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[LF.Anastasia]

GBP: British Pound takes advantage of the weak dollar

At the Forex currency market on Friday morning the British Pound Sterling rate goes up on Monday morning, continuing to move in the channel which took shape on Friday night. The GBP has a chance to regain losses of the last week, while the weakness of the USD is still preserved.

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 has come out of the oversold zone and shaping a buy signal.

Forex recommendations: in case of break down at the level of 1.6395, the pair will go to 1.6420 and 1.6450.

The main driver for the GDP growth today is the continuing weakness of the USD caused by the outcome of the speech of the FR chairman Bernanke on Friday.

In other respects, economic situation of Great Britain remains unchanged this morning.

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 the need be.

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.

According to the data released previously, 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. 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.

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. Earlier, MPC member, former “hawk” of the Bank of England Weale noted that regulator will take measure when British economy will need help. According to him neither the forecast of the Bank of England, nor recent dynamics of the market can be the reason to continue quantitative easing policy, as economic situation is very different from that of 2008.

It seems that Weale has radically changed his view on British economy, joining the camp of “Doves” led by King in August.

 

[LF.Anastasia]

CHF: Swiss Franc is rapidly getting weaker

At the Forex currency market Swiss Franc rate continues to decline in pairing with the USD on Monday, as market did not cease to talk about new measures of the SNB against CHF.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal, while volume are low. Stochastic Oscillator is moving sideways in the neutral zone and is not giving any signals.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8090, the pair USD/CHF will go to 0.8120 and 0.8150. If upward breakdown does not take place, the pair will consolidate close to the current levels.

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.

This had become the driver of pair’s movement on Friday. Investors’ actions were based on the rumors that Swiss national Bank had distributed a letter to the banks about intention to impose a tax on deposit. This information has not been confirmed; however investors remain on their toes.

Authorities of the country stated earlier 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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen tends to grow at the beginning of the week

At the Forex currency market the Japanese Yen rate goes up on Monday, continuing Friday’s trend.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow slightly, giving a buy signal, although it is very weak. Stochastic Oscillator goes down slowly in the neutral zone, giving a sell signal, which is also weak.

Forex recommendations: in case of breakdown at the level of 76.60, the pair will go to 76.45 and 77.30. If downward breakdown does not take place the pair will consolidate close to the current levels.

Meanwhile market’s attention is focused on the political changes in Japan. Recall that Prime minister of Japan Naoto Kan announced his resignation as a Prime Minister and leader of Democratic Party of Japan (DPJ). Now, all further policy of the country, including the issue of currency intervention will depend on the new head of the government. It is assumed that ex Minister of Foreign Affairs Seiji Maehara can take over position of Prime-Minister.

Information of today showed that Yosihiko Noda also has a chance to become a head of the Government of Japan.

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.

We would remind that Rating Agency Moody's reported that rating of Japan had 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 the disaster in March and ministerial changes that take place too often in the past five years. In addition, Japanese authorities also said that they are going to invest up to $100 billion to fight against expensive Yen. Noda stated in his comments 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 current measures taken by regulator 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.

 

[LF.Anastasia]

AUD: Growth of Australian Dollar was caused by the interest to risk

At the Forex currency market on Monday, the Australian Dollar rate growth amid revival of interest in risky positions among investors. For the time being growth of the AUD is limited because investors’ are still wary of any comments of the monetary authorities.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and is growing and is giving a buy signal, while volumes are below average. Stochastic Oscillator goes up in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0615, the pair will go to 1.0630 and 1.0650. If upward breakdown does not take place, the pair will stay close to the current levels.

External environment is still determinative for the AUD and the lack of volumes in the pair indicates that investors have adopted wait and see position.

As it became known today sales in the primary housing market of Australia fell by 8.0% m/m in July against the decline of 8.7% m/m a month earlier. Presently, it looks more like stabilization of the situation, than a tendency for improvement in the indicator.

According to the Minutes of the last meeting of the Reserve Bank of Australia which was made public earlier, leading economic indicators demonstrated moderate increase in employment, and if the world financial turmoil would continue, it could become a factor of pressure on 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. In addition, the document says that high exchange rate of the AUD and low level of households demand has 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.

It became known earlier 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%.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar strengthens at the beginning of the week

At the Forex currency market the New Zealand Dollar rate strengthens on Monday, due to the traders’ interest to risky positions, all the more so that levels of purchases of the NZD look appealing.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD, however it tends to grow, giving ground for a buy signal. Stochastic Oscillator goes up steadily in the neutral zone, and is giving a buy signal, coming close to the overbought area.

Forex recommendations: in case of breakdown at the level of 0.8460, the pair will go to 0.8470 and 0.8500. If upward breakdown does not take place, the pair will consolidate close to the current levels.

As long as the USD remains under pressure caused by the U.S. FR position declared by regulator Bernanke last Friday, investors will regain from previous sales.

Macro-economic environment in the country is stable.

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%.

As it was made public earlier 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, while unemployment rate had been even below the consensus forecast of 6.6%.

Last meeting of the Reserve Bank of New Zealand did not bring any surprises: it was 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.”

