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[LF.Anastasia]

GBP: British Pound is still under pressure

At the Forex currency market the British Pound Sterling rate is traded downward on Wednesday.

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, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6280, the pair will go to 1.6250 and 1.6230. If downward breakdown does not take place, the pair will consolidate at the current levels.

Today, investors are waiting for the publication of the business activity index in the country’s service sector in July.

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.

It became known yesterday that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points.

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. In addition, 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.

Earlier, 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.

CBI also suggests that low levels of consumer confidence reduce companies’ ability to invest.

 

[LF.Anastasia]

CHF: Swiss Franc has shifted highs and is being corrected

Swiss Franc rate continues to amaze by its persistence: the currency has shifted highs again today, setting it at the level of 0.7608, and is being slightly corrected at the moment.

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 remains in the oversold zone, and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.7650, the pair USD/CHF will go to 0.7620 and 0.7610. If downward breakdown does not take place, the pair will consolidate at the current levels.

According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9% y/y in May. In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.

Current data shows that the data released previously was seasonal and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11. 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.

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.

If CHF continues to rise towards 0.7550, it is possible that CNB can intervene in the course of the currencies trade.

 

[LF.Anastasia]

JPY: Japanese Yen stands still awaiting intervention

At the Forex currency market the Japanese Yen rate continues to be traded with slow progress, amid increasing indications of the possible intervention of the Bank of Japan.

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, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 77.40, the pair will go to 77.70 and 78.05. However, if upward breakthrough does not take place, the pair might drop to 76.80.

According to CitiFX estimates, the pair USD/JPY will go below the lows of March at 76.25, intervention in the currency trading by the Bank of Japan cannot be avoided and can cost Japanese regulator about $38-40 billion.

We would remind that the meeting of the regulator will start on Thursday and the levels at which the Bank of Japan will interfere in the trading process will be specified there.

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%.

Statistics released earlier was mixed: 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.

In addition, preliminary average wages in Japan fell by 0.8% y/y in June against the forecast of growth by 0.5% y/y.

 

[LF.Anastasia]

AUD: Statistics did not prevent Australian Dollar from downfall

The Australian Dollar rate continues to decline at the Forex currency market in the middle of the week.

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

Forex recommendations: in case of breakdown at the level of 1.0710, the pair will go to 1.0680 and 1.0650.

The following Australian data was released today:

– Volume of retail sales declined by 0.1% in June against the fall of 0.6% earlier

– Business activity index AIG in the service sector increased by 0.3 points in June, to the level of 48.8 points.

Retail sales are in the negative balance of the country, although demonstrating good dynamics. The AUD is still under pressure and it leads the pair AUD/USD down, below 1.06.

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.

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.

 

[LF.Anastasia]

NZD: Sales for New Zealand Dollar are being in progress for the third consecutive day

At the Forex currency market the New Zealand Dollar rate continues to decrease on Wednesday; sales which started at the beginning of the week are still in progress.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD,; it has slowed down its ascend because of high volumes and is giving a weak buy signal. Stochastic Oscillator is going down fast in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8560, the pair will go to 0.8540 and 0.8500. 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 significantly.

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.

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

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.”

 

[LF.Anastasia]

EUR/USD: EURO is under pressure, debt crisis is in progress

The pair EUR/USD declines at the Forex currency market on Thursday morning- investors started to pay attention to debt problems of Eurozone again.
By 9.15 Moscow time the Euro is at 1.4277 against yesterday’s closing level of 1.4322.

Italy explained yesterday that crisis is undergoing not only in the economy of Italy but in the global economy, they also stressed that rate of reduction in budget deficit in Italy is higher than in the most other countries and government is making all efforts to combat budget deficit. However, if markets were slightly reassured by this speech of Berlusconi, the following information did not give rise to any joy: rating agency Moody’s downgraded rating of Athens to the next “rubbish” level of Caa3 from the previous level of Caa1.

Meanwhile, sales of the Euro are restricted by negative U.S. statistics.

