LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar remains in the sideway channel

The Australian Dollar rate is traded slightly downward at the Forex currency market on Wednesday, at the moment, current pattern is identical to what we had yesterday.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is moving in the neutral zone and is growing, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0300, the pair will go to 1.0300 and 1.0290. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that consumer sentiment WESTPAC in Australia increased by 6.3% m/m in November, to the level of 103.4 points. According to monetary politician Evans, indicator is now at the highest level since May 2011, however this shall not stop RBA from lowering the rate again at the meeting in February.

Statistics could not help the situation with AUD, as it showed that business confidence NAB in Australia rose to 2 points in October against preliminary level of -1 points. According to NAB, the growth has been triggered by expectations that the Reserve Bank of Australia will continue to soften monetary policy in the future.

It is interesting that business confidence NAB in Q3 amounted to -4 points in Q3; while the index had been at the level of +5 points in Q2. According to estimates of the observers, the level of employment, sales and corporate profit in the country has dropped considerably.

As it became known earlier this week, productivity index in the construction sector of Australia rose to 34.7 points in October against 30.0 points in September. However, the AUD has not responded to statistics, because external background remains mixed and investors’ trading sentiment are close to consolidation.

We would remind that last week the Reserve Bank of Australia announced lowering in the interest rate up to 4.50% per annum, by 25 basis points which in general, agreed with expectations. In the follow-up comments the RBA noted that now inflation is being curbed with the help of the high rate of the currency and low demand of population; regulator expects that in 2012 inflation will be at the level of 2-3%. The Bank also recorded deterioration of the conditions in the labour market and decrease in prices for the raw materials. Concerns about developments in Eurozone are still high, and it seems that growth rate of the national economy is going to be moderate. According to RBA, lending rates are now slightly higher than the average level, despite softening of general conditions. It also worth noting, that RBA hinted at further lowering of the rates if general conditions do not improve.

 

[LF.Anastasia]

CAD: Canadian Dollar is getting weaker today

At the Forex currency market the Canadian Dollar rate is going down in the middle of the week, although oil prices remain high.

Forex forecast: MACD indicator for the pair USD/CAD has broken through the signal line from top to bottom and is traded in the negative area, moving along the signal line, and not giving a clear signal. Stochastic Oscillator is going down in the neutral zone, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0160 the pair will go to 1.0180 and 1.0200. If upward breakdown does not take place, the pair will remain at the current levels.

Yesterday, the head of the Bank of Canada Mr Carney said that banks shall cooperate more closely and European banks shall attract more private capital. He believes that growth the private financing is slowing down in Europe, which is a bad indication.

According to information received earlier, Canadian companies are going to continue effective work in the future, by increasing volume of investments and creating new jobs; however not as fast as it had been announced earlier. The forecast for sales in 2012 has been lowered in the country; as a result, local producers had 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.

CPI in Canada rose by 0.2% m/m (+3.2% y/y) in September 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%.

Statistics released last week showed decline in the Canadian employment sector; unemployment rate increased by 0.2% in October, up to the level of 7.3% versus the level of 7.1% in September. Full employment reduced by 71.7 thousand, part- time employment increased by 17.7 thousand. Overall rate of employment in Canada fell by 54 thousand last month against the growth of 60.9 thousand in September. After the release of this statistics representative of the Bank of Canada Harper noted that employment statistics fully reflects low confidence both in Canada and in the world; however labour sector is very volatile.

As for the global sentiments, Canadian Dollar like all other commodity currencies continues to be responsive to the changes in the external background.

 

[LF.Anastasia]

EUR/USD: Euro continues to decline

The pair EUR/USD is traded with minimal deviation at the Forex currency market on Thursday morning after significant fall yesterday

By 9.35 the Euro is at 1.3450 against yesterday’s closing level of 1.3554.

Yesterday’s massive sales were caused by the increase in yield of the Italian debt securities to the critical level of 7%, and then up to 7.25% when Prime Minister Silvio Berlusconi failed to convince parliament that prompt resolution of debt problems in the country is possible.

Meanwhile, process of approval of anti-crisis measures can be accelerated in the Italian Parliament before the end of the week, to allow Berlusconi to resign, which would help partly relieve pressure in the market.

Political talks have not been completed yet in Greece which is a point of pressure on the market.

Most likely, the pair EUR/USD will not leave the range of 1.3400-1.3480 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: Sale of British Pound has slowed down; however not yet suspended

At the Forex currency market the British Pound Sterling rate is traded downward on Thursday, continuing yesterday’s sales; while external background remains moderately negative.

Forex forecast: MACD indicator for the pair GBP/USD started to descend in the positive area, giving a sell signal. Stochastic Oscillator is changing direction again in the neutral zone; now it goes downward, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5900, target for the sale will be the levels of 1.5890 and 1.5870. If downward breakdown does not take place, the pair will remain close to the current levels.

At the meeting which is going to take place today, the Bank of England is expected to keep interest rate unchanged at the level of 0.50% per annum. The follow-up comments of regulator about general economic situation and inflationary pressure may be of interest.

