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[LF.Anastasia]

NZD: New Zealand Dollar tends to grow

At the Forex currency market on Tuesday, the New Zealand Dollar rate continues its upward trend that started yesterday, making use of the lull at the external markets to regain from previous losses.

Forex forecast: MACD indicator for the pair NZD/USD has broken through signal line from top to bottom and is giving a sell signal. It continues to go further down. Stochastic Oscillator has pushed away from oversold zone, which it did not come into, and goes up in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8300, the pair will go to 0.8320 and 0.8350. If upward breakdown does not take place, the pair will consolidate close to the current levels.

According to the data released today, 2-year inflation forecast in Q3 is at the level of 2.9% against the previous forecast of 3.0%.

Although the forecast was below expectations, it did not have a negative impact on the rate of the AUD.

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.

Last meeting of the Reserve Bank of New Zealand did not bring any surprises: it 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 point to maintain the rate at the current low level any further.”

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. 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%. It became known earlier 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.

 

[LF.Anastasia]

EUR/USD: Euro goes down again due to the increasing risks

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, because Moody's has downgraded Japanese ranking.

By 9.30 MSK the Euro is at 1.4404 against yesterday’s closing level of 1.4441.

It became known today that rating agency Moody's has downgraded credit rating of Japan to AA3 due to the high budget deficit which is close to 200% of the country’s GDP. The forecast remained ‘stable.”

Yesterday, the court of Manhattan acquitted former head of IMF, Domonique Staruss-Khan of all charges and allowed him to collect his passport to leave the country. Thus, political component is obvious n the case of the monetary politician.

The day is going to be uneventful in terms of macro-statistics; therefore external background will remain the main activator of the movement.

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4420 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: Activity in British Pound is low on Wednesday

At the Forex currency market the British Pound Sterling rate is traded slightly downward at the low volumes on Wednesday.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and started to go up, tending to shape a buy signal. Stochastic Oscillator goes down in the neutral zone and is shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6510, the pair will go to 1.6525 and 1.65501. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known yesterday that mortgage lending in Great Britain increased to 33.417 thousand in July, as per BBA estimates, against the previous level of 32.123 thousand. At the same time a number of loans for buying new houses reached the level of stg4.926 billion in July; refinancing of the loans issued earlier amounted to 26.043 thousand against 24.311 thousand earlier.

In general, indexes of July showed that mortgage lending in the middle of the summer was the highest over the year.

House prices in Great Britain reduced by 2.1% m/m (-0.3% y/y) in August; index of retail prices in the country fell by 0.2% m/m (+5.0% y/y), as per RPI estimates; while in June the indicator was at the same level of +5.0% y/y.

Unemployment rate in the UK was at the level of 4.9% in July. At the same time, level of unemployed increased by 37.1 thousand. 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. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. The head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, if required.

It is worth noting that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June.

As it became known earlier net volume of borrowing in the public sector of Great Britain was at the level of -stg1.961 billion in July against the value of stg1.350 billion in June. In addition, other indices also showed that volumes of various public borrowings also went down, indicating fairly high level of effectiveness of the current economic programs.

 

[LF.Anastasia]

CHF: Swiss Franc maintains positions in the narrow range

At the Forex currency market Swiss Franc rate is traded in low volumes on Wednesday morning, still staying within the narrow range.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal. Stochastic Oscillator has reversed in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7930, the pair USD/CHF will go to 0.7940 and 0.7970. If upward breakdown does not take place, the pair will consolidate close to the current levels.

According to statistics released yesterday, trade balance in Switzerland amounted to +2.825 million francs in July against the level of +1.74 billion in June. Thus, fears about further reduction of balance have not been corroborated.

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. 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.

Last week, Swiss National Bank held a round of talks with Ministry of Finance, which resulted in the declaration of complete mutual understanding in economic issues. Thus, Ministry of Finance intends to spend 2 billion francs to support economy, since exchange rate of the national currency is too overvalued which is detrimental to economic system.

In addition, authorities of the country stated that decision on the target level of Franc will be made by the CNB. We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwarding sector, SNB continued to pour liquidity at the trading floors to curb the growth of the Franc. Swiss National Bank had also 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. Weighty argument of the SNB was that there is a threat to economic development and price stability.

Main Swiss statistics will be released at the end of the week; on Thursday, investors will await information about the index of investor economic expectation ZEW in August, index the leading indicator KOF will be made public on Friday.

