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[LF.Anastasia]

JPY: Japanese Yen is being corrected after rapid growth

The Japanese Yen rate weakens at the Forex currency market on Monday after reaching new highs of March last Friday.

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 tends to come out of the oversold zone, and is prepared to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.90 and 78.05.

Economic situation remains almost unchanged in Japan on Monday morning.

The data released at the end of last week showed that unemployment rate in June was at the level of 4.6%; household spending fell by 4.2% y/y in June; net national CPI increased by 0.4% in June against the forecast of +0.5%.

At the last meeting, 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 amount 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%.

According to the Finance Minister Mr. Noda, current dynamics of the Yen does not correspond to fundamental indicators; however it is necessary to carry out thorough analysis to decide for how long actual situation at Forex can be left unattended. Representative of the Bank of Japan Mr. Yamaguchi said that high rate of the JPY had no effect on the actual state of economy.

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.

 

[LF.Anastasia]

AUD: Australian Dollar has returned to strength again

At the Forex currency market the Australian Dollar rate started to grow on Monday after slight correction at the end of last week.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and goes up, giving a buy signal. Stochastic Oscillator tends to come out of the overbought zone and started to shape a sell signal.

Forex recommendations: in case of breakdown at the level of 1.1060, the pair will go to 1.1080 and 1.1100.

It became known today that index of industrial activity AIG PMI in Australia fell by 9.5% in July, to 43.4 points against the previous level of 52.9 points. At the same time, sales of new houses in Australia fell by 8.7% m/m in June, as per HIA estimates, against the decline of 0.2% in May.

In other respect, economic situation in the country remains unchanged.

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.

CPI in Australia increased by 0.9% q/q ((+3.6% y/y) in Q2 against the forecast of growth by 0.7% q/q. This data turned out above expectations and supported growth in the pair AUD/USD. 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%

Lending in the private sector of Australia declined by 0.1% m/m (+2.7% y/y) in June, while the forecast had been +0.4% m/m. At the same time mortgage lending increased by 0.3% m/m last month against the growth of 0.5% in May.

Index of PPI in Australia increased by 0.8% on quarterly basis in Q2 against the growth of 1.2% in Q1. 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.

 

[LF.Anastasia]

CAD: Canadian Dollar has started off with growth on Monday

The Canadian Dollar rate is traded upward at the Forex currency market on Monday morning, since the main driver of the currency, oil is also increasing in price at the beginning of the week, due to the fact that the issue of the U.S. budget deficit reduction has been partly resolved.

Forex forecast: MACD indicator is moving in the negative area for the pair USD/CAD and is moving along the signal line, not giving any signals. Stochastic Oscillator has come out of the oversold zone earlier and is going down at the moment, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9500, the pair will go to 0.9480 and 0.94600. If downward breakdown does not take place, the pair will consolidate near the current level.

Statistics released last Friday showed that in May Canadian economy has demonstrated the most significant decline over two years– growth of GDP in Canada decreased by 0.3% m/m (C$1.26 trillion) in May against zero changes in April and +0.3% of growth in March.

Slowdown this time was caused by decrease of production in the leading economic sectors: oil and gas industry and mining sector.

It is clear that some negative factor should be attributed to the developments in the U.S, which is the largest trading partner of Canada.

CPI in Canada decreased by 0.7% m/m (+3.1% y/y) in June. It became a negative signal for the CAD.

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.

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 evaluation, 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.

The head of the Bank of Canada Mr. Carney said earlier 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.

 

[LF.Anastasia]

EUR/USD: USD celebrates triumph

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning –the House of Representatives finally approved the increase in the national debt limit of the U.S. yesterday.By 9.40 Moscow time the Euro is at 1.4244 against yesterday’s closing level of 1.4250.

