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[LF.Anastasia]

GBP: The British Pound correction didn’t last long

At the Forex currency market the British Pound Sterling rate started to trade downward on Monday morning – Friday’s correction didn’t last long and the external background remains disturbing.

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 stays in the oversold zone, 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.

The external background remains the main sell catalyst for the British Pound – still investors are not disposed to buy because of risks in spite of the fact that the currency is at very attractive levels.

According to the statistics mortgages are reviving in Great Britain: BBA Mortgage Approvals reached 35,226 k in August against the forecast of 33,250 k. The indicator jumped to 2010 highs. One should note that refinancing approvals totaled 27,114 k against 26,229 k before.

In this case the earlier data doesn’t seem strange: 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.

The data released earlier 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.

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 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.

Minutes of the last meeting of the bank of England which was made public at the end of the previous week, 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.

 

[LF.Anastasia]

CHF: Swiss Franc weakens again at the beginning of the week

Swiss Franc rate continues to weaken at the Forex currency market on Monday morning – Swiss National Bank prevents aggressive investors from buying Franc – lately one of the most safe-heaven currencies.

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 stays in the overbought zone and maintains a buy signal.

Forex recommendations: in case of breakup at the level of 0.9140, the pair USD/CHF will go to 0.9155 and 0.9190. If breakup does not take place, the pair will consolidate at the current levels.

Released last week SNB quarter report turned out to be pessimistic – according to the bank the economy will not show any signs of growth in 2H 2011 mostly because of expensive national currency and a sharp fall in demand.

According to Swiss National Bank, GDP will amount to 1.5-2% in 2011, besides the first half of the year will bring the main growth. In addition, the SNB also noted that without firm actions the economy could enter a recession.

CPI will be at the level of +0.4% in 2011, next year – at +0.5%.

Position of SNB remains firm: any attempt of the Franc to be corrected or act as a safe asset is suppressed from the very beginning. Testing of this opinion earlier has proved once again that this intention is firm.

There is increasing talk among investors in the market that SNB can review its position on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Meanwhile, no grounds have been found to confirm this rumor.

As it became known the day before, index of expectations ZEW in Switzerland fell to -75.1 points in September against the level of -71.4 points in August. Influence of the expensive Franc is obvious.

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 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: the Japanese Yen has again become attractive at the beginning of the week

At the Forex currency market the Japanese Yen rate remains high on Monday – demand for safe-heaven currency is increasing, and in spite of the Fridays’ correction the JPY is rising amid turbulent external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going down, giving a sell signal. Stochastic Oscillator is traded downward to the neutral zone aiming to enter the oversold zone again.

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

Recent attempt of the “Bulls” to recoup was not successful because external background deteriorated again; therefore the demand in the Yen went up.

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.

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 long as investors continue to flee from risks, the pair USD/JPY will remain under pressure.

It should be noted that the Bank of Japan shows no signs of interest to what is happening on the currency market. This can be explained by either it feels comfort within the latest alignment of forces, or the Bank of Japan prepares new measures to fight down the expensive JPY.

 

[LF.Anastasia]

AUD: the Australian Dollar free fall continues

At the Forex currency market the Australian Dollar rate continues falling on Monday amid no positive factors of support: the external background remains gloomy, and no fundamental data can stop selling.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area and is giving a sell signal. Stochastic Oscillator stays in the oversold zone, and is giving the same signal.

Forex recommendations: in case of breakdown at the level of 0.9650, the pair will go to 0.9640 and 0.9625. If the breakdown does not take place, the pair will consolidate at the current levels.

Australian economy does not provide any pretext for technical rebound, while external background is putting considerable pressure. The macroeconomic situation remains the same at the beginning of the week.

No data will be published in Australia till the end of the week, so traders should only hope for some rebound on the back of the external background.

Minutes of the last meeting of the Reserve Bank of Australia which were made public this week show, 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, which is a positive factor, however expensive AUD has forced to review 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.

The data released previously showed that consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. 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 lowest level since April 2009, indicating recession in the sentiments and prospects. National Australian Bank Ltd, noted commenting these result, that it reflects increased level of uneasiness and concern about further expansion of the debt crisis.

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. 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.

As it became known 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.

 

[LF.Anastasia]

NZD: the New Zealand Dollar goes down to new lows

The New Zealand Dollar rate continues trading downward at the Forex currency market on Monday morning – sales of the currency do not stop or change volume amid the gloomy external background.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal. Stochastic Oscillator is trying to rise in the oversold zone still to no effect.

Forex recommendations: in case of breakdown at the level of 0.7670, the pair will go to 0.7650 and 0.7630.

As it became known today, trade balance in New Zealand amounted to -NZD641 bln in august against the expectations of –NZD321 bln. This was a logical addition to the previously 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.

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.

It became known last week that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against the level of +0.9% q/q (+1.6% y/y) in Q1.

Therefore, there is actually stagnation in the economy of New Zealand: GDP has almost stopped rising last quarter, which proves that decision of the RBNZ do not change interest rate was logical. The report has disappointed market and currently it is quite possible that regulator will keep interest rates at this level for a long time, at least until the end of spring 2012.

Levels of exports do not support economy of New Zealand: the index decreased by 0.5% last quarter, while the share of imports increased by 1.7%.

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 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.

