LiteForex's analytics

[LF.Anastasia]

EUR/USD: Euro is pushed up by market expectations

The pair EUR/USD grows at the Forex currency market on Tuesday morning.

By 9.35 the Euro is at 1.3364 against yesterday’s closing level of 1.3309.

It seems that investors ignore the news about ratings: yesterday agency Fitch reported worsning forecast of the U.S rating to “negative” and this morning Moody’s did not exclude downgrade of ratings of 87 banks in 15 countries of Eurozone due to general weakness in the financial sector. Agency believes that if fiscal situation deteriorates, banks cannot expect to receive aid from governments.

However, positive sentiment in the market is supported by expectations that on Tuesday Finance Ministers of the countries in Eurozone can approve new scheme of expanding EFSF fund. It is possible that the issue of granting tranche to Greece will also be considered. Thus, Eurozone remains a newsmaker of the day.

Most likely the pair EUR/USD will not go beyond the range of 1.3305-1.3390 at the trading session of Tuesday.

 

[LF.Anastasia]

GBP: British Pound continues to recover

At the Forex currency market the British Pound Sterling rate continues to move upward on Tuesday as a part of correctional rebound.

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from top to bottom and is traded in the negative area, giving a sell signal. Stochastic Oscillator tends to go out of the oversold zone and started to shape a signal for moderate purchases.

Forex recommendations: in case of break down at the level of 1.5530, target for buying will be the levels of 1.5500 and 1.5520 as part of rebound. If favourable environment does not last long, the Pound will revert to the sales at around 1.5480.

Yesterday the head of the Bank of England Mr. King said that inflation will go down considerably, as currently slow growth of wages and spare capacity of the economy are making progress in this direction. In the next 6 months however drastic changes cannot be expected: CPI will remain in the channel of the existing rates.

This is the first time in the last few months when supposition about reduction of the inflation level was stated. Representative of the Bank of England, a former “Hawk”, Mr. Dale noted that inflation rate would drop sharply next year; meanwhile the Bank of England would continue to stimulate economy.

According to representative of the Bank of England Mr. Weale, economy of the country will not achieve pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy will not improve after the first round of stimulation.

Last week, British Prime Minister Cameron noted that European panic was the reason for paralyses in the market. In the current situation recovery pace in Great Britain is too slow. The country has to resolve the issue of its own debts and not to look around at others. Presently, additional stimulation could be dangerous; therefore it has not been seriously considered. However, if Eurozone resolved its urgent problems, it would become a powerful catalyst for the British economy.

According to observers from NABE, unemployment rate in the UK will be around 8.7% in 2012 against previous forecast of 8.5%; there is a chance that employment will increase up to 100 thousand in Q4 this year. It is expected that policy of the Bank of England will continue to be soft next year and GDP will amount to 2.2% in Q1 next year against predicted level of 2.5% in Q4 this year.

 

[LF.Anastasia]

CHF: Swiss Franc is rising in previous range

At the Forex currency market Swiss Franc rate is rising on Tuesday, remaining, nevertheless, in the previous trading range of 0.9084-0.9330.

Forex forecast: MACD indicator for the pair GBP/USD is going up in the positive area and is shaping a buy signal. Stochastic Oscillator has come out of the overbought zone and is going down in the neutral zone, giving a sell signal

Forex recommendations: in case of break down at the level of0.9200, the pair USD/CHF will go to 0.9190 and 0.9180.

The fact that the exchange rate of Franc remains in the range of the oversold channel- is an indication that Swiss National Bank is not present in the trading.

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.

Unemployment rate in Switzerland rose to 2.9%, which had been an expected rise from 2.8%. It became known last week that trade balance in Switzerland amounted to 2.15 billion francs in October against the forecast of 2.06 billion francs. The data is good, considering global slump in demand and expensive Franc.

According to Swiss National Bank estimates, GDP in Switzerland will amount to 1.5%-2.0% this year; main growth will be 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.

According to Swiss National Bank estimates, GDP in Switzerland will amount to 1.5%-2.0% this year; main growth will be 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. Representative of SNB Mr. Jordan reported earlier 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 it is required considering the state of economic forecasts and deflation. According to him, slowdown in economic growth in Switzerland, which had taken place earlier, was caused by high exchange rate of Swiss Franc.

 

[LF.Anastasia]

JPY: Japanese Yen weakens in anticipation of new intervention

At the Forex currency market the Japanese Yen rate continues to demonstrate weakness on Tuesday. This week, Japanese monetary authorities reported about probability of new intervention against expensive JPY. This news is still relevant and even weak statistics could not prevail over it.

