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AUD: Sale of Australian Dollar is still ongoing

The Australian Dollar rate continues to weaken at the Forex currency market on Monday morning.

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

Forex recommendations: in case of breakdown at the level of 1.0580, the pair will go to 1.0550 and 1.0530. If downward breakdown does not take place, the pair will consolidate close to the current levels.

The economic situation in Australia remains almost unchanged on Monday morning.

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%.

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 last 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar is being corrected at the beginning of the week, due to external instability

The New Zealand Dollar rate is traded downward at the Forex currency market on Monday, due to negative external environment.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and is going up, giving a buy signal; volumes are high. Stochastic Oscillator remains in the overbought zone; however, tending to come out of it.

Forex recommendations: in case of breakdown at the level of 0.8410, the pair will go to 0.8400 and 0.8380.

As it became known today, CPI in New Zealand rose by 1.0% q/q (+5.3% y/y) against the forecast of growth by 0.8% on quarterly basis. It is one more positive characteristic of the economic status in New Zealand.

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.

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.

 

[LF.Anastasia]

EUR/USD: EURO tends to decline again

The pair EUR/USD has declined slightly at the Forex currency market on Tuesday morning, while external background remains bleak. By 9.15 Moscow time the Euro is at 1.4092 against yesterday’s closing level of 1.4112.

Despite massive sale of the Euro during all day on Monday, by the evening the Euro had been bought back, as there was no comforting news from the USA. Congress did not move ahead in the issue of the volumes of budget reduction, therefore cannot proceed to discussions about the rise of the national debt limits of the country.

The data on the index of economic expectations ZEW in Germany will be released today – if the indicator turns out positive, it will be able to retain the Euro from drastic downfall. Most likely the pair EUR/USD will not go beyond the range of 1.4050-1.4130 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling stands still

At the Forex currency market the British Pound Sterling rate almost stands still on Tuesday morning, due to the lack of any news.

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

Forex recommendations: off the market.Feasible event scenario at Forex: in case of break down at the level of 1.6040, the pair will go to 1.6020 и 1.5980.

If downward breakdown does not take place, the pair will consolidate at the levels, achieved earlier.Moody’s believe that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%.

At the same time unemployment rate will vary in the range of 7.8-8.0%. The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year.

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.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.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 find out balance of power in the Monetary Committee.

 

[LF.Anastasia]

CHF: Swiss Franc is not far away from historic peaks

At the Forex currency market on Tuesday morning Swiss Franc rate is not far away from historic highs, achieved last week and continues to get slightly weaker.

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 0.8200, the pair USD/CHF will go to 0.8210 and 0.8235.

Economic situation in Switzerland remains almost unchanged.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 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. Three- month Libor rate remains 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, with a “stable” forecast.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.

 

[LF.Anastasia]

JPY: Japanese Yen remains in the range

At the Forex currency market the Japanese Yen rate remains in the five-day range of 78.45-79.60 on Tuesday and has not shown intention to go through any of the borders.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, shaping a sell signal; volumes are high. Stochastic Oscillator goes 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 78.80 and 78.50. If downward breakdown does not take place, the pair will go to 80.00.

Representative of the Bank of Japan said today that it is necessary to closely track negative impact of the strong Yen; it also seems very important to have control over foreign activities of the companies. He believes that Japanese economy needs effective strategies and strong Yen helps to reduce import prices and import costs.

As it became known earlier, 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.

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 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%.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.

 

[LF.Anastasia]

AUD: Australian Dollar started to recover

At the Forex currency market the Australian Dollar rate tends to recover on Tuesday after three days of sales.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and started to decline, giving a sell signal; however volumes are still low. Stochastic Oscillator is going down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0600, the pair will go to 1.0550 and 1.0530.

If downward breakdown does not take place, the pair can rise to 1.0645/50 as part of the corrective rebound.Growth of the AUD was prevented by the publication of minutes of the July’s meeting of the Bank of Australia - according to document the RBA needs time to evaluate the dimension of the inflationary pressure and the next CPI report will determine the direction of the monetary policy.

In addition, the minutes state that economic prospects are still positive in the medium term and as a whole, labor market does not demonstrate signs of recession. Thus, the RBA did not give any indications as when tightening of the monetary policy could commence.At the meeting two weeks ago, the Reserve Bank of Australia decided 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. As the data released last 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 earlier, consumer inflationary expectations MI in Australia rose to 3.4% in July against the level of 3.3% in June. The AUD has not really reacted to the data, focusing its attention on the Chinese statistics and forecasts.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]

CAD: Canadian Dollar is slightly rising in pairing with USD

At the Forex currency market the Canadian Dollar rate is rising slightly, amid growing oil prices.

Forex forecast: MACD indicator is moving in the negative area for the pair USD/CAD and goes down, maintaining a pair sell signal. Stochastic Oscillator tends to move away from the oversold zone, and started to shape a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9580, the pair will go to 0.9570 и 0.9550. If downward breakdown does not take place, the pair will consolidate near the current levels.

It became known yesterday that sale of new cars in Canada fell by 6.1% m/m in May against preliminary forecast of -1.1% m/m.

In addition, purchase of the Canadian securities by foreign investors increased by C$15.442 billion in May against revised level of C$8.523 billion in April.

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.

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.

 

[LF.Anastasia]

EUR/USD: EURO is losing positions due to American news

The pair EUR/USD is declining slightly at the Forex currency market on Wednesday morning, due to consensus that has been reached on the issue of the U.S. budget cuts.By 9.30 Moscow time the Euro is at 1.4139 against yesterday’s closing level of 1.4154.

Thus, American leader Barack Obama said last night that some progress has been achieved in the discussions about the rise of the limits of the U.S. national debt. He also noted that he had approved senators’ plan proposing budget cuts of $3.7 trillion over the next 10 years.

Negotiations between Republicans and Democrats will be continued this week, however, it is obvious that the matter is in progress now, which is especially important in view of decreasing of the allotted time for the discussion.

As for the news from Eurozone today, the data on the consumer confidence index in June is worth paying attention; the U.S. data on the houses sale in the secondary market last month will be released tonight.Most likely the pair EUR/USD will not go beyond the range of 1.4080-1.4190 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound remains in the five-day range

At the Forex currency market the British Pound Sterling rate goes down on Wednesday morning, remaining in the range of 1.6005-1.6178.

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

Forex recommendations: off the market.Feasible event scenario at Forex: in case of break down at the level of 1.6110, the pair will go to 1.6130 and 1.61601.

If upward breakdown does not take place, the pair will aim at 1.6080.Economic situation in the UK has not changed significantly this morning. The minutes of the last meeting of the bank of England will be made public today, it is expected to be unfavourable, it is also possible that the document will disclose problematic issues of the British economy.

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.Moody’s believe that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%. At the same time unemployment rate will vary in the range of 7.8-8.0%.

The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year. 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.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.