The rate of the Bank of England is on the record-breaking low level currently since March 2009 largely due to the weak economic growth and strong rise in inflation.

Statistics released yesterday showed that index of retail price in the UK fell by 0.3% m/m (+2.1% y/y) in October. The data released earlier showed that the UK house price balance RICS fell by 24% in October against the forecast of -23%. Consumer confidence index Lloyds reduced to -72 points in October versus the level of -67 points a month earlier. It is a negative signal reflecting among other things, negative impact of the European debt problems.

Meanwhile, Member of MPC Mr. Dale said earlier that he expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise. Representative of the Bank of England Mr. Bean has said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more significantly in the second half of the year. The head of the Bank of England, Mervyn King anticipates sharp fall in 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 impediments to economy.

As it became known this week, Confederation of British Industry, CBI, has reduced the forecast for the UK GDP up to 0.9% this year, and up to 1.2% in 2012, noting that most likely British economy will remain unchanged this quarter.

 

[LF.Anastasia]

CHF: Swiss Franc remains weak

At the Forex currency market Swiss Franc rate continues to decline.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is traded in the negative area; however it tends to go up and is ready to shape a buy signal. Stochastic Oscillator remains in the overbought zone, and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9145, the pair USD/CHF will go to 0.9150 and 0.9170.

Macro-economic situation in Switzerland remains almost unchanged this morning.

According to the head of Swiss national Bank Mr. Hildebrand, current crisis has a devastating effect and price stability which has been achieved through monetary policy is not a guarantor of financial stability. Therefore, the main goal of SNB is to ensure price stability.

Representative of Swiss National Bank Mr. Dantin said earlier that strong Franc continues to exert pressure on the economy of the country and, and SNB is prepared to take urgent measures in the event of deflation risks. He reiterated that economy of Switzerland is extremely dependent on exports.

Surplus of trade balance amounted to 1850 billion SHF in September. It became known earlier that consumption indicator UBS in Switzerland rose to 0.84 points in September against the 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.

Unemployment rate in Switzerland rose to 2.9% which was expected rise from 2.8%, however traders were upset. According to statistics released earlier monetary reserves in Switzerland decreased to 242.7 billion francs in October against ***.4 billion in September.

According to the quarterly report of SNB, economy of the country will move in the sideways in the second half of the year, largely, 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 is attributed 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 remains in the narrow trade range

At the Forex currency market the Japanese Yen rate remains in the narrow range on Thursday due to the whole set of reasons: on the one hand the pair is still affected by the currency intervention of last week, on the other hand, investors have a vague idea of the further movement in the market.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from bottom to top and is traded in the positive area. Oscillator reverses quickly in the neutral zone and is giving a buy signal today.

Forex recommendations: in case of breakdown at the level of 77.55, the pair will go to 77.30 and 77.10. If downward breakdown does not take place, the pair will consolidate at the current levels.

Situation in Japanese economy has not changed significantly. It became known yesterday that index of economic observers rose to 45.9 points in October versus 45.3 points in September. This has been the first growth of the index in three months, which is a positive indication for Japan, despite weakness of the economy in general.

As it became known earlier, preliminary index of coincident indicators in Japan fell by 1.4% m/m in September against the decline of 0.1% m/m last month. It is a negative signal for the Japanese economy, indicating sluggish rate of economic growth if there is any growth at all.

Last week was very eventful for Japan. Thus the Bank of Japan has conducted currency intervention earlier this week in order to relieve pressure of JPY on the national economy. Mr. Adzumi, Finance Minister of Japan, confirmed the fact of infusion into the currency market, which became especially important when the Yen had reached historical highs in pairing with the USD last week. Therefore, Central Bank of Japan has ventured to carry out the third currency intervention since the beginning of the year, which resulted in decline of the Yen by 5%.

In addition, regulator left interest rate in the previous range of 0-0.1% per annum, as expected; at the same time, asset purchase program was increased up 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 forecasts 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 whether currency intervention threatens the JPY or not.

It is interesting that surplus of trade balance in Japan has been going down for the third consecutive month; in September it amounted to Y1.585 trillion, which is 21,4% lower than the previous level. Number of begun housing construction in Japan fell by 10.8% y/y in September against the forecast of growth by 7.6% y/y. In addition, orders in construction sector of Japan declined by 9.3% y/y in September against the growth of 9.3% y/y in August.

 

[LF.Anastasia]

AUD: sales of Australian Dollar do not subside

At the Forex currency market the Australian Dollar rate continues to fall on Thursday largely due to negative external background and even morning statistics was not able to improve the situation.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving down, giving a sell signal. Stochastic Oscillator started to subside in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0090, the pair will go to 1.0070 and 1.0050. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that unemployment rate in Australia fell to 5.2% in October against 5.3% a month earlier.

According to the comments of Mr. Lowe, the head of RBA, serious threat to the future of the EU has faded away and world economic conditions are favourable for the development of agriculture in Australia. He believes that domestic demand of Asia is growing up at a good pace and floating rate of the AUD positively affects the cost of raw materials in the agricultural sector.

