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[LF.Anastasia]

EUR/USD: EURO declines after yesterday’s surge

The pair EUR/USD is being corrected at the Forex currency market on Friday morning after yesterday’s surge.By 9.10 Moscow time the Euro is at 1.4387 against yesterday’s closing level of 1.4423.

At the Summit of the European Group which ended yesterday, leaders of the major countries approved a new package of financial aid to Greece in the amount of 109 billion Eur. Athens will also receive support from private investors who will exchange existing bonds for the similar ones but with the longer period of circulation.

It is possible, however, that international rating agencies will consider this decision as an acknowledgement of the partial default of Greece.In the U.S., President Barack Obama continues to negotiate a plan to reduce budget deficit.The day is not going to be very eventful in terms of the macro-statistics; therefore investors will be guided by external signals.

 

[LF.Anastasia]

GBP: British Pound started profit taking

At the Forex currency market the British Pound Sterling rate is being corrected on Friday morning after yesterday’s rise due to external positive factor.

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 1.6300, the pair will go to 1.6325 and 1.6250.

If upward breakdown does not take place the pair will consolidate at the current levels. The Pound might drop to 1.6240 because of profit taking.The Pound received the main share of the positive factors from external background; nevertheless internal statistics was also encouraging. Thus, retail sales increased by 0.7% m/m (0.4% y/y) in June against the forecast of reduction by 0.1% m/m.

This was the fact that inspired players to start purchase.In addition, net volume of public borrowing PSNB amounted to 11.977 billion pounds in June against the forecast of 10.4 billion pounds.In other respect, economic situation in the UK has not changed much.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%. The minutes of meeting of the Bank of England, which were made public earlier 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 it is very unlikely that tightening of the monetary policy can 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. A week earlier, Citigroup reported a change in the rate forecast of the UK, shifting expectations of growth rate into Q2 2012 from Q4 2011 earlier.

 

[LF.Anastasia]

CHF: Swiss Franc is traded with no clear direction

At the Forex currency market Swiss Franc rate come to the end of the week not having a clear trend on Friday morning, starting from Monday the pair USD/CHF is being traded in compliance with external background, Franc acted as a protective currency, however it bounced each time when external background became stable.

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 going down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8150, the pair USD/CHF will go to 0.8130 and 0.8110.

The data released yesterday showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.In addition, it became known that economic expectation index ZEW amounted to -58.9 points in July against the level of -24.3 points in June.

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%).According to authorities’ evaluation, 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.

 

[LF.Anastasia]

JPY: Japanese Yen remains near highs of March

Forex currency market the Japanese Yen rate is being corrected on Friday after retesting highs of March.

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 down in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 78.80, the pair will go to 78.50 and 78.30.

Finance Minister of Japan, Mr. Noda noted today that the Yen is moving only in one direction lately. He believes that stabilization in Greece will encourage improvement of the general situation in the market.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.

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. 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.

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%.

 

[LF.Anastasia]

AUD: Australian Dollar is still close to the highs of the week

At the Forex currency market the Australian Dollar rate continues to show disposition to grow.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; it goes up and is giving a sell signal. Stochastic Oscillator is increasing in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0850 the pair will go to 1.0870 and 1.0890. If upward breakdown does not take place, the pair will consolidate close o the current levels.

It became known today that import price index in Australia rose by 0.8% in Q2 against the forecast of -1.1%. At the same time, export price increased by 6.0% in Q2 against the forecast of +4.5%.

Growth in exports last quarter was attributed largely due to the rise in exports of lubricants, mineral oil and also related materials.

It was made public this week that 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%

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.

As it became known earlier 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]

NZD: New Zealand Dollar would not grow weary of reaching new local highs

At the Forex currency market the New Zealand Dollar rate remains close to new local peaks on Friday.

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, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8640, the pair will go to 0.8655 and 0.8680. The pair could drop to 0.8580 as part of correction at the end of the week.

There is speculation in the market that the Reserve Bank of New Zealand is looking closely at market’s reaction to the measures to resolve debt crisis in Europe which might imply a disposition to raise the level of the interest rate at the meeting next week.

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. CPI in New Zealand rose by 1.0% q/q (+5.3% y/y) in Q2 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 earlier 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 the long term.

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.

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]

EUR/USD: Major pair is in pendency

The pair EUR/USD is near the previous levels at the Forex currency market on Monday.By 9.15 Moscow time the Euro is at 1.4357 against closing level of 1.4357 on Friday.

Players have taken a wait and see attitude this morning - the U.S. cannot boast that the decision on the size of the budget cuts and the increase in the limits of public debt have been resolved. Time period for decision-making has expired last Friday. Moreover, the 2nd of August, the day when the U.S. shall make decision on the revised allowable size of public debt is approaching.

Earlier, American politicians suggested that thorny issues shall be resolved at the weekend; however market has not received new information yet.The day is going to be quiet in terms of macro-statistics; therefore the market will continue to be guided by external background.Most likely the pair EUR/USD will not go beyond the range of 1.4300-1.4420 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound started with decline on Monday

At the Forex currency market the British Pound Sterling rate is gliding down on Monday morning because external background remains tense.

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 1.6300, the pair will go to 1.6325 and 1.6250.

If upward breakdown does not take place the pair will consolidate at the current levels. The Pound might drop to 1.6240 as part of profit taking.As it became known today price for houses in the UK fell by 0.1% m/m (-3.9% y/y) in July, as per Hometrack estimates.The situation in the economy of Great Britain has not changed significantly this morning.The report which was made public last week showed that 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%.

The minutes of meeting of the Bank of England, which were made public earlier 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 it is very unlikely that tightening of the monetary policy can 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.Earlier the Pound received momentum for growth: retail sales increased by 0.7% m/m (0.4% y/y) in June against the forecast of reduction by 0.1% m/m. This was the fact that inspired players to start purchase. In addition, net volume of public borrowing PSNB amounted to 11.977 billion pounds in June against the forecast of 10.4 billion pounds.

 

[LF.Anastasia]

CHF: Swiss Franc maintains positions near historic highs

At the Forex currency market Swiss Franc rate is getting slightly weaker on Monday morning, staying nevertheless close to historic highs, achieved recently.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal; volumes are increasing.. Stochastic Oscillator is going down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8115, the pair USD/CHF will go to 0.8100 and 0.8180.

On Wednesday investors will await publication on the leading indicators index KOF in July.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%).

According to authorities’ evaluation, 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.The data released earlier showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.

In addition, it became known that economic expectation index ZEW amounted to -58.9 points in July against the level of -24.3 points in June. 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. Due to persistent external uncertainty there is a chance that Franc will retest previous historic highs in the nearest future.

 

[LF.Anastasia]

JPY: Japanese Yen holds positions near the peak of March

The Japanese Yen rate holds positions near the highs of March at the Forex currency market on Monday morning even though the pair USD/JPY tends to grow today.

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 down in the neutral zone, giving a sell signal and coming close to the oversold zone.

Forex recommendations: in case of breakdown at the level of 78.40, the pair will go to 78.25 and 78.10.

Judging by the dynamics of the last week, it seems that Japanese Yen has restored its previous status of a protective currency. 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. 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.

Finance Minister of Japan, Mr. Noda noted last week that the Yen is moving only in one direction lately. He believes that stabilization in Greece will encourage improvement of the general situation in the market.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.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%.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.