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[LF.Anastasia]

EUR/USD: Euro continues to lose positions

The pair EUR/USD is traded downward at the Forex currency market on Tuesday morning

By 9.10 the Euro is at 1.3605 against yesterday’s closing level of 1.3625.

Yesterday Italy offered to the market five-year bonds in the volume of 3 billion euro and the yield immediately skyrocketed to the highs of 14 years, to 6.29%. The yield of the securities at the previous auction in October amounted to 5.32%.

Other Italian debt securities which have been traded in the market earlier also demonstrated the rise in yield on Monday. This Thursday, Spain is also going to offer government bonds.

Therefore, investors do not believe in Italian plans to resolve debt problems promptly.

Today investors will also watch over coming macro-statistics

Most likely, the pair EUR/USD will not leave the range of 1.3580-1.3680 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is still under pressure

At the Forex currency market the British Pound Sterling rate continues to be traded downward on Tuesday while external background remains moderately negative due to Europe. Great Britain keeps reiterating that it experiences serious pressure because of European debt problems which impacts on the exchange rate of the GBP.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the positive area; it started to descend again and is ready to shape a sell signal. Stochastic Oscillator is going down in the neutral zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5880, target for the sale will be the levels of 1.5870 and 1.5850. If downward breakdown does not take place, the pair will remain close to the current levels.

So far, Great Britain does not respond to new surge of fears of the traders about the state of the economy in Eurozone.

According to statistics released at the end of last week, volume of industrial output in the construction sector of the UK was revised upwards in Q3 (it reduced by 0.2% against preliminary -0.6%). It is difficult to overestimate importance of this data: construction sector contributes about 7% of the country’s GDP and sooner or later positive dynamics of this sector will support economy.

British Prime Minister Cameron believes that there is severe turbulence in the market now while Europe is experiencing hard time. The rise in the rates will be disastrous in the current situation especially for households; so, government’s sympathies are obviously not in favour of bankers.

Statistics released earlier showed that 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.

At the meeting which was held earlier, 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.

 

[LF.Anastasia]

CHF: Swiss Franc begun to weaken rapidly

At the Forex currency market Swiss Franc rate is getting weaker on Tuesday, to all appearance Swiss National Bank is present at the trades again.

Forex forecast: MACD indicator for the pair USD/CHF started to move upward from the signal line and is ready to shape a buy signal. Stochastic Oscillator tends to go out of the overbought zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9120, the pair USD/CHF will go to 0.9130 and 0.9150.

Representative of SNB Mr. Jordan said today, that Swiss regulator does not need external guidance on monetary policy, as it is an independent institution and does not intend to receive instructions from business groups and politicians. SNB will continue to take appropriate measures if economic forecasts and deflation will need them. According to him growth of Swiss economy has slowed down earlier, due to the high exchange rate of Swiss Franc.

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.

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. 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.

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. 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.

 

[LF.Anastasia]

JPY: Japanese Yen continues to strengthen gradually

At the Forex currency market the Japanese Yen rate continues to strengthen today, however in a moderate pace not to provoke reaction of the Bank of Japan.

Forex forecast: MACD indicator for the pair USD/JPY is traded in the positive area and is moving along the signal line, not giving a clear signal; while volumes begun to decrease. Oscillator has come into oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.95, the pair will go to 76.90 and 76.80. If downward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic situation in Japan has not changed significantly on Tuesday morning.

As it became known today, revised volume of industrial output in Japan amounted to -3.3% m/m (-3.3% y/y) in September against preliminary level of -4.0% m/m. In addition, preliminary real GDP in Japan rose by 1.5% q/q (+6.0% y/y) in Q3 against the forecast of growth by 5.9% y/y. Plus to this, according to the data released last week, 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. Judging by statistics Japanese economy has fully recovered from disaster in March. However, negative impact of the expensive national currency is still very strong and it is not clear yet how long current balance in economy will persist.

Earlier, 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.

