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AUD: Australian Dollar is being corrected after rapid growth

The Australian Dollar rate goes down at the Forex currency market on Monday which looks logical after rapid growth by three figures last week.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, however it has reversed earlier and continues to give a buy signal. Stochastic Oscillator is reversing in the oversold zone and gives ground for shaping a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0710, the pair will go to 1.0700 and 1.7680.

As it became known today, level of retail sales in Australia fell by 0.6% m/m in May against the growth by 1.2% in April. The data is negative: reduction in the buyers’ interest indicates cautious attitude to economic outlook.According to the data released earlier, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points.

In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%. It became known yesterday, that inflation expectations have remained at the level of May at 3.3% q/q in June. At the same time activity index in the manufacturing sector of Australia increased by 5.2 points in June, to the level of 52.9 points.

Thus, the index has exceeded the meaningful standard of 50 points and is now giving a positive indication.Vice president of the Reserve Bank of Australia Mr. Low, stressed earlier that special efforts are required to maintain low and stable level of inflation. According to him previous growth of CPI was attributed mostly to the external factors and influence of the currencies’ exchange rates was insignificant.He also noted that very little unused spare capacity is left in the economy, and the upward pressure on inflation was caused by such facts as labour costs and growing prices for utilities.

Minutes of the last meeting of the Reserve Bank of Australia was released earlier; the document stressed that inflationary prospect in the country suggests further tightening; however recent macro-data does not encourage the rise in the rates. “Current inflation rate is partly due to the deflationary effects of the rise in interest rate and slowdown in the increase of expenditure for labour force,” stressed the document. The AUD fell amid such background, since investors did not like uncertainty in the views of the RBA.A meeting of the Reserve Bank of Australia will be held tomorrow, on Tuesday.

 

[LF.Anastasia]

CAD: Canadian Dollar has reached the highs of May again

At the Forex currency market the Canadian Dollar rate has reached highs of May this year on Monday morning, supported by stable external background and oil prices which continue tom grow.

Forex forecast: MACD indicator is moving in the positive area for the pair USD/CAD; however it goes down, giving a pair sell signal. Stochastic Oscillator tends to reverse in the oversold zone, still staying there, although it has started to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9790, the pair will go to 0.9570 and 0.9550.

If downward breakdown does not take place, the pair will consolidate close to the current levels.Real GDP in Canada remained unchanged on monthly basis in April, showing growth by 2.8% y/y against the forecast of -0.1% m/m (+2.7% y/y).

Decline has been recorded in the manufacturing sector (-0.7% m/m) which is the consequence of reduction in the level of production in the car sector. GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.Employment sector in Canada is still strong: according to the data released earlier, weekly wages rose by 0.7% in April, to the level of C$876.44 (+3.5% y/y).

Balance of current account in Canada was at the level of –CAD $8.92 billion in QI against the level of CAD$10.28 billion in QIV last year. In addition, real GDP of basic prices increased by 0.3% (+2.8% y/y) in QI against revised level of -0.1 % m/m in February.At the beginning of June the Bank of Canada left the interest rate unchanged at the level of 1.00% per annum which agreed with market expectations.

The regulator said in the follow-up comments that minimization in incentives shall be thoroughly considered, although eventually all the incentives will be phased out. According to the Bank of Canada, core inflation remains relatively low and economy is active, as expected. At the same time expensive Canadian Dollar may well become a break on national economic growth and provide a restraining influence on inflation.According to the plan of the Finance Ministry of Canada, the country shall revert to the budget surplus by 1014.

 

[LF.Anastasia]

EURO/USD: EURO is being corrected under pressure from Chinese news

The pair EUR/USD is being corrected at the Forex currency market on Tuesday amid investors’ risk aversion caused by expectations of new measures from Chinese authorities.

By 9.25 Moscow time the Euro is at 1.4480 against yesterday’s closing level of 1.4539.

