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[LF.Anastasia]

JPY: Japanese Yen continues to consolidate

The Japanese Yen rate continues to consolidate at the Forex currency market on Tuesday for the fifth consecutive session. Although the purchase volume is not high, the trend is obvious.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go up, confirming a pair buy signal. Stochastic Oscillator continues to give a pair sell signal today being in the neutral zone.

Forex recommendations: if bearish sentiment intensifies and in case of breakdown at the level of 82.30 traders’ targets will be the levels of 81.70 and 81.30.

It became known this morning that revised volume of industrial output in Japan increased by 1% m/m in November which became the first factor of the indicator’s growth over half a year. At the same time capacity utilization rose by 1.6% m/m in November against the previous fall by 2.3% and the ratio of stocks and supplies was revised to -8.3% m/m in November against the growth by 8.4% m/m in October.

It is worth noting that the growth of industrial production was supported by the output volume of the cars (+4.5% in November against preliminary forecast of growth by 4.4% m/m which became the first fact of growth in 7 months).
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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar demonstrates urge to recover

At the Forex currency market the Australian Dollar rate continues to be technically corrected upward on Tuesday after the fall to the lows of four-week.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and is going down confirming a previous sell signal for the pair. Stochastic Oscillator is not giving a clear signal on Tuesday being in the neutral 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 1.0050 and 1.0090. If a breakdown does not take place the pair will continue to consolidate close to the current levels.

Prime Minister of Australia Julia Gillard said today that authorities will have to make a difficult choice while preparing a budget for 2012-2013, although the fact of surplus is not questioned. Flooding in Australia in early January is still number one news: natural disaster in Queensland and the two neighboring states threatens to become the most severe over the past 50 years.

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.

To date, the situation for the AUD is as follows: as long as overall positive sentiment prevails at the market there cannot be any fears regarding the currency collapse, although its fragility and the ease with which it had been sold earlier should be taken into account. However, if the market receives another portion of negative information the pair AUD/USD can go below the level of 0.9900.

 

[LF.Anastasia]

CAD: Consolidation of Canadian Dollar continues on Tuesday

At the Forex currency market the Canadian Dollar rate continues the growth which has started earlier.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and continues to descend, confirming a previous sell signal for the pair. Stochastic oscillator is not giving a clear signal today being in the oversold zone.

Forex recommendations: if current bearish sentiment will maintain at the market and in case of breakdown at the level of 0.9840 traders’ targets will be the levels of 0.9810 and 0.9765.

Statistics on the employment rate in Canada released last week was a positive factor for the CAD. Thus, number of jobs increased for the third time in a row in December, by 22 thousand, following the growth by 15.2 thousand in November. At the same time unemployment rate remained at the previous level of 7.6% (forecast was 7.7%) in December which has become the lows since January 2009.

In general, the CAD seems the most stable among high-yielding currencies even taking into account its close proximity to the USA. Most likely the short term growth of the Canadian currency will be continued due to the steady state of the local economy.

There is an opinion at the market that the Bank of Canada will not change the interest rate until QII next year as the pace of economic recovery 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. Canadian Minister of Finance Mr. Flaherty stressed earlier that the rate would not remain low for ever. The rate is now at the level of 1% per annum; the last time the rate was changed upward by 25 basis points in September this year.

Note also that 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%.

 

[LF.Anastasia]

EUR/USD: Euro grows up amid weakness of USD

The EUR/USD is traded in the positive area at the Forex currency market on Wednesday morning, continuing to grow.
By 09.55 Moscow time the Euro is at 1.3471 against closing session level of 1.3386 yesterday.

External background remains tranquil, oil prices are rising and investors now wait for the last night statistics on U.S.

Thus, it is assumed that data on a number of new houses in the USA will be weak, declining by 0.9% (16:30 MT) Statistics on a number of requests for unemployment benefit in the USA is also scheduled for release on Thursday.

If the data will be worse than expected, sales of the USD, which is now at the lows of 5 weeks, will increase.

Most likely the pair EUR/USD will be in the range of 1.3370-1.3500 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound continues to grow, approaching three- month highs

At the Forex currency market the British Pound Sterling rate has been growing for 9 consecutive session, approaching confidently to three-month highs.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD; it has crossed the signal line from the bottom up and confirms a previous buy signal for the pair. Stochastic Oscillator is giving a similar signal today, remaining in the overbought zone.
Forex recommendations: if bullish sentiment is maintained in the market and in case of breakdown at the level of 1.6060 buyers’ targets will be the levels of 1.6100 and 1.6130.

The UK labour market data will be made public today which can affect alignment of forces in the pair. In any case corrective pullback will do no harm.
According to the data released earlier inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%.This is another evidence proving that the Bank of England will raise interest rate soon, market believes that this is a resolved issue already, as inflation has remained above target level of the regulator for 11 months. Earlier 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.

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.

Meetings of the regulator are scheduled for: 10 February, 10 March, 7 April, 5 May, 9 June, 7 July, 4 August, 8 September, 6 October, 10 November, 8 December.

 

[LF.Anastasia]

CHF: Swiss Franc continues to consolidate slowly

Swiss Franc rate continues to grow at the Forex currency market amid positive external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, it is going up, giving a pair buy signal. Stochastic oscillator continues to give a pair sell signal, remaining in the oversold zone.

Forex recommendations: considering that bearish sentiment can intensify for the pair USD/CHF in the current conditions traders’ targets will become the levels of 0.9510 and 0.9470 today.

