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[LF.Anastasia]

EUR/USD: EURO soars up again, due to bad U.S. news

The pair EUR/USD is traded slightly upward at the Forex currency market on Friday morning, since the agency S&P has warned the U.S. about the possibility of ranking downgrade.

By 9.20 Moscow time the Euro is at 1.4168 against yesterday’s closing level of 1.4141.

After the publication of strong data on the U.S. employment market, the Euro had been corrected; however today it reverted to growth since the agency S&P announced the possibility of the downgrade in the U.S. ranking from the level of AAA, because decision on the upper limit of the government debt has not been taken.

Yesterday, the head of the U.S. Federal Reserve Mr. Ben Bernanke said that possible rejection of the increase in the maximum allowable level of government debts by the authorities is suicide pact.

Not too much data is going to be made public today; the week will be finished with the publication of the U.S. macro-statistics.

Most likely the pair EUR/USD will not go beyond the range of 1.4100-1.4200 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound finishes the week in advantageous position

At the Forex currency market the British Pound Sterling rate slightly rises on Friday morning, having a chance to gain advantageous position in the end of this week.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is going up slowly, giving a buy signal. Stochastic Oscillator is going up in the neutral zone, giving a buy signal and has reached overbought zone.

Forex recommendations: in case of break down at the level of 1.6150, the pair will go to 1.6160 and 1.6190. If upward breakdown does not take place, the pair will consolidate at the levels, achieved earlier.

The situation in the British economy remains almost unchanged this morning.

The head of the Bank of England Mr. Mervyn King noted yesterday that in the next couple of years inflation in the country shall revert to the level of 2.0%. According to him, current monetary policy is quite logical and its aggressive tightening in the past and this year had been an unwise step. The meeting of the Bank of England was held last week: interest rate was kept unchanged at the level of 0.50% per annum. Statements on the monetary policy have not been made. It is likely that the rate will remain at the current level until Q1 2012. The minutes of the meeting will be made public on 20 July.

As it became known earlier, CPI in Great Britain fell by 0.1% m/m (4.2% y/y) in June versus the forecast of growth by 0.2% m/m. In addition, overall trade balance in the UK amounted to -stg4.06 billion in May against the forecast of stg2.700 billion. It seems that the rise of imports in May triggered the growth of deficit in trade balance of the country.

According to the data released earlier, unemployment rate in the UK amounted to 7.7% in March-May, level of unemployed reduced by 26 thousand within the same period. The level of unemployed rose by 24 thousand in June, while unemployment rate amounted to 4.7%.

Average weekly earnings in Great Britain rose by 2.3% including bonuses in May against the growth of 2% in April.

Thus, situation in the labor market remains tense, largely due to the austerity measures of the government.

According to the forecast made by NIESR, GDP in Great Britain will rise by 0.1% in June against the revised level of 0.5% in May. It is logical, because economic situation in the UK remains tense. Comparable sales index BRC in Great Britain reduced by 0.6% in June against the slump by 2.1% y/y in May.

 

[LF.Anastasia]

CHF: Swiss Franc continues to demonstrate strength

At the Forex currency market on Friday morning, Swiss Franc rate remains near the new historic highs, achieved this week.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator remains in the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8160, the pair USD/CHF will try to retest new lows of 0.8081.

Rating agency Fitch confirmed the ranking of Switzerland at the level of AAA, and gave a “stable” forecast.

At the meeting earlier, Swiss National Bank decided to leave 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%).

Representative of Swiss government noted earlier that national economy is still in good shape despite strengthening of the national currency. As the same time, first signs of cooling in the export sector could be seen and if these symptoms continues to develop, it will have a negative impact on the economy as a whole.

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. In June the index decreased by 0.5% m/m (-0.4% y/y) against the forecast of reduction by 0.3% m/m.

Representative of Swiss National Bank Mr. Jordan said that Switzerland went through the crisis easier than other countries largely due to its monetary policy and if the country will return to deflation, the CNB knows how to fight it. Jordan is concerned, however about recent dynamics of the EUR/CHF, saying that risks will increase when Italy will join the list of the EU problematic countries.

According to authorities, Swiss National Bank is solely responsible for the course of monetary policy and in the coming future it is likely to adopt new, effective measures to achieve price stability soon.

 

[LF.Anastasia]

JPY: Japanese Yen stands still at the end of the week

At the Forex currency market the Japanese Yen rate almost stands still in pairing with the USD, amid relatively quiet external environment.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator started to go up in the neutral zone, pushing away from oversold zone, and is giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 79.00, the pair will go 79.80 and 78.16. If downward breakdown does not take place, the pair will go to 80.00.