Thus, yesterday, the House of Representatives of the Congress voted to rise the limit of the U.S. national debt by $2.4 trillion in two stages. Budget of the U.S government expenditures will be reduced for the amount of $2.1 trillion in the next 10 years.Investors did not make use of the weak U.S. statistics, because decision on the public debt had become a more powerful driver in favour of the USD growth.

The data on the revenues and expenditures of Americans in June will be known tonight, if statistics turn out positive the USD will receive good support.Most likely the pair EUR/USD will not go beyond the range of 1.4190-1.4310 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound tries to recover after yesterday’s sales

At the Forex currency market the British Pound Sterling rate is traded slightly upward on Tuesday morning after significant sales yesterday, when the USD was supported by the decision of the Congress.

Forex forecast: MACD indicator for the pair GBP/USD, has broken through the signal line from bottom to the top and is now in the positive area, maintaining a buy signal. Stochastic Oscillator is going down in the neutral zone, maintaining a sell signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of break down at the level of 1.6330, the pair will go to 1.6350 and 1.6370.

If upward breakdown does not take place, the pair will consolidate at the current levels.Yesterday, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably.

In addition, CBI suggests that low levels of consumer confidence reduce companies’ ability to invest.Moody’s believes 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.

Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.CPI in the UK fell by 0.1% m/m (4.2% y/y) in June against the forecast of growth by 0.2% m/m.Finance Minister Osborne is confident that Great Britain continues to hold a status of a quiet habour, because national authorities are taking tough measures on fiscal policy.

He believes that the country shall continue to adhere to consolidation plan to get rid of debts; meanwhile the Britain is able to keep away from recession. Rejection from the fiscal plan at the moment will become a real threat to economic growth, thinks Osborne.

 

[LF.Anastasia]

CHF: Swiss Franc is indefatigable in achieving new highs

Swiss Franc rate remains strong at the Forex currency market; yesterday it has shifted historic highs upward, setting it at the level of 0.7729.

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 0.7800, the pair USD/CHF will go to 0.7780 and 0.7765.

If downward breakdown does not take place, the pair will consolidate at the current levels.Swiss monetary authorities have mentioned 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 has confirmed the ranking of Switzerland at the level of AAA, with a “stable” forecast.Authorities believe that 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.Leading indicators index KOF in Switzerland fell to 2.04 in July against the forecast of 2.11.

This has become another sign of slowdown in Swiss economy.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.On Tuesday, Swiss data on manufacturing sector in July will be released, as well as level of retail sales in June. On Friday, 5 August, investors will focus their attention on CPI for the last month.

 

[LF.Anastasia]

JPY: Japanese Yen is being corrected moderately

At the Forex currency market the Japanese Yen rate is being corrected moderately on Tuesday, although yesterday it has reached highs of March once again.

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 tends to come out of the oversold zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 77.50, the pair will go to 77.70 and 78.05.

However, if upward breakthrough does not take place, the pair might drop to 76.90.Speculation that arises more and more often at the market speaks about possibility of intervention by the Bank of Japan – there is no decision on the matter so far; however the meeting of the regulator will start on Thursday and the levels at which the Bank of Japan will interfere with the trading process will be specified there.

The data released this morning showed that preliminary average wages in Japan fell by 0.8% y/y in June against the forecast of growth by 0.5% y/y.At the last meeting, 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 amount 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%.According to the Finance Minister Mr. Noda, current dynamics of the Yen does not correspond to fundamental indicators; however it is necessary to carry out thorough analysis to decide for how long actual situation at Forex can be left unattended.

Representative of the Bank of Japan Mr. Yamaguchi said that high rate of the JPY had no effect on the actual state of economy.The data released at the end of last week showed that unemployment rate in June was at the level of 4.6%; household spending fell by 4.2% y/y in June; net national CPI increased by 0.4% in June against the forecast of +0.5%.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.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar go on

At the Forex currency market the Australian Dollar rate continues to remain under pressure on Tuesday, which was caused by the positions of the RBA this time.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and goes up, giving a buy signal. Stochastic Oscillator has come out of the overbought zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0890, the pair will go to 1.0870 and 1.0850.

