedule of the Bank of Canada meetings for 2011 is as follows: 18 January, 1 March, 12 April, 31 may, 19 July, 7 September, 25 October, 6 December.

Core index of consumer prices in Canada remained unchanged in November after the rise by 0.4% in October, the growth has slowed down to 1.4% on annual basis 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.

According to Flaherty, Finance Minister of Canada, 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. Flaherty also thinks that 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.

 

[LF.Anastasia]

EUR/USD: Euro declines in mid-week

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, concerns about problems in the Eurozone’s peripheral countries are in the forefront again for investors.

By 10.40 Moscow time the Euro is at 1.3272 against closing session level of 1.3307 yesterday.

Nothing fundamentally new happened in the market – the Minutes of the U.S. Federal Reserve of 14 December, released yesterday confirmed that outlooks have not improved much enough to change the volume of government bonds redemption in the market.

Stability in the views of the FR can be in advantage of the interest in risk; however purchases have not started yet.

Ireland did not make traders happier this morning when unfavourable PMI data in the service sector was published, which accelerated sales of the major pair

Today producer price index in Eurozone will become known; in the afternoon traders’ attention will be focused on the ISM services data in the U.S. as well as statistics on oil and oil products reserves.

Most likely that pair EUR/USD will not go beyond the range of 1.3200-1.3350 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound Sterling determines movement direction

At the Forex currency market the British Pound Sterling rate is traded with the lack of definite direction.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, however continues to go up, confirming a previous buy signal for the pair. Stochastic Oscillator continues to be in the overbought zone today, giving a similar signal.

Forex recommendations: if bullish sentiments intensify for the pair, buyers’ targets will become the levels of 1.5590 and 1.5620. Otherwise, the pair will continue to consolidate close to the current levels.

Yesterday’s UK statistics retained the GBP from sales in some way. Level of money supply in the UK increased by 3.5% on quarterly basis in November; number of approved mortgage requests rose slightly, although level of net mortgage lending declined to 788 million pounds sterling in November against the level of 1.172 billion pounds in October.)

In addition, representative of the Treasury Mr. Osborne stressed on Tuesday that country’s authorities do not yet plan to raise taxes, which urged traders to buy GBP.

According to the British financial press, all those measures on budget savings adopted by the authorities of Great Britain earlier will be continued in order to reduce the level of budget deficit in the country. Observers believe that the risk of repeated recession is low and the reduction of government expenditures along with the rise of taxes does not give grounds for this.

However, many experts continue to assess reduction of budget spending in Great Britain as an excessively risky step.

In general, at least first half of the year 2011 will be complicated for the British economy.

CIPD, the UK Institute of Personnel Development believes that the situation in the employment sector can be complicated for UK economy in 2011, because unemployment rate can rise to 9% and employment can reduce to 200 thousand jobs.

According to CIPD estimates reduction in the public sector will amount to about 120 thousand jobs and about 80 thousand in the private sector. We would remind that British Government plans to reduce the number of staff in public sector by 330 thousand by 2015.

 

[LF.Anastasia]

CHF: Swiss Franc continues to rollback from historical highs

At the Forex currency market technical correction continues for Swiss Franc on Wednesday after it has reached historical peaks at the end of December.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is still going down, confirming a previous sell signal for the pair. Stochastic oscillator is giving an antipodal, buy signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9500 the pair will go to 0.9520 and 0.9550. If the level of 0.9470 is exceeded, traders’ targets will be the levels of 0.9450 and 0.9430.

The situation in Swiss economy does not indicate any major changes.

We would remind that business activity index in Swiss industries fell to 59.6 points n Decemberagainst the forecast of 61 points and previous value of 61.8 points. According to the data released at the end of December, KOF indicator in Switzerland fell to the level of 2.10 in December against its previous value of 2.13; however it still remains at a high level, confirming the belief that country’s economy continues to recover.

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%.

Interest rate in Switzerland (Libor) is currently in the target level of 0-0.75%; the next meeting of the Swiss National Bank is scheduled for 17 March. Subsequent meeting of 2011 will be held on 16 June, 15 September, 15 December.