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[LF.Anastasia]

NZD: Sale of New Zealand Dollar did not take long to wait

The New Zealand Dollar rate is on sale again at the Forex currency market after a short break: due to the high tension at the global financial markets, investors’ thirst for risk is minimal.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal. Stochastic Oscillator is also going down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8170, the pair will go to 0.8165 and 0.8150.

In general the economic situation in New Zealand remains unchanged, external background and expectations of the U.S. Federal reserve decision are the main drivers. 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. 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 statistics released this morning, activity index on the service sector of New Zealand fell by 0.6 points in August, to the level of 53.9 points. At the same time, consumer confidence Westpac in New Zealand remained at the level of 112.0 points in Q3 versus similar level in Q2. It is the latest data that keeps the NZD afloat, showing that consumers believe in the best. 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. Outcome of the meeting of the Reserve Bank of New Zealand held earlier was predictable, however investors were disappointed.

Thus, interest rate was left at the previous level of 2.50% as expected. The RBNZ commented that a pause in revision of the rate has lasted that long, due to poor economic prospects of the countries- 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 has 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.

 

[LF.Anastasia]

EUR/USD: Major pair is waiting for the outcome of the Federal Reserve meeting

Trades are stable for the pair EUR/USD at the Forex currency market on Wednesday morning; however turnover is low in advance of the decisions of the U.S. Federal Reserve.

By 9.05 MSK the Euro is at 1.3711 against yesterday’s closing level of 1.3700.The event of the day is the meeting of the Federal Reserve which will take decision on the interest rate tonight, (will remain close to zero, 22.15 MSK) and will give guidelines for the further monetary policy of the regulator.

Markets expect that FR will announce additional economic stimulus, and the question is what instruments will be involved in this process.

In general, the lull is expected in the pair during the day, only if external background will not interfere. Most likely the pair EUR/USD will not go beyond the range of 1.3570-1.3760 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound came to a standstill awaiting new catalysts

At the Forex currency market the British Pound Sterling rate almost came to a standstill on Wednesday morning; market awaits new catalysts from the U.S. Federal Reserve; meanwhile it takes up wait and see attitude.

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 is in the neutral zone, it has finished trades being along the signal line and started to go down, giving a sell signal.

Forex recommendations: in case of break down at the level of 1.5720, sales target will be the levels of 1.5690 and 1.5650. If downward breakdown does not take place, the pair will aim to 1.5830.

Statistics released this morning showed that consumer confidence index Nationwide amounted to 48 points in August versus preliminary level of 49 and the forecast of 47 points. It is not yet the cause for optimism; nevertheless index of expenditure demonstrates increase: it had been 79 in August against preliminary 72.

Therefore, consumer confidence is stable so far; although it remains in close proximity to historic lows. People are ready to spend money; however clearer economic outlooks are required for them to gain more confidence. It became known this week that house prices Rightmove increased by 0.7% m/m in September.

The data on the real estate sector from other leading agencies will be known soon, which will provide a clearer outlook. Meanwhile, we can see the lack of offers as it emphasized by Rithmove and upward pressure from the very low interest rates, which encourage the growth of the house prices; plus to this low level of public confidence to economy and reluctance of people to spend money, caused by obscure economic prospects.

It became known earlier 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. In general, there is no trend to risk, therefore the Pound preserves downward trend, which does not cancel short term upward correction, that will again lead to sales in case of negative developments.

 

[LF.Anastasia]

CHF: Attempt of Swiss Franc to strengthen has not been crowned with success

Swiss Franc rate made attempt to strengthen at the Forex currency market on Wednesday morning, which had been nipped in the bud by regulator. Situation for the Franc remains unchanged.

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

Forex recommendations: in case of breakdown at the level of 0.8935, the pair USD/CHF will go to 0.8950 and 0.89700. If upward breakdown does not take place, the pair will consolidate at the current levels.

SNB maintains firm position: any attempt of Franc of being corrected or act as a safe asset is suppressed from the very beginning. Testing this morning has proved once again that this intention is firm.

Accoring to the data released earlier showed 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. The data released earlier showed 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.

According to Swiss National Bank, GDP will amount to 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 +0.5% in 2013.

