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[LF.Anastasia]

JPY: Japanese Yen is being corrected after three-day growth

At the Forex currency market on Wednesday the Japanese Yen rate is getting weaker on Thursday morning for the first time this week; the Yen has strengthened enough over the last three days to be technically corrected.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal; however, volumes are decreasing. Stochastic Oscillator has come into oversold zone and is 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 77.35. If upward breakdown does not take place, the pair will consolidate at the current levels. Current correction in the pair will slightly reduce risks of a new round of currency intervention from the Bank of Japan.

Economic situation in Japan has not changed significantly this morning.

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%. 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 next quarter Japan will demonstrate the rise of economy.

Statistics released earlier showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. Statistics released yesterday showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

A meeting of G7 last weekend showed that member countries are concerned about the fate of Japan and large countries are willing to participate in consultations; however joint actions are not yet expected.

As it became known yesterday revised industrial production in July increased by 0.4% m/m versus preliminary level of +0.6% m/m; which is quite natural because slump, which is evident in the economy, was caused by slowdown in the global economy.

 

[LF.Anastasia]

AUD: Australian Dollar continues to fall

At the Forex currency market the Australian Dollar continues to fall: sales has not subsided for the sixth consecutive session, which demonstrates the lack of fundamental support on one hand, and on the other hand, brings closer the time of technical correction.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area after breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator has come into oversold zone and is maintaining a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0200, the pair will go to 1.0180 and 1.0160. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known this morning that consumer inflation expectations in Australia rose to 2.8% in September, as per estimates of Melbourne Institute against provisional estimate of 2.7%. This data is of general nature and the AUD did not respond to it; however it is obvious that inflationary pressure will continue to grow.

The data released earlier showed that consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. Statistics released earlier showed that index of business conditions NAB in Australia fell by 3 points in August against the level of -1 point in July. The index declined to the lows since April 2009, indicating slump in the sentiments and prospects. National Australian Bank Ltd, noted commenting this outcome that it reflects increased level of uneasiness and concern that debt crisis will spread further.

It became known earlier that trade balance in Australia was at the level of +A$1.83 billion in July against the forecast of +A$1.9 billion, which is slightly better than the data in June, however weaker than predicted. Obviously, external background puts pressure on the economy of the Green Continent.

At the meeting last week, the Reserve Bank of Australia decided to leave the cash rate unchanged at 4.75% per annum, as expected. In the follow-up comments the head of the RBA Glen Stevens noted that “medium term economic prospects look worse that it had been expected a few months earlier. Global financial markets demonstrated severe instability”. The situation with the rate seems logical amid such background. “The RBA Committee decided that the most viable option will be to maintain current course of the monetary policy. At the next meeting the RBA will continue to carefully analyze both the prospects for economic growth and inflation in Australia, –said Stevens.

If the RBA contemplates reduction of the rate from the current levels in response to the external background, interrupting a nine-month pause, it will become an indication for the AUD to continue its fall.

 

[LF.Anastasia]

NZD: New Zealand Dollar has accelerated downward movement

At the Forex currency market on Thursday the New Zealand Dollar rate continues its descend, that has been accelerated after the rate decision of the Reserve Bank of New Zealand.

Forex forecast: MACD indicator for the pair NZD/USD gradually breaks through the signal line from top to bottom, giving a sell signal. Stochastic Oscillator is moving in a similar way in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8140, the pair will go to 0.8130 and 0.8100.

Although the outcome of today’s meeting of the Reserve Bank of New Zealand was predictable, investors were upset. Thus, interest rate was left at the previous level of 2.50% as expected.

The RBNZ noted in the comments that a pause in revision of the rate has lasted so long, due to poor economic prospects of the countries which are commercial partners of New Zealand. In particular, the Central Bank is concerned about the situation in the USA and in Europe as a whole. At the same time, previous high level of exchange rate of the AUD exerted pressure on the national economy.

According to RBNZ it seems reasonable at the moment to leave the rate unchanged at the previous level so as to take into account risks of the global economy.

In addition, it became known that purchasing manager index PMI BNZ in New Zealand fell to 52.9 points in August against the previous level of 53.2 points. The index had been declining for the third consecutive month which demonstrates slowdown in the sector.

The data released earlier showed that activity in the construction sector of Australia was at the level of - 6.6 q/q in Q2, which agreed with the revised data in Q1. The NZD did not respond to the data too much. As it was made public earlier, 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.

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. This was another positive feature in the outline of New Zealand economy. It is worth noting that number of permits to construct in New Zealand decreased by 1.4% m/m in July against the forecast of +3.0%.

 

[LF.Anastasia]

EUR/USD: External background contributes to successful recovery of Euro

The pair EUR/USD slowly declines at the Forex currency market on Friday morning after the growth in the previous sessions.