 

[LF.Anastasia]

JPY: Japanese Yen has ignored regulator, as well as rating

At the Forex currency market on Tuesday, the Japanese Yen rate remains strong in the middle of the week, regardless developments negative for Japan.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is moving along the signal line, not giving a clear signal. Stochastic Oscillator remains in the neutral zone and is not giving a clear indications of movement direction.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.85, the pair will go to 77.00 and 77.50. If upward breakdown does not take place the pair will consolidate close to the current levels.

This morning, Rating Agency Moody's reported that rating of Japan has been downgraded to AA3. According to Moody’s the country is under the threat of high level of budget deficit, which has already reached 200% of GDP. In addition, the memorandum has mentioned aftermaths of disaster in March and ministerial changes that take place too often in the past five years.

Japanese authorities also said this morning that they are going to invest up to $100 billion to fight against expensive Yen. In his comments Noda stated that the reserves of the fiscal year of 2011 can be used in the fight against expensive Yen and that most likely these measures will help to “weaken” the JPY. Finance Ministry explained in the comments that measures taken by regulator today shall be beneficial for the rate of the JPY in the future. It could be the truth in the future, however today the JPY does not respond to the measures and statements and remains close to the highs of March.

Representative of Japanese monetary authorities Mr. Noda said earlier that government elaborates on the solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures to support economy which suffers from impact of expensive YPY. According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to complete turnaround in the ascending channel of the JPY.

According to 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%. 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.

 

[LF.Anastasia]

AUD: Activity in Australian Dollar is still low

At the Forex currency market the Australian Dollar rate started to decline in the middle of the week, however activity in the pair has been low due to the wait-and- see attitude of investors, who are focused on the developments which will take place at the end of the week.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and started to make upward reversal, giving a buy signal. Stochastic Oscillator also reverses upward in the neutral zone; however its buy signal is weak at the moment.

Forex recommendations: in case of breakdown at the level of 1.0480, the pair will go to 1.0490 and 1.0510. If upward breakdown does not take place, the pair will stay close to the current levels.

It became known today that price index for corporate services in Australia remains unchanged on monthly basis, -0.5% y/y in July against the level of -0.8% y/y in June. In addition, index of leading indicators Conference Board in Australia fell to -0.8% in June; while a month earlier it had amounted to -0.1%.

According to the data released last week index of leading indicators Westpac in Australia increased by 0.2% m/m (+1.6% y/y) in June against the growth of 3.0% y/y in May. However, the rate of decline in the index is minimal, considering that the index has been steadily decreasing since 2010. This index indicates prospects for economic activity for the next 3-9 months and judging by its dynamics, rapid growth can be hardly expected.

Minutes of the last meeting of the Reserve Bank of Australia which were made public earlier showed that leading economic indicators demonstrated moderate increase in employment, and if the world financial turmoil would continue, it could become a factor of pressure to household spending and sentiments in the business circles, which in its turn, would have a negative impact on the general projections of the Central Bank. At the same time expensive raw material in the world pushes the level of inflation upward. In addition, the document says that high exchange rate of the AUD and low level of households demand, have a restrictive effect on inflation. Among other things at the last meeting, arguments in favour of the rate increase were suppressed by the downside risks to demand and high level of tension at the global financial sector.

We would remind 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”.

Despite informative internal background, external environment is determinative for the AUD.

 

[LF.Anastasia]

NZD: New Zealand Dollar is in the focus of sellers’ attention

At the Forex currency market the New Zealand Dollar rate is under intense attention of sellers which is understandable: market is not prepared to start basic purchases, given the fact that external background is still tense and investors are awaiting the speech of Bernanke in Jackson Hole on Friday and his reference about QE3.

Forex forecast: MACD indicator for the pair NZD/USD has broken through signal line from top to bottom and is giving a sell signal. It continues to go further down. Stochastic Oscillator has pushed away from oversold zone, which it did not come into, and goes up in the neutral zone, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8300, the pair will go to 0.8320 and 0.8350. If upward breakdown does not take place, the pair will consolidate close to the current levels.

The data released in the middle of the week demonstrated that export in New Zealand was at the level of NZ$3.7 billion in July. Surplus of trade balance fell in July and amounted to +NZ$129 million versus the level of +NZ$197 million in June. Note that exports increased by 4.5% in Q2, to NZ$12.2 billion; imports fell by 1%, to the level of NZ$11.8 billion. Exports to China and Australia have been reducing gradually, up to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (previously: +4.7% y/y) respectively.

