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[LF.Anastasia]

CHF: Swiss Franc decides on its direction

At the Forex currency market Swiss Franc rate stands still amid both mixed external background and differently directed technical signals.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to move along the signal line, not giving a pair any signal. Stochastic Oscillator is in the overbought zone today, maintaining a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9230 the pair will go to 0.9250 and 0.9270. If the level of 0.200 is exceeded, the target of decline will be the levels of 0.9180 and 0.9160.

Important statistics presenting fresh information about the state of national economy will be released this week in Switzerland. Data on the Leading indicators KOF for March will become known on Wednesday, Retail sales and PMI are to come out on Friday.

Previously Swiss National Bank started to indicate that intervention of possible: representative of the regulator Mr. Dantin said yesterday that the Bank is able to ensure price stability even amid excess liquidity. In addition the politician noted that the cost of the intervention at the currency market will be determined by the information pressure.

Bulls took the hint very well, which has been demonstrated by the current dynamics of the pair.

Swiss National Bank adopted measures of verbal intervention against the Franc last week: representatives of the SNB said following the meeting that strong currency is a hard burden for the economy and its inflated price will trigger a slowdown of economic growth – largely, due to the decrease of the export volumes.

Level of three-month LIBOR rate was left unchanged, at the 0.25%, as expected.
Statistics previously demonstrated that level of CPI in Switzerland increased by 0.4% m/m (+0.5% y/y) in February against the forecast of growth by 0.3% m/m. Thus, inflation in Switzerland has been increasing slightly so far, which on one hand, indicates economic recovery in the country and on the other hand does not give rise to discussions of the interest rate revision.

 

[LF.Anastasia]

JPY: Japanese Yen continues to weaken in the pair USD/JPY

The Japanese Yen rate continues declining at the Forex currency market on Monday after being unchanged for nearly a week in the extremely narrow offset channel.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, but turned upward, which together with low volumes gives a pair buy signal. Stochastic Oscillator left the overbought zone, giving a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.80 the pair will go to 82.00 and 82.20. If the level of 81.50 is exceeded, traders’ targets will become the levels of 81.20 and 81.00.

Last Friday the Japan Prime Minister noted, that the situation with Fukushima Plant remains complicated, but is not getting worse. He also stressed the fact that there is no reason for optimism about the plant.

However, it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan in March will reduce GDP of the country in the middle of this year by 0.25%-0.5%; however it is possible that rapid economic growth will follow after that.

The day before representative of the Bank of Japan Mr. Miyao said the day before yesterday that the regulator shall carefully trace all risk factors for the process of Japanese economic recovery. In addition, time frame and volumes of reconstruction is not known yet which makes obscure further economic outlooks of the Country of the Rising Sun.

We would remind that earlier Japan with the help of Central Banks of B7 countries conducted currency intervention, which discarded the Yen from local highs. As noted by the representative of the Bank of Japan Noda, countries of B7 conducted intervention, using the pair Euro/Yan. Currency intervention was not aimed at certain levels.

Market believes that regulator will have to carry out cash infusion not once to maintain the effect of the intervention- a one-time intervention is unlikely to be effective for the JPY. And offset of the pair USD/JPY in the last few days is a striking proof of that.

Within the national economy picture remains tight: statistics released on Friday showed net CPI in Japan declined by 0.3% y/y in February against the level of -0.2% y/y in January. Therefore, Japan is still in the state of inflation.

 

[LF.Anastasia]

AUD: Australian Dollar continues to rise steadily

At the Forex currency market the Australian Dollar rate continues to rise steadily – the pair AUD/USD moves in the rising channel for the eight consecutive trading session.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, but is rising giving a pair buy signal. Stochastic Oscillator remains in the overbought zone, also maintaining a buy signal.

Forex recommendations: if buyers’ sentiment for the pair AUD/USD preserves the levels of 1.0296 and 1.0320 will be the target for bulls today.

The AUD ignores weak statistics released last week as well as conditions for the technical rollback – the pair exceeded the level of 1.0227, moving higher 1.0296.

