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[LF.Anastasia]

Euro/USD: Euro gains support from investors’ optimism

The pair EUR/USD is traded upward on Wednesday morning – amid positive investors’ expectations.

By 9.15 Moscow time the Euro is at 1.4253 against Tuesday closing session level of 1.4221.

Final Eurozone 4q GDP data will be released midday – the indicator is expected to increase by 0.3%.

Another positive factor – expectations on today’s ECB meeting, during which the key interest rate, as markets anticipate, may be raised – to 1.25% per annum from the current level of 1%.

In whole the situation remains calm by now.

Ben Bernanke said in his speech that the increase in inflation seen now was based on commodity-price factor and was therefore transitory. According to him, this would not be long and Fed had to monitor inflation extremely closely to be ready to respond in case the situation worsened.

Most likely the pair EUR/USD will not go beyond the range of 1.4200-1.4290 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound increased sharply

At the Forex currency market the British Pound Sterling rate succeeded in rising from local lows on Tuesday and Wednesday.


Forex forecast: MACD indicator is crossing the signal line top-down for the pair GBP/USD, sell signal remains intact. At the same time volumes are insignificant indicating weakness of the signal. Stochastic Oscillator has entered the overbought zone today, maintaining a buy signal.

Forex recommendations: in case of current market sentiment maintenance and breakup at the level of 1.6340 the pair will move to 1.6350 and 1.6370.
Note that the pair GBP/USD started a sharp increase on the back of GBP/JPY growth amid Japanese currency’s weakness.
Thereby the increase looks unstable.

According to the BCC survey released the day before, 1q GDP in Great Britain is expected to come out at the level of 0.6-0.7%. Besides 1q sales among manufacturers may reach the level of +8 points against 4q level of +24 points, orders may decline to +22 points against +19 points seen previously.

1q sales among service providers are expected to come out at the level of +6 points against 4q level of +5 points, orders may grow to +5 points from -7 points seen previously.

According to the data released today, BRC Retail price index in Great Britain increased by 2.4% y/y in March against the increase by 2.7% y/y in February.

According to the Minutes of previous 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.

The Bank of England will hold a meeting on Thursday this week, but is likely to leave the benchmark interest rate unchanged. Currently the key rate remains at 0.50% per annum.

 

[LF.Anastasia]

CHF: Swiss Franc slides again

At the Forex currency market Swiss Franc rate continues moving away from local highs amid weak demand on on Wednesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues rising, maintaining a former buy signal. Stochastic Oscillator is moving along in the neutral zone today, giving a mixed signal.

Forex recommendations: in case buyers’ sentiment preserves and the level of 0.9275 is exceeded, the pair will go to 0.9290 and 0.9310.

Earlier 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.

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.

Level of three-month LIBOR is currently at the level of 0.25%.

As it became known last Friday, the level of real retail sales in Switzerland increased by 1.5% m/m in February against the decrease by 2.4% m/m in January. At the same time SVME-PMI index decreased to the level of 59.3 points in March against the level of 63.5 points seen previously. Thereby the data was mixed, but CHF didn’t respond to it remarkably, being pressured by USD amid strong U.S. macroeconomic data.

March CPI data will be released in Switzerland on Wednesday. The indicator is expected to increase by 0.6% y/y against the level of 0.5% seen previously and amount to 0.2% m/m (0.4% m/m before).

 

[LF.Anastasia]

JPY: Japanese Yen is weakening with every passing day

The Japanese Yen rate continues weakening for the tenth consecutive session at the Forex currency market on Wednesday, showing only a slight technical correction, the pair USD/JPY is strengthening.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is going upward having crossed the signal line bottom-up the day before. Stochastic Oscillator stays in the overbought zone today, maintaining a buy signal.

Forex recommendations: in case of breakup at the level of 84.50 the pair will go to 84.60 and 84.80.

As it became known on today, Coincident indicator in Japan grew by 0.4% m/m to the level of 106.3 points in February against the increase by 2.4% m/m in January. Leading indicator grew by 2.7% m/m to the level of 104.2 points against the increase by 2.4% m/m in January.

