LiteForex's analytics

[LF.Anastasia]

CHF: Swiss Franc is moving away from historic highs

At the Forex currency market on Wednesday morning Swiss Franc rate continues to move away from historic highs, which it had reached last week, due to the relative lull in the market.

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

Forex recommendations: in case of breakdown at the level of 0.8250, the pair USD/CHF will go to 0.8270 and 0.8290.

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%).

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.

Representatives 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 observed and if these symptoms continue to develop, it will have a negative impact on the economy as a whole.

According to the representative of Swiss National Bank Mr. Jordan, 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 off. Jordan is concerned, however about recent dynamics of the EUR/CHF, saying that risks will increase when Italy joins the list of the EU problematic countries. Earlier, rating agency Fitch confirmed the ranking of Switzerland at the level of AAA, with a “stable” forecast.

 

[LF.Anastasia]

JPY: Japanese Yen holds back its movement

The Japanese Yen rate remains in the range of 78.45-79.60 at the Forex currency market in the middle of the week, not planning a shift to either direction.

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.It became known today that revised index of leading indicators in Japan rose by 3.4 points in May, against preliminary level of +3.6 points; at the same time revised index of coincident indicators increased by 2.7 points in may against preliminary level of +2.4 points.Market was neutral to the news.

Representative of the Bank of Japan Mr. Yamaguchi said today that high level of the JPY had no effect on the actual state of economy.He also said yesterday 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.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%.It is of interest 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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar suspended its growth

At the Forex currency market the Australian Dollar rate has suspended its growth that started yesterday and is waiting for the external signals.

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 up slowly in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0740, the pair will go to 1.0750 and 1.0770.

If upward breakdown does not take place, the pair will consolidate close o the current levels.It became known today that leading indicator in Australia fell by 0.3 points in June, to the level of 279.5 points, as per Westpac estimates. Market did not respond to the statistics, awaiting more serious external signals.Meanwhile Chinese statistics released this morning showed that economic growth in the country is still in progress and it is a positive signal for the AUD.

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.The minutes of the meeting of the Reserve Bank of Australia in July which was made public earlier stated that the RBA needs time to evaluate 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 gave no indication as to 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 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 worse than expected.

 

[LF.Anastasia]

CAD: Bank of Canada supported Canadian Dollar

At the Forex currency market the Canadian Dollar rate stands still on Wednesday morning. However, there is a chance that growth that has been observed yesterday could be continued.

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 has come back to the oversold zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9480, the pair will go to 0.9470 and 0.9450.

If downward breakdown does not take place, the pair will consolidate near the current levels.Yesterday, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast. According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the coming future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); 2.6% in 2012 and 2.1% in 2013.Export performance in Canada is negative, according to the Bank estimates, because low demand in the USA prevents the indicator from growing and expensive CAD makes situation worse.

The growth in the interest rate in Canada will directly depend on stability in the economic development.According to the plan of the Finance Ministry of Canada, presented earlier, 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.It became known earlier 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.

 

[LF.Anastasia]

EUR/USD: EURO receives support due to expectations of the summit outcome

The pair EUR/USD is growing at the Forex currency market on Thursday morning in anticipation of the positive solutions of the summit of European Group which starts today.By 9.00 Moscow time the Euro is at 1.4265 against yesterday’s closing level of 1.4214.

It became known last night, that at the meeting, which was held in advance of the summit, Germany and France had reached agreement on the general issues of financial aid scheme for Greece as part of the second package.

This news pushes the Euro upward, while in the U.S. uncertainty in the issue of rising national debt limits is still high.The day is going to be eventful in terms of statistics, which will increase volatility in the major pair.Most likely the pair EUR/USD will not go beyond the range of 1.4180-1.4300 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is waiting for external signals to strengthen

At the Forex currency market the British Pound Sterling rate almost stands still on Thursday morning, tending to continue its growth, which however will require external catalysts, because the GDP lacks internal cause for growing.

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

Forex recommendations: in case of break down at the level of 1.6170, the pair will go to 1.6185 и 1.6200.

If upward breakdown does not take place the pair will consolidate at the current levels.Interesting information for the Pound will be released this afternoon: investors will receive the UK data on the retail sales in June.

