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[LF.Anastasia]

CAD: Canadian Dollar has reached three -year highs once again

The Canadian Dollar rate is growing steadily at the Forex currency market amid positive dynamics of the capital markets and also due to the resumed consolidation of raw materials.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and goes down due to high volume of transactions, giving a pair sell signal. Stochastic Oscillator is approaching oversold zone today, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9520 the targets will be the lows of Wednesday at 0.9495, and then 0.9470.

It became known yesterday that the index of leading indicators in Canada increased by 0.8% in March against 0.8% m/m earlier, wholesales sale fell by 0.6% in February against 1.5% m/m in January.

In regards to the Canadian Dollar rate, IMF believes that if average oil price will remain at about $90 barrels (in October- $79 barrels) CAD will increase, with the help of support from the commodity sector of the country’s economy.

Earlier, Imperial Bank of Commerce reported on the revision of its GDP forecast for QIV 2010 to 2.6% versus the previous level of 2.3% and the Bank expects that this year economic growth will be by 2.6% (2.4 % earlier).

The Bank of Canada stated earlier that CPI in the country will begin to rise, going above expected level. At the same time value of key index of net CPI is also growing, remaining close to the target level of 2% so far.

Regulator assumes that annual GDP growth in Canada will be at the level of 2.9% this year.

According to the experts from International Monetary Fund, Canadian economy will grow by 2.3% y/y this year, which is less than the forecast of +2.7% y/y in October.

At the same time, IMF expects economic growth by 2.7% in Canada in 2012.

 

[LF.Anastasia]

AUD: Australian Dollar does not get tired of reaching highs

At the Forex currency market the Australian Dollar rate has reached highs once again on Wednesday, exceeding the level of 1.0704. It is a good result for the commodity currency

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is going up, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0700 the pair can go to 1.0730. It is worth noting that probability of technical pullback is high at the moment.

Unemployment rate reduced to 4.9% in March versus the preliminary 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.

It became known in the middle of the week that index of prices for import increased by 0.9% on quarterly basis in QI. Leading indicators index rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia keeps interest rate unchanged for a long time. Leading indicators index demonstrates good growth in the Australian economy: figures show that growth is unlikely to be too high next year; however there will be some growth.

As noted in the minutes of the meeting of 5 April, released by the Reserve Bank of Australia, current monetary politics is quite acceptable, however, at the same time the regulator expects growth of inflation rate. GDP is expected to be strong in QI. The document clarifies that “main index of CPI can demonstrate growth in March, while GDP will decline more significantly in QI than previously expected. The Committee will carefully consider all these factors”.

Following the meeting of the Reserve Bank of Australia in April the decision was made to keep current level of the interest rate unchanged at the level of 4.75% per annum – it has been for the fourth time already that the RBA does not dare to continue monetary policy tightening. Judging by recent comments, we should not expect the rise in the interest rate at the next meeting either.

 

[LF.Anastasia]

Euro/USD: Maximum over the last 15 months

The pair EUR/USD has reached new highs at the Forex currency market on Thursday morning amid expectations of the data on the dynamics of prices for houses in the U.S. and general recovery of the commodity and stock markets after the local sales.

By 10.00 Moscow time the Euro is at the level of 1.4640 against closing level of 1.4550 yesterday. Therefore, the pair has reached 15 month highs

Experts predict that considering the fall in house prices (forecast: -0.3% in February) and other signals, indicating slowdown of the economic recovery, Federal reserve is not going to raise base interest rate until at least QI 2012.

In addition, the Dollar will fall in price from 13 to 16 in pairing with the most actively traded currencies of the world amid expectations of the data on the U.S. houses prices. Therefore, the market is still in power of external background which is negative for the USD.

Most likely the pair EUR/USD will be above the range of 1.4310-1.448 at the trading session on Thursday.

 

[LF.Anastasia]

Euro/USD: Trading activity will be low for the Euro on Friday

The pair EUR/USD almost stands still at the Forex currency market on Friday due to the lack of external news.
By 8.00 Moscow time the Euro is at 1.4557 against closing level yesterday which was close to the current one.

The Euro had approached the 15-month highs yesterday in pairing with the USD amid risk aversion of the investors. News was not favourable to the USD either: number claims for unemployment benefit in the USA was above forecast; while FRB index of manufacturing activity in Philadelphia amounted to 18.5 points against 43.4 points in March.