Meanwhile BOJ meeting started today, at the end of which central bank is expected to keep its target rate unchanged at 0.1% per annum (the level remains intact from December 2008) and accept a new plan of extra financing.

Besides markets are awaiting the regulator to announce offering a credit program for financial companies amounting to $12 bln at 0.1% per annum.
All central bank’s movements now aim at stabilization lending for companies to be able to use cheap money in the wake of magnitude-9 earthquake.
Part of the above mentioned measures was taken by BOJ after the quake of 1995, but in smaller volume terms.

According to observers, monetary policy tightening should not be expected until mid-2012, and stimulus programs will not be cut down for the nearest 6 months at least.

Revised data on Tankan survey was released the day before – as it became known, business confidence of all major companies in Japan after the earthquake on March, 11, increased by 6 points against the increase by 5 points in December. Besides the forecast for June turned out to be at the level of -2 points after the earthquake and tsunami. Before the acts of God the forecast was at +3 points.

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.

 

[LF.Anastasia]

AUD: Australian Dollar regains strength after a correction

At the Forex currency market the Australian Dollar regains strength after two days’ decline within the bounds of technical correction.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is rising steadily, giving a pair buy signal. Stochastic Oscillator today declines in the neutral zone, giving a pair sell signal.

Forex recommendations: off the market. But in case of bulls’ sentiment strengthening, the pair may go to 1.0380.

A set of macro-statistics was published in Australia today:
– Housing finance fell by 5.6% m/m in February against the decrease by 4.5% in January;
– Invest housing finance fell by 2.3% m/m in February against the decrease by 6.8% in January.

According to observers, the main reason for weak housing statistics were floods seen in Australia at the beginning of the year.
Macroeconomic background remains weak: trade balance deficit was recorded for the first time since spring 2010 (-А$205 mln in February against +А$1.4 bln in January). Besides, AiG Performance of Service Index decreased to the level of 46.5 points in March against the level of 48.7 points in February.

Thereby macroeconomic background is still of no strong support to aussie.
As a result of RBA meeting the interest rate was left unchanged at the level of 4.75% per annum the day before – the officials didn’t resolve to tighten monetary policy for the fourth time. The decision was in line with expectations and didn’t evoke markets’ response.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to strengthen

At the Forex currency market the New Zealand Dollar rate continues to strengthen on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is rising, maintaining a buy signal. Stochastic Oscillator stays in the overbought zone today, giving the same signal.

Forex recommendations: in case of current market sentiments’ strengthening and breakup at the level of 0.7725 the pair will move to the previous high at 0.7733 and then – to 0.7750.

According to New Zealand monetary officials, the regulator will not have to reduce the key interest rate because of economic stabilization.
In other respects the situation in the national economy remains unchanged.

As it became known the daybefore, the 1q level of NBNZ Business Confidence in New Zealand, according to NIESR, decreased by 27% against the 4q level of +8 points.

Thereby the first 1q data is being published, yet rather weak. Still kiwi ignores the statistics. March data is not impressive: the level of NBNZ business outlook in New Zealand declined to -8.7 points in March against the level of 34.5 points in February. It is difficult to judge on the reasons of such a rollback, and one should wait for the next data to judge on the trend.

Export levels increased by 17% y/y in February, import – by 23% y/y to the level of NZ$3.86 bln. Export accounts for about 30% of NZ GDP and an increase in it will have a positive effect on the national economy.

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.

Data released on trade balance last week turned out to be positive for the first time in 8 months. The main catalysts for this were high commodity prices and an increase in export levels of wood and dried milk.

 

[LF.Anastasia]

GBP: British Pound declines on the threshold of BOE meeting

At the Forex currency market the British Pound Sterling rate declines on Thursday amid technical correction as well as on the threshold of today’s BOE meeting.

Forex forecast: MACD indicator is crossing the signal line for the pair GBP/USD, giving a mixed signal. Stochastic Oscillator is in the overbought zone today, maintaining a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakup at the level of 1.6330 the pair will go to 1.6350 and 1.6370. If the level of 1.6280 is broken down, sellers’ targets will become 1.6260 and 1.6240.