We would remind that leading indicator CB increased by 0.1% in January against the growth by 0.7% in December. It is the best indication for the medium term outlook of Australian economy; although it seems that external background overbalances this information. The data released earlier showed that leading indicators Westpac fell by 0.1% m/m in January while the forecast had been +0.8% m/m. It is a moderately negative sign for the Australian economy.

As noted by the representatives of the Bank of Australia earlier that economy of the country has been growing almost at the level of trend, and current moderately restrictive fiscal policy fits the external situation.

Interest rate is at the level of 4.75% per annum in Australia now. The meetings of RBA in 2011 will be held on 4 April, 2 May, 6 June, 4 July, 1 August, 5 September, 3 October, 31 October, 5 December.

Note, as it became known earlier, the Reserve Bank of Australia sold А$414 billion in the market in February – the action was aimed at weakening the position of the AUD, says the RBA monthly bulletin. In addition the RBA bought А$464 billion from foreign banks in February.
This week important statistics will be released only on Thursday (Retail sales in February), so the general external background will remain key driver for the pair.

 

[LF.Anastasia]

NZD: New Zealand Dollar may turn into correction after a rapid growth

At the Forex currency market the New Zealand Dollar rate starts a slight retreat that is natural after a rapid growth seen last week.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and continues to rise, weakly indicating buyers’ sentiment. Stochastic Oscillator aims at leaving the overbought zone, forming a sell signal.

Forex recommendations: if current bearish sentiments strengthen in the market sellers’ targets will become the levels of 0.7500 and 0.7480.

Februaries’ trade balance data will be released on Tuesday this week, further dynamics of the pair NZD/USD will depend on the external background. Note that last week the New Zealand Dollar has regained almost completely from the reduction which followed the decision of the RBNZ.

At the last meeting the Reserve Bank of New Zealand decided to decrease interest rate by 50 basis points, to the level of 2.50% per annum. Investors, who had predicted possible reduction of the indicator, ignored its decrease by 25 basis points.

It became the reason of the dramatic fall of the NZD, and what is more, Prime Minister John Key said earlier in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate.
Statistics released showed that GDP in New Zealand rose by 0.2% m/m (+0.8% y/y) in QIV against the forecast of growth by 0.1% m/m, which support positive dynamics in NZD.

Statistics of the last week showed that balance of current account in New Zealand decreased to -NZ$3.5 billion against the value of -NZ$1.77 billion in QIII. The balance is most likely decreased due to the seasonal factors and we surely can see improvement in the situation.

 

[LF.Anastasia]

Euro/USD: The pair is to win back statistics

The pair EUR/USD is traded slightly upward on Tuesday morning, staying near the level of 1,41 on low volumes.

By 8.50 Moscow time the Euro is at 1.4093 against Monday closing session level of 1.4086.

The day is going to be informative in terms of macro-statistics: investors will pay attention to the data released in France (Consumer Spending in February, 10.45 Moscow time) and Germany (preliminary CPI in March). In addition markets will take interest in GfK Consumer Sentiment in Germany in April.

Investors are also awaiting for the data from USA (ADP Employment Change in March, April, 1), market will focus on Consumer Confidence in March (18.00 Moscow time).

Besides market will pick up external signals – today the U.S. are to delegate responsibility to NATO on Libya campaign.

Most likely the pair EUR/USD will not go beyond the range of 1.4010-1.4150 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound makes another attempt of correction

At the Forex currency market the British Pound Sterling makes another attempt of correction from lows.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, but continues to decline, besides volumes are slowly going out, that may indicate reversal. Stochastic Oscillator is in the oversold zone, giving a pair sell signal.

Forex recommendations: in case of bullish movement strengthening buyers’ targets for today will be the levels of 1.6025 and 1.6040. If breakdown doesn’t occur, the pair will continue to consolidate near current levels.

Final 4q GDP data will be released in Great Britain today at 12.30 Moscow time. If the indicator is revised upward the news will be supportive for the British Pound.

