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[LF.Anastasia]

GBP: British Pound started the week slightly downward

At the Forex currency market the British Pound Sterling rate trades lower amid absence of new drivers on Monday.

Forex forecast: MACD indicator is rising in the positive area for the pair GBP/USD, volumes are also rising maintaining a buy signal. Stochastic Oscillator remains in the overbought zone today, giving a similar signal.

Forex recommendations: after a technical rollback it is not ruled out go that buyers will turn to the pair at the levels of 1.6380 and 1.6430.

2010-year high for GBP/USD is at the level of 1.6459, but strong stops are at 1.6445/50.
Last week’s British currency strength called forth USD’s weakness that was pressured by absence of decisions on budget. This factor partly remains intact today.

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.

Important British statistics will be released April, 27 – 1q GDP that monetary officials hope to have grown by 0.7%. In case the economic growth is confirmed, interest rate in mid-term may be raised to 0.75% per annum.

BOE meeting the day before didn’t bring any surprises: the benchmark interest rate was left unchanged at the level of 0.50% per annum, volume of debt securities was also left unchanged – 200 billion pound sterling.

According to the Minutes of the latest 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.

 

[LF.Anastasia]

CHF: Swiss Franc pauses after last week's growth

At the Forex currency market Swiss Franc rate experiences a slight correction on Monday after a sharp strengthening last week amid USD’s weakness.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is rising, giving a pair buy signal. Stochastic Oscillator has entered the oversold zone today, giving a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakup at the level of 0.9090 the pair will go to 0.9110 and 0.9130. If the level of 0.9070 is broken down, sellers’ targets will be 0.9060 and 0.9045.

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. A couple of weeks ago 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.

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.
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%.

 

[LF.Anastasia]

JPY: Japanese Yen continues making attempts of correction

The Japanese Yen rate continues making attempts of correction from local lows in pairing with USD at the Forex currency market on Monday amid Dollar’s weakness on the back of 2H budget decision difficulties in USA.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakup at the level of 85.00 the pair will go to 85.10 and 85.30. If the level of 84.60 is broken down, sellers’ targets will become the level of 84.30.

Current situation in Japan remains fuzzy: after a new series of earthquaking and another atomic power station under the threat of destruction, sentiment in the country is far from stable. According to the police data, the most injured are Miyagi (8017 people dead), Iwate (3811 people), and Fukushima (1226 people) prefectures.

According to the statistics released on Monday, Machinery orders in Japan decreased by 2.3% m/m in February against an increase by 4.2% m/m before. The indicator gives an idea of volumes of 3-6 months’ investments in industry. Thereby expenditures’ cut threatens Japanese economy to say nothing of the difficult situation in business after earthquakes and tsunami.

Statistics released earlier turned out to be positive (unemployment rate totaled to 4.6% in February, not reviewed; current account balance increased by 3.0% y/y in February against the decrease by 47.6% in January; import levels increased 3.3% y/y, export grew 4.1% y/y).

Last week according to BOJ decision 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. 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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar continues going higher

At the Forex currency market the Australian Dollar surges for new 28-years’ highs.

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

Forex recommendations: in case of breakup at the level of 1.0585 the pair will go to 1.0600.

Note that the pair is seriously overbought.

Macroeconomic background in Australia remains mixed: on the one hand, Unemployment rate decreased to 4.9% in March against the preliminary level of 5%, Employment increased by 37.8k in March against the forecast of growth by 24k. Thereby strong labour market data supported aussie, having convinced investors of monetary policy tightening to resume earlier.

On the other hand, 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.

Besides, as became known the day before, Housing finance in Australia fell by 5.6% m/m in February against the decrease by 4.5% in January. According to observers, the main reason for weak housing statistics were floods seen in Australia at the beginning of the year.

As a result of RBA meeting last week 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 stands still at the beginning of the week

At the Forex currency market the New Zealand Dollar rate stands still on Monday evaluating the external background.

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

Forex recommendations: after a possible technical correction buyers’ targets will be 0.7840 and 0.7880.

Risk appetite that verges on recklessness remains the main driver for NZD; besides, pressured USD allows such currencies grow.

Thereby the first 1q data published last week is 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.

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.

According to NZ monetary officials, there is no need in reducing the key interest rate again as the situation in the national economy looks rather stable. This fact also gives support to kiwi.