According to the minutes of the last meeting of the Bank of Japan, there is a potential necessity of policy easing, and this has been confirmed by the published statistics, which despite its optimistic results, does not show signs of the trend.

At the meeting, which was held this week, the Bank of Japan decided to leave interest rate unchanged in the target range of 0-0.1% per annum, as expected.

Lending program was also left unchanged in the volume of 30 trillion yen. According to the Bank estimates, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%.

It became known yesterday that consumer confidence index in Japan rose to 35.3 points in June against the level of 34.2 points in May. It is a good sign, showing that economy in the Country of the Rising Sun continues its slow but sure recovery. Statistics released earlier showed that bank lending in Japan decreased by 0.6% y/y in June against the forecast of -0.5% y/y.

Note: that starting from this June the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

According to the data released this week, capacity utilization in Japan increased by 12.8% y/y in May against the decline of 1.1% in April. In addition, revised volume of industrial output in Japan rose by 6.2% m/m in May against preliminary value of +5.7%.

 

[LF.Anastasia]

AUD: Australian Dollar slides down towards the end of the week

The Australian Dollar rate is still on sale at the Forex currency market on Friday morning, continuing yesterday’s trend.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, is moving along the signal line and not giving a clear signal. Stochastic Oscillator is going up in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0650, the pair will go to 1.0630 and 1.0610. If downward breakdown does not take place, the pair will consolidate close to the current levels.

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.

As the data released this week showed, business conditions index in Australia increased by 2 points in Jule, as per NAB estimates< against zero value in May. At the same time, business confidence index NAB amounted to 0 points against the level of +6 points in May, and GDP forecast for the fiscal year of 2011-2012 had been reduced to 1.7%

According to the data released yesterday, consumer inflationary expectations MI in Australia rose to 3.4% in July against the level of 3.3% in June. The AUD has not reacted strongly to the data, focusing its attention on the Chinese statistics and forecasts.

At the meeting of the Reserve Bank of Australia yesterday the decision was made to leave interest rate at 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 interfere with the process. Market expected that Stevens would 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%.

 

[LF.Anastasia]

NZD: New Zealand Dollar is in profit taking position

The New Zealand Dollar rate goes down at the Forex currency market on Friday after reaching new historic highs this week. Investors are adopting profit taking positions in advance of the weekend, which is quite logical.

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

Forex recommendations: in case of breakdown at the level of 0.8410, the pair will go to 0.8430 and 0.8450. Technical rebound could lead the pair to 0.8380.

Economic situation in New Zealand has not changed significantly this morning.

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.

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.

Statistics released this week showed that GDP in New Zealand rose by 0.8% on quarterly basis (+1.4% y/y) in Q1 against the forecast of growth by 0.3% q/q (+0.5% y/y).

The indices have been very favourable, which supports the NZD.

It is possible that the data will be less positive in Q2; however in general, the trend will remain the same, which is favourable for the pair NZD/USD in long term outlook.

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

The data released earlier showed that net level of budget deficit in New Zealand rose to -NZD$40 billion (20.4% billion of the country’s GDP) in May, which was below economists’ forecast. According to the estimates of the Finance Minister Mr. English, budget deficit is still too large and active measures are required to reduce it.

 

[LF.Anastasia]

EUR/USD: EURO declines due to concerns about Greece

The pair EUR/USD is traded downward at the Forex currency market on Monday morning, as investors fear that new complications might arise in the Greek issue in advance of the EU summit this Thursday.

By 9.30 Moscow time the Euro is at 1.4077 against closing level of 1.4156 on Friday.

Summit of the European group will be held in Brussels this Thursday. It will be devoted to the further finance to Greece. Recall that the second package of financial aid to Greece has not been approved yet, because participation of the private investors in this project has not been coordinated.

As long as uncertainty in the issue persists, the Euro will remain under pressure.

Before 22 of June this week, decision on the volume of the U.S. budget reduction shall be adopted, and it is also a risk factor for the major currency pair.

Most likely the pair EUR/USD will not go beyond the range of 1.4100-1.4200 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound started this week with decline

At the Forex currency market the British Pound Sterling rate tends to decline on Monday morning; its opening level has been lower than final level on Friday.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is going up fast, giving a buy signal; however volumes are decreasing. Stochastic Oscillator started reversal in the overbought zone, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6100, the pair will go to 1.6080 and 1.6060. If downward breakdown does not take place, the pair will consolidate at the levels, achieved earlier.

On 20 July this week the minutes of the meeting of the Bank of England will be made public; in this respect it will be interesting to know balance of power in the Monetary Committee.

