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[LF.Anastasia]

NZD: New Zealand Dollar continues to strengthen

The New Zealand Dollar rate is traded upward at the Forex currency market on Tuesday morning, continuing the rise amid investors’ interest to risk, which is preserved this week.

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 has come into overbought zone and maintains a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8520, the pair will go to 0.8540 and 0.8560. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known on Tuesday that permits to construct in New Zealand increased by 13.0% in July against the fall of 1.3% in June.

It is too early to speak about tendency; however current results are quite good.

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%.

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 medicine.

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%.

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.

 

[LF.Anastasia]

EUR/USD: USD is strengthening, amid positive expectations

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, continuing to slide down, the same as last night.

By 9.40 MSK the Euro is at 1.4435 against yesterday’s closing level of 1.4440.

According to the minutes of the meeting of the Federal Reserve in August, which was made public last night, Committee discussed the issue of QE3 as part of a solution to support national economy. The document showed that split of opinions still preserved in the Federal Reserve.

The USD was supported by the publication – investors believed that the camp of “hawks” in the FR was reinforced by new members.

A lot of U.S. news is scheduled for the release this afternoon which can influence on the balance of power in the major pair.

Most likely the pair EUR/USD will not go beyond the range of 1.4405-1.4520 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound has a setback

At the Forex currency market morning the British Pound Sterling rate continues to retreat on Wednesday morning, the same as last night. Weak statistics has made position of the GBP worse.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and is going down slightly, giving a sell signal, while volumes are low. Stochastic Oscillator is moving along the signal line in the neutral zone and is not giving any signals.

Forex recommendations: in case of break down at the level of 1.6300, the target for sale will become the levels of 1.6280 and 1.6260.

According to the data released today consumer confidence index GFK/NOP in the UK fell to -31 points in August against the level of -30 points in July. This index, which is one of the most objective assessment of consumer confidence in the UK, is now below the lows of 1970, the time of recession in the country

Note: that this index indicates consumers’ economic expectations for the next 12 months.

It became known yesterday that 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. At the same time, 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 indications, CBI expects stabilization of the situation in Q4.

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 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.

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 tries to start correction

At the Forex currency market Swiss Franc rate tries to regain at least some of the losses on Wednesday morning, as those investors who hedge their positions against market instability have begun to show interest in the currency again.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, ready to break through the signal line from bottom to top and is 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 0.8160, the pair USD/CHF will go to 0.8180 and 0.8210.

Statistics released yesterday showed that consumption indicator UBS fell to 1.29 points in July against the level of 1.52 points in June. The indicator has been sliding down not for the first month, showing negative tendencies in the economy.

In general the economic situation in Switzerland remains unchanged. Earlier investors made use of the rumors that Swiss national Bank had distributed a letter to the banks about intention to impose a tax on deposit, which explains the weakness of the Franc. This information has not been confirmed and it is possible that SNB will intervene in the currency trading once again in order to prevent the Franc from strengthening.

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.

According to the data released earlier, 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.

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 great bulk of statistics.

 

[LF.Anastasia]

JPY: Japanese Yen returned to sustained growth

Japanese Yen has returned to growth at the Forex currency market on Wednesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow, giving a buy signal, while volumes are low. Stochastic Oscillator goes down 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 76.50, the pair will go to 76.20 and 77.00. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier

The data was weak which was to the advantage of the growing Yen. From the beginning of the week, attention of the market is focused on the political changes in Japan. It became known yesterday that former Finance Minister Yosihiko Noda was elected the head of the Government of Japan. Terms of office of the ex- 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.

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.

 

[LF.Anastasia]

AUD: Support is required to maintain growth of the Australian Dollar

The Australian Dollar rate is still traded upward at the Forex currency market on Wednesday morning, however volumes are low which indicated potential decline in the currency if new catalysts for purchase will not turn up at the market.

Forex forecast: MACD indicator remains in the negative area for the pair AUD/USD, and is growing, giving a buy signal, while volumes are still insignificant. Stochastic Oscillator has come into overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0700, the pair will go to 1.0720 and 1.0750. If upward breakdown does not take place, the pair will stay close to the current levels.

Macro-economic situation in Australia is improving: consumer lending in Australia increased by 0.2% m/m in July versus the fall of 0.1% in June. Number of permits to construct in Australia increased by 1.0% m/m in July against the decline of 3.6% m/m in June. It is a good indication; however it is too early to speak about tendency.

