LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar is sold intensively today

At the Forex currency market the Australian Dollar rate is in sale again on Friday

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; however it is going down, confirming a previous sell signal for the pair. Stochastic Oscillator is giving an antipodal signal today, approaching overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0000 the pair will go to 1.0030 and 1.0055. If the level of 0.9950 is exceeded, traders’ targets will become the levels of 0.9910 and 0.9850.

To all appearances, market is fixed on selling the AUD this year.

The meeting of the Reserve Bank of Australia is scheduled for 31 January and market will carefully wait for the comments of the RBA head, as the AUD future will depend on them in the short term. Interest rate in Australia is at the level of 4.75% per annum. 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.

Natural disaster still remains the main negative factor for Australian economy and Australian Dollar rate. Flooding started in the North East part of Australia and in Queensland and is now threatens to be the largest in the last 50 years. It is obvious now that the flooding is spreading to the South, to the area of Breesban, the third largest city of Australia. 95% of sugar production of Australia is concentrated in Queensland, as well as large amounts of coal. In general, about 20% of the entire economy of the Green Continent is located in the state of Queensland. According to various estimates, the growth of Australian economy can slow down by 0.2% in QI 2011, due to natural disasters.

Note, that many companies have already reported losses sustained due to the flooding which will impact on Australian economy in full scale.

 

[LF.Anastasia]

EUR/USD: Euro goes down under the pressure from external background

The EUR/USD is traded downward at the Forex currency market on Monday morning amid investors’ expectations of the meeting of EU Finance Ministers.

By 10.25 Moscow time the Euro is at 1.3309 against closing session of 1.3385 on Friday.

A meeting of EU countries’ Finance Ministers will start on Monday where the issue of debt crisis in Eurozone is supposed to be discussed and new mechanisms to address this aspect are going be determined.

The prospect of volume increase of European Fund for financial aid and expansion of its functions are among possible measures.

Thus, under pressure exerted by the external background, the Euro is under threat of massive sale again.

Most likely the pair EUR/USD will be in the range of 1.3250-1.3350 on Monday trading session.

 

[LF.Anastasia]

GBP: British Pound Sterling is still strong and is of interest for purchase

At the Forex currency market the British Pound Sterling rate is virtually standing still, as players withdrew from risky positions in advance of the EU Finance Ministers’ meeting in Brussels; however the GBP is still has high potential.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and is going up, confirming a previous buy signal for the pair. Stochastic oscillator is in the overbought zone and is giving a similar signal.

Forex recommendations: if the current situation will be maintained the pair can continue to consolidate close to the current level rising slightly. However, in case of breakdown at the level of 1.5810 traders’ targets can become the levels of 1.5750 and 1.5670.

It became known today that according to the Rightmove data prices for houses in the UK increased by 3.0% m/m (+0.4% y/y). At the same time statistics released before that showed that the level of houses prices in the UK fell by 0.2% m/m (+2.9% m/m). This sector is still very difficult to estimate as the agencies use different data and approaches. It is worth emphasizing that real estate sector in the UK remains in a difficult position amid decline of consumer interest due to hazy economic outlooks.

Prime Minister Cameron said that Britain does not intend to join Eurozone, however the country supports reforms of the economic management of Eurozone in every possible way. The statement was made amid aggravation of investors’ attention to the Eurozone’s debt problems.

According to the representatives of the British Chamber of Commerce sharp increase in demand for exports in the country would not be a sufficient factor to stop slowing down of British economy according to the results of QIV 2010 and QI of 1011. Thus, experts of the Chamber believe that although the rate of production is high, low productivity in the service sector still remains a weak spot of the UK economy.

International rating agency Moody's stated this week that financial situation in Great Britain as well as in Germany, France and the USA remains stable and is virtually unchanged. This fact confirms the ranking of the countries at the level of AAA. It is worth noting that at the meeting of the bank of England yesterday interest rate was maintained at the previous level of 0.5% per annum.

 

[LF.Anastasia]

CHF: Swiss Franc does not go out of the range

At the Forex currency market Swiss Franc rate goes down slightly on Monday amid general correction and investors’ negative sentiment; however it still remains within the range of 0.9604-0.0.9785.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going up, confirming a pair buy signal. Stochastic Oscillator remains in the oversold zone today 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 0.9670 the pair will go to 0.9710 and 0.9750. If the level of 0.9600 is exceeded, traders’ target will be the levels of 0.9560 and 0.9500.

Last week the government of Switzerland clarified its position in regards to the growth of Swiss Franc for the first time in a long time. In particular, the authorities said that consolidation of CHF is a threat to the recovery of the national economy. The officials see the main catalyst of the CHF strengthening in the debt crisis in Eurozone.

In addition, the government announced that the SNB should influence on the rate of the Franc, working with it directly. It increases the possibility of the regulator’ intervention in the market unilaterally.

