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[LF.Anastasia]

GBP: British Pound received a chance to go on with strengthening

At the Forex currency market on Monday morning, the British Pound Sterling rate continues upward trend which started last week; while investors regain from previous sales, the Pound has time to recover too; regardless internal situation in the UK.

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

Forex recommendations: in case of break down at the level of 1.6320, the pair will go to 1.6340 and 1.6360. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known today that house prices in the UK fell by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

Earlier, Prime Minister Cameron recalled the Parliament in order to proceed to work this Thursday, mainly because of the escalating situation in the country. This is a precedent. Parliament had been summoned from vocation only twice in the last decade in 2001, when there was a terrorist attack in the U.S. and in 2002 when Britain joined military campaign against Iraq.

The head of the Bank of England, Mervyn King stressed earlier in his speech that current anxiety in the markets is the result of the irritable situation with the debts in the U.S and Eurozone. Regulator downgraded his forecast for the world economic growth and noted that outlooks for the growth in the British GDP are also decreasing. According to him, downside risks dominate in the British economy now; in 2012 the country can only expect modest economic growth, because economic problems aggravate nearly every day. British economy has already faced downfall in the volume of lending and free financing and regulator does not rule out that the rate might be increased “one day”, however monetary policy shall remain flexible. The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds. No special comments have been made: British regulator continues to adhere to the old monetary policy. British monetary politician Mr. Osborn said yesterday that collapse of the Eurozone would be economic disaster for both Europe and Great Britain. He said that the UK strictly implements the plan to reduce budget deficit; however the world politicians should act be more effective and vigorous to prevent imbalance. We would remind that rating agency S&P said last week that rating downgrade is not a threat for Great Britain.

It also became known earlier, 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. 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. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.

 

[LF.Anastasia]

CHF: Swiss Franc is getting weaker under pressure of national regulator

Swiss Franc rate is traded downward at the Forex currency market on Monday, and it has been going on for the fourth consecutive session, since Swiss National Bank gave to understand that it is going to continue currency interventions for as long as the need be.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal, while volumes decrease. Stochastic Oscillator is going up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7955, the pair USD/CHF will go to 0.7970 and 0.7990. If upward breakdown does not take place, the pair will consolidate at the current levels.

Long positions in Franc continue to fall at Forex market; investors fear that SNB can take more drastic measures, as it has warned earlier that it will adjust the rate of Franc to the Euro, if speculations with the exchange rate of Swiss currency will not reduce in volume.

We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwards sector, SNB continued to infuse liquidity at the trading floors to curb the growth of the Franc. We would remind that earlier, 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. SNB named the threat to economic progress and price instability as main arguments.

According to the representative of SNB Mr. Jordan, Central Bank of the country is prepared to take proactive measures to maintain financial stability in the market in the future; however the issue of the interest rate increase is not going to be discussed at the moment. In addition, short- term risks to price stability have a downward trend.

At the same time Mr Dantin stressed that Franc is still significantly overvalued; however the idea of pegging of Franc to the USD is difficult to implement, and therefore is not feasible at the moment. According to Dantin, present accommodative policy is completely justified.

Current data shows that the data released previously has been of a seasonal character 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. 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.

It became known last week that consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

There is a great deal of talk at the market that as long as measures of the CNB were not successful and the rate tends to zero, regulator can choose a different option guided by experience of Brazil, and introduce a negative rate or tight control over capital movement.
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[LF.Anastasia]

JPY: Japanese Yen is ready to yield to USD

At the Forex currency market the Japanese Yen rate is getting slightly weaker on Monday; the data on Japanese economy was quite stable, due to which the JPY began to retreat.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going down, giving a sell signal. Stochastic Oscillator tends to come out of the oversold zone, starting to shape a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.00, the pair will go to 77.20 and 77.45. The upward breakdown does not take place the pair will consolidate close to the current levels.

According to statistics released at the beginning of the week, real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2.