Today, investors are waiting for the outcomes of the meeting of the European central Bank which is going to announce its decision on the interest rate and will report economic outlooks. Additional pressure on the trading floors is exerted by the resumed talk of the possible QE3 in the U.S.

Most likely the pair EUR/USD will not go beyond the range of 1.4200-1.4350 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is losing positions

At the Forex currency market the British Pound Sterling rate is going down on Thursday – investors are moving away from risks, amid new facts of slowing down in the global economy. In addition, a meeting of the Bank of England will be held today.

Forex forecast: MACD indicator for the pair GBP/USD, remains in the positive area, however it is moving along the signal line not giving a clear signal. Stochastic Oscillator is also moving along the signal line in the neutral zone, not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6340, the pair will go to 1.6310 and 1.6280. If downward breakdown does not take place, the pair will consolidate at the current levels.

A meeting of the Bank of England will be held today; where interest rate issue will be resolved, most likely it will be maintained at the previous level of 0.50%. Comments of the British regulator are not worth of expecting, the last few meeting were as similar as peas.

It became known yesterday that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. In addition, 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.

Earlier, 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.

CBI also 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.

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 moving away from historic highs

At the Forex currency market Swiss Franc rate continues to weaken on Thursday- market is regaining from yesterday’s statement of the Swiss national Bank.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, tending towards sideways and maintaining a sell signal. Stochastic Oscillator is coming out of the oversold zone and has started to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7800, the pair USD/CHF will go to 0.7820 and 0.7850. If upward breakdown does not take place, the pair will consolidate at the current levels.

Thus, yesterday Swiss national Bank had restricted three- month Libor rate to 0-0.25% (it had amounted to 0-0.75% previously). They also stated that increasing rate of the Franc is a negative factor for the national economy; therefore Libor rate will tend to zero and the SNB is going to infuse liquidity into the market in the nearest future to “chill out” the Franc.

The threat to economic progress and price stability are two main arguments which the SNB has in favour of intervention.

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.

According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9% y/y in May. In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.

Current data shows that the data released previously was seasonal and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11. 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.

 

[LF.Anastasia]

JPY: Japanese Yen was thrown away from highs by intervention

The Japanese Yen rate is decreasing rapidly at the Forex currency market on Thursday morning – the Bank of Japan had carried out currency intervention to release pressure from the economy of the country caused by the expensive currency.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, shifting into the sideways movement and not giving a clear signal. Stochastic Oscillator goes up in the neutral zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 79.50, the pair will go to 79.70 и 78.05.

At the meeting of the Bank of Japan today, interest rate was left unchanged, in the range of 0-0.1%, at the same time program of assets purchase has been increased up to 15 trillion yen (previously: 10 trillion yen). In addition, volume of purchases of the long term government bonds was raised to 4 trillion yen (2 trillion yen earlier); size of program to purchase corporate bonds was increased to 2.9 trillion yen (2 trillion yen earlier).

Economic evaluation of the Central Bank was raised again in July, because regulator believes that activity in the economy is growing fast, so economy of Japan is on the way to gradual recovery.

Meanwhile, this morning the Central Bank of Japan had carried out currency intervention to reduce pressure which Yen exerts on the economy.

Statistics released earlier was mixed: 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.

In addition, preliminary average wages in Japan fell by 0.8% y/y in June against the forecast of growth by 0.5% y/y.

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 continues to free fall

At the Forex currency market the Australian Dollar rate continues to free fall on Thursday since investors do not show any interest in risky positions.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is moving along the signal line, not giving a clear signa; volumes are decreasing. Stochastic Oscillator has come into oversold zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0640, the pair will go to 1.0620 and 1.0590.

Economic situation in Australia has not changed significantly this morning.

Despite positive data: volume of retail sales in Australia declined by 0.1% in June against the fall of 0.6% earlier, investors continue to sell the AUD, as general trend of risk aversion is still strong at the world trading floors. It is worth noting that business activity index AIG in the service sector increased by 0.3 points in June, to the level of 48.8 points.

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). 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%

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.

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”.