Forex forecast: MACD indicator for the pair USD/JPY has slowed down its fall near the signal line and is now moving along it, not giving a clear signal. Oscillator continues to go up in the neutral zone and is maintaining a buy signal.

Forex recommendations: in case of breakdown at the level of 78.00, the pair will go to 78.10 and 78.30.

This morning statistics showed that unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy.

The head of the Bank of Japan Mr. Shirakawa noted yesterday that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was caused by the European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030.

At that Mr. Shirakawa noted that interventions against Yen are acceptable and effective.

This last comment seems to be very unfavourable for the JPY.

Earlier, Association of Economic Planning of the Cabinet of Japan rose market’s interest to 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%. It became known earlier that index of coincident indicators in Japan was revised to -1.3 points in September against previous level of -1.4 points.

Rating agency S&P said earlier that Japanese rating is going to be revised soon, as financial situation in the country is deteriorating every day. According to the economists of the Agency it is hardly probable that Japan will be able to avoid debt problems. 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. The data released earlier showed that net national CPI in Japan decreased by 0.1% y/y in October, which agreed with the forecast.

 

[LF.Anastasia]

AUD: Australian Dollar continues to go upward

At the Forex currency market the Australian Dollar rate goes upward on Tuesday supported by investor’s sentiment which is in general positive, and calm external background. The AUD hardly reacts to the domestic news, ignoring not only revision of forecasts for the country’s economy, but also the rise in rating by the agency Fitch.

Forex forecast: Earlier MACD indicator for the pair AUD/USD has broken through the signal line from top to bottom and is still traded in the negative area, giving a sell signal. Stochastic Oscillator is going up in the neutral zone and is giving a clear buy signal.

Forex recommendations: in case of breakdown at the level of 0.9980, the pair will go to 0.9990 and 1.0020.

It became known today that Australian authorities have revised forecast for GDP growth in 2012 downward, to 3.5%. Previous forecast was at 3.75%

It also became known that rating agency Fitch upgraded rating on Australia’s obligations in foreign currency to the level of AAA from the previous notch of AA+, for the reason of positive revision of the levels of public debts which are now slightly above 26%.

The head of the Reserve Bank of Australia Mr. Stevens stressed earlier that Europe and its leaders have to hurry up to resolve their problems. According to export statistics, Australia and its economy is seriously affected by the slump in global demand.

Unemployment rate in Australia decreased to 5.2% in October against 5.3% a month earlier. 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.

The data released earlier showed that leading indicators index CB in Australia increased by 0.1% m/m in September against a previous decline of 0.2% m/m. Corporate profit and exports of agricultural products were among the main drivers of the increase in the index. New statistics does not cancel downward pressure, and the main reason for this was caused by changes in prices for securities at the stock market.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to strengthen moderately

At the Forex currency market the New Zealand Dollar rate continues to strengthen moderately today, supported by national political news and general stability of the external background.

Forex forecast: MACD indicator for the pair NZD/USD is going down in the negative area and is giving a sell signal; volumes are maximal. Stochastic Oscillator has left oversold zone and is giving a clear buy signal.

Forex recommendations: in case of breakdown at the level of 0.7570, the pair will go to 0.7580 and 0.7590. Meanwhile the growth looks more like a rebound.

It became known yesterday that the party of the current prime-Minister John Kay won the elections, which supported growth of the NZD, as investors have received a confirmation that current monetary policy will be pursued.

Statistics released this week showed that business confidence NBNZ amounted to +18.3 points in November against the level of +13.2 points in October. According to business estimates business outlooks shall become better soon, at least as indicated by statistics.

According to previous statistics, volume of retail sale 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. The data released earlier showed that annual inflationary expectations in New Zealand declined to 2.72% in Q4 against the level of 2.94% a quarter earlier. This became another indication that economy of the country decelerates rates of growth.

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. It became known earlier that trade balance in New Zealand was at the level of –NZ$*** million in October against the level of NZ$784 million in September. The index remained in deficit last month although higher than the forecasts of economists. Volumes of export increased by 5.3% (NZ$3.9 billion on annual basis in October and imports rose by 8.9% y/y due to demand for industrial production.

 

[LF.Anastasia]

EUR/USD: Euro have lost momentum for growing correction

The pair EUR/USD is traded slightly upward at the Forex currency market on Wednesday morning.

By 9.35 the Euro is at 1.3335 against yesterday’s closing level of 1.3327.

Investors try to find advantages in the news from Eurozone where the next tranche to Greece in the amount of 8 billion euro was approved yesterday and mechanism of expanding the fund EFSF has been clarified, However, information that the agency S$P has downgraded ratings of large American banks seriously interferes with favourable trading sentiments

In addition to Greece, Ireland will receive a new tranche as well.