According to the data released yesterday, consumer sentiment WESTPAC in Australia increased by 6.3% m/m in November, to the level of 103.4 points. According to monetary politician Evans, indicator is now at the highest level since May 2011, however this shall not stop RBA from lowering the rate again at the meeting in February.

Business confidence NAB increased to 2 points in October against preliminary level of -1 points. According to NAB, the growth has been triggered by expectations that the Reserve Bank of Australia will continue to soften monetary policy in the future. It is interesting that business confidence NAB in Q3 amounted to -4 points in Q3; while the index had been at the level of +5 points in Q2. According to estimates of the observers, the level of employment, sales and corporate profit in the country has dropped considerably.

We would remind that last week the Reserve Bank of Australia announced lowering in the interest rate up to 4.50% per annum, by 25 basis points which in general, agreed with expectations. In the follow-up comments the RBA noted that now inflation is being curbed with the help of the high rate of the currency and low demand of population; regulator expects that in 2012 inflation will be at the level of 2-3%. The Bank also recorded deterioration of the conditions in the labour market and decrease in prices for the raw materials. Concerns about developments in Eurozone are still high, and it seems that growth rate of the national economy is going to be moderate. According to RBA, lending rates are now slightly higher than the average level, despite softening of general conditions. It also worth noting, that RBA hinted at further lowering of the rates if general conditions do not improve.

 

[LF.Anastasia]

NZD: New Zealand Dollar is descending

At the Forex currency market the New Zealand Dollar rate continues to descend on Thursday in response to the negative investor sentiment at the global capital markets.

Forex forecast: MACD indicator for the pair NZD/USD has merged with the signal line and is not giving a clear 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 0.7745, the pair will go to 0.7740 and 0.7720. If downward breakdown does not take place, the pair will consolidate at the achieved levels.

As it became known today, consumer confidence index in New Zealand amounted to 109.0 points in November against 112.2 points for the previous period. This data is another indication of the slowdown in the economy of New Zealand.

According to previous data, GDP in New Zealand rose by 0.1% q/q (+1.5% y/y) in Q2 against the level of +0.9% q/q (+1.6% y/y) in Q1. Thus New Zealand economy is actually in the state of 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.

At the meeting in the end of October, 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.

 

[LF.Anastasia]

EUR/USD: Euro is recovering at the end of the week

The pair EUR/USD is traded upward at the Forex currency market on Friday morning in expectation of voting in Italian parliament.

By 9.25 the Euro is at 1.3621 against yesterday’s closing level of 1.3602.

So, European Central Bank had to intervene yesterday before panic in the market could sweep over trading floors: ECB started to buy Italian and Spanish debt securities thereby knocking down their yield from the critical level, thus, reducing the volume of risk in the market.

However, vote in the Italian parliament about anti-crisis package shall complete today and after that current Prime Minister of the country Berlusconi can leave his post. It is assumed that Mario Manti, former Commissioner of the European Union can take over this position. Risks are coming from France today, which demanded from S&P confirmation of its rating at the level of AAA, as rumors about its possible revision have intensified at the market.

Attention of the markets will be still focused on Europe at the end of the week.

Most likely, the pair EUR/USD will not leave the range of 1.3580-1.3690 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is quiet at the end of the week

At the Forex currency market the British Pound Sterling rate is barely moving on Friday after hectic week.

Forex forecast: MACD indicator for the pair GBP/USD started to descend in the positive area, and is going to give a sell signal. Stochastic Oscillator is changing direction again in the neutral zone; now it goes downward, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5915, target for the sale will be the levels of 1.5905 and 1.5890. If downward breakdown does not take place, the pair will remain close to the current levels.

At the meeting which was held yesterday, the Bank of England kept interest rate unchanged at the level of 0.50% per annum as expected. The rate of the Bank of England is at the current record-breaking low level since March 2009, largely due to the weak economic growth and rapid rise in inflation.

Follow-up comments did not add anything new, the Bank of England remained loyal to the conservative policy and left previous size of QE in the amount of 275 billion pounds. It will take regulator another three months to finalize purchases as part of an additional package to QE and after that he can revert to revision of its volume.

Nevertheless, Central Bank increased QE package only in October, therefore it is hardly realistic to expect any serious monetary measures from British regulator.

Meanwhile, Member of MPC Mr. Dale said earlier that he expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise. Representative of the Bank of England Mr. Bean has said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more significantly in the second half of the year. The head of the Bank of England, Mervyn King anticipates sharp fall in 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 impediments to economy.

As it became known this week, Confederation of British Industry, CBI, has reduced the forecast for the UK GDP up to 0.9% this year, and up to 1.2% in 2012, noting that most likely British economy will remain unchanged this quarter.

According to statistics released today, retail price index BRC in the UK decreased by 0.3% m/m (+2.1% y/y) in October. The data released earlier showed that the UK house price balance RICS fell by 24% in October against the forecast of -23%. Consumer confidence index Lloyds reduced to -72 points in October versus the level of -67 points a month earlier. It is a negative signal reflecting among other things, negative impact of the European debt problems.