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[LF.Anastasia]

CAD: Growth of Canadian Dollar did not last for long

The Canadian Dollar rate is traded downward at the Forex currency market on Tuesday after yesterday’s steady growth.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and goes up steadily, while volumes are above average. Stochastic Oscillator is coming out of the oversold zone, staring to shape a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0300, the pair will go 1.0310 and 1.0335. If upward breakdown does not take place, the pair will remain at the current levels.

Macro-economic background in Canada remained unchanged this morning.

Unemployment rate in the country decreased to 7.1%; while employment rate in the country increased by 60.9 thousand. For the Canadian economy that is closely linked with the economy of the USA it is a significant step forward. Meanwhile earlier unemployment rate in Canada increased to 7.3% in August against the forecast of 7.2% and previous level of 7.2. In addition, labor productivity fell by 0.9% on quarterly basis in Q2 against the forecast of decline by 0.7% q/q. It also became known that number of begun construction in Canada fell to 184.7 thousand in August against the forecast at 200 thousand. It is clearly obvious at the moment, that slowdown in the key indicators was caused by the state of the global economy and proximity to the Unites States.

The Bank of Canada believes that GDP of the country will amount to about 2.8% in 2011 (reduction by 0.1% versus forecast of April); in 2012 it will be 2.6% and 2.1% in 2013. According to the evaluation of the Bank, exports performance in Canada is negative because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation even more complicated. The growth in the interest rate in Canada will directly depend on stability in economic development.

By the way, CPI in Canada rose by 0.3% m/m (+3.1% y/y) in August.

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]

EUR/USD: Euro is alarmed by debt problems again

The pair EUR/USD goes down moderately at the Forex currency market on Wednesday morning because investors are concerned about possible complications in resolving problems of Eurozone.

By 9.30 MSK the Euro is at 1.3638 against yesterday’s closing level of 1.3639.

Yesterday parliament of Slovakia voted against expansion of the European Financial Stability Fund (EFSF), since if the plan is adopted, country will have to invest a few billion EUR.

It is not excluded that another vote will take place before the end of this week.

Markets attention today will be focused on the daily data on Eurozone.

Most likely the pair EUR/USD will not go beyond the range of 1.3600-1.3690 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound grows slightly

At the Forex currency market the British Pound Sterling rate moderately grows on Wednesday morning after yesterday’s sales.

Forex forecast: MACD indicator for the pair GBP/USD started to grow moderately in the negative area, shaping a buy signal; however volumes are decreasing. Stochastic Oscillator continues to grow in the neutral zone, moving along the signal line and maintaining a buy signal.

Forex recommendations: in case of break down at the level of 1.5600, target for purchase will be the levels of 1.5610 and 1.5630. However, if breakdown does not take place the pair will have a chance to resume its decline.

Volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August as became known yesterday, however did not keep the GDP from sales.

Volume of retail sales index BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear fell despite the seasonality. Therefore, basic demand is minimal at the moment.

It became known earlier that retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. According to the agency’s estimate prices for food amounted to +0.1% m/m (+5.0% y/y) last month. As it became known earlier consumer confidence index Gfk in the UK rose to -30 points in September against -31 points in August. However, despite positive dynamics, index is still close to the historic lows and has not yet reached historic average. The indicator has moved away from the bottom, nevertheless it is still too far from stability. Note that assessment indicator of general economic situation fell to -58 points over the last 12 months.

As the outcome of the meeting in October, the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time increasing volume of the assets repurchase program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the assets repurchase program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the drastic crisis now.

 

[LF.Anastasia]

CHF: Swiss Franc slowed down its pace

Swiss Franc rate is back to gradual movement at the Forex currency market after sharp rise on Monday Franc is strengthening imperceptibly.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, it goes down and is shaping a sell signal. Stochastic Oscillator goes down in the neutral zone, moving and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9060, the pair USD/CHF will go to 0.9040 and 0.9020. If downward breakdown does not take place, the pair will remain close to the current levels.

There are no fundamental changes in Swiss economy; position of Swiss National Banks is strong enough to keep currency in the permissible limits.
At the beginning of this week the pair USD/CHF slid down following the pair EUR/CHF, which had been actively sold by one of the Swiss Banks and British Clearing Bank, explained dealers.

As per the SNB annual report, in the next 6 month economy of the country will come to a standstill due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year. It became known earlier that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however repercussion of the expensive national currency is possible. Index of PMI SVME fell to 48.2 points in September against the level of 51.7 points in August. In addition retail sales in Switzerland fell by 1.9% y/y in August against +1.9% y/y a month earlier.