Both fundamentals and the general external background continue to put pressure on the British Pound. The day before Spencer Dale of Bank of England said he would be ready to reverse his decision on the key interest rate in case the inflationary pressure in the country continued to ease. He voted to raise the key rate this month guided by the inflation indicators.

According to the Minutes of meeting of the Bank of England 6 members of MPC voted for keeping interest rate at the previous level. In addition, 8 people were for preserving current volume of the assets redemption program. Posen voted for the growth of QE by 50 billion pounds. Therefore, balance of forces in the Monetary Committee has remained unchanged, which frustrated bulls who expected indications of imbalance. Following the meeting of the Bank of England it became known that interest rate was kept at the previous level of 0.50% per annum, volume of debt securities was also left unchanged – 200 billion pound sterling.

Statistics released last week also made its contribution to Pound’s weakness. Firstly, released statistics were weak and disappointed investors: retail sales excluding fuel in Great Britain fell by 1.0% m/m (+1.2% y/y) in February, level of retail sales fell by 0.8% m/m (+1.3%) y/y against the forecast of reduction by 0.6% m/m.

Still medium trend for GBP/USD is bearish with the possibility of technical correction.

 

[LF.Anastasia]

CHF: Swiss Franc resumed strengthening

At the Forex currency market Swiss Franc rate continues strengthening started the day before.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to move along the signal line, not giving a pair any clear signal. Stochastic Oscillator is moving away from the overbought zone today, starting giving a pair sell signal.

Forex recommendations: if bearish sentiment for the pair AUD/USD gathers momentum sellers’ targets levels will be 0.9120 and 0.9080 for today.

According to the data released on Tuesday, UBS Consumption Indicator in Switzerland decreased to the level of 1.459 points in February against the level of 1.657 points in January.

Note that data on the Leading indicators KOF for March will become known on Wednesday, Retail sales and PMI are to come out on Friday. These indicators will present fresh information about the state of national economy.
Swiss National Bank adopted measures of verbal intervention against the Franc last week: representatives of the SNB said following the meeting that strong currency is a hard burden for the economy and its inflated price will trigger a slowdown of economic growth – largely, due to the decrease of the export volumes.

Level of three-month LIBOR rate was left unchanged, at the 0.25%, as expected.
Note that verbal interventions are ordinary for SNB. Previously Swiss National Bank started to indicate that intervention of possible: representative of the regulator Mr. Dantin said that the Bank is able to ensure price stability even amid excess liquidity. In addition the politician noted that the cost of the intervention at the currency market will be determined by the information pressure.

The internal background stays stable: level of CPI in Switzerland increased by 0.4% m/m (+0.5% y/y) in February against the forecast of growth by 0.3% m/m. Thus, inflation in Switzerland has been increasing slightly so far, which on one hand, indicates economic recovery in the country and on the other hand does not give rise to discussions of the interest rate revision.

Thereby solid ground for the Swiss Franc remains intact – at least until SNB passes from words to deeds. But the possibility of interference is still rather small.

 

[LF.Anastasia]

JPY: Japanese Yen is stable on Tuesday

The Japanese Yen rate is stable at the Forex currency market on Tuesday: morning marked attempts to strengthen on good statistics, but all movements in USD/JPY are again insignificant as regulators still monitor all Forex fluctuations with the participation of the currency.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, slightly going upward, giving a pair buy signal. Stochastic Oscillator is in the overbought zone today.

Forex recommendations: leaning on the general external and internal background, off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.70 the pair will go to 81.90 and 82.10. If the level of 81.50 is exceeded, traders’ targets will become the levels of 81.30 and 81.00.

Important data published in Japan today contains:
– Unemployment rate decreased to the level of 4.5% in February against the level of 4.9% in January;
– The level of retail sales rose by 0.1% y/y in February against the same increase in January;
– The level of Small Business Confidence decreased to 49.5 points in March against the level of 56.6 points seen in February;
– Household spending decreased by 0.2% y/y in February against the reduction by 1.0% y/y in January.

