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[LF.Anastasia]

GBP: British Pound continues to grow steadily

At the Forex currency market the British Pound rate continues to rise in price on Monday following markets’ growing interest in risk.

Forex recommendations: In case of break down at the level of 1.5985, target for the purchase will be the levels of 1.5990 and 1.6000.

Meanwhile, market is very sensitive to risk; investors believe that European debt problems will be resolved any day now, and then financial world will again obtain some stability and prospects for recovery.

Earlier it became known that 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. The data released earlier showed that volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Great Britain reiterates that it is Europe that seriously impedes its recovery. Last week, representative of the Bank of England Mr. Bean said that the Bank of England had been focused on medium- term inflation prospects at the moment. However, the country is still significantly affected by the developments in Eurozone. Recent data, which showed the rise in inflation, had been triggered by number of factors of temporary nature.

CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which affects economy. 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 would not cease to strengthen

At the Forex currency market Swiss Franc rate continues to grow on Monday; it seems that too persistent traders overwhelmed defenses of the SNB and consolidated near significant levels. Franc is very close to the levels from which it had been taken away when SNB set minimal admissible rate of Franc to Euro, and now market will monitor actions of the regulator very carefully.

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 in the neutral zone, and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8810, the pair USD/CHF will go to 0.8800 and 0.8780. If downward breakdown does not take place, the pair will remain close to the current levels.

Macro-economic situation in Switzerland has not changed significantly this morning, and external background dictates main direction of the trades.

We would remind that kick-start for consolidation was triggered last week 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 have been interpreted as follows: regulator’s power to support the Franc is fading away. Recall 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. Earlier trade union of Switzerland urged authorities and the Bank to toughen the fight against expensive Franc suggesting to increase minimum allowable exchange rate of the pair EUR/CHF in order to avoid recession. Representative of the Trade Union believe this measure will also support employment sector.

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.

Trade balance surplus in Switzerland amounted to 1850 billion SHF in September.

According to the data released last week, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly 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.

 

[LF.Anastasia]

JPY: Japanese Yen is still the power of buyers and volatility

At the Forex currency market the Japanese Yen rate is traded slightly downward at the beginning of the week after the rise last Friday. Dynamics in demand for the JPY clearly illustrates to what extent investors are uncertain of the plan of European recovery.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, coming close to the signal line and moving along it, not giving a clear signal. Stochastic Oscillator is in the neutral zone, shaping a sell signal.

Forex recommendations: in case of breakdown at the level of 76.10, the pair will go to 76.00 and 75.80. If downward breakdown does not take place, the pair will consolidate at the current levels.

Apparently, high demand in Japanese Yen is based on markets’ uncertainty that plan to rescue Eurozone which is going to be presented by Germany and France this Wednesday will work and really improve economy in the region.

Meanwhile, anti-inflation strategy is nearly ready in Japan; the country is prepared to announce additional infusion of 2 trillion yen to help companies-exporters which suffered from overvalued national currency. Another 2 trillion yen will be used in the employment sector.

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. The head of the Bank of Japan confirmed this earlier when he said that it is necessary to monitor carefully the impact of the European debt crisis on the Japanese economy, including Forex market and commodity platforms. According to him situation in Japan is stable at the moment and authorities expect revival of the economic growth soon.

The Yen increased by 6% this year, thus, forcing Government to take measures.

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.

 

[LF.Anastasia]

AUD: Australian Dollar started this week with ascend

At the Forex currency market the Australian Dollar rate is traded upward, due to investors’ interest in risk, while market hopes for recovery of the European economy.
Forex forecast: MACD indicator for the pair AUD/USD goes up in the negative area and is giving a buy signal; Stochastic is in the overbought zone again, and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0400, the pair will go to 1.0420 and 1.0460. If upward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic satiation in Australia is neutral this morning.

At the last regular meeting in the middle of October, 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.

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.

Business confidence NAB in Q3 amounted -4 points while in Q2 the index had been at the level of +5 points. According to observers’ estimates the level of employment, sales and corporate profit in the country has dropped considerably. Business conditions in the three- month term amounted +5 points against +10 points previously and amounted to level of +18 points on annual basis against prior +27 points. Sharp decline in the indicator, kicked off a quarter earlier, is still going on.

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.

 

[LF.Anastasia]

CAD: Canadian Dollar is growing for the third consecutive day

At the Forex currency market the Canadian Dollar rate continues to consolidate positions on Monday, moving in line with markets’ positive sentiments. Oil sector has supported commodity currency; but it should be understood that the main catalyst is expectation of some improvement in the European and world economy.

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

Forex recommendations: in case of breakdown at the level of 1.0040 , the pair will go 1.0020 and 1.0010. If downward breakdown does not take place, the pair will remain at the current levels.

As it became known at the end of last week, CPI in Canada rose by 0.2% m/m (+3.2% y/y) against the forecast of growth by 0.1% m/m. At the same time base inflation showed growth of 0.5% m/m (+2.2% y/y) versus the forecast of growth by 0.2% m/m. At the moment the rise in inflation is within acceptable limits and is not harmful to economy. Leaders of the large Canadian companies indicate decline in nflationary expectations; it is predicted that in 2012 CPI will be in the range of 1-3%.

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 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.

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.

Canadian companies are going to continue effective work in the future and increase volume of investments, creating new jobs, however not as fast as it was announced earlier. The country has lowered its forecast for sales in 2012; as a result local producers have to temper their personal forecasts. According to the estimates of the Bank of Canada, sentiment of the leaders of the large companies fell down compared with the summer period, since top management expects the decrease in the U.S. GDP and conservation of uncertainty in respect to global economic outlooks.