 

[LF.Anastasia]

EUR/USD: Euro decides on external catalysts

The pair EUR/USD stands practically still at the Forex currency market on Tuesday.

By 9.05 MSK the Euro is at 1.3527 against Monday’s closing level of 1.3532.

According to CNBC data, European regulators actively discuss the possibility of setting up a new company – SPV – that will buy bonds of the countries injured by debt crisis.

For this to come into action a special EFSF mechanism should be used, that will be able to issue its own bonds if needed. The main aim of the plan is to loosen pressure on burdened with debt Eurozone countries.

Still investors have no exact opinion how to react on such initiatives and if it’s going to be another not working scheme.

In the midday traders will keep an eye on the Consumer confidence statistics from USA.

Most likely the pair EUR/USD will not go beyond the range of 1.3480-1.3580 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: The British Pound starts an active correction

At the Forex currency market the British Pound Sterling rate resumes moving upward from a year lows on Monday morning – backed by today’s favorable conjuncture. Firstly – attractive levels, secondly – rather calm external background. At the same time one should note that fundamentally the British Pound is still weak.

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 stays left the oversold zone, and is steadily rising in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakup at the level of 1.5580, sales target will be the levels of 1.5590 and 1.5630. If breakup does not take place, the pair will consolidate close to the current levels.

The British Pound’s year lows did good to the currency – amid rather stable external background investors gained interest in GBP. Still it’s too early to talk of the about-turn.

According to the statistics mortgages are reviving in Great Britain: BBA Mortgage Approvals reached 35,226 k in August against the forecast of 33,250 k. The indicator jumped to 2010 highs. One should note that refinancing approvals totaled 27,114 k against 26,229 k before.

In this case the earlier data doesn’t seem strange: 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.

Minutes of the last meeting of the bank of England which was made public at the end of the previous week, 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 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.

 

[LF.Anastasia]

CHF: Swiss Franc tries to resume growth

Swiss Franc rate tries to resume growth at the Forex currency market on Tuesday morning amid stable external background. Still the pair USD/CHF is traded within a tight range closely watched by SNB.

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 starts moving downward forming a sell signal.

Forex recommendations: in case of breakup at the level of 0.9030, the pair USD/CHF will go to 0.9055 and 0.9070. If breakup does not take place, the pair will possibly go to 0.8985 to start growth.

As it became known today, UBS Consumption indicator in Switzerland fell to 0.79 points in August against the level of 1.29 points a month before. This is another sign of Swiss economy cooling.

Released last week SNB quarter report turned out to be pessimistic – according to the bank the economy will not show any signs of growth in 2H 2011 mostly because of expensive national currency and a sharp fall in demand. According to Swiss National Bank, GDP will amount to 1.5-2% in 2011, besides the first half of the year will bring the main growth. In addition, the SNB also noted that without firm actions the economy could enter a recession. CPI will be at the level of +0.4% in 2011, next year – at +0.5%. Position of SNB remains firm: any attempt of the Franc to be corrected or act as a safe asset is suppressed from the very beginning. Testing of this opinion earlier has proved once again that this intention is firm.

As it became known the day before, index of expectations ZEW in Switzerland fell to -75.1 points in September against the level of -71.4 points in August. Influence of the expensive Franc is obvious.

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 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.

There is increasing talk among investors in the market that SNB can review its position on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Meanwhile, no grounds have been found to confirm this rumor.

 

[LF.Anastasia]

JPY: the government plans to weaken the national currency

At the Forex currency market the Japanese Yen rate weakens a bit on Tuesday amid stable external background. Besides the government plans to weaken the Japanese currency in the long term influence JPY.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going down, giving a sell signal. Stochastic Oscillator resumes growth in the neutral zone giving a buy signal.

Forex recommendations: out of market.

Possible Forex scenarios: in case of breakup at the level of 76.40, the pair will go to 76.60 and 76.90. If breakup does not take place, the pair will consolidate at the current levels.

As it became known today, Japanese politicians will take a set of measures to weaken the national currency in the long term. Presumably, the measures will include using JPY in M&A and in securing electric payments. Still the amount of money to be spent is unknown.

It’s interesting to note that Japan doesn’t rule out taking part in Greece aid – in case the Athens provide an adequate plan.

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.

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.

 

[LF.Anastasia]

AUD: the Australian Dollar moves away fro the local lows

At the Forex currency market the Australian Dollar rate trades upward on Tuesday moving away from the local lows tested at the beginning of the week. Positive sentiment comes from world financial markets’ correction.


Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area and is giving a sell signal. Stochastic Oscillator came out of in the oversold zone and is rising in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakup at the level of 0.9890, the pair will go to 0.9920 and 0.9945. If the breakup does not take place, the pair will consolidate at the current levels.

Still the increase is correctional and it’s too early to speak of the about-turn. One should note that the Australian economy does not provide any pretext for technical rebound – the external background is the only hope.

The macroeconomic situation remains the same by today.

Minutes of the last meeting of the Reserve Bank of Australia which were made public this week show, 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, which is a positive factor, however expensive AUD has forced to review 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.

The data released previously showed that consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. 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 lowest level since April 2009, indicating recession in the sentiments and prospects. National Australian Bank Ltd, noted commenting these result, that it reflects increased level of uneasiness and concern about further expansion of the debt crisis.

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. 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.

No data will be published in Australia till the end of the week, so traders should only hope for some rebound on the back of the external background.