If indicator continues the decline of May, it will become a signal for the GDP sales. The minutes of meeting of the Bank of England, which was made public yesterday indicates that MPC ranks are still suffering from the split: Will and Dale continue to vote for the rate increase by 25 basis points.In general, most members of the Monetary Committee believes that it is very unlikely that tightening of the monetary policy will take place in the short term, moreover, there is an opinion that most likely economic weakness will last longer than expected.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.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 is still in the state of complete uncertainty

At the Forex currency market on Wednesday morning Swiss Franc rate is getting weak again after the growth on Wednesday morning.

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

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 0.8250, the pair USD/CHF will go to 0.8270 and 0.8290.

If the level of 0.8200 is exceeded, the target of decline will be the level of 0.8150.The data on the Swiss trade balance in June will be released today, if the indicator is positive and the balance will expand, the Franc will be able to receive support.According to authorities, Swiss National Bank is solely responsible for the course of monetary policy and in the nearest future it is likely to adopt new, effective measures to achieve price stability.

Representatives 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 observed and if these symptoms continue to develop, it will have a negative impact on the economy as a whole. Earlier, rating agency Fitch confirmed the ranking of Switzerland at the level of AAA, with a “stable” forecast.According to the representative of Swiss National Bank Mr. Jordan, 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 off.

Jordan is concerned, however about recent dynamics of the EUR/CHF, saying that risks will increase when Italy joins the list of the EU problematic countries. 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%).

 

[LF.Anastasia]

JPY: Japanese Yen maintains positions in the range

The Japanese Yen rate still remains in the six-day range of 78.45-79.60 60 at the Forex currency market on Thursday.

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 78.80, the pair will go 78.50 and 78.30. If downward breakdown does not take place, the pair will go to 80.00.

Trade balance in Japan increased to the level of +Y70.7 billion in June against the forecast of -Y149.0 billion; therefore the balance exceeded limits of the two-month downfall of deficit. Exports in Japan decreased by 1.6% y/y last month against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been 11.0% y/y.

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%.It is of interest 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. Representative of the Bank of Japan Mr. Yamaguchi said today that high level of the JPY had no effect on the actual state of economy.

He also said earlier 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.

 

[LF.Anastasia]

AUD: Australian Dollar has not determined movement direction yet

At the Forex currency market the Australian Dollar rate is going down slightly on Thursday morning after inert rise of yesterday: the currency has not received momentum to determine clear movement direction yet.

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 up in the neutral zone, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0740 the pair will go to 1.0750 and 1.0770. If upward breakdown does not take place, the pair will consolidate close o the current levels.

As it became known today, business confidence NAB in Australia amounted to +6 points in Q2 against the prior value of +11 points. At the same time index of current conditions rose by 3 points against preliminary +2 points and assessment of business conditions in the three-month term increased by 10 points (forecast had been the growth of 15 points)

According to the NAB estimates the gap between strong and weak sectors of Australia is reaching historic maximum and reminds of the situation in 2000 when slowdown occurred in the weak links of the economic chain.

It is worth noting that business conditions index in Australia increased by 2 points in July, 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%

The minutes of the meeting of the Reserve Bank of Australia in July which was made public earlier stated that the RBA needs time to evaluate 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 gave no indication as to when tightening of the monetary policy could commence.

At the last 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 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 worse than expected. It became known yesterday that leading indicator in Australia fell by 0.3 points in June, to the level of 279.5 points, as per Westpac estimates. Market did not respond to the statistics, awaiting more serious external signals.

 

[LF.Anastasia]

CAD: Canadian Dollar growth is still in progress

At the Forex currency market the Canadian Dollar rate continues to grow on Thursday for the third consecutive session.

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 has come back into the oversold zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9430, the pair will go to 0.9410 and 0.9380. If downward breakdown does not take place, the pair will consolidate near the current levels.

Yesterday, the head of the Bank of Canada Mr. Carney said that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis; plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy.

Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

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 Q4 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.

It became known earlier that sale of new cars in Canada fell by 6.1% m/m in May against preliminary forecast of -1.1% m/m. Earlier, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast.

According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the nearest future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); and it will be: 2.6% in 2012 and 2.1% in 2013.

According to the Bank estimates, export performance in Canada is negative, because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation more complicated. The growth in the interest rate in Canada will directly depend on stability in the economic development. According to the plan of the Finance Ministry of Canada, presented earlier, the country shall revert to the budget surplus by 1014.