Last week, Association of Economic Planning of the Cabinet of Japan arose market’s interest in new macro statistics forecasts. Thus, as per their estimates, real GDP in Japan will rise by 0.24% in the fiscal year of 2011 against the forecast in October of +0,22%. In 2012 fiscal year GDP will increase by 2.22% (+2.30% previously). Net CPI this year will amount to -0.12% (-0.15% forecast in October), and in 2013 net inflation will be +0.18%.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar have not been superseded by purchases yet

At the Forex currency market the Australian Dollar rate is traded in the red on Tuesday, as investors continue not to favor risks.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving down, giving a sell signal; volumes are minimal. Stochastic Oscillator started to go up in the neutral zone, giving a signal for moderate buying.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0180, the pair will go to 1.0170 and 1.0150. If downward breakdown does not take place, the pair will consolidate at the current levels.

Minutes of the last meeting of the Reserve Bank of Australia were released today. According to the document, The RBA expects that in the next two years dynamics of the country’s GDP will be close to the trend; at the same time regulator noted that latest statistics has improves slightly. Slowdown of the Chinese economy naturally affected the growth rate of the Australian economy and inflation in Australia probably has reached its peak.

According to RBA, decline in market rates enables to maintain discount rate unchanged, while high risks of deceleration in Australian economy, which can be caused by recession in Europe, are still preserved.

As it became known earlier unemployment rate in Australia decreased to 5.2% in October against 5.3% a month earlier. 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.

As per the estimates of the Treasury of Australia, the Asia-Pacific region is much stronger than Europe and the USA. It is important to understand that growth of Asian economies can be not linked with Europe. According to the Treasury, Australia has all chances to change current course of monetary policy if it will be necessary. This opinion agrees with general outline of the previous views of the politician. 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 price of raw materials in the agricultural sector.

 

[LF.Anastasia]

NZD: Sales of New Zealand Dollar have not dropped

At the Forex currency market the New Zealand Dollar rate continues to lose positions, as new ground for purchases has not turned up.

Forex forecast: MACD indicator for the pair NZD/USD has broken through the signal line from top to bottom and maintains a sell signal. Stochastic Oscillator has pushed away from the oversold zone and is moving sideways in the neutral zone, not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 0.7730, the pair will go to 0.7720 and 0.7710. If downward breakdown does not take place, the pair will consolidate at the achieved levels.

It became known this week that volume of retail sales in New Zealand increased by 2.2% q/q in Q3 against preliminary level of growth of 1.0%. In addition, activity index in the service sector BNZ decreased to 50.6 points in October against preliminary level of 52.9 points.

Statistics is still mixed which it the reflection of strong impact of the developments both in Europe and in China. 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. These have been the key in the issue of lowering of the rating. 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.

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. Home sales REINZ in New Zealand declined by 0.3% m/m (+28.3% y/y) in October. This data was neutral for the NZD. 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 slowdown in the economy of New Zealand.

 

[LF.Anastasia]

EUR/USD: Euro is still under strong pressure

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, amid deterioration of external environment.

By 9.10 the Euro is at 1.3452 against yesterday’s closing level of 1.3530.

Investors continue to track the results of the auction of the European countries and the results are not inspiring: placement of Italy, Belgium and Spain this week has led to the rise in the yield of securities on all fronts. Spain continues to place its bonds today; it is going to offer the market debt securities with maturities up to 2022 in the volume of 4 billion euros. France will pick up the baton on Thursday.

As long as traders are not convinced that Eurozone can cope with the crisis, there is not going to be serious changes in the trend of the trades for the pair Euro/Dollar.

Most likely, the pair EUR/USD will not leave the range of 1.3390-1.3490 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: Sales of British Pound are still preserved

At the Forex currency market the British Pound Sterling rate is still traded downward on Wednesday due to negative external influence.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the positive area; it started to descend again and is ready to shape a sell signal. Stochastic Oscillator is going down in the neutral zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5755, target for the sale will be the levels of 1.5740 and 1.5720. If downward breakdown does not take place, the pair will be close to the current levels.