 

[LF.Anastasia]

EUR/USD: Bulls for Euro are shifting into observation mode

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning after yesterday’s rise over 1.39.

By 9.25 MSK the Euro is at 1.3903 against yesterday’s closing level of 1.3928.

Today, investors expect statistics on Germany and France; probably consumer confidence index will be weak.

It is unlikely that movement in the market will be too active in advance of the Summit scheduled for Wednesday: markets are waiting for publication of the plan to rescue Eurozone from debt problems in the middle of the week.

However, it should be understood that resolution of the debt problem is a long process and major pair looks too overbought at the moment.

Most likely the pair EUR/USD will not leave the range of 1.3870-1.3930 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound has been slightly corrected

At the Forex currency market the British Pound Sterling rate goes down slightly on Tuesday, since investors are shifting into the standby mode in advance of tomorrow’s summit in Europe.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator goes up in the neutral zone and is approaching overbought zone, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5985, target for the purchase will be the levels of 1.5990 and 1.6000. There is high probability of the more significant correction downward.

According to Mr. Will a member of the Bank of England and MPC, British economy demonstrates slow growth rate and probable recession in Q4 would not become a great surprise.

Great Britain reiterates that Europe seriously impedes its progress. Last week, representative of the Bank of England Mr. Bean said that the Bank of England had been focused on medium- term inflation prospects at the moment. However, the country is still significantly affected by the developments in Eurozone. Recent data which showed the rise in inflation had been triggered by number of factors of temporary nature.

CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which affects economy. 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.

Earlier it became known that 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. The data released earlier showed that volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Meanwhile, market is very susceptible to risk; investors believe that European debt problems will be resolved any day now, and then financial world will again obtain some stability and prospects for recovery.

 

[LF.Anastasia]

CHF: Swiss Franc slowed down its growth

At the Forex currency market Swiss Franc rate suspended its growth on Tuesday and the pair USD/CHF is aimed at slight correction after rather significant decline. Meanwhile, SNB has not commented last rise of the national currency.

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

Forex recommendations: in case of breakdown at the level of 0.8810, the pair USD/CHF will go to 0.8800 and 0.8780. If downward breakdown does not take place, the pair will remain close to the current levels.

It became known today that consumption indicator UBS in Switzerland rose to 0.84 points in September against revised level of 0.80 points in August.

Given that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive. 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. Trade balance surplus in Switzerland amounted to 1850 billion SHF in September.

According to the data released last week, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly 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.

We would remind that kick-start for consolidation was triggered last week 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 have been interpreted as follows: regulator’s power to support the Franc is fading away. Recall 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. Earlier trade union of Switzerland urged authorities and the Bank to toughen the fight against expensive Franc suggesting to increase minimum allowable exchange rate of the pair EUR/CHF in order to avoid recession. Representative of the Trade Union believe this measure will also support employment sector.

 

[LF.Anastasia]

AUD: Australian Dollar stands still

At the Forex currency market the Australian Dollar rate stands still on Tuesday since investors are not willing to take risk in advance of two European summits.

Forex forecast: MACD indicator for the pair AUD/USD has merged with the signal line and is ready to break through from top to bottom. Stochastic Oscillator has come into overbought zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0480, the pair will go to 1.0490 and 1.0520. If upward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic satiation in Australia is neutral this morning.

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.

At the last regular meeting in the middle of October, 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.

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.

Business confidence NAB in Q3 amounted -4 points while in Q2 the index had been at the level of +5 points. According to observers’ estimates the level of employment, sales and corporate profit in the country has dropped considerably. Business conditions in the three- month term amounted +5 points against +10 points previously and amounted to level of +18 points on annual basis against prior +27 points. Sharp decline in the indicator kicked off a quarter earlier, is still going on.

 

[LF.Anastasia]

CAD: Canadian Dollar continues to grow in a steady pace

At the Forex currency market the Canadian Dollar rate is traded upward on Tuesday and the rise in currency has been observed for the fourth consecutive day. Today, investors will wait for the outcome of the meeting of the Bank of Canada and its interest rate decisions.

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

Forex recommendations: in case of breakdown at the level of 1.0000, the pair will go 0.9980 and 0.9965. If downward breakdown does not take place, the pair will remain at the current levels.

Today at 17.00 MSK, the Bank of Canada will announce its interest rate decision. Now the rate is at the level of 1.00% per annum and changes are not expected. Comments on the current state of Canadian economy and its prospects will be of interest.

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 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.

Unemployment rate in the country decreased to 7.1% in September, 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.

Canadian companies are going to continue effective work in the future and increase volume of investments, creating new jobs, however not as fast as it was announced earlier. The country has lowered its forecast for sales in 2012; as a result local producers have to temper their personal forecasts. According to the estimates of the Bank of Canada, sentiment of the leaders of the large companies fell down compared with the summer period, since top management expects the decrease in the U.S. GDP and conservation of uncertainty in respect to global economic outlooks.

As it became known at the end of last week, CPI in Canada rose by 0.2% m/m (+3.2% y/y) against the forecast of growth by 0.1% m/m. At the same time base inflation showed growth of 0.5% m/m (+2.2% y/y) versus the forecast of growth by 0.2% m/m. At the moment the rise in inflation is within acceptable limits and is not harmful to economy. Leaders of the large Canadian companies indicate decline in inflationary expectations; it is predicted that in 2012 CPI will be in the range of 1-3%.