Data released on trade balance earlier 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. 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.

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

 

[LF.Anastasia]

Euro/USD: Euro is sold due to the Japanese news

The pair EUR/USD is traded downward at the Forex currency market on Tuesday amid investors’ risk aversion after a new series of tremors in Japan.
By 9.20 Moscow time the Euro is at 1.4398 against closing session level of 1.4435 yesterday.

In addition on Tuesday morning Japan reported an increased level of risk up to 7 at the nuclear power plant “Fukusima-1”, “Chernubul” which is the maximum against the previous level 5, which has also intensified investors’ risk aversion.

Today in the afternoon investors expect the U.S. data on import prices and foreign trade balance.

Most likely the pair EUR/USD will not go beyond the range of 1.4300-1.4420 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: Sales continue for the British Pound

At the Forex currency market the British Pound Sterling rate continues to fall – the sales today were caused by the risk aversion due to the increasing radioactivity threat in Japan.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is going up, maintaining a pair buy signal, however indicator’s volumes has slowed down the growth. Stochastic Oscillator has come out of the overbought zone today and is going down in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.6290 the pair will go to 1.6270 and 1.6250.

Today in the afternoon investors will await statistics on the consumer prices level in Great Britain in March. If we will witness the rise in the rate once again, the Pound will receive support. At 12.30 Moscow time trade balance will be also made public.

Thus, the USD is gaining strength again against the Pound, therefore fears of the last week regarding the U.S. budget are pushed to the sidelines. It became known yesterday that index of retail sales BRC in Great Britain increased by 2.4% y/y in March against the growth by 2.7% y/y in February.

Sales in the service sector are expected to be at the level of +6 points in QI against +5 in the last quarter; orders can increase to +5 against -7 earlier.

The UK important data will be published on 27 April – it will be GDP in QI and monetary authorities hope to see the growth by 0.7%. If economic growth will be affirmed the rate can be increased to 0.75% per annum in the medium term. The meeting of the Bank of England did not give any surprises: interest rate was left at the level of 0.50% per annum, assets redemption program was also maintained in the previous volume.

According to the minutes of the last meeting of the Bank of England, 6 members of MPC voted for keeping interest rate at the previous level. In addition 8 people voted for the maintenance of the current assets redemption program unchanged. Posen voted for the rise in the QE to 50 billion pounds.
The GBP/USD maximum in 2010 is at 1.6459, however strong stop is located at around 1.6445/50.

 

[LF.Anastasia]

CHF: Swiss Franc acts as safe currency again and is growing

At the Forex currency market Swiss Franc rate continues to grow on Tuesday; after the new information about high level of radiation in Japan investors begun to buy safe currencies and Franc is among of them.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to rise, however volumes in the indicator are declining. Stochastic Oscillator dropped in the oversold zone today maintaining a pair sell signal.

Forex recommendations: in case of breakdown at the level of 0.9030 the pair will go to 0.9000 and 0.8980.

The situation in Swiss economy has not changed fundamentally this morning. It became known earlier that actual level of retail sales in Switzerland increased by 1.5% m/m in February against the fall by 2.4% m/m in January. However index of SVME-PMI fell to 59.3 points in March against the previous value of 63.5. According to the data released yesterday level of CPI in Switzerland rose by 0.6% m/m (+1,0% y/y) in March against the forecast of growth by 0.2% m/m. It is a ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

Three- month Libor rate remains unchanged, at the level of 0.25%.

Swiss National Bank has been actively taking measures of verbal intervention against the Franc: following the last meeting representatives of the SNB said that strong currency is a burden for the economy and its overprice will trigger slowdown of the economy – largely due to the deceleration in exports volumes. A couple of weeks ago the Swiss national Bank began to give indications of the possible intervention: the representative of the regulator Mr. Dantin stressed that the Bank is capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention in the currency market will be determined by the informational pressure.

The data on producer price index in Switzerland in March will be made public on Wednesday (previous value is +0.2% m/m); on Thursday the index of investors’ economic expectations ZEW in April will be released.