A 2-year inflation forecast released yesterday showed that expectations at the level of 2.9% are in Q3 against the previous forecast of 3.0%. Although the forecast was below previous expectations, it did not have a negative impact on the rate of the NZD.

It became known earlier 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.

Last meeting of the Reserve Bank of New Zealand did not bring any surprises: it 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 point to maintain the rate at the current low level any further.”

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. 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%.

 

[LF.Anastasia]

EUR/USD: USD is in anticipation of tomorrow’s support

The pair EUR/USD declines slightly at the Forex currency market on Thursday morning expecting that tomorrow the head of the U.S. Federal Reserve Ben Bernanke will offer hopes to the market for a new package of expansionary measures.

By 9.05 MSK the Euro is at 1.4402 against yesterday’s closing level of 1.4414.

Trading session today will be pending of the outcome of tomorrow’s annual conference in Jackson Hole where the U.S. FR chairman Ben Bernanke shall give his speech. Projections of the investors are based on the similar meeting a year earlier where Bernanke outlined the idea of QE2. Now, it is possible that the monetary politician will give a hint at new measures of quantitative easing.

This afternoon investors will await the data on the number of unemployment benefit claims for a week in the U.S.

Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4450 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound has slowed down its fall

At the Forex currency market the British Pound Sterling rate has slowed down its fall on Thursday morning; however it remains under sellers’ scrutiny.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has returned to the sideways trend and is not giving a clear signal. Stochastic Oscillator goes down in the neutral zone and is shaping a sell signal.

Forex recommendations: in case of break down at the level of 1.6350, the pair will go to 1.6325 and 1.6310. If downward breakdown does not take place, the pair will consolidate close to the current levels.

According to the data released today, British consumers continue to lose confidence in the economy. As per Nationwide estimates, assessment indicator of the current economic conditions in July remained at the low levels, reducing to 49 points against the previous 51 points. Thus, the growth of the indicator in May was temporary and was provoked by the royal wedding and since that time it is successively going down.

In general, levels of consumer confidence remain low, which adds dark tint to the gloomy picture of British economy.

It became known earlier that mortgage lending in Great Britain increased to 33.417 thousand in July, as per BBA estimates, against the previous level of 32.123 thousand. At the same time a number of loans for buying new houses reached the level of stg4.926 billion in July; refinancing of the loans issued earlier amounted to 26.043 thousand against 24.311 thousand earlier. In general, indexes of July showed that mortgage lending in the middle of the summer was the highest over the year.

House prices in Great Britain reduced by 2.1% m/m (-0.3% y/y) in August, according to Rightmove estimates; index of retail prices in the country fell by 0.2% m/m (+5.0% y/y), as per RPI estimates; while in June the indicator was at the same level of +5.0% y/y.

It is worth noting that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June. As it became known earlier net volume of borrowing in the public sector of Great Britain was at the level of -stg1.961 billion in July against the value of stg1.350 billion in June. In addition, other indices also showed that volumes of various public borrowings also went down, indicating fairly high level of effectiveness of the current economic programs.

Unemployment rate in the UK was at the level of 4.9% in July. At the same time, level of unemployed increased by 37.1 thousand. 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. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. The head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, if required.

 

[LF.Anastasia]

CHF: Swiss Franc continues to maintain positions in the narrow range

At the Forex currency market Swiss Franc rate is traded with low-intensity on Thursday, remaining within the narrow range, which has developed this week.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal. Stochastic Oscillator has reversed in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7960, the pair USD/CHF will go to 0.7970 and 0.7970. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Investors will wait for the data on the index of investor economic expectations ZEW in August, which is going to be released today, and leading indicators index KOF in August, which will become known on Friday.

In general economic situation in Switzerland remains unchanged. There is still high risk that SNB will intervene into the currencies trading once again to prevent Franc’s strengthening.

It became known earlier 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. 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.

Last week, Swiss National Bank held a round of talks with Ministry of Finance, which resulted in the declaration of complete mutual understanding in economic issues. Thus, Ministry of Finance intends to spend 2 billion francs to support economy, since exchange rate of the national currency is too overvalued which is detrimental to economic system.

In addition, authorities of the country stated that decision on the target level of Franc will be made by the CNB. We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwarding sector, SNB continued to pour liquidity at the trading floors to curb the growth of the Franc. Swiss National Bank had also 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. Weighty argument of the SNB was that there is a threat to economic development and price stability.

According to statistics released yesterday, trade balance in Switzerland amounted to +2.825 million francs in July against the level of +1.74 billion in June. Thus, fears about further reduction of balance have not been corroborated.