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[LF.Anastasia]

JPY: Japanese Yen continues to grow steadily

At the Forex currency market the Japanese Yen rate continues to move in the ascending channel on Thursday due to the demand among traders, caused by the increasing geopolitical tension in the Middle East.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it started to move along the signal line and is not giving a clear signal. Stochastic Oscillator has come out of the oversold zone and continues to give a pair sell signal.

Forex recommendations: if investors’ bearish sentiment is maintained, traders’ targets will be the levels of 81.75 and 81.30/25.

The data released on Wednesday showed that deficit of trade balance in January amounted to Y471.4 billion against expected level of +Y37.1 billion; although it can be only a seasonal factor. The level of import prices increased by 1.4% y/y in January against expectations of the rise by 7.4%; the level of import increased by 12.4% y/y (forecast: +8.1% y/y). In addition, the deputy head of the Bank of Japan Mr. Yamaguchi stressed this morning that now high rate of national currency neutralizes the factor of high import prices. In addition, he also drew attention to the fact that there is no need to revise forecasts for economic growth with the account of high oil price.

The data published earlier demonstrated that index of activity in all sectors of Japan continued to decline in December: by 0.2% m/m against similar reduction level in November. At the same time experts of Nomura Bank reported last week that the worst stage is over for the economy of the Country of the Rising Sun and the process of economic recovery will accelerate. It agrees with the assessment of the Bank of Japan which emphasized that Japanese economy is strong enough now to cope with consequences of temporary recession. That seems to be an interesting resonance.

In addition the data released earlier showed that revised index of leading indicators in Japan increased by 0.8% in December; while index of coincident indicators was revised to+1.1%. As macro-data showed earlier, actual GDP declined by 0.3% q/q (forecast-2.0% y/y) in QIV, 2010; index of capital expenditures increased by 0.9% q/q in QIV against +1.5% in QIII. Therefore, the main publication earlier this week- Japanese GDP was above forecasts, however this effect can be temporary, since the economy of the country is still in the complex situation.

It is interesting that the news announced by the rating agency Moody's Investors Service about downgrading forecast of Japanese rating, which is Aa2 now, from “stable” to “negative” because growing budget deficit in the country and the lack of effective political measures are the risk factors for the national economy, had been won back by the pair USD/JPY rather quickly.

 

[LF.Anastasia]

AUD: External background prevents recovery of Australian Dollar

The Australian Dollar rate continues its efforts to recover at the Forex currency market on Thursday; however aggravation of the external background, which is still preserved due to the events in the Middle East, does not promote active purchase.

Forex recommendations: MACD indicator is in the positive area for the pair AUD/USD and it goes down slowly, continuing to give a pair sell signal. Stochastic Oscillator is moving towards oversold zone and is also giving a pair sell signal.

Forex recommendations: if external background changes for the worse, the pair will go to 1.0020 and 0.9980. If the situation remains stable the pair will continue to consolidate close to the current levels.

It became known today that level of capital investment in private sector of Australia increased by 1.3% on quarterly basis in QIV last year, reaching the level of A$29.691 billion. Thus, in accordance with the forecast, total index of capital expenditures will be at the level of A$128.93 billion in 2010-2011.

The data released earlier showed that the level of business confidence NAB in Australia declined by 5 points in QIV against the level of 9 points earlier. However the pressure from external background is getting stronger and the currency is being sold, due to investors’ withdrawal from risks.

No important publications are expected this week; therefore, external background will become the main activator for the pair. Situation in the Australian economy remains unchanged. The AUD is still afloat due to the overall optimism.

Earlier the head of the Reserve Bank of Australia Glenn Stevens noted that he expected stabilization of the national economy, due to which, interest rate would remain unchanged for some time. He also said that economic growth of the Australian economy could be better, than the forecast, despite negative impact of the natural disaster that befell on the country at the beginning of the year. At the same time Stevens believes in the support from strong economies of India, China, the USA, and risks – from the European economies.

In general, medium term trend for the currency seems downward.

 

[LF.Anastasia]

EUR/USD: Euro keeps going up

The pair EUR/USD has been traded upward for the third consecutive day on Friday morning with the help of support from investors’ expectations of possible interest rate increase soon.

By 10.11 Moscow time the Euro is at 1.3831 against closing session level of 1.3799 yesterday.