Yesterday, governor of the Bank of England Mervyn King said that sharp decline in inflation is expected over the next 6 months; in 2012 CPI will be around the target level of 2%. At the same time, uncertainty in the ratio of rate and extent of the decline in CPI will be preserved; decline of inflationary pressure might happen instantly or gradually.

Today, investors are waiting for the publication of the inflation release. It is possible that the Bank of England will revise its forecast on the economic growth: up to 1% in 2011 and similarly in 2012.

At the meeting which was held earlier, 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.

According to statistics released at the end of last week, volume of industrial output in the construction sector of the UK was revised upwards in Q3 (it reduced by 0.2% against preliminary -0.6%). It is difficult to overestimate importance of this data: construction sector contributes about 7% of the country’s GDP and sooner or later positive dynamics of this sector will support economy.

British Prime Minister Cameron believes that there is severe turbulence in the market now while Europe is experiencing hard time. The rise in the rates will be disastrous in the current situation especially for households; so, government’s sympathies are obviously not in favour of bankers.

 

[LF.Anastasia]

CHF: Swiss Franc has returned to local lows

At the Forex currency market Swiss Franc rate is still weak and has returned to local lows on Wednesday, without support from Swiss national Bank.

Forex forecast: MACD indicator for the pair USD/CHF started to move upward from the signal line and is ready to shape a buy signal. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9220, the pair USD/CHF will go to 0.9230 and 0.9250.

Swiss economy is stable this morning in terms of macro-statistics.

Representative of SNB Mr. Jordan said today, that Swiss regulator does not need external guidance on monetary policy, as it is an independent institution and does not intend to receive instructions from business groups and politicians. SNB will continue to take appropriate measures if economic forecasts and deflation will need them. According to him growth of Swiss economy has slowed down earlier, due to the high exchange rate of Swiss Franc.

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. 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. 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. 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 has regained partly after the fall caused by intervention

At the Forex currency market the Japanese Yen rate continues to strengthen gradually in the middle of the week, which was probably triggered by traders who were eager to sit out during the time of turbulence in the relatively safe harbours.

Forex forecast: MACD indicator for the pair USD/JPY is traded in the positive area and is moving along the signal line, not giving a clear signal; while volumes begun to decrease. Oscillator has come into oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.95, the pair will go to 76.90 and 76.80. If downward breakdown does not take place, the pair will consolidate at the current levels.

At two-day meeting which finished today, the Bank of Japan decided to keep interest rate at the previous level of 0.10% per annum. Previous volume of assets purchases was also left unchanged (20 trillion yen) as it has been revised only at the end of October. It is not excluded that regulator will continue easing of the monetary policy if the Yen will rise in price especially knowing that afterwar highs of the YPY have been tested much more than once.

As it became known this week, revised volume of industrial output in Japan amounted to -3.3% m/m (-3.3% y/y) in September against preliminary level of -4.0% m/m. In addition, preliminary real GDP in Japan rose by 1.5% q/q (+6.0% y/y) in Q3 against the forecast of growth by 5.9% y/y. Plus to this, according to the data released last week, 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. Judging by statistics Japanese economy has fully recovered from disaster in March. However, negative impact of the expensive national currency is still very strong and it is not clear yet how long current balance in economy will persist.

Earlier, Association of Economic Planning of the Cabinet of Japan arose market’s interest in new macro statistics forecasts. Thus, as per their estimates, real GDP in Japan will rise by 0.24% in the fiscal year of 2011 against the forecast in October of +0,22%. In 2012 fiscal year GDP will increase by 2.22% (+2.30% previously). Net CPI this year will amount to -0.12% (-0.15% forecast in October), and in 2013 net inflation will be +0.18%. Japanese economy is still dependant on the external demand, which cannot give much hope at the moment.