China declared at the beginning of the week that inflationary pressure remains high and Central bank intends to adhere to the current monetary policy. Observers believe it is possible that China will increase interest rate in the coming days.

Inflation in China amounted to 5.5% in May; preliminary estimate had been-6.2%.

American investors are coming back to the market today after the day off yesterday.

Most likely the pair EUR/USD will not go beyond the range of 1.4420-1.4510 at the trading session in the middle on Tuesday.

 

[LF.Anastasia]

GBP: British Pound declines due to deterioration of external background slowly

At the Forex currency market the British Pound Sterling rate declines on Tuesday morning as investors do not want to risk because of Chinese news and are shifting to safe currencies.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and goes down, giving a sell signal. Stochastic Oscillator has reversed in the neutral zone, pushing away from oversold zone and started to slide down, at a steady gait.

Forex recommendations: in case of breakdown at the level of 1.6020, the target for the purchase will be the levels of 1.6000 and 1.5980. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Economic situation remains unchanged in the UK this morning.

Meeting of the Bank of England will be held on Thursday and decision on the interest rate will be made there. Surprises are not expected. Most likely the rate will be left at the level of 0.5% per annum.

Final GDP in the UK (third reading) increased by 0.5% on quarterly basis (+1.6% y/y) which agreed with the forecast. At the same time level of consumer spending fell by 0.6% on quarterly basis (-0.5% y/y) in Q1.

The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who substituted a “hawk” Sentence, joined conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.

Representative of the Bank of England Mr. Fisher said yesterday that British Financial markets are under threat of significant risks and one of the risk factor at the moment could be stress tests in the event if their results will become a surprise for the markets. Eurozone continues to hamper the UK: Fisher stressed that the sovereign debt crisis in Eurozone and general uncertainty of the macro-economic outlook threaten recovery of the financial market.

It became known last Friday that British manufacturing industry has slowed down its growth; as per CIPS/Markit estimates PMI index amounted to 51.3 points in June against the revised level of 52.0 points in May. The data released earlier showed that volume of production in the service sector of Great Britain declined by 1.2% m/m (+0.8% y/y) in April. Net mortgage lending totaled to Stg1.098 billion in May versus stg1.047 billion in April.

 

[LF.Anastasia]

CHF: Swiss Franc determines movement direction

At the Forex currency market on Friday Swiss Franc rate did not show intention to move to either sides, while external background is ambiguous.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however is going upward and is giving a weak buy signal. Stochastic Oscillator has reached oversold zone and is maintaining a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8490, the pair USD/CHF will go to 0.8510 and 0.8530. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known yesterday that retail sales in Switzerland fell by 4.1% in May against the growth of 7.8% in April.

Statistics released earlier showed that producer prices and prices for imports decreased by 0.2% (-0.4% y/y) in May against the forecast of growth by 0.1% m/m. It became known earlier that unemployment rate in Switzerland fell to 2.9% in May against the level of 3.1% in April and the forecast of 3.0%. At the meeting last week Swiss National Bank left three- month Libor rate in the previous range of 0-0,75% with a tendency to 0.25%. At the same time, the SNB said that GDP growth would amount to 2% this year. Inflation in 2011 is predicted at around +0.9% (previously +0.8%), in 2012: +1.0% (previously 1.15), in 1013: +1.7% (previously +2.0%).

As the data released this week showed consumption indicator UBS in Switzerland rose by 1.91 points in May against the growth of 1.57 points in April.

GDP in Switzerland has slowed down growth rate in QI this year, increasing by 0.3% on quarterly basis (+2.4% y/y) against the rise of 0.8% last quarter and the forecast of growth of 0.6 %. The data released earlier showed that CPI in Switzerland remained unchanged on monthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m (+0.3% y/y).

In became known last Friday that index of business activity PMI SVME in Switzerland decreased to 53.4 points in June against the forecast of 57.8 points and the previous level of 59.2 points.

The data on inflation in Switzerland in June will become known this Thursday. Unemployment rate in June will be made public on Friday.