If policy of the Federal Reserve regarding the rate has been stable for a long time, ECB is not so definite. Earlier representatives of the regulator emphasized more than once that tightening of the monetary policy will possibly begin in Eurozone in the nearest future. Today levels of consumer prices in Germany will be made public; it is expected that the index will rise to two-year highs, which can become another prerequisite for revision of the interest rate policy by the ECB.

Since the beginning of the week The Euro has already added 1% against the USD and today it is at the three- week highs

Most likely the pair EUR/USD will not go beyond the range of 1.3750-1.3890
at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound goes down at the end of the week

At the Forex currency market the British Pound Sterling rate goes down on Friday, continuing yesterday’s dynamics and therefore, it had come out of the range and went downward.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to move along the signal line, not giving a signal. Stochastic Oscillator continues to go down today and is giving a pair sell signal, being in the neutral zone.

Forex recommendations: if current sentiments will prevail at the market, and in case of breakdown at the level of 1.6120, traders’ targets will be the levels of 1.6075 and 1.6030/20.

It became known this morning that level of consumer confidence in Great Britain rose to -28 points in February, as per GfK/NOP estimates, against the previous value of -29 points. The news was moderately optimistic for the Pound; however it did not save the Pound from sales.

According to CBI which was released earlier, decline in sales volume from 37 points to 6 points is quite logical, as the program of reduction in public expenditure gave its first results. At the same time in the retail sector of the country the sentiments remains the most pessimistic since 2009.

Earlier a representative of the Bank of England Miles noted that according to regulator’s estimates the process of scrapping of the program of stimulation is quite slow. Miles believes that there is no need in monetary policy tightening as suggested by the supporters of the rate increase who keep eye on inflation levels. According to him, sharp tightening of the monetary policy will harm British economy, while inflation will revert to its key level of 2% by the year 2012.

The data on the public sector borrowing released on Tuesday inspired players, making it possible for the Pound to add about 20 pips, however it was not able to reverse general trend: the volume of net borrowing in Great Britain reduced to STG5.252 billion in January against the level of -STG0.095 billion a year earlier. Statistics released earlier showed that index of houses prices Rightmove increased by 3.1% m/m (+0.3% y/y) in Great Britain. It is worth noting that different agencies, which monitor real estate market in the UK, use different indicators and as a result published data from time to time differs diametrically.

Meanwhile Friday’s statistics gave chance for the Pound to soar up: level of retail sales rose by 1.9% m/m (+5.3% y/y) in January against expectations of grow by 0.2% m/m; net mortgage lending in the UK remained invariable in January, at the level of STG 1.2 billion.

 

[LF.Anastasia]

CHF: Swiss Franc begun to rollback after reaching new historical highs

At the Forex currency market Swiss Franc rate demonstrates slight rollback on Friday after reaching a new historical peak once again.

Forex forecast: MACD indicator is in the negative area for the pair and continues to go down, giving a pair sell signal. Stochastic Oscillator still remains in the oversold zone today; however it tends to come out of it and start forming a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9290 the pair goes to 0.9330 and 0.9360. If the level of 0.9200 is broken down, traders’ targets will be the levels of 0.9175 and 0.9120.

Publication of the index of leading indicators KOF in Switzerland is scheduled for the release today.

It became known yesterday that employment rate in Switzerland declined to the level of 4.085 billion in QIV against expectations of growth to 4.086 billion; however Franc ignored this information. The data released earlier showed that indicator of consumption UBS in Switzerland fell to the level of 1.676 points (-0.15 points) in January amid decreasing sales in retail sector due to the low demand for new cars. However the indicator still remains above the key level of 1.5, which ensures favorable prospects

In addition, import prices in Switzerland increased by 9.8% y/y in January; export rose by 15.5% y/y.

It is a factor of trade balance (index rose to the level of 1.96 billion euro in January against the growth to 1.26 billion euro earlier) that helps the CHF to be considered as a stable currency, since the country does not require external borrowings.

According to the head of the Bank, Philipp Hildebrand, currency intervention carried out by the National Bank of Switzerland last year has reached its objective. Monetary politician believes that Switzerland has achieved price stability and got rid of the signs of inflation. We would remind that SNB had been buying the Euro since March 2009 until the middle of 2010 to limit the growth of Franc. Hildebrand is confident that Switzerland is in more advantageous position now compared with Eurozone, where inflation amounts about 2%. Price stability, according to the monetary politician, does not give rise to complaints.

