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[LF.Anastasia]

GBP: British Pound Sterling still has growth potential

At the Forex currency market the British Pound Sterling rate started to go down at the beginning of this week after rapid growth last 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 is still in the overbought zone, maintaining a buy signal.

Forex recommendations: in case of break down at the level of 1.5810, target for purchase will be the levels of 1.5830 and 1.5850. However, if specified level is not broken down, the pair will have a chance to resume its decline.

Statistics released this morning showed that house price index Rightmove in the UK rose by 2.8% m/m (+1.2% y/y) against preliminary expectations of grow by 0.7% m/m.

The survey demonstrated that there is a huge gap between the house prices in the North and South, as in the Southern part of the country the price is still twice as high as in the North.

As it became known earlier retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. 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. As it became known earlier volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Deputy head of the Bank of England Mr. Bean said last week that British regulator is ready for follow-up actions in addition to the expansion of the asset purchase program to stg75 billion, adopted last week. Bean has clarified that the Bank of England will agree to additional economic stimulus if economic outlooks will suddenly worsen, for example if recovery rate will slow down significantly.

We would remind that in 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 tends to grow

Swiss Franc rate is traded slightly downward at the Forex currency market on Monday morning; however this does not alter general trend of CHF to rise.

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

Forex recommendations: in case of breakdown at the level of 0.8920, the pair USD/CHF will go to 0.8910 and 0.8890. If downward breakdown does not take place, the pair will remain close to the current levels.

It seems that Swiss National Bank is running out of reserves. Step by step Franc successfully gains strength. The growth last week was triggered when the pair USD/CHF went down following EUR/CHF, which had been actively sold out 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 be 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.

As it became known earlier, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September. Franc barely reacted to statistics.

Statistics released earlier showed 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 not known precisely yet what volumes SNB has at the trades now.

 

[LF.Anastasia]

JPY: Japanese Yen weakens rapidly

At the Forex currency market the Japanese Yen rate continues to weaken at the beginning of the week. Judging by the intraday dynamics Positive sentiments and optimism predominate at the market at the moment and interest in “quiet harbor” is fading away.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going up, giving a buy signal. Stochastic Oscillator continues to increase in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 77.25, the pair will go to 77.40 and 77.50. If upward breakdown does not take place, the pair will consolidate at the current levels.

While markets are inspired by speedy resolution to debt problems in Eurozone, interest in JPY is fading away rapidly: demand for safe currency is low, as players are ready to take risk.

In other respects macro economic situation in the Country of the Rising Sun remains almost unchanged. Except for the statistics released this morning which demonstrated that revised industrial output in Japan rose by 0.6% m/m (+0.4%y/y), below expectations. It became known today that money supply M2 in Japan increased by 2.7% y/y, which agreed with the forecast. In addition, corporate goods price index rose by 2.5% y/y in September, which agreed with expectations. Tankan business survey 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.

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.

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. Large information block released at the end of last week included the following piece of 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%.

 

[LF.Anastasia]

AUD: Australian Dollar does not cease to grow

At the Forex currency market the Australian Dollar rate continues to grow on Monday. The growth is largely based on external positive factor and investors’ desire to take risk.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up steadily, giving a buy signal; however volumes are minimal. Stochastic 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 1.0350, the pair will go to 1.0365 and 1.0380. If upward breakdown does not take place, the pair will consolidate at the current levels. Chances of correction are high.

It became known last week that business confidence NAB in Australia rose 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 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, 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 indicates general pessimistic sentiment.

In general, last week was successful for the AUD, which at first, took advantage of the external background, and later, statistics to regain from losses of September. Unemployment rate in Australia declined to 5.2% in September versus the level of 5.3% in August. This data demonstrated dynamics for the first time since this March. Employment rate rose by 20.4 thousand last month, while analytics expected the growth of not more than 10 thousand. As noted in the Bureau of Statistics in Sydney, coal mining companies hire staff to meet demand for raw materials from China and India.

This data has scored out expectations that the RBA will reduce the rate in the nearest future. At the last regular meeting 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to strengthen

At the Forex currency market the New Zealand Dollar rate is traded upward at the start of the week, continuing ascending movement.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area, going up and giving a buy signal. Stochastic Oscillator is in the overbought zone and maintains a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8055, the pair will go to 0.8070 and 0.8080.

The data released this morning showed that business activity index in the service sector of New Zealand decreased to 53.2 points in September against preliminary level of 53.8 points. At the same time, 4 out of 5 components of the index have increased, and only one component (warehouse stock) has decreased.

Meanwhile the index shows ambiguous data: there have been too many mixed external factors lately.

According to economists from Fitch, current account surplus in New Zealand will expand in 1012 and 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.

It was made public last week, 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 look promising to high-yielding currencies.

As it became known earlier 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 export suffers from significant external impact: we are speaking here about global reduction in demand all over the world. Therefore, economy of New Zealand has actually fallen into stagnation: GDP almost stopped growing in the 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.

 

[LF.Anastasia]

EUR/USD: Euro awaits strong catalyst to grow again

The pair EUR/USD goes up slightly at the Forex currency market on Tuesday morning after yesterday’s fall.