Thereby the statistics turned out to be mixed: while Japan labour market continued to rise in February on economic recovery, the level of household spending reflected winding up of stimulus programs.

Currently it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan in March will reduce GDP of the country in the middle of this year by 0.25%-0.5%; however it is possible that rapid economic growth will follow after that.

The day before representative of the Bank of Japan Mr. Miyao said the day before yesterday that the regulator shall carefully trace all risk factors for the process of Japanese economic recovery. In addition, time frame and volumes of reconstruction is not known yet which makes obscure further economic outlooks of the Country of the Rising Sun.

We would remind that earlier Japan with the help of Central Banks of B7 countries conducted currency intervention, which discarded the Yen from local highs. As noted by the representative of the Bank of Japan Noda, countries of B7 conducted intervention, using the pair Euro/Yan. Currency intervention was not aimed at certain levels.

 

[LF.Anastasia]

AUD: Australian Dollar continues trading near 28-year highs

At the Forex currency market the Australian Dollar rate continues to rise steadily on Tuesday – after a slight correction near 28-year highs.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and is rising, aiming to cross the signal line and break it up, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone, but is set to go down.

Forex recommendations: if buyers’ sentiment for the pair AUD/USD preserves former highs at levels of 1.0315 and 1.0325 will be the target for bulls today.

Remember, that under existing conditions a correction targeting the level of 1.0110 may take place.
Macroeconomic background looks weak for Australia. According to the data released by Australian Housing Industry Association, Newly Built Home Sales rose by 0.6% in February against the increase by 2.4% in January.

The portion of important statistics will come out this week only on Thursday (Retail Sales in February), so the key driver for the pair will be the general external background.

We would remind that leading indicator CB increased by 0.1% in January against the growth by 0.7% in December. It is the best indication for the medium term outlook of Australian economy; although it seems that external background overbalances this information. The data released earlier showed that leading indicators Westpac fell by 0.1% m/m in January while the forecast had been +0.8% m/m. It is a moderately negative sign for the Australian economy.

As noted by the representatives of the Bank of Australia earlier that economy of the country has been growing almost at the level of trend, and current moderately restrictive fiscal policy fits the external situation.

Interest rate is at the level of 4.75% per annum in Australia now. The meetings of RBA in 2011 will be held on 4 April, 2 May, 6 June, 4 July, 1 August, 5 September, 3 October, 31 October, 5 December.

Thereby aussie is set to go down by the end of the week – it is still unclear what tone will take RBA during the meeting on Monday, April 4.

 

[LF.Anastasia]

NZD: New Zealand Dollar tries to resume growth after a correction the day before

At the Forex currency market the New Zealand Dollar rate tries to resume growth today, broken by a technical correction the day before.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD, but continues to rise, indicating buyers’ sentiment. Stochastic Oscillator aims at leaving the overbought zone, forming a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7535/40 the pair will go to 0.7550 and 0.7580. If the level of 0.7500 is exceeded, traders’ targets will become the levels of 0.7480 and 0.7450.

As it became known today, trade balance in New Zealand increased to NZ$194 mln in February against the level of NZ$11 mln in January and forecast of growth to NZ$272 mln.

In addition export levels increased by 17% y/y, import – by 23% y/y.
At the last meeting the Reserve Bank of New Zealand decided to decrease interest rate by 50 basis points, to the level of 2.50% per annum. Investors, who had predicted possible reduction of the indicator, ignored its decrease by 25 basis points.

It became the reason of the dramatic fall of the NZD, and what is more, Prime Minister John Key said earlier in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate.
Statistics released showed that GDP in New Zealand rose by 0.2% m/m (+0.8% y/y) in QIV against the forecast of growth by 0.1% m/m, which support positive dynamics in NZD.

Statistics of the last week showed that balance of current account in New Zealand decreased to -NZ$3.5 billion against the value of -NZ$1.77 billion in QIII. The balance is most likely decreased due to the seasonal factors and we surely can see improvement in the situation.