It is worth noting that SNB gave indications in September that could have been interpreted as follows: regulator’s power to maintain the Franc is fading away. We would remind that according to the rumors that grew louder among investors in the market SNB can review its position on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. According to Mr Jordan, a representative of the SNB, it is necessary to increase the reserves of the SNB in order to prevent the growth of the Franc. SNB will take all measures to protect the target level of SNB. According to him, if you just sit back, CHF will rise above the parity level in pairing with the Euro. At the same time the monetary politician did not comment on the probability of increasing the target level.

 

[LF.Anastasia]

JPY: Japanese Yen has not determined movement direction yet

At the Forex currency market the Japanese Yen rate remains is the rather narrow range in the middle of the week, following high intraday volatility which is becoming the usual case.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going up, giving a buy signal. Stochastic Oscillator goes down in the neutral 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 76.60, the pair will go to 76.30 and 76.10. If downward breakdown does not take place, the pair will consolidate at the current levels.

Statistics released today showed that net orders in the machine building sector in Japan increased by 2.1% y/y in August against the growth of 0.4% in July. It is a positive indication; however we shall wait for the data in September to see dynamics of the index.

Tankan business survey, which was published this week, showed that expectations of the large industrial enterprises amounted to +2 points in September against the forecast of +3 points. Expectations of large non-industrial enterprises demonstrated decline of 11 points versus the forecast of -14 points and -21 points previously. Total current account surplus in Japan amounted to Y407.5 billion in August against the forecast of Y462 billion. In addition, consumer confidence index in Japan declined to 38.6 points in September against the forecast of 37.2 points

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. The data released at the end of the last week included the following information about inflation: base national CPI amounted to +0.2% y/y in August. In addition, it also became known that unemployment fell to 4.3% in August against the forecast of 4.7% and previous level of 4.7%.

From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen.

 

[LF.Anastasia]

AUD: Australian Dollar stands still in uncertainty

At the Forex currency market the Australian Dollar rate is going up slightly on Wednesday, regaining from the fall in the morning. There are a lot of mixed factors that prevent steady growth the AUD

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up slightly starting to shape a buy signal. Stochastic Oscillator is moving in a similar way in the overbought zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9970, the pair will go to 0.9990 and 1.0000. If upward breakdown does not take place, the pair will consolidate at the current levels.

According to the data released today consumer confidence WESTPAC in Australia rose by 0.4% m/m, to the level of 97.2 points in October. As noted by monetary politician Evans it is possible that the rate will go down in November, since low growth of the index speaks about general pessimistic sentiment.

Recall that earlier JP Morgan revised its view on the interest rate of Australia- economists do not expect the growth of rate by 25 basis points in 2012, predicting that the interest rate will remain at the current level until the end of the next year. At the regular meeting last week the Reserve Bank of Australia decided to leave interest rate unchanged at the level of 4.75% per annum. Thus, the pause in the process of monetary tightening policy of the RBA has been lasting for 11 months. In the follow-up comments the regulator said that monetary policy can mitigate in the future if inflation requires it. The follow-up statement said that more time can be required to analyze the impact of turbulence in the markets. Apparently, the rate of the RBA is unlikely to be raised until the first quarter of 2012.

As it became known on Tuesday business confidence NAB in Australia increased to -2 points in September against preliminary level of -3 points. At the same time business conditions increased by 2 points, as per NAB research, against the preliminary level of -9 points, which the Research Agency attributed to the sharp fall of the AUD’s rate earlier.

According to the data released earlier composite activity index in the construction sector AIG in Australia fell by 2.1 points, up to 30.0 points in September. Consumer lending in Australia amounted to +0.2% in August against the level of +0.3% m/m in July. It has become another reason for selling the AUD. Index of leading indicators Westpac/MI in Australia increased by 1.4% in July, to the level of 284.2 points (+3.1% y/y) against preliminary expectations of +2.7%. As it became known earlier consumer inflation expectations in Australia increased to 2.8% in September, as per Institute of Melbourne against provisional estimate of 2.7%. According to statistics released earlier business activity index in the manufacturing sector of Australia fell to 42.3 points in September against the previous level of 43.3 points.

 

[LF.Anastasia]

NZD: New Zealand Dollar hopes to continue its growth

The New Zealand Dollar rate strengthens slightly at the Forex currency market in the middle of the week; external background remains moderately uncertain, and while there are no obviously negative factors, the AUD is growing.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area; however it goes up slightly, starting to shape a buy signal. Stochastic Oscillator maintains similar signal in the overbought zone.

Forex recommendations: in case of breakdown at the level of 0.7830, the pair will go to 0.7850 and 0.7880

As it became known on Wednesday morning, house prices QV in New Zealand increased by 0.7% y/y in September against the rise of 0.1% y/y in August.

Meanwhile, the AUD is closely monitoring the situation in China, since potential trade war between China and the USA does not promise anything good to high-yielding currencies.