By 9.10 MSK the Euro is at 1.3863 against yesterday’s closing level of 1.3876.

The Euro seems to have been corrected well after the collapse to the lows of February at the beginning of the week; in the middle of the week investors were supported by the statements of France and Germany on Greece and yesterday the European Central Bank announced additional support to the financial sector in the region. Regulator will provide banks of Europe with liquidity in dollars to ensure that financial institutions will not face shortage of American currency by the end of the year. It is assumed that there will be three lending operations within three months.

Therefore, the Eurozone demonstrates clear intention to struggle through current debt problems.

Most likely the pair EUR/USD will not go out of the range of .3780-1.3930 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound remains under pressure

At the Forex currency market the British Pound Sterling remains under pressure on Friday.

Forex forecast: MACD indicator for the pair GBP/USD continues to go down in the negative area, giving a sell signal; volumes are increasing. Stochastic Oscillator tends to go out of the oversold zone and started to shape a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.5800, the target for buying will be the levels of 1.5820 and 1.58401. If upward breakdown does not take place, the pair will aim to 1.5750.

It became known yesterday that retail sales in the UK fell by 0.2% m/m, in August, the index has not changed on annual basis. In addition, Mr. Cable said this morning that program QE will enable economy to regain both consumer and business confidence if they press ahead with a program in the same volumes.

The data released earlier was interesting: index of retail sales in the UK amounted to +0.6% m/m (+5.2% y/y), which agreed with expectations. In addition, consumer price index CPI rose by 0.6% m/m (+4.5% y/y) in August against the forecast of growth by 0.6% m/m. Inflation was fueled by the rising prices for textiles and clothes. Thus, inflationary pressure on the British economy still persists and is not going to retreat. The data released in the middle of the week showed that as per MOT estimates, unemployment rate in the UK remained at the previous level of 7.9% in July. In addition, the level of unemployed increased by 80 thousand for the reporting period. Official statistics demonstrates that unemployment rate in the UK remained at the level of 4.9% in August and level of unemployed increased by 20.3 thousand.

It seems that Great Britain will continue to reform the banking sector, with the main objective of protecting investors and consumers from the consequences of financial crisis.

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.

It became known earlier that balance of house price RICS in the UK amounted to -23% in August which agreed with the forecast.

 

[LF.Anastasia]

CHF: Investors are not interested in Swiss Franc yet

Swiss Franc rate is traded slightly upward at the Forex currency market on Friday; however, the pair has not left its range, because regulator keeps watch.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area, maintaining a buy signal. Stochastic Oscillator has left overbought zone and is going down, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8800, the pair USD/CHF will go to 0.8820 and 0.8850. If upward breakdown does not take place, the pair will consolidate at the current levels.

At the meeting, which was held earlier, Swiss National decided to leave the three-month Libor rate at the zero level, as expected. In the follow up comments SNB noted that it would continue to protec the target exchange rate of EUR/CHF at 1.20. In addition Regulator stated that Swiss GDP will grow by 1.5-2% in 2011 (previously it was the level of 2%); inflation will not exceed the level of 0.4% this year. CPI will be at the level of -0.3% next year and will be +0.5% in 2013. CNB also confirmed its intention to buy foreign currency in unlimited volume in order to prevent growth of the Franc.

It also became known yesterday that volume of industrial production in Switzerland rose by 2.3% y/y in Q2 against the forecast of +2.7% y/y.

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. Statistics released earlier showed that indicator of consumption 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; therefore, tough position of the SNB will be most welcome.

The data released earlier showed that 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. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 2.8% in August, the same as in July. It is good that “long arms” of the Franc has not reached this important sector. Statistics which was made public before this decision showed that Switzerland slides down to deflation: CPI in August fell by 0.3% m/m against the forecast of decline by 0.2% m/m.

 

[LF.Anastasia]

JPY: Correction of Japanese Yen is still going on

At the Forex currency market the Japanese Yen rate is still being corrected on Friday. Moreover, sharp movement has been observed in the pair USD/JPY again, which can indicate involvement of the regulator in the trades.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal; however, volumes are decreasing. Stochastic Oscillator is in the oversold zone and maintains a sell signal; however it tends to go upward which gives grounds to a buy signal.

Forex recommendations: in case of breakdown at the level of 77.00, the pair will go to 77.10 and 77.35. If upward breakdown does not take place, the pair will consolidate at the current levels. Current correction in the pair will slightly reduce risks of a new round of currency intervention from the Bank of Japan. Thus, looking at the latest dynamics of the pair a thought that regulator is involved in trades does not seem too weird.

Economic situation has not changed dramatically in Japan this morning.

Statistics released earlier showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. Statistics released yesterday showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

As it became known the day before yesterday, revised industrial production in July increased by 0.4% m/m versus preliminary level of +0.6% m/m; which is quite natural because slump, which is evident in the economy, was caused by slowdown in the global economy. 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%. 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 next quarter Japan will demonstrate the rise of economy.