As it became known the day before 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.

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.

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%.

 

[LF.Anastasia]

CAD: Canadian Dollar gradually steps back from three-week highs

At the Forex currency market the Canadian Dollar rate started to slide away from three-week highs as soon as the USD started to gain strength.

Forex forecast: MACD indicator is moving up in the positive area for the pair USD/CAD, however it is going down, giving a sell signal. Stochastic Oscillator has pushes away from the oversold zone and started to go up in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9790, the pair will go 0.9820 and 0.9850. If upward breakdown does not take place, the pair will stay at the current levels.

Statistics released earlier prevented growth of the CAD: prices for industrial goods remain at the level of -0.3% in July, the same as a month earlier; prices for raw materials fell by 1.2% against previous expectations of decline by 2.5%.

The situation became harder due to the data on trade balance: the index amounted to -$15.33 billion in Q2 against expectations of -$13.8 billion.

Net CPI in Canada increased by 0.2% m/m (+1.6% y/y) in July. The indicator fell by 0.7% m/m (+3.1% y/y) in June.

As it became known, number of begun construction in Canada increased to 205.1 thousand in July which is higher than the forecast at 194.5 thousand and above the previous level of 196.6 thousand. In addition, trade deficit in Canada was at the level of -$1.6 billion in June against the level of -$1 billion in May. This is probably related to the problems in the neighboring U.S.

Earlier, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast. According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the nearest future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); and it will be: 2.6% in 2012 and 2.1% in 2013. According to the Bank evaluation, export performance in Canada is negative, because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation more complicated. The growth in the interest rate in Canada will directly depend on stability in the economic development. The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

 

[LF.Anastasia]

GBP: British Pound is still on sale

At the Forex currency market morning the British Pound Sterling rate continues to be under pressure, as external background does not give ground for purchases.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and goes down, giving a sell signal, while volumes are low. Stochastic Oscillator is slowly moving down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of break down at the level of 1.6250, the target for sale will become the levels of 1.6230 и 1.6210.

It seems that thirst for risk has faded away as quickly as it showed up earlier- traders’ enthusiasm lasted for only half a week.

It became known yesterday that 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. At the same time, 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 indications, CBI expects stabilization of the situation in Q4.

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 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.

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 today consumer confidence index GFK/NOP in the UK fell to -31 points in August against the level of -30 points in July. This index, which is one of the most objective assessment of consumer confidence in the UK, is now below the lows of 1970, the time of recession in the country Note: that this index indicates consumers’ economic expectations for the next 12 months.

 

[LF.Anastasia]

CHF: Swiss Franc goes up, as regulator refrains from action

At the Forex currency market Swiss Franc rate regains losses –investors had been annoyed with the position of the Swiss National Bank, so while the SNB maintains position of noninterference, they begun to buy Franc.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, ready to break through the signal line from bottom to top and is shaping a buy signal, while volume are low. Stochastic Oscillator is prepared to leave overbought zone and tends to shape a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8010, the pair USD/CHF will go to 0.7990 and 0.7970. If downward breakdown does not take place, the pair will consolidate at the current levels.

Demand for Franc went up when government announced a new market aid program, although the amount was lower than expected: CHF870 million. In addition, authorities indicated that they are not going to set a target rate for the Franc.

According to the Minister of Economic Affairs of Switzerland, the country will have to put up with expensive Franc for some time and only SNB is able to influence on the Franc in medium-term.

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.

According to the data released earlier, 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.

Statistics released earlier showed that consumption indicator UBS fell to 1.29 points in July against the level of 1.52 points in June. The indicator has been sliding down not for the first month, showing negative tendencies in the economy.

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 great bulk of statistics.

 

[LF.Anastasia]

JPY: Japanese Yen continues to gain weight

Japanese Yen continues to grow at the Forex currency market on Thursday morning: demand for “safe harbor” increases, moreover, political changes in the government are also favourable for the JPY.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, it is moving along the signal line, not giving any signals. Stochastic Oscillator goes down in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.40, the pair will go to 76.20 and 76.00. If downward breakdown does not take place, the pair will consolidate at the current levels.

The Yen continues to take advantage of the political changes in the government: former Finance Minister Yosihiko Noda was elected the head of the Government of Japan. Terms of office of the ex- 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.

It became known yesterday that number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier. The data was weak, which was to the advantage of the growing Yen, which normally moves in the direction opposite to the markets’ sentiment.

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.

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.