Apparently market needs more fundamental basis to continue correction.

Most likely the pair EUR/USD will not go beyond the range of 1.3300-1.3370 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound has not got sufficient positive momentum

At the Forex currency market the British Pound Sterling rate is traded downward on Wednesday as external background and domestic news do not enable to continue upward correction.

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from top to bottom and is traded in the negative area, giving a sell signal. Stochastic Oscillator continues to grow in the neutral zone, indicating that buying will be relevant.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.5530, target for selling will be the levels of 1.5520 and 1.5500.

It became known today that rating agency Fitch did not excluded probability that the UK ranking could be downgraded, as national budgetary reserves of the country have been rather depleted. The agency believes that economic growth rate in the UK will slow down and influence of the European debt crisis will increase, which will eventually challenge current rating of the country.

The head of the Bank of England Mr. King said earlier that inflation will go down considerably, as slow growth of wages and spare capacity of the economy are currently making progress in this direction. In the next 6 months however, drastic changes cannot be expected: CPI will remain in the channel of the existing rates. This is the first time in the last few months when supposition about reduction of the inflation level has been made. Representative of the Bank of England, a former “Hawk”, Mr. Dale noted that inflation rate would drop sharply next year; meanwhile the Bank of England would continue to stimulate economy.

According to observers from NABE, unemployment rate in the UK will be around 8.7% in 2012 against previous forecast of 8.5%; there is a chance that employment will increase up to 100 thousand in Q4 this year. It is expected that policy of the Bank of England will continue to be soft next year and GDP will amount to 2.2% in Q1 next year against predicted level of 2.5% in Q4 this year.

According to a representative of the Bank of England Mr. Weale, economy of the country will not reach pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy does not improve after the first round of stimulation. Weale also indicated that there are signs of new recession.

 

[LF.Anastasia]

CHF: Swiss Franc is getting weaker in the middle of the week

At the Forex currency market Swiss Franc rate is getting weaker on Wednesday after two days of steady growth, and is returning now into the oversold range.

Forex forecast: MACD indicator for the pair GBP/USD is in the positive area and is moving along the signal line while volumes are high and is not giving any signals. Stochastic Oscillator has come out of the overbought zone and is going down in the neutral zone, giving a sell signal

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 0.9250, the pair USD/CHF will go to 0.9260 and 0.9280. If upward breakdown does not take place, the pair will consolidate at the current levels.

Macro-economic background in Switzerland remains almost unchanged today.

According to the estimates of Swiss National Bank, GDP in Switzerland will amount to 1.5%-2.0% this year; main growth will be 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.

Representative of SNB Mr. Jordan reported earlier 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 it is required considering the state of economic forecasts and deflation. According to him, slowdown in economic growth in Switzerland, which had taken place earlier, was caused by high exchange rate of Swiss Franc.

Trade surplus in Switzerland 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.

Unemployment rate in Switzerland rose to 2.9%, which had been an expected rise from 2.8%. It became known last week that trade balance in Switzerland amounted to 2.15 billion francs in October against the forecast of 2.06 billion francs. The data is good, considering global slump in demand and expensive Franc.

 

[LF.Anastasia]

JPY: Japanese Yen lost guides for movement

At the Forex currency market the Japanese Yen rate is traded slightly downward on Wednesday, lacking clear medium-term trend.

Forex forecast: MACD indicator for the pair USD/JPY has slowed down its fall near the signal line and is now moving along it, not giving a clear signal. Oscillator is in the neutral zone, shifting to sideways movement and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 78.00, the pair will go to 78.10 and 78.30. If upward breakdown does not take place, the pair has a chance to return to 77.60.

Today’s statistics showed that orders in the construction sector of Japan amounted to +24.3% y/y in October. In addition, preliminary industrial output rose by 2.4% m/m (+0.4% y/y) in October against the forecast of +1.1% m/m. nevertheless not everything is so positive: PMI in the manufacturing industry declined to 49.1 points in November, as per Markit/JMMA estimates, against the level of 50.6 points in October.

Another “fly in the ointment” came from rating agencies: Japanese agency R&I is going to review AAA rating of country with probability of downgrade.

Rating agency S&P said earlier that Japanese rating is going to be revised soon, as financial situation in the country is worsening every day. According to the economists of the Agency it is hardly probable that Japan will be able to avoid debt problems.

It became known yesterday that unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy.

The head of the Bank of Japan Mr. Shirakawa noted yesterday that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was caused by the European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective. This last comment continues to bring disadvantages for the JPY.