 

[LF.Anastasia]

JPY: Japanese Yen is getting weaker on Tuesday

The Japanese Yen rate is traded downward at the Forex currency market on Tuesday, since Japanese Yen is losing its status of a protective currency, reacting to the changes in the external background.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, slightly goes up, shaping a buy signal. Stochastic Oscillator is going up in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 81.15, the pair will go to 81.30 and 81.45.

The data released today showed that the impact of the March earthquake on the wages rate of Japan is getting weaker: average wages rose by 1.1% y/y in May against the decline of 1.4% in April.

It is worth noting that trade balance deficit amounted to Y853.7 billion (forecast –Y710.1 billion) against the surplus a year earlier. It became known earlier that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%. This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic. According to the data released earlier trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.

It became known in the middle of the week that preliminary volume of industrial output in Japan rose by 5.7% m/m (-5.9% y/y) in May. The data is above the forecast (5.5%). Recall, that in March when severe earthquake and tsunami hit the country industrial output had collapsed to 15%.

The data released last week showed that real expenditures of the households amounted to -1.9% y/y in May against the level of -3.0% in April. Net CPI level increased to +0.65% y/y in May against the level of +0.6% in April. Index Tankan was also presented towards the end; it showed that both, Japanese large and small companies have equally pessimistic view on the current situation however they believe in prospects and intend to work hard.

The head of the Bank of Japan Mr. Shirakawa said at the beginning of the week that economic growth of the Country of the Rising Sun has faced powerful downward pressure. Nevertheless 7 out of 9 regions of the country have revised their economic forecast upward.

 

[LF.Anastasia]

AUD: Correction for Australian Dollar is still being continued

At the Forex currency market the Australian Dollar rate continues to be under pressure from sellers.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, however is increasing, giving a pair buy signal. Stochastic Oscillator has reversed in the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0675, the pair will go to 1.0650 and 1.0630.

At the meeting of the Reserve Bank of Australia today the decision was made to leave interest rate at the previous level of 4.75% per annum and according to the comments of the regulator, moderately restrictive monetary policy is consistent with the actual situation.

According to the RBA, the base rate will rise very gradually and economic growth in 2011 will be slower than expected. Stevens, the head of the RBA has said in the accompanying statement that Australian economy is gradually recovering after natural disasters, while European debt problems have a negative impact on the process.

Market expected that Stevens would give drop a hint at the time when the rate would be raised, however it did not happen.

As per the RBA estimates, employment sector of Australia is in the stable state, unemployment rate is described as moderate lately, although it has not affected unemployment rate, which remains at the level of 5%.

According to the data released earlier, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points. In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%. It became known yesterday, that inflation expectations have remained at the level of May at 3.3% q/q in June. At the same time activity index in the manufacturing sector of Australia increased by 5.2 points in June, to the level of 52.9 points. Thus, the index has exceeded the meaningful standard of 50 points and is now giving a positive indication.

As it became known today, level of retail sales in Australia fell by 0.6% m/m in May against the growth by 1.2% in April. The data is negative: reduction in the buyers’ interest indicates cautious attitude to economic outlook.

Vice president of the Reserve Bank of Australia Mr. Low, stressed earlier that special efforts are required to maintain low and stable level of inflation. According to him previous growth of CPI was attributed mostly to the external factors and influence of the currencies’ exchange rates was insignificant.

He also noted that very little unused spare capacity is left in the economy, and the upward pressure on inflation was caused by such facts as labour costs and growing prices for utilities.

 

[LF.Anastasia]

NZD: New Zealand Dollar has reached new highs

At the Forex currency market the New Zealand Dollar rate has tested new highs on Tuesday, moving the upper border of the channel to the level of 0.8331. However after the release of the Chinese news and aggressive comments of the bank of China the AUD is profit taking.

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

Forex recommendations: in case of breakdown at the level of 0.8290, the pair will retest the level of 0.8331 and will go to 0.8340. As part of profit taking the AUD could sag to 0.8250/ 30.