In addition, negotiations between Republicans and Democrats in the U.S. government about the limit of size of the national debt do not support the Dollar either.

Trading activity will be low at the trading floors today – most of the markets will be closed due to the Easter celebrations.

Most likely the pair EUR/USD will not go beyond the range of 1.4500-1.4590 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound Sterling is being slightly corrected

At the Forex currency market the British Pound Sterling rate goes down slightly on Friday after yesterday’s highs.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and goes up, giving a pair buy signal. Stochastic Oscillator is growing in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.6520 the pair will go to 1.6540. if upward breakdown does not take place, the pair will consolidate close to the current levels.

As the data released yesterday showed net volume of UK public sector borrowing in March reduced (to 18.632 billion pounds) due to the reduction in emissions of the government bonds by the end of the fiscal year. Net demand of the British government in cash amounted to 139.6 billion pounds for 2010/2011 against expected OBR of 141.1 billion pounds.

Current budget of the UK without intervention in the financial sector showed deficit in the amount of 10.442 billion pounds in March against 11.468 billion pounds a year earlier.

The data released earlier showed that consumer confidence in Great Britain increased to 44 points in March, as per Nationwide study, against the level of 39 points in February. At the same time index of expenditure rose to 66 points versus the previous level of 53; expectation index went up to 66 points against the 51 previously. Therefore, confidence index in the UK has moved away from the lows, which is a positive factor for the British economy. The data released today showed that CPI in Great Britain grew by 0.3% m/m (+4.0% y/y) in March. Sterling sluggishly responded to this statistics – for over a year inflation in the UK has been considerably higher than the significant level of 2% to which the Bank of England adheres.
According to the representative of the Bank of England Mr. Sentence, inflation in Great Britain can exceed the level of 5% soon. He believes that inflation will go up during the summer. “If we wait until all signals of inflation will turn from flashing yellow to red, it will be too late to raise interest rates from the accommodative level” he stressed in his interview to the foreign news agency.

Minutes of the last meeting of the Bank of England were released yesterday – balance of power in the Monetary Committee remained unchanged: 6:3 and the regulator still has no intention to start monetary tightening policy. It is unlikely that the rate will be raised before July-August this year.

 

[LF.Anastasia]

CHF: Swiss Franc maintains positions close to new historic highs

At the Forex currency market Swiss Franc remains close to the high levels on Friday due to investors’ withdrawal from the dollar positions.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, giving a pair sell signal. Stochastic oscillator stopped to rise in the neutral zone, not giving a clear signal.

It is expected that activity in the currency market will be low today because most of the countries will have Easter holidays.

It became known last week that index of investors’ economic expectations ZEW increased to 8.8 points in April against the fall by 13.5 points in February. It was a positive sign for Switzerland which confirmed the continuation of the national economy recovery even despite strong Franc. The data of this week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agreed with the forecasts.

Real level of retail sales in Switzerland increased by 1.5% m/m in February against the decline by 2.4% m/m in January; 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 an ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

Representative of Swiss national Bank Mr. Dantin stressed earlier 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.

SNB has already highlighted the problems more than once: following the last meeting, the regulator said that strong currency is a burden for the economy and overprice will trigger slowdown in economic growth – largely due to the deceleration in export volumes.

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

 

[LF.Anastasia]

JPY: Japanese Yen continues to rise in price

Japanese Yen rate continues to grow at the Forex currency market on Friday supported by the massive withdrawal of investors from the USD positions.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and goes down, maintaining a pair sell signal. Stochastic Oscillator has come back to the oversold zone today and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 81.70 the pair will go to 81.50 and 81.35.

It became known this morning that Japanese government decided not to issue new government bonds aimed at financing supplementary budget which is designated for recovery process after the earthquake and tsunami in March.

In addition, on Friday morning government of the Country of the Rising Sun approved budget in the amount of 4.015 trillion yen designated for the North-East regions of the country which suffered the most losses during the earthquake.