It became known earlier that retail sales in New Zealand increased by 0.9% q/q in Q2 against the forecast of growth by 0.7% on quarterly basis. According to the details given in the report the growth is attributed to the sale of motor spare parts, electrical goods and medicals.

 

[LF.Anastasia]

EUR/USD: Euro is pushed up due to interest in risk

The pair EUR/USD is traded upward at the Forex currency market on Tuesday morning, continuing movement in the three-day ascending channel.

By 9.30 MSK the Euro is at 1.4518 against yesterday’s closing level of 1.4510.

Investors seems willing to take risk- first of all, buying interest is being supported by the Friday’s speech of the FR chairman Ben Bernanke, and secondly, the U.S. statistics released yesterday, which demonstrated the growth of Americans’ expenditures above the forecast, alsoencouraged the interest to risk.

The data on Eurozone will be released this afternoon, including index of consumer expectations and index of consumer confidence in the U.S. in August.

Most likely the pair EUR/USD will not go beyond the range of 1.4480-1.4560 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound determines movement direction after steady growth

At the Forex currency market morning the British Pound Sterling rate is between two fires on Tuesday morning: on the one hand interest in risk is clearly evident in the market, and this can push the pound upward; on the other hand British statistics holds back buying spree.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and is going down slightly, starting to shape a sell signal, while volumes are low. Stochastic Oscillator continues to go up in the neutral zone and is giving a buy signal.

Forex forecast: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6415, the pair will go to 1.6430 and 1.6450. However, in case of the movement to 1.6390, target for sale will become the level of 1.6370.

Yesterday markets in the UK were closed, however statistics released this morning was disappointing: index of consumer optimism in the service sector of Great Britain fell by 29% in Q3, as per CBI estimates, against the growth of 10% in Q2.

The Bank of England expected the growth of the index to the more optimistic levels in Q3 - statistics showed the opposite: optimism is fading away in the current quarter, and volume of business operations reduces in parallel.

Despite such gloomy indexes, CBI anticipates stabilization of the situation in Q4.

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.

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 the need be.

Unemployment rater 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.

 

[LF.Anastasia]

CHF: Swiss Franc continues to weaken

At the Forex currency market Swiss Franc rate continues to weaken on Tuesday. In addition to the internal factors, demand in the currency – “safe harbor” is not high. At the moment.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal, while volume are low. Stochastic Oscillator has come into overbought zone and continues to give a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8190, the pair USD/CHF will go to 0.8210 and 0.8230.

GDP in Switzerland in Q2 will be known on Thursday, as well as the data on PMI in August and retail sales in July. The rise in volatility in the pair is possible on this day due to the bulk of statistics.

In general the 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.

This had become the driver of pair’s movement on Friday. Investors’ actions were based on the rumors that Swiss national Bank had distributed a letter to the banks about intention to impose a tax on deposit. This information has not been confirmed; however investors remain on their toes.

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.

Authorities of the country stated earlier 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 the data released yesterday, unemployment rate in Switzerland remained at the level of 3.0% in July. Statistics released earlier showed that the level of retail sales in Switzerland increased by 7.4% in June against the revised level of -3.9% in May. In addition, index of PMI SVME rose to 53.5 points in July against the forecast of 52.5 points.

 

[LF.Anastasia]

JPY: Japanese Yen does not make sudden movements

At the Forex currency market the Japanese Yen rate is traded with minimal deviation on Tuesday morning due to political changes in Japan.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow slightly, giving a buy signal, although it is very weak. Stochastic Oscillator goes down slowly in the neutral zone, giving a sell 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 77.10 and 77.30. If upward breakdown does not take place the pair will go to the level of 76.50.

Attention of the market is focused on the political changes in Japan. It became known today that former Finance Minister Yosihiko Noda was elected the head of the Government of Japan. Terms of office of the former Prime Minister Kan expired on Tuesday.

Now market will watch how consistent Noda is going to be in the monetary policy- he has already outlined three main areas of work in this post, one of it includes the fight against expensive JPY.

We would remind that Rating Agency Moody's reported that rating of Japan had 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 the disaster in March and ministerial changes that take place too often in the past five years. In addition, Japanese authorities also said that they are going to invest up to $100 billion to fight against expensive Yen. Noda stated in his comments 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 current measures taken by regulator 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.

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: Australian Dollar continues progressive advance

At the Forex currency market on Monday, the Australian Dollar rate continues progressive advance on Tuesday morning.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and is growing and is giving a buy signal, while volumes are below average. Stochastic Oscillator goes up while entering overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0675, the pair will go to 1.0690 and 1.0720. If upward breakdown does not take place, the pair will stay close to the current levels.

According to the data released on Tuesday, number of permits to construct in Australia increased by 1.0% m/m in July against the decline of 3.6% m/m n June. It is a good indication, however it is too early to speak about tendency.

As it became known yesterday sales in the primary housing market of Australia fell by 8.0% m/m in July against the decline of 8.7% m/m a month earlier. Presently, it looks more like stabilization of the situation, than a tendency for improvement in the indicator.

It became known earlier 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%.

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 was 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 on 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. In addition, the document says that high exchange rate of the AUD and low level of households demand has 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.