GDP fell less than expected, and Minister of Finance of the country of the rising sun said that Japan will demonstrate the rise of economy next quarter. Monetary politician regards the fall in Q2 as a temporary phenomena; he said that it is required to monitor risks, caused by expensive Yen. In addition, it is not possible to resolve the issue of deflation immediately and prices in the country will recover gradually.

Japanese Finance Minister Noda said this morning that the JPY moves in one direction at Forex and the Bank of Japan is closely monitoring all changes. Last weekend, Japanese Finance Minister Noda said that during the meeting of the Big Seven he clarified the importance of the conducted currency intervention which had been aimed to reduce the rise of the national currency. At the same time he did not indicate whether Japan is going to conduct currency intervention in the future. Despite liquidity that has been infused in the market, the Yen continues to grow again, using external instability as an activator.

The data released earlier showed that composite index of consumer confidence in Japan increased to 37.0 points in July against the value of 35.3 points in June. It also became known yesterday that current account surplus in Japan was -50.2% y/y in June, Y526.9 billion against decline of 51.7% y/y in May. It became known today that revised volume of industrial output in Japan increased by 3.8% m/m in June against preliminary value of +3.9% m/m. . As it can be seen it is slightly below the forecast, however in general, it is a good indication, despite the fact that capacity utilization in June was twice as low as the level of May. According to statistics released earlier, preliminary index of leading indicators increased to 103.2 points in June against the previous level of 99.4 points. At the same time preliminary index of coincident indicators in June was at the level of 108.6 points against the forecast of 108.7 points. Statistics is positive, it demonstrates that Japanese economy is moving towards recovery although slowly and with halts.

According to the previous estimates of the Bank of Japan, 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 in June against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been of 11.0% y/y.

 

[LF.Anastasia]

AUD: Australian Dollar is recovering again

At the Forex currency market the Australian Dollar rate begun to grow again, on Monday taking advantage of stabilization in the foreign markets, after significant fall last week,

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, while volumes are low, giving a sell 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 1.0435, the pair will go to 1.0450 and 1.0470. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Macro-economic situation has not changed significantly in Australia this morning.

It became known today that business activity index in construction sector AIG in Australia increased by 0.3 points, up to 36.q points in July. Price index for houses in Australia fell by 0.1% q/q in Q2 against the forecast of reduction by 0.9% on quarterly basis.

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%

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”.

According to the data released earlier, employment rate in Australia decreased by 0.1 thousand in July against expectations of growth by 10.3 thousand. Unemployment rate in the country rose unexpectedly, up to the highs of eight months, and amounted to 5.1%; while in June the index remained at the level of 4.9%.

Therefore, it is getting more evident that Australian economy is losing momentum to growth and is slowing down.

 

[LF.Anastasia]

NZD: New Zealand Dollar has a chance to regain, along with other currencies

The New Zealand Dollar rate is traded upward at the Forex currency market on Monday; the NZD is supported by external background, which has stabilized after collapse of last week.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD; moving along the signal line and is not giving a clear signal. Stochastic Oscillator is going up in the neutral zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8270, the pair will go to 0.8250 and 0.8230. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Economic situation in New Zealand has not changed fundamentally on Monday morning.

According to the released data, consumer confidence ANZ in New Zealand increased to 114.4 points in August against preliminary level of 109.4 points. 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.

Two weeks earlier, 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 which has been planned for the nearest future is aimed to duly curb the rise in 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.”

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

In addition, it became known this week that unemployment rate in New Zealand amounted to 6.5% in Q2 against revised similar value in Q1. Employment rate in New Zealand has not changed on quarterly basis in Q2, showing growth by 2.0% y/y, to 2.214 million. In general the data agreed with the economists’ forecast, unemployment rate had been even below consensus forecast of 6.6%. However, this did not prevent sales of the NZD.

The NZD has a real chance to recover from previous losses while external background has stabilized.

 

[LF.Anastasia]

EUR/USD: Euro is waiting for signals from Germany and France

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning, still staying close to the highs of three weeks, in advance of the meeting of Presidents of France and Germany who are going to discuss issues of financial stabilization.