Note, that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery.
A report of Credit Suisse AG and Osec which was made public this week showed that sentiment of Swiss exporters is improving despite the recent highs of the Franc. Companies are confident that demand for the goods of Swiss production will remain high over the next few months, although the threats posed by the expensive CHF are still present. According to the research, export barometer in QI of this year will amount to 0.6 which is higher than the levels of Q VI 2010. In general the results of the QI of this year are expected to be favourable in the export sector. Companies are taking into account that after the rise of the Franc by 16% last year the demand from the Eurozone will be lower but not critical.

It became known earlier that consumer price index in Switzerland remained unchanged on monthly basis in December, demonstrating the rise by 0.5% on annual basis; while analytics had expected the growth by 0.2% m/m and +0.3% y/y. It became known on Friday that Swiss national Bank refused to accept Portuguese state bonds as collateral for the repo transactions –earlier the same action has been taken for Irish securities. Thus, SNB abandoned unnecessary risks, becoming the first regulator who acknowledged big problems of sovereign debts in the peripheral countries of Eurozone.

 

[LF.Anastasia]

JPY: Japanese Yen remains in the range, awaiting new signals

At the Forex currency market the Japanese Yen rate decreases on Monday, not going out of the previous range of 82.60-83.70.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is going up, giving a pair buy signal. Stochastic oscillator is giving an antipodal signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: if bullish sentiment intensifies for the pair USD/JPY and in case of breakdown at the level of 83.00, buyers’ targets will become the levels of 83.40 and 83.75. Otherwise the pair will continue to consolidate close to the current levels.

According to the quarterly report of the Bank of Japan on the state regional economies, 7 out of 9 regions have lowered their growth estimates. At the same time 7 regions reported slowdown of economic recovery process (Sakura report). In addition, levels of industrial production also fell in the regions and capital expenditures have increased.

The head of the Bank of Japan Mr. Shirakawa said earlier this week that Japanese economy demonstrates signs of moderate recovery; however its pace is slowing down. Nevertheless, country’s economic recovery will be resumed as soon as some urgent issues will be resolved. Shirakawa did not address the issues of the Yen’s rate and its affect on the domestic economy, which was noted by the market.
It became known earlier that number of orders in machine -building sector fell again for the third consecutive month, due to the obscure outlooks for the future; companies are not in a hurry to increase the level of expenditures on rates and equipment. High level of Yan can become a constraint in this case.

We would remind that last week, Prime Minister of Japan Khan presented a new Cabinet of Ministers; the old government had resigned. Thus, Yoshihiko Noda will become Finance Minister again, Kaoru Yosano will take the post of Minister of Economic and Fiscal Policy and Barney Qaeda will be Minister of Trade.

Interest rate of the Bank of Japan is at the minimal level of 0.1% per annum. 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: Australian Dollar determines movement direction

The Australian Dollar rate determines movement direction at the Forex currency market on Monday, while still being weak.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and continues to go 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 0.9850 the pair will go to 0.9810 and 0.9770. If the level of 0.9920 is broken down, buyers’ target will become the levels of 0.9950 and 0.9980.

The reason of Friday’s fall of the AUD was the decision of China to raise the reserve requirements for the Banks by 50 basis points. Amid previous negative indicators for the AUD, which are still effective, the weakness of the currency is obvious.

Natural disaster still remains the main negative factor for Australian economy and Australian Dollar rate. Flooding started in the North East part of Australia and in Queensland and is now threatens to be the largest in the last 50 years. It is obvious now that the flooding is spreading to the South, to the area of Breesban, the third largest city of Australia. 95% of sugar production of Australia is concentrated in Queensland, as well as large amounts of coal. In general, about 20% of the entire economy of the Green Continent is located in the state of Queensland. According to various estimates, the growth of Australian economy can slow down by 0.2% in QI 2011, due to natural disasters. Note, that many companies have already reported losses sustained due to the flooding which will impact on Australian economy in full scale.

The meeting of the Reserve Bank of Australia is scheduled for 31 January and market will carefully wait for the comments of the RBA head, as the AUD future will depend on them in the short term. Interest rate in Australia is at the level of 4.75% per annum. 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.

Most likely, the AUD will remain under the pressure for a while and below the level of 0.9900.

 

[LF.Anastasia]

NZD: New Zealand Dollar tries to grow at the beginning of the week

The New Zealand rate is traded upward at the Forex currency market on Monday, trying to get out of the three -day range.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is moving along the signal line, preventing from forming a clear signal. Stochastic Oscillator is giving a pair buy signal today being in the overbought zone.

Forex recommendations: if bullish sentiment intensifies for the pair and in case of breakdown at the level of 0.7725 buyers’ target will be the level of 0.7800 and a new local high of 0.7840.

It became known last week that level of business sentiment in New Zealand in QIV rose to 8 points, as per NZIER estimates, against the previous level of 6 points. It is a positive indicator for the NZD; amid natural disaster in Australia and the fall of AUD, the New Zealand currency looks attractive at the moment among the high yielding currencies.

In general the economy in New Zealand has remained unchanged.

