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[LF.Anastasia]

JPY: Japanese Yen is not going to slow down its growth rate

The Japanese Yen rate continues to rise at the Forex currency market on Thursday despite decisions of the Bank of Japan.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, and started to decline, giving a sell signal; volumes are increasing. Stochastic Oscillator is still near the oversold zone, shaping a similar signal.

Forex recommendations: in case of breakdown at the level of 75.80, the pair will go to 75.65 and 75.50. If downward breakdown does not take place, the pair will consolidate at the current levels.

The Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected, at the same time, increasing program of asset purchases to Y50 trillion from Y55 trillion.

In the follow-up comments Japanese regulator stressed that risks to economy shall be thoroughly considered as well as downside risks to price forecast in the future.

According to the estimates of the Bank of Japan exchange rate of the Yen will remain high for a while, the Bank has not clarified if currency intervention threatens the JPY or not.

We would remind that this week, there was information in Japanese press that the Bank of Japan is planning to discuss with the largest world’s regulators a chance of common intervention.

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 Mr Shirakawa had 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.

Newly appointed Finance Minister of Japan Mr. Adzumi said that regulator is ready to take decisive measures if the JPY continues to grow, despite the fact that recent rise in the rate of the national currency is the result of speculations. At the same time the Bank of Japan is aware that dynamics of the Yen is based not on the fundamental data but only on the targets of speculators; therefore injections would need to be voluminous and cyclic.

 

[LF.Anastasia]

AUD: Australian Dollar is strengthening again

The Australian Dollar rate is traded upward at the Forex currency market on Thursday, reflecting general rise in investor’s sentiment.

Forex forecast: MACD indicator for the pair AUD/USD has broken through the signal line from bottom to top and is now in the positive area, giving a buy signal; volumes are increasing. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0550, the pair will go to 1.0570 and 1.0590. If upward breakdown does not take place, the pair will consolidate at the current levels.

According to the data released today, CPI in Australia rose by 0.6% q/q (+3.5% y/y) in Q3 against the forecast of growth by 0.5% on quarterly basis. At the same time, inflation increased by 0.9% on quarterly basis in Q2; slowdown in CPI is obvious. It is worth noting that seasonally-weighted CPI rose by 0.3% (it is being tracked by RBA). Growth of inflation has been minimal since Q3 in 1997. It is possible now that at the meeting on 1 November the RBA will decrease the rate from the current 4.75% per annum.

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.

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 Q3; while the index had been at the level of +5 points in Q2. 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]

NZD: New Zealand Dollar climbs upwards

At the Forex currency market the New Zealand Dollar rate is traded upward on Thursday, reflecting overall optimistic sentiment which prevails in the global capital market.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area, and started sideways movement, not giving a clear signal. Stochastic Oscillator is in the neutral zone and is moving in the same direction, not giving any signals either.

Forex recommendations: in case of breakdown at the level of 0.8080, the pair will go to 0.8090 and 0.8120. If upward breakdown does not take place, the pair will consolidate at the achieved levels.

At the meeting which ended late last night, the Reserve Bank of New Zealand decided to leave interest rate unchanged at the level of 2.5%.

The RBNZ clarified that rate was left at the record-low level largely because of debt crisis in Europe and slow down in inflation in New Zealand. According to the head of the regulator Alan Bollard, there is no point to raise the rate considering existing economic and financial risks. However, Bollard admitted that “if global developments will slightly affect the economy of New Zealand, it is possible that increasing pressure on domestic resources will gradually force us to raise the rate”

According to average estimate of the economists, interviewed by Bloomberg, the rate of the RBNZ is not going to be changed until Q2 of 2012.

According to Fitch economists, 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 than in 2008; however risks from Europe and the U.S. are still there. He also believes that the rate of NZD is still overvalued.

Prior statistics showed 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. It is obvious that economy of the country, which is focused on exports, 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. As it was made public earlier, 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.

 

[LF.Anastasia]

EUR/USD: Euro took a break after rapid growth

The pair EUR/USD is traded with maximum deviation at the Forex currency market on Friday after rapid rise yesterday.

By 9.30 MSK the Euro is at 1.4176 against yesterday’s closing level of 1.4188..

At the trades on Thursday the pair EUR/USD showed the highest rise this year, amid positive European decisions and favourable U.S. statistics.

Investors will be interested in the data on France and U.S. today. Figures of consumer spending in these countries are being prepared for publication.

Most likely the pair EUR/USD will not go beyond the range of 1.4090-1.4195 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound Sterling declines slowly at the end of the week

At the Forex currency market the British Pound Sterling rate is traded downward on Friday after yesterday’s rise before the weekend.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator has come into overbought zone, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.6088, target for the purchase will be the levels of 1.6095 и 1.6105.

It became known today that consumer confidence index Gfk in the UK fell to -32 points in October against the forecast of -30 points. Thus, the level of confidence of British consumers fell to 32-month low.

As it became known earlier retail price index BRC in the UK rose 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. 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.

Debates regarding monetary policy are still going on in the UK. Thus, Mr. Bean noted earlier, that as the result of QE program, the level of inflation can rise by 0.5%; however positive effect of the incentive program is that GDP will get additional +0.5%.

Meanwhile, member of MPC Mr. Dale noted earlier that he also expects sharp decline in CPI at the beginning of 2012. 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 have been a great surprise.

The head of the Bank of England Mervyn King noted that Britain has effective medium-term financial plan and if QE1 had not been introduced, situation with bank lending would have been much worse. However, there is a double-edged sword here and no one can guarantee that QE2 can increase the volume of borrowing.