The Bank of England will hold a meeting midday, during which the decision on the benchmark interest rate will be taken and economic perspectives – evaluated. Markets are confident with the interest rate to be kept unchanged at 0.50% per annum.

According to the Minutes of previous 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.

According to the BCC survey released the day before, 1q GDP in Great Britain is expected to come out at the level of 0.6-0.7%. Besides 1q sales among manufacturers may reach the level of +8 points against 4q level of +24 points, orders may decline to +22 points against +19 points seen previously.

1q sales among service providers are expected to come out at the level of +6 points against 4q level of +5 points, orders may grow to +5 points from -7 points seen previously.

According to the data released the day before, BRC Retail price index in Great Britain increased by 2.4% y/y in March against the increase by 2.7% y/y in February.

 

[LF.Anastasia]

CHF: Swiss Franc started growth

At the Forex currency market Swiss Franc rate continues growth started the day before on Thursday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues rising, maintaining a former buy signal. Stochastic Oscillator is sliding in the neutral zone today, giving a pair sell signal.

Forex recommendations: in case the level of 0.9175 is broken down sellers’ targets will be 0.9160 and 0.9150, otherwise the pair will start consolidation near the current levels.

According to the data released the day before, the level of CPI in Switzerland increased by 0.6% m/m (+1.0% y/y) in March against the forecast of growth by 0.2% m/m. It is a mixed factor for Swiss economy, because it indicates recovery as well as serious inflation pressure.
Level of three-month LIBOR is currently at the level of 0.25%.

As it became known earlier, the level of real retail sales in Switzerland increased by 1.5% m/m in February against the decrease by 2.4% m/m in January. At the same time SVME-PMI index decreased to the level of 59.3 points in March against the level of 63.5 points seen previously. Thereby the data was mixed, but CHF didn’t respond to it remarkably, being pressured by USD amid strong U.S. macroeconomic data.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen experiences a slight correction

The Japanese Yen rate experiences a slight correction from local lows at the Forex currency market on Thursday. One should note that it is a technical correction.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is rising, giving a pair buy signal. Stochastic Oscillator stays in the overbought zone today, maintaining a similar signal.


Forex recommendations: after a technical correction buyers’ targets will be 85.30 and 85.50.

According to BOJ decision released after today’s meeting, the key interest rate was left unchanged at the historical low of 0.0-1% per annum. The regulator stated, that national economy remains under strong downside pressure expected in the meantime. Later a moderate recovery will take place.

As noted by the officials, financial markets are in whole stable whereas a number of regions experiences production cuts and small business weakness.

Besides BOJ announced a new plan of extra financing amounting to Y1 trln.

All central bank’s movements now aim at stabilization lending for companies to be able to use cheap money in the wake of magnitude-9 earthquake. Part of the above mentioned measures was taken by BOJ after the quake of 1995, but in smaller volume terms.

Revised data on Tankan survey was released the day before – as it became known, business confidence of all major companies in Japan after the earthquake on March, 11, increased by 6 points against the increase by 5 points in December. Besides the forecast for June turned out to be at the level of -2 points after the earthquake and tsunami. Before the acts of God the forecast was at +3 points.

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.

According to observers, monetary policy tightening should not be expected until mid-2012, and stimulus programs will not be cut down for the nearest 6 months at least.

 

[LF.Anastasia]

Euro/USD: news from Portugal put pressure on Euro

The pair EUR/USD is traded slightly downward on Thursday morning being pressured by the news from Portugal after a surge the day before.
By 8.50 Moscow time the Euro is at 1.4303 against Wednesday closing session level of 1.4331.

The main reason for today’s selloff is that Portugal seeks bailout from EU. This didn’t cause a sensation as markets had a notion about the situation in country’s national economy.

According to European Commission President Jose Barroso, Portugal’s application will be considered undertime in compliance with current rules and procedures.

The ECB meeting will take place today, during which the regulator will decide on the key interest rate – as markets anticipate it may be raised to 1.25% per annum from the current level of 1%.

In whole the pair may move sideways today.
Most likely the pair EUR/USD will not go beyond the range of 1.4220-1.4360 at the trading session on Thursday.