It became known today that business sentiment NZIER in New Zealand rose to 27 points in Q2 against -27 points earlier. It is a positive factor.

Earlier, the Reserve Bank of New Zealand decided to keep interest rate unchanged at the minimum of 2.50% per annum, since it is going to continue its work on improvement in economic system. According to the head of the RBNZ, NZD has been overvalued because of high export prices for raw materials, therefore, national currency rate, which has increased over the last two months, has adverse impact on the rebalancing of the economy in New Zealand. Bollard expressed confidence that decline of the NZD will be gradual because currency intervention will not be able to change the trend.

Consumer confidence index Westpac in New Zealand increased to 112.0 points in Q2 against the level of 97.7 points in Q1. Consumer confidence ANZ increased to 112.5 points in June against the preliminary level of 103.3 points. In addition, volume of retail sales in New Zealand rose for the first time in the last three quarters in Q1, which is a good sign of the economic recovery. Thus, indicator increased by 0.9% q/q which agreed with the forecast, excluding inflation.

At the same time, trade balance in New Zealand was at the level of NZD$605 billion in May against the forecast of NZD$1000 billion. This is a negative data, because decline in the trade balance will indicate decline in the level of exports later, which will be the impact of cooling in Chinese economy.

 

[LF.Anastasia]

EURO/USD: EURO tends to recover

At the Forex currency market the pair EUR/USD begun to recover from yesterday’s correction on Wednesday morning.By 9.40 Moscow time the Euro is at 1.4446 against yesterday’s closing level of 1.4428.

The USD is under pressure today in advance of the publication of the U.S. statistics: the data on the labour market is scheduled for the release at the end of the week, where the situation is predicted to remain unchanged.

At the same time the Euro successfully resists external negative factors, given that Moody’s has downgraded the rating of Portugal to Ba1, several steps downward at a time, which is now below investment grade. Forecast is “negative”. The EUR continues to receive support from tomorrow’s meeting of the ECB. Most likely the pair EUR/USD will not go beyond the range of 1.4400-1.4520 at the trading session in the middle on Wednesday.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to decline slowly

At the Forex currency market the British Pound Sterling rate continues to slide down gradually on Wednesday because local economy does not give rise for optimism.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and goes down, giving a sell signal. Stochastic Oscillator has reversed in the neutral zone, pushing away from oversold zone and started to slide down, gathering pace.

Forex recommendations: in case of breakdown at the level of 1.6020, the target for the purchase will be the levels of 1.6000 and 1.5980.

If downward breakdown does not take place, the pair will consolidate close to the current levels.As it became known today, retail price index BRC in Great Britain rose by 0.5% m/m (+2.9% y/y) in June against the level of +2.3% y/y in May. Price index for food rose by 5.7% y/y last month (+4.9% y/y in May). Increase in the index was the highest since October 2008, confirming the view that inflation is accelerating.

According to the latest information CPI in May amounted to 4.5%.In addition, permanent employment index KPMG/REC in the UK decreased to 52.2 points in June versus the level of 55.1 points in May.Final GDP in the UK (third reading) increased by 0.5% on quarterly basis (+1.6% y/y) which agreed with the forecast. At the same time level of consumer spending fell by 0.6% on quarterly basis (-0.5% y/y) in Q1.

The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who substituted a “hawk” Sentence, had joined a conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.

It became known last Friday that British manufacturing industry has slowed down its growth; as per CIPS/Markit estimates PMI index amounted to 51.3 points in June against the revised level of 52.0 points in May. The data released earlier showed that volume of production in the service sector of Great Britain declined by 1.2% m/m (+0.8% y/y) in April. Net mortgage lending totaled to Stg1.098 billion in May versus stg1.047 billion in April.

Meeting of the Bank of England will be held on Thursday and decision on the interest rate will be made there. Surprises are not expected. Most likely the rate will be left at the level of 0.5% per annum.