Meanwhile, King expects sharp decline of inflation in 2012. 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 creates new obstacles to 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 is being slightly corrected at the end of the week

At the Forex currency market Swiss Franc rate is going down slightly on Friday after steady growth yesterday. Swiss National Bank has not yet made any comments about the recent rise in CHF.

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

Forex recommendations: in case of breakdown at the level of 0.8605, the pair USD/CHF will go to 0.8600 and 0.8580. If downward breakdown does not take place, the pair will remain close to the current levels.

Macro-economic situation in Switzerland has not changed dramatically this morning.

Silence of the Swiss National Bank can be interpreted in different ways: probably the SNB has no tools to curb Franc, or may be regulator just monitors reaction of the market.

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.

Surplus of trade balance amounted to 1850 billion SHF. It became known yesterday that consumption indicator UBS in Switzerland rose to 0.84 points in September against revised level of 0.80 points in August. Taking into account that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive. 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.

According to the annual report of the SNB, over the second half of the year economy of the country will move in the sideways, due to the impact of 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 continues to rise in price

The Japanese Yen rate continues to rise at the Forex currency market on Friday.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, and started to decline, giving a sell signal; volumes are increasing. Stochastic Oscillator is moving along the signal line above oversold zone and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 75.80, the pair will go to 75.65 and 75.50. If downward breakdown does not take place, the pair will consolidate at the current levels.

There was a lot of news from Japan today, including the data on unemployment (above expectations) and preliminary volume of industrial in September (much worse than expected).

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 Mr Shirakawa had 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.

As newly appointed Finance Minister of Japan Mr. Adzumi said that regulator is ready to take decisive measures if the JPY continues to grow, despite the fact that recent rise in the rate of the national currency is the result of speculations. At the same time the Bank of Japan is aware that dynamics of the Yen is based not on the fundamental data but only on the targets of speculators; therefore injections would need to be voluminous and cyclic.

The Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected, at the same time, increasing program of asset purchases to Y50 trillion from Y55 trillion. In the follow-up comments Japanese regulator stressed that risks to economy shall be thoroughly considered as well as downside risks to price forecast in the future. According to the estimates of the Bank of Japan exchange rate of the Yen will remain high for a while, the Bank has not clarified if currency intervention threatens the JPY or not. We would remind that this week, there was information in Japanese press that the Bank of Japan is planning to discuss with the largest world’s regulators a chance of common intervention.

 

[LF.Anastasia]

AUD: Australian Dollar is being slightly corrected at the end of the week

At the Forex currency market the Australian Dollar rate goes down on Friday after yesterday’s rapid growth. The fact that it is the end of the week also matters as investors partly lock in profits.

Forex forecast: MACD indicator for the pair AUD/USD has broken through the signal line from bottom to top this week, and is now in the positive area, giving a buy signal; volumes are increasing. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0680, the pair will go to 1.0570 and 1.0590. If upward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic background in Australia remains almost unchanged. Current rise in AUD is explained by investors’ active interest in risk which led the currency to two-month highs.

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.

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 Q3; while the index had been at the level of +5 points in Q2. 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.

According to the data released yesterday, CPI in Australia rose by 0.6% q/q (+3.5% y/y) in Q3 against the forecast of growth by 0.5% on quarterly basis. At the same time, inflation increased by 0.9% on quarterly basis in Q2; slowdown in CPI is obvious. It is worth noting that seasonally-weighted CPI rose by 0.3% (it is being tracked by RBA). Growth of inflation has been minimal since Q3 in 1997. It is possible now that at the meeting on 1 November the RBA will decrease the rate from the current 4.75% per annum.

 

[LF.Anastasia]

NZD: New Zealand Dollar is finishing this week with significant increase

At the Forex currency market the New Zealand Dollar rate is traded downward on Friday as investors lock in profit at the end of the week.

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

Forex recommendations: in case of breakdown at the level of 0.8180, the pair will go to 0.8200 and 0.82200. If upward breakdown does not take place, the pair will consolidate at the achieved levels.

In terms of macro-economics, situation in New Zealand remains unchanged.

At the meeting on Thursday, the Reserve Bank of New Zealand decided to leave interest rate unchanged at the level of 2.5%. The RBNZ clarified that rate was left at the record-low level largely, because of debt crisis in Europe and slow down in inflation in New Zealand. According to the head of the regulator Alan Bollard, there is no point to raise the rate considering existing economic and financial risks. However, Bollard admitted that “if global developments will slightly affect the economy of New Zealand, it is possible that increasing pressure on domestic resources will gradually force us to raise the rate”

According to average estimate of the economists, interviewed by Bloomberg, the rate of the RBNZ is not going to be changed until Q2 of 2012.

Prior statistics showed 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. It is obvious that economy of the country, which is focused on exports, 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. As it was made public earlier, house prices QV in New Zealand increased by 0.7% y/y in September against the rise of 0.1% y/y in August.

According to Fitch economists, 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.

 

[LF.Anastasia]

EUR/USD: Euro started this week with a slump

The pair EUR/USD goes down at the Forex currency market on Monday after rapid growth last week.

By 9.50 MSK the Euro is at 1.4013 against yesterday’s closing level of 1.4150.

This morning, investors will move away from risks in advance of statistics scheduled for this week. Nevertheless, the fall in the USD can be the highest this month since June this year.

Traders will be interested in the data on unemployment in Eurozone in September.

Most likely the pair EUR/USD will not go beyond the range of 1.3970-1.4030 at the trading session on Monday.