It is also worth noting that Japan considers the possibility to raise taxes to 15% of the sales tax from the current 10%. It became known yesterday that surplus of trade balance amounted to Y196.5 billion in March against the level of Y931.94 billion a year earlier and tertiary index rose by 0.8% m/m in February against the fall by 0.1% in January - Japanese economy had really expanded but it was before the earthquake in March.
At the same time level of export decreased by 2.2% y/y in March, while level of import increased by 11.9% y/y which is logical.

Earlier statistics showed that the revised volume of industrial output in Japan rose by 1.8% m/m in February against the preliminary level of +0.9%. This is a mediate indicator for the Yen because it shows the situation prior to the earthquake in March. Statistics released this week showed that volume of orders for the basic production equipment in Japan reduced by 2.3% m/m in February for the first time in 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 very hard after the series of earthquakes and tsunamis.

The situation in Japanese economy remains almost unchanged. On 18 April the Bank of Japan started to repurchase government bonds from the market for the amount of Y160 billion which should support national economy.

 

[LF.Anastasia]

AUD: Australian Dollar is being corrected after new highs

At the Forex currency market the Australian Dollar rate goes down after reaching a new peak yesterday.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it rises, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone, giving a similar signal.

Forex recommendations: considering external background- off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0700 the pair will go to 1.0650. If a breakdown does not take place the pair will consolidate close to the current levels.

The data released earlier showed that producer prices increased above the forecast in QI (+1.2% on quarterly basis against the growth by 1.0% in QIV, 2010), indicating accelerated recovery of the local economy.
With the help of support from stable national economic situation, the Australian Dollar continues to be an interesting tool for investors; on Thursday it has reached the highest level since 1983, at 1.0776.

Kevin Rood, Minister of Foreign Affairs of Australia said yesterday that RBA has no plans to carry out currency intervention, although national currency is significantly overvalued.

Unemployment rate reduced to 4.9% in March versus the preliminary 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.

It became known in the middle of the week that index of prices for import increased by 0.9% on quarterly basis in QI. Leading indicators index rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia keeps interest rate unchanged for a long time. Leading indicators index demonstrates good growth in the Australian economy: figures show that growth is unlikely to be too high next year; however there will be some growth.

 

[LF.Anastasia]

CAD: Canadian Dollar remains strong

At the Forex currency market the Canadian Dollar rate remains close to the high levels on Friday amid the rise in the oil prices and general positive situation at the global capital markets, which was observed yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and goes down although volumes of sales are high, and gives a pair sell signal. Stochastic Oscillator has come into oversold zone today, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9510 the pair will go to 0.9490 and 0.9475. If downward breakdown does not take place for the pair, considering low activity in the market today, the USD/CAD will consolidate close to the current levels.

It became known yesterday that retail sales in Canada increased by 0.4% in February against the fall by 0.4% in January. In addition, index of leading indicators in Canada increased by 0.8% in March against 0.8% m/m earlier and wholesales sale fell by 0.6% in February against 1.5% m/m in January.

In regards to the Canadian Dollar rate, IMF believes that if average oil price will remain at about $90 barrels (in October- $79 barrels) CAD will increase, with the help of support from the commodity sector of the country’s economy.

Earlier, Imperial Bank of Commerce reported on the revision of its GDP forecast for QIV 2010 to 2.6% versus the previous level of 2.3% and the Bank expects that this year economic growth will be by 2.6% (2.4 % earlier).

The Bank of Canada stated earlier that CPI in the country will begin to rise, going above expected level. At the same time value of key index of net CPI is also growing, remaining close to the target level of 2% so far. Regulator assumes that annual GDP growth in Canada will be at the level of 2.9% this year.

According to the experts from International Monetary Fund, Canadian economy will grow by 2.3% y/y this year, which is less than the forecast of +2.7% y/y in October.

 

[LF.Anastasia]

Euro/USD: Euro maintains stability at the beginning of the week

The pair EUR/USD is traded slightly upward at the Forex currency market on Monday morning, awaiting when investors will be back after Easter holidays.

By 9.15 Moscow time the Euro is at 1.4571 against closing level of 1.4561 on Friday.

The day is going to be quiet today – main trading floors will start trading at full capacity only tomorrow; and today we can only expect data on the U.S. new houses sales in March at 18.00.

In general investors’ sentiment is still elevated in the market although volatility remains high.

Most likely the pair EUR/USD will not go beyond the range of 1.4500-1.4595 at the trading session on Monday.