Last Friday Citigroup reported a change in the rate forecast of the UK, shifting expectations of growth rate into Q2 2012 from Q4 2011 earlier.

According to the forecast made by NIESR, GDP in Great Britain will rise by 0.1% in June against the revised level of 0.5% in May. It is logical, because economic situation in the UK remains tense. Comparable sales index BRC in Great Britain reduced by 0.6% in June against the slump by 2.1% y/y in May.

As it became known earlier, CPI in Great Britain fell by 0.1% m/m (4.2% y/y) in June versus the forecast of growth by 0.2% m/m. In addition, overall trade balance in the UK amounted to -stg4.06 billion in May against the forecast of stg2.700 billion. It seems that the rise of imports in May triggered the growth of deficit in trade balance of the country. According to the data released earlier, unemployment rate in the UK amounted to 7.7% in March-May, level of unemployed reduced by 26 thousand within the same period. The level of unemployed rose by 24 thousand in June, while unemployment rate amounted to 4.7%. Average weekly earnings in Great Britain rose by 2.3% including bonuses in May against the growth of 2% in April.

Thus, situation in the labor market remains tense, largely due to the austerity measures of the government.

The head of the Bank of England Mr. Mervyn King noted yesterday that in the next couple of years inflation in the country shall revert to the level of 2.0%. According to him, current monetary policy is quite logical and its aggressive tightening in the past and this year had been an unwise step. The meeting of the Bank of England was held last week: interest rate was kept unchanged at the level of 0.50% per annum. Statements on the monetary policy have not been made. It is likely that the rate will remain at the current level until Q1 2012.

 

[LF.Anastasia]

CHF: Swiss Franc still maintains its position near historic highs

At the Forex currency market on Friday morning, Swiss Franc rate is getting weaker on Monday; although it still maintains its position near historic highs- during Asian session Franc was aiming at retest.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator is reversing in the oversold zone and shaping a weak buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8100, the pair USD/CHF will try to retest new lows of 0.8081. If the level of 0.8135 is broken down, the target the pair’s growth will become the level of 0.8150. On Thursday, 21 July the data on Swiss trade balance in June will be made public.

Representative of Swiss government noted earlier that national economy is still in good shape despite strengthening of the national currency. As the same time, first signs of cooling in the export sector could be seen and if these symptoms continue to develop, it will have a negative impact on the economy as a whole.

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. In June the index decreased by 0.5% m/m (-0.4% y/y) against the forecast of reduction by 0.3% m/m.

According to authorities, Swiss National Bank is solely responsible for the course of monetary policy and in the coming future it is likely to adopt new, effective measures to achieve price stability soon.

Representative of Swiss National Bank Mr. Jordan said that Switzerland went through the crisis easier than other countries largely due to its monetary policy and if the country will return to deflation, the CNB knows how to fight it. Jordan is concerned, however about recent dynamics of the EUR/CHF, saying that risks will increase when Italy will join the list of the EU problematic countries.

At the meeting earlier, Swiss National Bank decided to leave 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%).

Rating agency Fitch confirmed the ranking of Switzerland at the level of AAA, and gave a “stable” forecast.

 

[LF.Anastasia]

JPY: Japanese Yen got stuck in the four-day range

At the Forex currency market the Japanese Yen rate remains in the four-day range of 78.45-79.60 on Monday morning.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator started to go up in the neutral zone, pushing away from oversold zone, and is giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 79.00, the pair will go 79.80 and 78.16. If downward breakdown does not take place, the pair will go to 80.00.

According to the estimates of Nomura Bank, probability of intervention of the Bank of Japan comes to 48% at the moment.

It became known yesterday that consumer confidence index in Japan rose to 35.3 points in June against the level of 34.2 points in May. It is a good sign, showing that economy in the Country of the Rising Sun continues its slow but sure recovery. Statistics released earlier showed that bank lending in Japan decreased by 0.6% y/y in June against the forecast of -0.5% y/y.

Note: that starting from this June the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

According to the data released this week, capacity utilization in Japan increased by 12.8% y/y in May against the decline of 1.1% in April. In addition, revised volume of industrial output in Japan rose by 6.2% m/m in May against preliminary value of +5.7%.

According to the minutes of the last meeting of the Bank of Japan, there is a potential necessity of policy easing, and this has been confirmed by the published statistics, which despite its optimistic results, does not show signs of the trend.

At the meeting, which was held last week, the Bank of Japan decided to leave interest rate unchanged in the target range of 0-0.1% per annum, as expected.

Lending program was also left unchanged in the volume of 30 trillion yen. According to the Bank estimates, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%.