 

[LF.Anastasia]

JPY: Japanese Yen is growing amid general risk aversion

The rate of the Japanese Yen continues to grow at the Forex currency on Tuesday- however the JPY is pushed upward only due to the investors’ risk aversion amid the information about radioactivity threat at Japanese nuclear power stations which has been spread in the markets. In this regard the Yen is gaining popularity again –but only as a safe currency.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is going up maintaining a pair buy signal. Stochastic Oscillator goes down in the neutral zone today, giving a pair sell signal.

Forex recommendations: for those who wish to take risk – in case of breakdown at the level of 83.80 the pair will go to 83.50 and 83.40. For the others: off the market.

As noted in the minutes of the meeting of the Bank of Japan of 14 March released today, the earthquake of 11 March and subsequent devastating tsunami had a significant impact on the Japanese economy. Members of the Monetary Committee have agreed to continue soft policy and mitigate it further as soon as possible. The Bank of Japan expects deterioration in sentiments both within large companies, production and households.
In addition the head of the regulator Mr. Shirakawa noted today that Japanese economy had declined in exactly the same way after the collapse of Lehman Brothers.

Statistics released on Monday showed that volume of orders for the basic production equipment in Japan reduced by 2.3% m/m in February for the first time over the last three months while a month earlier the index had increased by 4.2%. The indicator gives an idea about the amount of capital investments in production sector for the next 3-6 months. Thus, continuation of companies’ cost reduction threatens to the Japanese economy in addition to the fact that the situation in the business sector has already been too hard after the series of earthquakes and tsunamis.

Statistics released earlier was positive (unemployment rate amounted to 4.6% in February, not revised; balance of current account increased by 3.0% y/y in February against the fall by 47.6% in January; level of import increased by 3.3% y/y, export rose by 4.1% y/y).

Last week the Bank of Japan decided to keep interest rate unchanged at the previous level of 0-0.1% which is the absolute minimum. According to the statement of the regulator, national economy remains under severe downward pressure which will be preserved. Later it is expected to revert to moderate recovery later. Growth of interest rate is not expected until mid 2012 according to observers and economic stimulus program will run for at least the next 6 months.

The situation in Japan remains tense: after the next series of tremors when one more nuclear power station is under threat of devastation, the situation in the country is far from being stable. According to police departments, three prefectures are being affected by the disaster the most severely: Miyagi (8017 thousand people killed) Iwate (3811 people); Fukusima (1226 people). News about tremors of various magnitudes is still received today.

 

[LF.Anastasia]

AUD: Australian Dollar is being corrected from the highs

The Australian dollar rate is being corrected from the highs of 28 years at the Forex currency market on Tuesday. Significant overbought of the pair AUD/USD is a good precondition for the technical pullback.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and goes upward; volumes remain high for the indicator which maintains a buy signal for the pair. Stochastic Oscillator goes down in the neutral zone today, giving a pair sell signal.

Forex recommendations: if sales intensify the target will become the levels of 1.0420 and 1.0390.

This morning Finance Minister of Australia Mr Swan said that Australian economy is positive and will only benefit from economic growth of the developing countries. According to him, although IMF has revised GDP forecast downward for Australia, country’s economy continues to recover.
Note that IMF research showed that GDP forecast for Australia had been reduced to 3% in 2011 against the previous level of 3.5%. Floods in January partly impacted the revision of the forecast.

Following the meeting of the Reserve Bank of Australia last week it was decided to keep current level of the interest rate unchanged at the level of 4.75% per annum – thus, it is the fourth time already when the RBA does not dare to continue monetary policy tightening. The decision had been anticipated and did not provoke any reaction in the market.

The meetings of the RBA will be held on 2 May, 6 June, 4 July, 1 August, 5 September, 31 October, 5 December.
Macro-economic environment remains mixed in Australia. On the one hand unemployment rate reduced to 4.9% in March versus the prior level of 5.0% and employment rate rose by 37.8 thousand last month against the forecast of increase by 24 thousand. Therefore, strong performance in the employment sector pushed the AUD to go upward, instilling investors with the idea that the RBA can resume monetary tightening policy earlier.

On the other hand deficit of trade balance was recorded in the country for the first time since spring 2010 (February -А$205 billion against +A$1.4 billion in January). In addition activity index in the service sector reduced to 46.5 points in March against the value of 48.7 points in February.

As it became known earlier lending in the housing sector fell by 5.6% m/m in February against the decline by 4.5% in January; according to the observers’ estimates the index collapsed due to the floods in the beginning of the year in Australia.