According to the decision of the Reserve bank of Australia, interest rate in the country was left at the previous level of 4.75% per annum. In the follow-up comments, the head of the RBA, Mr. Stevens said that external uncertainty prevents the rise in the interest rate in Australia at the moment. He said that “ it was agreed that it was reasonable to maintain current course of monetary policy especially taking into account acute sense of uncertainty at the financial markets recently.

At the next meeting the RBA will continue to estimate varying prospects for growth and inflation”.In addition, the data released earlier showed that price index of houses in Australia fell by 0.1% q/q in Q2 against the forecast of reduction by 0.9% on quarterly basis.Lending in the private sector of Australia declined by 0.1% m/m (+2.7% y/y) in June, while the forecast had been +0.4% m/m.

At the same time mortgage lending increased by 0.3% m/m last month against the growth of 0.5% in May.CPI in Australia increased by 0.9% q/q ((+3.6% y/y) in Q2 against the forecast of growth by 0.7% q/q. This data turned out above expectations and supported growth in the pair AUD/USD. 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%Index of PPI in Australia increased by 0.8% on quarterly basis in Q2 against the growth of 1.2% in Q1. 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. Index of industrial activity AIG PMI in Australia fell by 9.5% in July, to 43.4 points against the previous level of 52.9 points. At the same time, sales of new houses in Australia fell by 8.7% m/m in June, as per HIA estimates, against the decline of 0.2% in May.

 

[LF.Anastasia]

NZD: New Zealand Dollar breaks new records

At the Forex currency market the New Zealand Dollar rate stands still on Tuesday, evaluating external background after reaching the highs of 0.8844 yesterday.

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 tends to come out of the overbought zone, and started to shape a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8760, the pair will go to 0.8740 and 0.8700. However of downward breakdown does not take place, the pair will keep the target at 0.8850.

Macro-economic situation in New Zealand has not changed much.

According to statistics released this week, trade balance in New Zealand increased by NZ$230 billion in June against the forecast of NZ$400 billion. Slowdown in surplus was logical in June: volume of growth rate in imports and exports fell last month. Thus exports increased by 4.5% in Q2, to NZ$12.2 billion; imports dropped by 1%, to the level of NZ$11.8 billion. Exports to China and Australia fell sequentially: to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (+4.7% y/y earlier) respectively.

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.

At the meeting which was held yesterday, the Reserve bank of New Zealand decided to leave interest rate at the previous level of 2.5% per annum. In the follow-up comments the RBNZ said that monetary policy tightening is planned for the nearest future to duly curb the growth of prices in the country.

As the head of the Bank, Mr. Bollard noted:”World financial risks have begun to fade out and economic growth continues to accelerate pace; therefore, there is no sense to maintain the rate at the current low level any further.”

Worth noting that permits for construction in New Zealand fell by 1.4% m/m in June against the forecast of +3.0%.

 

[LF.Anastasia]

EUR/USD: EUR/USD evaluates external background

The pair EUR/USD is traded with little progress at the Forex currency market on Wednesday morning: yesterday the U.S. Senate approved the increase in the national debts limit for $2.4 trillion in two stages.

By 9.40 Moscow time the Euro is at 1.4206 against yesterday’s closing level of 1.4203.

Thus, the upper limit of the U.S. national debt will be raised by $2.4 trillion in the next few months in two stages- it will relieve tension of the markets in regards to this matter. However, rating agency Moody's has already reported downgrade of the U.S. rating AAA to a “negative” because budget organization demonstrated inconsistency this time, although finally the treat of default has been released.

Statistics on the level of retail sales in Eurozone in July will be made public today; in the afternoon investors will wait for the data on the business activity index ISM in the non-manufacturing sector of the U.S. in July.

Most likely the pair EUR/USD will not go beyond the range of 1.4150-1.4250 at the trading session on Wednesday.