 

[LF.Anastasia]

JPY: Japanese Yen is being corrected after the previous growth

The Japanese Yen rate is being corrected at the Forex currency market after a sharp rise this week on the surge of the demand from buyers, who tries to hedge their risks.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it starts to descend, giving a pair sell signal. Stochastic Oscillator starts to come out of the oversold zone and is giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 82.20 buyers’ targets will be the levels of 82.50 and 82.75/80.

Deflation in Japan continues to retreat – the data on CPI in January, released today, showed reduction in the rate by 0.2% y/y after the decline by 0.4% y/y in December and the forecast of -0.3%. Food and energy resources begun to rise in price in the Country of the Rising Sun – and these are the main factors of inhibition of deflationary loop.

The data released on Wednesday showed that deficit of trade balance in January amounted to Y471.4 billion against expected level of +Y37.1 billion; although it can be only a seasonal factor. The level of import prices increased by 1.4% y/y in January against expectations of the rise by 7.4%; the level of import increased by 12.4% y/y (forecast: +8.1% y/y). In addition, the deputy head of the Bank of Japan Mr. Yamaguchi stressed this morning that now high rate of national currency neutralizes the factor of high import prices. In addition, he also drew attention to the fact that there is no need to revise forecasts for economic growth with the account of high oil prices.

The data published earlier demonstrated that index of activity in all sectors of Japan continued to decline in December: by 0.2% m/m against similar reduction level in November. At the same time experts of Nomura Bank reported last week that the worst stage is over for the economy of the Country of the Rising Sun and the process of economic recovery will accelerate. It agrees with the assessment of the Bank of Japan which emphasized that Japanese economy is strong enough now to cope with consequences of temporary recession. That seems to be an interesting resonance.

In addition the data released earlier showed that revised index of leading indicators in Japan increased by 0.8% in December; while index of coincident indicators was revised to+1.1%. As macro-data showed earlier, actual GDP declined by 0.3% q/q (forecast-2.0% y/y) in QIV, 2010; index of capital expenditures increased by 0.9% q/q in QIV against +1.5% in QIII. Therefore, the main publication earlier this week- Japanese GDP was above forecasts, however this effect can be temporary, since the economy of the country is still in the complex situation.

 

[LF.Anastasia]

AUD: Australian Dollar rate tends to keep on growing

At the Forex currency market the Australian Dollar rate keeps on going up on Friday, continuing the trend of the past sessions.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it started moving along the signal line, not giving a clear signal. Stochastic Oscillator goes up today and is giving a pair buy signal, being in the neutral zone.

Forex recommendations: if current external background is maintained and in case of breakdown at the level of 1.0150, buyers’ targets today will be the level of 1.0170 and the local highs of 1.0200.

Important publications have not been released this week; therefore, external background was the main activator for the pair. Situation in the Australian economy remains unchanged. The AUD is still afloat due to the overall optimism. However, the trend seems to be downward for the currency in the medium term.

Earlier the head of the Reserve Bank of Australia Glenn Stevens noted that he expected stabilization of national economy, and consequently, interest rate would remain unchanged for some time. He also said that economic growth of Australian economy could be better, than the forecast despite negative impact of the natural disaster that befell the country at the beginning of the year. At the same time Stevens believes in the support from strong economies of India, China, the USA, and risks – from the European economies.

It became known yesterday that level of capital expenditure in private sector of Australia increased by 1.3% on quarterly basis in QIV last year, reaching the level of A$29.691 billion. Thus, in accordance with the forecast, total index of capital expenditures will be at the level of A$128.93 billion in 2010-2011.

The data on the level of business confidence NAB in Australia presented earlier showed the decline in the index by 5 points in QIV against the level of 9 points earlier. However the pressure from external background is nevertheless stronger and the currency had been sold due to investors’ withdrawal from risks.

The possibility that aggressive traders can come back into the pair still remains.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to recover

At the Forex currency market the New Zealand Dollar rate continues to recover on Friday after drastic fall this week.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and continues to go down, confirming a previous sell signal for the pair. Stochastic oscillator has come out of the oversold zone and started forming a pair buy signal.

Forex recommendations: if current external background is maintained and in case of breakdown at the level of 0.7500, buyers’ targets will be the level of 0.7520 and 0.7550. However, further sales of the New Zealand currency should not be excluded either.