Ministry of Finance takes a dark view of the economic outlooks of the country; therefore, earlier they downgraded the forecast of economic growth 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%

Note also, that budget deficit is assumed 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.

Regulator’s meetings in 2011 are scheduled for 26 January, 9 March, 27 April, 8 June, 27 July, 14 September, 26 October and 7 December.

 

[LF.Anastasia]

EUR/USD: Euro grows up, as investors do not expect positive news from USA

The pair EUR/USD is traded upward on Tuesday morning, as investors expect weak statistics on the U.S. real estate market today.
By 10.25 Moscow time the Euro is at 1.3347 against closing session level of 1.3294 yesterday.

The meeting of the EU Finance Ministers still continues in Brussels and market awaits the U.S. statistics of tonight – macro-economic calendar was not eventful yesterday; the U.S. trading floors did not work on Monday as it was the day off.

It is assumed that statistics on the new houses in the USA scheduled for the release tonight will show reduction by 0.9%.
In general, external background still remains the main driver.

Most likely the pair EUR/USD will not go beyond the range of 1.3250-1.3390 at trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to grow steadily

At the Forex currency market the British Pound Sterling continues the growth which has been observed for the eighth consecutive session.

Forex forecast: MACD indicator is in the zero zone for the pair GBP/USD, crossed with the signal line and giving a pair buy signal. Stochastic Oscillator remains in the overbought area and is giving a similar signal.

Forex recommendations: if bullish sentiment for the pair will be maintained buyers’ targets will become the levels of 1.6000 and 1.6040.

In the mid-day, by 12.30 Moscow time, the data on CPI in the UK will be made public, statistics can affect the balance of forces in the pair GBP/USD. The indicator has been exceeding the target level of the Bank of England by 3% for 11 months already.

Today the Pound was supported by statistics on the level of consumer confidence Nationwide which increased to the level of 53 points in December against the previous value of 45 points. It seems that the rise in income of population at the end of the year provided support to the indicator.

We would remind that it became known yesterday that according to the Rightmove data prices for houses in the UK increased by 3.0% m/m (+0.4% y/y). At the same time statistics released before that showed that the level of houses prices in the UK fell by 0.2% m/m (+2.9% m/m). This sector is still very difficult to estimate as the agencies use different data and approaches. It is worth emphasizing that real estate sector in the UK remains in a difficult position amid decline of consumer interest due to hazy economic outlooks.

International rating agency Moody's stated this week that financial situation in Great Britain as well as in Germany, France and the USA remains stable and is virtually unchanged. This fact confirms the ranking of the countries at the level of AAA. It is worth noting that at the meeting of the bank of England yesterday interest rate was maintained at the previous level of 0.5% per annum.

According to the representatives of the British Chamber of Commerce sharp increase in demand for exports in the country would not be a sufficient factor to stop slowing down of British economy according to the results of QIV 2010 and QI of 1011. Thus, experts of the Chamber believe that although the rate of production is high, low productivity in the service sector still remains a weak spot of the UK economy.

 

[LF.Anastasia]

CHF: Swiss Franc came out of the range and is growing

At the Forex currency market Swiss Franc rate finally has come out of the previous range and demonstrates consolidation despite frequent talk about possible steps of Swiss national Bank and prospects of intervention.

Forex recommendations: if bearish sentiment for the pair intensifies and in case of breakdown at the level of 0.9600 traders’ targets will be the levels of 0.9550 and 0.9510.

Apparently, Swiss authorities are not ready for the currency intervention, although the market expects unilateral intervention by Swiss National bank. Despite concerns about the rise of CHF and CNB losses (in 2010 the regulator lost 21 billion francs or 4% of GDP due to the currency rise), the probability of intervention is estimated as low so far.

We would remind that last week the government of Switzerland clarified its position in regards to the growth of Swiss Franc for the first time in a long time. In particular, the authorities said that consolidation of CHF is a threat to the recovery of the national economy. The officials see the main catalyst of the CHF strengthening in the debt crisis in Eurozone. Note, that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery.

It became known earlier that consumer price index in Switzerland remained unchanged on monthly basis in December, demonstrating the rise by 0.5% on annual basis; while analytics had expected the growth by 0.2% m/m and +0.3% y/y. It became known on Friday that Swiss national Bank refused to accept Portuguese state bonds as collateral for the repo transactions –earlier the same action has been taken for Irish securities. Thus, SNB abandoned unnecessary risks, becoming the first regulator who acknowledged big problems of sovereign debts in the peripheral countries of Eurozone.

A report of Credit Suisse AG and Osec which was made public this week showed that sentiment of Swiss exporters is improving despite the recent highs of the Franc. Companies are confident that demand for the goods of Swiss production will remain high over the next few months, although the threats posed by the expensive CHF are still present. According to the research, export barometer in QI of this year will amount to 0.6 which is higher than the levels of Q VI 2010. In general the results of the QI of this year are expected to be favourable in the export sector. Companies are taking into account that after the rise of the Franc by 16% last year the demand from the Eurozone will be lower but not critical.