By 9.30 MSK the Euro is at 1.3778 against yesterday’s closing level of 1.3736.

Investors are waiting for the U.S. economic news today, in particular indicator of primary housing market that can sustain interest in risky currencies, bring tranquility in the market and restore confidence in stability of American economy.

However, taking account yesterday’s dynamics of the Euro it is getting ever more apparent that previous growth of the pair EUR/USD was based purely on expectations which have not been backed by practical steps.

Therefore, strong catalyst is required for the Euro to continue its growth, which is not yet available.

Most likely the pair EUR/USD will not leave the range of 1.3700-1.3810 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound tends to continue its growth

At the Forex currency market the British Pound Sterling rate resumed its growth on Tuesday after yesterday’s drawdown.

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 tends to come out of the overbought zone, and started to shape a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.5790, target for purchase will be the levels of 1.5810 and 1.5830. However, if external negative factor intensifies, the level of 1.5711 will become the target for sale.

Macro- economic background in the UK remains mostly unchanged this morning.

It was plainly obvious yesterday that the pair GBP/USD correlated with EUR/USD based on the external negative factors.

As it became known earlier retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. 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. According to the data released earlier volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Statistics released this morning showed that house price index Rightmove in the UK rose by 2.8% m/m (+1.2% y/y) against preliminary expectations of grow by 0.7% m/m. The survey demonstrated that there is a huge gap between the house prices in the North and South, as in the Southern part of the country the price is still twice as high as in the North.

We would remind that in 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.

Deputy head of the Bank of England Mr. Bean said last week that British regulator is ready for follow-up actions in addition to the expansion of the asset purchase program to stg75 billion, adopted last week. Bean has clarified that the Bank of England will agree to additional economic stimulus if economic outlooks will suddenly worsen, for example if recovery rate will slow down significantly.

 

[LF.Anastasia]

CHF: Swiss Franc consolidates at the achieved levels

Swiss Franc rate is making efforts to grow slightly at the Forex currency market on Tuesday, remaining at the levels achieved this week.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal. Stochastic Oscillator is coming 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 breakdown at the level of 0.8990, the pair USD/CHF will go to 0.9010 and 0.9030. If upward breakdown does not take place, the pair will remain close to the current levels.

In regards to macro-economics, significant changes in the economy of Switzerland did not take place.

Last week kick-start to consolidation was triggered when the pair USD/CHF went down, following EUR/CHF, which had been actively sold out 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 be 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. Therefore, reserves of the CNB seem to disappear before our eyes along with determination of the Bank to curb the Franc.

As it became known earlier, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September Franc barely reacted to statistics. Statistics released earlier showed 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 not known precisely yet what volumes SNB currently has at the trades.

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.

 

[LF.Anastasia]

JPY: Japanese Yen is rising in price again

At the Forex currency market the Japanese Yen rate continues ascending trend on Tuesday which started yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going up, giving a buy signal; volumes are increasing. Stochastic Oscillator started to reverse in the neutral zone, shaping a sell signal.

Forex recommendations: in case of breakdown at the level of 76.70, the pair will go to 76.50 and 76.40. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that final orders for industrial equipment in Japan increased by 20.1% in September against the growth of 20.3% in August. Association of machine-tool construction industry of Japan stated that last month the index had reached the lowest level since 2009. According to the data released yesterday revised industrial production in Japan rose by 0.6% m/m (+0.4% y/y) in August; below expectations.

In other respects macro economic situation in the Country of the Rising Sun remains almost unchanged.

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.

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. Large information block released at the end of last week included the following piece of 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%.

As it became known earlier, money supply M2 in Japan increased by 2.7% y/y, which agreed with the forecast. In addition, corporate goods price index rose by 2.5% y/y in September, which agreed with expectations. Tankan business survey 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.

 

[LF.Anastasia]

AUD: Sale of Australian Dollar was not long in coming

At the Forex currency market the Australian Dollar rate is losing ground, urged by Chinese statistics.

Forex forecast: MACD indicator USD is in the negative area for the pair AUD/ and is going up steadily, giving a buy signal; however volumes are minimal. Stochastic is leaving overbought zone, and is giving a start to a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0120, the pair will go to 1.0100 and 1.0090.

If downward breakdown does not take place, the pair will consolidate at the current levels. Morning statistics from China, the main trade partner of Australia showed deceleration of economic growth rate up to 9.1% y/y in Q3 against 9.5% y/y in Q2. The AUD reacts to the index by going down: Overbought of the currency and deterioration of the external background are acting as a catalyst.In general, last week was successful for the AUD, which at first, took advantage of the external background, and later, statistics to regain from losses of September.

Unemployment rate in Australia declined to 5.2% in September versus the level of 5.3% in August. This data demonstrated dynamics for the first time since this March. Employment rate rose by 20.4 thousand last month, while analytics expected the growth of not more than 10 thousand. As noted in the Bureau of Statistics in Sydney, coal mining companies hire staff to meet demand for raw materials from China and India.This data has scored out expectations that the RBA will reduce the rate in the nearest future.

At the last regular meeting 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 last week business confidence NAB in Australia rose 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 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, 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 indicates general pessimistic sentiment.