By 9.20 MSK the Euro is at 1.4416 against yesterday’s closing level of 1.4443.

Expectations of the meeting where Sarkozy and Merkel are going to discuss and develop measures of financial stabilization in the region are favourable for the Euro. In addition market believes that idea of France about issue of Eurobonds, secured by 17 countries of the European Union can contribute to stability.

Publication of the weak statistics this afternoon about the number of new construction sites in July can be unfavourable for the USD today. In addition, agency Moody’s downgraded the forecast for growth in the real level of GDP in the U.S. to 2% in the second half of the year (previously: 3.5%) and lowered the forecast for U.S economic growth in 1012 to 3% (3.5% earlier).

Thus, traders have plenty matters to think over.

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4500 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound has interrupted its three-day growth

At the Forex currency market on Tuesday morning, the British Pound Sterling rate is traded downward after three days of growth, which is quite logical.

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

Forex recommendations: in case of break down at the level of 1.6360, the pair will go to 1.6370 and 1.6390. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Yesterday, representative of the Bank of England Mr. Miles stressed that British regulator does not see reason to expand QE program which operates in the economy. Earlier, Prime Minister Cameron recalled the Parliament in order to proceed to work this Thursday, mainly because of the escalating situation in the country. This is a precedent. Parliament had been summoned from vocation only twice in the last decade in 2001, when there was a terrorist attack in the U.S. and in 2002 when Britain joined military campaign against Iraq.

British monetary politician Mr. Osborn said yesterday that collapse of the Eurozone would be economic disaster for both Europe and Great Britain. He said that the UK strictly implements the plan to reduce budget deficit; however the world politicians should act be more effective and vigorous to prevent imbalance. We would remind that rating agency S&P said last week that rating downgrade is not a threat for Great Britain.

It also became known earlier, 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. 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. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. In addition, house prices in the UK fell by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

The head of the Bank of England, Mervyn King stressed earlier in his speech that current anxiety in the markets is the result of the irritable situation with the debts in the U.S and Eurozone. Regulator downgraded his forecast for the world economic growth and noted that outlooks for the growth in the British GDP are also decreasing. According to him, downside risks dominate in the British economy now; in 2012 the country can only expect modest economic growth, because economic problems aggravate nearly every day. British economy has already faced downfall in the volume of lending and free financing and regulator does not rule out that the rate might be increased “one day”, however monetary policy shall remain flexible. The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds. No special comments have been made: British regulator continues to adhere to the old monetary policy.

 

[LF.Anastasia]

CHF: Swiss Franc determines movement direction

Swiss Franc rate is traded slightly upward at the Forex currency market on Tuesday morning; which, however, looks more like technical correction for the pair USD/CHF after several days of steady upward movement.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal, while volumes are decreasing. Stochastic Oscillator has reached oversold zone and continues to go up, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7835, the pair USD/CHF will go to 0.7850 and 0.7890. If upward breakdown does not take place, the pair will consolidate at the current levels.

It became known this week that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released earlier showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

However, the data released previously has been of a seasonal character 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. 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.

Long positions in Franc continue to fall at Forex market; investors fear that SNB can take more drastic measures, as it has warned earlier that it will adjust the rate of Franc to the Euro, if speculations with the exchange rate of Swiss currency will not reduce in volume.

We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwards sector, SNB continued to infuse liquidity at the trading floors to curb the growth of the Franc. We would remind that earlier, 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. SNB named the threat to economic progress and price instability as main arguments.

According to the representative of SNB Mr. Jordan, Central Bank of the country is prepared to take proactive measures to maintain financial stability in the market in the future; however the issue of the interest rate increase is not going to be discussed at the moment. In addition, short- term risks to price stability have a downward trend.

At the same time Mr Dantin stressed that Franc is still significantly overvalued; however the idea of pegging of Franc to the USD is difficult to implement, and therefore is not feasible at the moment. According to Dantin, present accommodative policy is completely justified.