It became known earlier that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against +0.9% q/q (+1.6% y/y) in Q1. Commodity prices ANZ in New Zealand fell by 1.3% m/m in September against -1.2% m/m. Apparently, economy of the country which is focused on exports suffers from significant external impact: we are speaking here about global reduction of demand all over the world.

Therefore, economy of New Zealand is actually in stagnation: GDP almost stop its growth last quarter, which only proves that the decision of the RBNZ not to change the levels of the interest rate was logical. The report 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.

According to Fitch economists, current account surplus in New Zealand will expand in 1012 and will amount to 4.9%, in 2013-5.5%. At the same time net level of foreign debt of New Zealand is above the level corresponding to its ranking. Finance Ministry of the country noted that rating agencies in the world are too cautious about debt problems and it is still unknown whether the similar actions should be expected from other players in the ranking sector. Earlier the head of the Reserve Bank of New Zealand said that probably financing of the banks in the country can become a problem in 1012. According to Bollard banking system of New Zealand is in a better state now that it was in 2008; however risks from Europe and the U.S. are still there. The rate of NZD is still overvalued.

 

[LF.Anastasia]

EUR/USD: Euro continues to grow

The pair EUR/USD is traded upward at the Forex currency market on Thursday morning.

By 9.30 MSK the Euro is at 1.3799 against yesterday’s closing level of 1.3790.

Investors’ enthusiasm is based on the expectations of solution for the European debt problems, in particular approval of the expansion project of EFSF by Slovakia and emergency aid to Greece by way of issuing sixth tranche of funds.

By the way, government of Slovakia resigned after the failure of previous vote in parliament.

The day is going to be eventful in terms of macro statistics; the data on final index of consumer prices in Germany in September will be released in the middle of the session; later, the U.S. figures on the number of unemployment benefit claims for a week and trade balance of goods and services in August

Most likely the pair EUR/USD will not go beyond the range of 1.3720-1.3830 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound came to a halt after rapid growth

At the Forex currency market the British Pound Sterling rate slowed down growth rate on Thursday after the rise in the middle of the week.

Forex forecast: MACD indicator for the pair GBP/USD started to grow moderately in the negative area, shaping a buy signal; however volumes are decreasing. Stochastic Oscillator continues to grow in the overbought zone, moving along the signal line and maintaining a buy signal.

Forex recommendations: in case of break down at the level of 1.5740, target for purchase will be the levels of 1.5750 and 1.5770. However, if specified level is not broken down, the pair will have a chance to resume its decline.

British economy has not changed significantly this morning.

Volume of retail sales BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear fell despite the seasonality. Therefore, basic demand is minimal at the moment. Volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August as became known yesterday, however did not keep the GDP from sales.

As the outcome of the meeting in October, the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time increasing volume of the assets repurchase program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the assets repurchase program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the drastic crisis now.

It became known earlier that retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. According to the agency’s estimate prices for food amounted to +0.1% m/m (+5.0% y/y) last month. As it became known earlier consumer confidence index Gfk in the UK rose to -30 points in September against -31 points in August. However, despite positive dynamics, index is still close to the historic lows and has not yet reached historic average. The indicator has moved away from the bottom, nevertheless it is still too far from stability. Note that assessment indicator of general economic situation fell to -58 points over the last 12 months.

 

[LF.Anastasia]

CHF: Swiss Franc still hopes to strengthen

Swiss Franc rate once again tests firmness of principles of the SNB at the Forex currency market, trying to break through and to rise.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, it goes down and is shaping a sell signal. Stochastic Oscillator is in the oversold zone, moving and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8960, the pair USD/CHF will go to 0.8940 and 0.8920. If downward breakdown does not take place, the pair will remain close to the current levels.

Apparently, positions of the Swiss National Bank are not too strong. Step by step Franc is successfully gaining strength. Earlier this week, the pair USD/CHF went down, following the pair EUR/CHF, which had been actively sold by one of the Swiss Banks and British Clearing Bank, as dealers explained.

It is worth noting that SNB gave indications in September that could have been interpreted as follows: regulator’s power to maintain the Franc is fading away. We would remind that according to the rumors which grow louder among investors in the market, SNB can revise its stand on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. According to Mr Jordan, a representative of the SNB, it is necessary to increase the reserves of the SNB in order to prevent growth of the Franc. SNB will take all measures to protect the target level of SNB. He also said that if they let the grass grow under the feet, CHF will rise above the parity level in pairing with the Euro. At the same time, monetary politician did not comment chances of increasing the target level.

According to the annual report of the SNB, over the next 6 month economy of the country will come to a standstill due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year. It became known earlier that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however repercussion of the expensive national currency is possible. Index of PMI SVME fell to 48.2 points in September against the level of 51.7 points in August. In addition retail sales in Switzerland fell by 1.9% y/y in August against +1.9% y/y a month earlier.