In addition, the CNB also confirmed its intention to buy foreign currency in unlimited volume in order to prevent growth of the Franc.

It became known earlier that trade balance in Switzerland amounted to +0.81 billion in August against the forecast of +1.97 billion: influence of the expensive currency and external background is obvious. Volume of industrial production in Switzerland grew by 2.3% y/y in Q2 against the forecast of +2.7% y/y.

 

[LF.Anastasia]

JPY: Japanese Yen is growing despite drastic measures

At the Forex currency market the Japanese Yen rate has tested highs of March in the middle of the week; however it has been quickly corrected for half of the figure. Interest to the Japanese yen is still high at the market: not too many entities have been left in the list of “quiet harbors’.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is moving along the signal line now, not giving a clear signal. Stochastic Oscillator has come back into the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.10, the pair will go to 75.90 and 75.70. If downward breakdown does not take place, the pair will consolidate at the current levels.

The pair went down to the lows of March this morning; however it has been quickly corrected up to 76.60. Investors talk about attempt of Bank of Japan to conduct intervention, which was not successful; however in such case regulator’s influence would have been more significant and effect from infusion would have been long lasting. The Bank of Japan does not make any comments on this, maintaining its existing position which is quick reaction in case of need.

According to the recently released information, Finance Ministry of Japan is going to address to the “Big Twenty” with the question of how exactly the countries are planning to resolve European debt problems and raise the issue of negative pressure of the expensive Yen on the economy of Japan. This can weaken the JPY for some time; however significant rollback can only take place if regulator will interfere with the market.

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. T

here are no risks for the Yen at the moment if only Central Bank of the country would not start currency intervention. However, even in such case a series of infusions will be required in order to weaken the Yen for a long time.It became known earlier that revised industrial output in July rose by 0.4% m/m against preliminary value of +0.6% m/m, which is logical since the decline that is being observed in all sections was caused by the slowdown of the world economy.

 

[LF.Anastasia]

AUD: Australian Dollar needs strong support to start large-scale correction

At the Forex currency market on Wednesday the Australian Dollar rate tries to continue upward ascend which started yesterday; however catalysts are not there this morning: markets’ attention is focused on final session of the U.S. Federal Reserve tonight. Investors’ thirst for risk remain low despite attractive exchange rates of the currency.

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 goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0250, the pair will go to 1.0220 and 1.0200. If downward breakdown does not take place, the pair has a chance to go to 1.0355.

It became known this morning that leading indicators index Westpac/MI in Australia increased by 1.4% in July, to the level of 284.2 points (+3.1% y/y) versus prior expectations of +2.7%. The AUD neglected this information: there are more influential players on the scene of the currency market on Wednesday.It became known earlier 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.

According to the data released earlier 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. Minutes of the last meeting of the Reserve Bank of Australia which was made public this morning says that current levels of the rates correspond to the existing situation, while medium term outlooks for economic growth continue to be optimistic.

Companies are ready to hire employees and it is a positive factor, however expensive AUD has forced them to review their business strategies and plans. The minutes look weird, considering that Australian economy suffers huge losses now due to the decrease in exports levels and particularly for coal.

 

[LF.Anastasia]

NZD: There is little faith in stability of New Zealand Dollar

Trades for the New Zealand Dollar rate are mixed the Forex currency market in the middle of the week; there is activity in the currency, however definite direction of movement is not there. Investors are waiting for the outcome of the U.S. Federal Reserve meeting and they will start to create a medium term channel on the basis on new information.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal. Stochastic Oscillator is also going down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8200, the pair will go to 0.8175 and 0.8150.

According to the released data current account balance in New Zealand amounted to –NZ$2.0 billion in Q2 against preliminary estimate of –NZ$1.5% billion. It is obvious that economy of the country suffers from the global decline in demand – New Zealand is the country which is focused on exports and supplies dairy products vegetables, wool, therefore much less money will come to the state treasury.

According to statistics released yesterday activity index on the service sector of New Zealand fell by 0.6 points in August, to the level of 53.9 points. At the same time, consumer confidence Westpac in New Zealand remained at the level of 112.0 points in Q3 versus similar level in Q2. It is the latest data that keeps the NZD afloat, showing that consumers believe in the best. 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.