 

[LF.Anastasia]

AUD: Sale of Australian Dollar has been suspended

At the Forex currency market the Australian Dollar rate almost stands still on Friday morning; sale of the currency has suspended when investors’ fears about slowdown in global economy have dissipated.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area after breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator has come into oversold zone and started to rise giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0350, the pair will go to 1.0380 and 1.04101. If upward breakdown does not take place, the pair will consolidate at the current levels. Chances are high that aggressive sellers will be back in the pair.

Situation in the Australian economy has not changed significantly this morning.

It became known yesterday that consumer inflation expectations in Australia rose to 2.8% in September, as per estimates of Melbourne Institute against provisional estimate of 2.7%. This data is of general nature and the AUD did not respond to it; however it is obvious that inflationary pressure will continue to grow. The data released earlier showed that consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. Statistics released earlier showed that index of business conditions NAB in Australia fell by 3 points in August against the level of -1 point in July. The index declined to the lows since April 2009, indicating slump in the sentiments and prospects. National Australian Bank Ltd, noted commenting this outcome that it reflects increased level of uneasiness and concern that debt crisis will spread further.

At the meeting in the beginning of September, the Reserve Bank of Australia decided to leave the cash rate unchanged at 4.75% per annum, as expected. In the follow-up comments the head of the RBA Glen Stevens noted that “medium term economic prospects look worse that it had been expected a few months earlier. Global financial markets demonstrated severe instability”. The situation with the rate seems logical amid such background. “The RBA Committee decided that the most viable option will be to maintain current course of the monetary policy. At the next meeting the RBA will continue to carefully analyze both the prospects for economic growth and inflation in Australia, –said Stevens. If the RBA contemplates reduction of the rate from the current levels in response to the external background, interrupting a nine-month pause, it will become an indication for the AUD to continue its fall.

It became known earlier that trade balance in Australia was at the level of +A$1.83 billion in July against the forecast of +A$1.9 billion, which is slightly better than the data in June, however weaker than predicted. Obviously, external background puts pressure on the economy of the Green Continent.

 

[LF.Anastasia]

NZD: New Zealand Dollar is in anticipation of strong catalysts

At the Forex currency market on Friday the New Zealand Dollar rate is traded upward, however neither fundamental nor external grounds are there to start rapid growth. Situation in the global capital markets slightly stabilized by the end of the week; however more solid grounds are required for the significant rise.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal. Stochastic Oscillator is moving in the neutral 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 0.8250, the pair will go to 0.8265 and 0.8280.

As it became known on Friday, consumer confidence index ANZ in New Zealand fell to 112.6 points in September against the level of 113.3 points in August. It is clear that macro-economy does not provide any support to the NZD.

A meeting of the Reserve Bank of New Zealand was held yesterday. Outcome of the meeting was predictable, investors were upset. Thus, interest rate was left at the previous level of 2.50% as expected.

The RBNZ noted in the comments that a pause in revision of the rate has lasted so long, due to poor economic prospects of the countries which are commercial partners of New Zealand. In particular, the Central Bank is concerned about the situation in the USA and in Europe as a whole. At the same time, previous high level of exchange rate of the AUD exerted pressure on the national economy. According to RBNZ it seems reasonable at the moment to leave the rate unchanged at the previous level so as to take into account risks of the global economy.

In addition, it became known that purchasing manager index PMI BNZ in New Zealand fell to 52.9 points in August against the previous level of 53.2 points. The index had been declining for the third consecutive month which demonstrates slowdown in the sector.

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. This was another positive feature in the outline of New Zealand economy. It is worth noting that number of permits to construct in New Zealand decreased by 1.4% m/m in July against the forecast of +3.0%. Activity in the construction sector of Australia was at the level of - 6.6 q/q in Q2, which agreed with the revised data in Q1. The NZD did not respond to the data too much. As it was made public earlier, 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.

 

[LF.Anastasia]

EUR/USD: Euro falls in price due to new financial concerns

The pair EUR/USD is traded downward at the Forex currency market on Monday morning, because no fundamental progress in the Greek issue has been made. By 9.10 MSK the Euro is at 1.3665 against closing level of 1.3795 on Friday.

Last weekend at meeting the heads of financial institutions of Eurozone discussed situation in Greece – they did not come to agreement on new measures for Athens, disappointing investors and once again suggesting probability of default in Greece.Solution to allocate tranche to the country has been postponed until October – if Greece demonstrates constructive economic achievements, the cash flow can be granted at the next meeting.

Therefore, unsteady position of Greece is still preserved, which forces traders to move away from long positions on the Euro. Most likely the pair EUR/USD will be in the channel of 1.3580-1.3690 at the trading session on Monday.