Last week Swiss government announced that the SNB should influence on the rate of the Franc, working with it directly. This increases the possibility of the regulator’s unilateral intervention in the market. Note that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery. This has been confirmed by Swiss authorities who reminded that strong Franc complicates correction of the national economy.

However, even a weak Franc will bear risks for Switzerland.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen continues to gain strength

At the Forex currency market the Japanese Yen rate continues to grow amid weakening of the USD.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY however it is moving along the signal line and is not giving a clear signal today. Stochastic oscillator is giving a pair sell signal being in the neutral zone.

Forex recommendations: if current bearish sentiment for the pair USD/JPY will be maintained traders’ targets will be 81.75 and 81.30.
Today Minister of Economy Mr. Yosano expressed hope that the JPY will be traded at the adequate levels. In addition, the head of the Bank of japan Shirakawa and Prime Minister Khan exchanged views on the current situation in the Japanese economy and the world; Shirakawa drew attention again to the priorities of monetary policy in Japan.

Tertiary index indicating state of affairs and expenditures in the services sector of Japan increased by 0.6% m/m.

In November which agreed with the forecast. It became the sixth consecutive factor of growth rate which is a positive indicator.

In addition statistics released on Tuesday was favourable too: revised volume of industrial output in Japan increased by 1% m/m in November which became the first factor of the indicator’s growth over half a year. At the same time capacity utilization rose by 1.6% m/m in November against the previous fall by 2.3% and the ratio of stocks and supplies was revised to -8.3% m/m in November against the growth by 8.4% m/m in October.

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.

 

[LF.Anastasia]

AUD: Australian Dollar’s rate continues to regain from the lows

At the Forex currency market the Australian Dollar rate continues to rise on Wednesday regaining from the dip to four-week low earlier.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving along the signal line not giving a clear signal. Stochastic Oscillator continues to give a pair buy signal today.

Forex recommendations if current investors’ sentiment will be maintained and in case of breakdown at the level of 1.0050 buyers’ targets will be the levels of 1.0100 and 1.0130.

It became known this morning that consumer confidence index in Australia fell by 5.7% in January against the growth by 0.2% in December, mostly due to the flooding in the country. Flooding in Australia in early January is still number one news: natural disaster in Queensland and the two neighboring states threatens to become the most severe over the past 50 years.

Prime Minister of Australia Julia Gillard said yesterday that authorities will have to make a difficult choice while preparing a budget for 2012-2013, although the fact of surplus is not questioned. It is clear already that Australian economy in QI can lose from 0.8% to 1% of its GDP.

To date, the situation for the AUD remains unchanged and as follows: as long as overall positive sentiment prevails at the market there cannot be any fears regarding the currency collapse, although its fragility and the ease with which it had been sold earlier should be taken into account. However, if the market receives another portion of negative information the pair AUD/USD can go below the level of 0.9900.

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.

 

[LF.Anastasia]

CAD: Canadian Dollar tends to rise after yesterday’ correction

The Canadian Dollar rate demonstrates slight increase at the Forex currency market on Wednesday after yesterday’s drawdown in advance of the meeting of the Bank of Canada and follow –up comments of the regulator.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and continues to go down, confirming a previous sell signal for the pair. Stochastic oscillator is giving an antipodal 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 0.9900 the pair will go to 0.9870 and 0.9840. If the level of 0.9930 is exceeded, buyers’ targets will be the levels of 0.9950 and 0.9980.

At the meeting yesterday the Bank of Canada decided to leave the interest rate unchanged at the level of 1%.
In the follow -up comments regulator stated that high rate of the CAD is holding back exports in the country, although the levels of net export will be maintained amid demand for raw materials.

In addition, the Bank of Canada said that the fact of tightening of the monetary policy in the developing countries will affect the price movement; and that self-recovery of the world economy progresses slightly faster than the it had been predicted although risks also increase.

As for the inflation levels, regulator expects that level of core and general indices of consumer prices will be below 2% level by the end of 1012.
Statistics on the employment rate in Canada released last week was a positive factor for the CAD. Thus, number of jobs increased for the third time in a row in December, by 22 thousand, following the growth by 15.2 thousand in November. At the same time unemployment rate remained at the previous level of 7.6% (forecast was 7.7%) in December which has become the lows since January 2009.

In general, the CAD seems the most stable among high-yielding currencies even taking into account its close proximity to the USA. Most likely the short term growth of the Canadian currency will be continued due to the steady state of the local economy.

 

[LF.Anastasia]

EUR/USD: Euro is being corrected slightly; potential for the growth is still there

The pair EUR/USD is traded on Thursday, being slightly corrected after the two days of growth.

By 10.05 Moscow time the Euro is at 1.3464 against the closing session level of 1.3473 yesterday.

Yesterday investors expected statistics on a number of new construction in the USA which turned out to be weaker than the forecast: the indicator showed decline by 4.3% against the previous month and amounted to 529 thousand houses on annual basis, as per Ministry of Commerce report. Experts expected the reduction by 0.9% over the month, to 550 thousand. According to the revised data a number of new construction was to 553 thousand in November, but not 555 thousand as had been reported earlier.

The market will wait for the U.S. statistics on a number of requests for unemployment benefit and also houses sales data at the secondary market tonight.

Most likely the pair EUR/USD will be in the range of 1.3380-1.3520 at the trading session on Thursday.