 

[LF.Anastasia]

JPY: Japanese Yen remains within the range

At the Forex currency market on Tuesday morning the Japanese Yen rate is still within 76.30-77.35; the trading range, which had been established over the past few days.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going down, giving a sell signal. Stochastic Oscillator has come out of the oversold zone, and is going upward, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.90, the pair will go to 77.20 and 77.45. If upward breakdown does not take place the pair will consolidate close to the current levels.

According to statistics released at the beginning of the week, real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2. GDP fell less than expected, and Minister of Finance of the country of the rising sun said that Japan will demonstrate the rise of economy next quarter. Monetary politician regards the fall in Q2 as a temporary phenomena; he said that it is required to monitor risks, caused by expensive Yen. In addition, it is not possible to resolve the issue of deflation immediately and prices in the country will recover gradually. 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 in June against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been of 11.0% y/y.

The data released earlier showed that composite index of consumer confidence in Japan increased to 37.0 points in July against the value of 35.3 points in June. It also became known yesterday that current account surplus in Japan was -50.2% y/y in June, Y526.9 billion against decline of 51.7% y/y in May. It became known today that revised volume of industrial output in Japan increased by 3.8% m/m in June against preliminary value of +3.9% m/m. . As it can be seen it is slightly below the forecast, however in general, it is a good indication, despite the fact that capacity utilization in June was twice as low as the level of May. According to statistics released earlier, preliminary index of leading indicators increased to 103.2 points in June against the previous level of 99.4 points. At the same time preliminary index of coincident indicators in June was at the level of 108.6 points against the forecast of 108.7 points. Statistics is positive, it demonstrates that Japanese economy is moving towards recovery although slowly and with halts.

According to the previous estimates of the Bank of Japan, 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%.

Japanese Finance Minister Noda said this morning that the JPY moves in one direction at Forex and the Bank of Japan is closely monitoring all changes. Last weekend, Japanese Finance Minister Noda said that during the meeting of the Big Seven he clarified the importance of the conducted currency intervention which had been aimed to reduce the rise of the national currency. At the same time he did not indicate whether Japan is going to conduct currency intervention in the future. Despite liquidity that has been infused in the market, the Yen continues to grow again, using external instability as an activator.

 

[LF.Anastasia]

AUD: Australian Dollar failed to stay in the ascending channel

At the Forex currency market the Australian Dollar rate is traded downward on Tuesday; after three days of growth the AUD failed to gather enough strength to withstand changing market sentiments.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is going down, while volumes are average, and is giving a sell signal. Stochastic Oscillator goes up in the neutral zone, approaching to 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 1.0480, the pair will go to 1.0490 and 1.0520. If upward breakdown does not take place, the pair will stay close to the current levels and will tend to rollback to 1.0430.

Today, minutes of the last meeting of the Reserve Bank of Australia was made public, according to which leading economic indicators demonstrate moderate increase in employment, and if the world financial turmoil will be continued, it will become a factor of pressure for household spending and sentiments in the business circles, which in its turn will have a negative impact on the general projections of the Central Bank.

In addition, the document states that high rate of the Australian Dollar and low level of demand in households can act as deterrent force for the inflation. At the same time expensive raw material in the world pushes level of inflation upward.

Among other things at the meeting, arguments in favour of rate increase were suppressed by the downside risks to demand and high level of stress at the global financial exchanges.

Recall that 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 other respect, macro-economic background has not changed much.

It became known yesterday that business activity index in construction sector AIG in Australia increased by 0.3 points, up to 36.q points in July. Price index for 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 data released earlier, employment rate in Australia decreased by 0.1 thousand in July against expectations of growth by 10.3 thousand. Unemployment rate in the country rose unexpectedly, up to the highs of eight months, and amounted to 5.1%; while in June the index remained at the level of 4.9%.

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%

Therefore, it is getting more evident that Australian economy is losing momentum to growth and is slowing down.