As it became known earlier, 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. 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.

 

[LF.Anastasia]

EUR/USD: Euro takes advantage of the FR decision

The pair EUR/USD is traded downward at the Forex currency market this morning, although decision of the Federal Reserve had been above all markets’ expectations.

By 9.00 MSK the Euro is at 1.3542 against yesterday’s closing level of 1.3572.So, according to the decision of the U.S. Federal Reserve Operation Twist system in the amount of $400 billion will be introduced to support American economy, it will include purchase of the long -term bonds and at the same- time sale of short term bonds for the amount of $400 billion. Interest rate was left unchanged in the range of 0-0.25% per annum.

The news about changes in the structure of the FR balance has made market anxious, although it had been expected: additional measures to further stimulate the economy from the regulator were predictable.In the follow up comments the US FR acknowledged that downward risks to the U.S. economy are still high, which only reaffirmed traders’ idea about slowdown in recovery.

Investors are going to estimate the situation during today’s trading session.Most likely the pair EUR/USD will not go beyond the range of 1.3480-1.3590 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: Sales of British Pound are increasing every day

At the Forex currency market the British Pound Sterling rate continues to fall on Thursday morning; this downward movement meets our expectations of the medium-term channel for the GDP/USD because the Pound has a very low chance even for the corrective rebound.

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 is in the neutral zone, it has finished trades being along the signal line and started to go down, giving a sell signal.

Forex recommendations: in case of break down at the level of 1.5430, sales target will be the levels of 1.5410 and 1.5380. If downward breakdown does not take place, the pair will consolidate close to the current levels.

External background continues to be the main catalyst for the sales of the GDP- investors are not too willing to buy, keeping risks in mind, although the currency has reached very attractive levels for the purchase.Statistics released this morning showed that consumer confidence index Nationwide amounted to 48 points in August versus preliminary level of 49 and the forecast of 47 points. It is not yet the cause for optimism; nevertheless index of expenditure demonstrates increase: it had been 79 in August against preliminary 72.

Consumer confidence is stable so far; although it remains in close proximity to historic lows. People are ready to spend money; however clearer economic outlooks are required for them to gain more confidence. Minutes of the last meeting of the bank of England which was made public yesterday, took market by surprise: all 9 members of the Monetary Committee voted to maintain interest rate at the low levels.

Nevertheless, MPC started to contemplate seriously about expanding of the QE program.It became known earlier 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. It became known this week that house prices Rightmove increased by 0.7% m/m in September. The data on the real estate sector from other leading agencies will be known soon, which will provide a clearer outlook.

Meanwhile, we can see the lack of offers as it emphasized by Rithmove and upward pressure from the very low interest rates, which encourage the growth of the house prices; plus to this low level of public confidence to economy and reluctance of people to spend money, caused by obscure economic prospects.

 

[LF.Anastasia]

CHF: Swiss Franc is deprived of chances to grow

At the Forex currency market Swiss Franc rate continues to weaken on Thursday morning because yesterday National Bank of Switzerland successfully repelled investors’ attempt to enter into the Franc and to hedge positions in the market.

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

Forex recommendations: in case of breakdown at the level of 0.9050, the pair USD/CHF will go to 0.9070 and 0.9090. If upward breakdown does not take place, the pair will consolidate at the current levels.

SNB maintains firm position: any Franc’s attempt of being corrected or act as a safe asset is suppressed from the very beginning. Testing of this opinion yesterday has proved once again that this intention is firm. Investors do not cease to talk in the market that SNB can review its position on the key levels and fix exchange rate of the pair EUR/CHF at the level of 1.25.

Meanwhile, no grounds have been found to confirm this rumor.The data released earlier showed 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. The data released earlier showed 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.It became known earlier that trade balance in Switzerland amounted to +0.81 billion in August against the forecast of +1.97 billion: influence of the expensive currency and external background is obvious. Volume of industrial production in Switzerland grew by 2.3% y/y in Q2 against the forecast of +2.7% y/y.

According to Swiss National Bank, GDP will amount to 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 +0.5% in 2013. In addition, the CNB also confirmed its intention to buy foreign currency in unlimited volume in order to prevent growth of the Franc.