Earthquake in the South of New Zealand this week has led the pair NZD/USD down by 2.5 figures just within one session, and still affects low consumer interest in the NZD

The data on the business confidence NAB for January was released earlier: thus, index demonstrated growth rate to 4 points against the decline by 3 points in December. Index of business conditions reduced to 6 points in the first month of the year against the previous value of 6. In addition, the data on the houses prices in January became known, which showed reduction by 1.5% y/y against -0.9% y/y in December.

At the last meeting in January the Reserve Bank of New Zealand made an expected decision to keep interest rate at the previous level of 3.0% per annum. The Central Bank showed adherence to maintain monetary policy unchanged. In the follow-up comments, the head of the RBNZ, Bollard stressed that the rates will sequentially increase over the next two years.

The report of the Reserve Bank of New Zealand showed that two-year inflation forecasts remained unchanged in QI: +2.6%.

The data on New Zealand, released on Friday was mixed: index of industrial activity rose to the level of 53.7 in January against 53.2 in the previous period; producer prices at exit/entrance for quarter IV: +0.9%/+0.2% respectively; consumer confidence index ANZ increased to 108.2 in February against 117.1 in January.

In addition, Finance Minister of New Zealand said last week that strong domestic currency did not support national economy, and consequently economy does not look quite competitive.

Knowing that in spite of the recent events, the economy of New Zealand is quite stable at the moment, current downfall can be considered as a good chance to buy a pair at the local lows.

 

[LF.Anastasia]

CAD: Canadian Dollar gains momentum

Consolidation of the Canadian Dollar at the Forex currency market has turned into an active phase on Monday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is going down, giving a pair sell signal. Stochastic Oscillator has reached oversold zone and is giving a pair sell signal.

Forex recommendations: if current market sentiments are be maintained, traders’ target will become the level of 0.9730.

Technically, the pair USD/CAD has been in the grip of the downward trend since the end of September, and movement of quotes is within the pattern “top-down flag”. The lower boundary of the graphic figure passes through important support level at 0.9730, the lows of December 2007.

According to the experts from the International Monetary Fund, Canadian economy will grow by 2.3% y/y in the current year; lower than the forecast of October (+2.7% y/y). At the same time IMF expects that in 2012 Canadian economy will increase by 2.7%. The exact figures of the GDP growth in the country will be published on 28 February but meanwhile IMF supposes that the indicator will be at the level of 2.9% (earlier – 3%).

Current consolidation of the national currency of Canada is supported not only by technical factors, but by fundamental ones as well, however rally will slow down when approaching important borderline of 0.9730, this level will not be exceeded at the first attempt.

Note, that technically, correction of the downward trend is taking shape, caused the fact that the pair has been oversold.

 

[LF.Anastasia]

AUD: Growth of Australian Dollar has slowed down on Monday

At the Forex currency market the Australian Dollar rate has slowed down its growth on Monday, determining direction for further movement.

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 has come into overbought zone today, and keeps giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0200 the pair will go to 1.0240 and 1.0280. If the level of 1.0150 is exceeded, traders’ targets will be the levels of 1.0080 and 1.0050.

It became known this morning that level of total lending in Australia increased in January by 3.3% per annum, as per estimates of the Reserve bank of Australia, against expectations of the rise by 3.2%.

At the same time, lending in the private sector increased by 0.3% m/m last month (preliminary level was +0.2%).

Earlier the head of the Reserve Bank of Australia Glenn Stevens noted that he expected stabilization of national economy, and consequently, interest rate would remain unchanged for some time. He also said that economic growth of Australian economy could be better, than the forecast despite negative impact of the natural disaster that befell the country at the beginning of the year. At the same time Stevens believes in the support from strong economies of India, China, the USA, and risks – from the European economies.

It became known earlier that level of capital expenditure in private sector of Australia increased by 1.3% on quarterly basis in QIV last year, reaching the level of A$29.691 billion. Thus, in accordance with the forecast, total index of capital expenditures will be at the level of A$128.93 billion in 2010-2011.

The data on the level of business confidence NAB in Australia presented earlier showed the decline in the index by 5 points in QIV against the level of 9 points earlier. However the pressure from external background is nevertheless stronger and the currency had been sold due to investors’ withdrawal from risks.

Tomorrow, on Tuesday, data on Australian retail sales in January will be made public; in the middle of the week, GDP level in Australia in QIV is going to be released; data on trade balance will become known on 3 March.