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[LF.Anastasia]

JPY: Positions of Japanese Yen has not changed fundamentally

At the Forex currency market rates of the Japanese Yen remain stable; trading trend for the pair USD/JPY has not been clearly defined.

Forex forecast: MACD indicator for the pair USD/JPY begun to grow in the positive area and is giving a buy signal. Oscillator continues to decline slowly in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.70, 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 77.40.

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

The head of the Bank of Japan Mr. Shirakawa noted this week that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by 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.

It became known earlier 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.

Statistics released this week 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 forwarded AAA rating of country for the review 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.

 

[LF.Anastasia]

EUR/USD: Euro concludes this week with increase

The pair EUR/USD is traded upward at the Forex currency market on Friday, continuing to increase moderately.

By 12.45 Moscow time the Euro is at 1.3483 against yesterday’s closing level of 1.3460.

Favourable data on the U.S. employment market supports positive sentiment in the market. A piece of information from this sector which will be published tonight will require special attention.

At the end of this week the USD versus the EUR has made the most drastic decline in a month.

Most likely the pair EUR/USD will not go beyond the range of 1.3430-1.3510 at the trading session on Friday.

 

[LF.Anastasia]

AUD: Moderately positive factor distinguishes Australian Dollar on Friday

At the Forex currency market the Australian Dollar rate is traded slightly upward on Friday while investors have adopted wait and see attitude.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and shifted into sideways movement, not giving a clear signal. Stochastic Oscillator has come into overbought zone and is moving along the signal line, maintaining a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0270, the pair will go to 1.0280 and 1.0290. If negative factors intensify, the pair can go down to 1.0250 and 1.0230.

Macro-economic background remains stable in Australia.

Financial situation in the country is ambiguous: previous statistics showed that lending in the private sector of Australia increased by 0.2% m/m (+3.5% y/y) in October against the forecast of growth of 0.4% m/m. Previous block of statistics demonstrated 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.

It became known earlier that Australian authorities revised GDP growth forecast downward, to 3.5% in 2012. Previously, forecast had been at 3.75%

This week, rating agency Fitch upgraded rating of Australia’s obligations in foreign currency to the level of AAA from the previous notch AA+, due to positive revision public debts levels, 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. It became known yesterday that retail sales in Australia increased to the highest value of +0.2% m/m over 4 months. In September the index rose by 0.4%, and by 0.6% in August. This data upset investors who are concerned that such precarious balance in the economy can be disturbed.

 

[LF.Anastasia]

CAD: Canadian Dollar is upward at the end of the week

At the Forex currency market the Canadian Dollar rate is moving upward on Friday, as investors’ sentiment is favourable for the risky assets. Activity in the pair is low.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and is moving along the signal line, not giving a clear signal while volumes are average. Stochastic Oscillator remains in the overbought zone, and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0130, the pair will go to 1.0120 and 1.0100.

This afternoon investors will wait for the information on employment rates in October (expected growth is 17.5 thousand), as well as unemployment rates in October (forecast is 7.3%, unchanged).

It became known earlier that GDP in Canada increased by 3.5% y/y in Q3 against revised decline of 0.5% in April-June. Economists predicted growth of the indicator by 3%.

Worth noting statistics of the week is that prices for industrial goods reduced by 0.1% m/m in October while growth of 0.1% had been expected. Raw material prices fell by 1.2% m/m in October against the forecast of +1.0%.

CPI rose by 0.2% (+2.9% y/y) in October against the forecast of growth of 0.1% (+2.7% y/y). The indicator happened to be lower than the previous level of 3.1% y/y, however, it is still within the range of 1-3% specified by the Bank of Canada. Last month, prices in Canada increased mostly for gasoline and food.

The Bank of Canada believes that country’s GDP will amount to 2.8% in 2011 (decline by 0.1% against the forecast in April), in 2012 it will be: 2.6% and in 2013: 2.1%. According to the Bank, export performance in Canada is weak, because low demand in the U.S. impedes progress in the index and expensive CAD also offers a challenge. The rise in the interest rate in Canada will directly depend on stability in economic growth.

Earlier the head of the Bank of Canada Mr. Carney said that the regulator will maintain the rate at the level of 1% due to the influence of European developments. He believes that situation with European debt has deteriorated prospects of the global economy and spread panic in the financial markets. Taking into account the foregoing it is obvious that the program of providing help to the banks will be continued. The bank of Canada along with other largest world’s banks supported the idea of the U.S. FR to lower swop interest rates which will enable to increase liquidity of the USD at the market and stabilize monetary situation. Canadian monetary politician Mr. Flaherty noted this week that situation in the world economy would not change until Europe allocates more resources to fight against crisis. He shares point of view of German politicians and IMF that lost time will cost expensive price to Eurozone.

 

[LF.Anastasia]

EUR/USD: Euro is kept afloat by expectations

The pair EUR/USD is traded upward on Monday morning compared with Friday, however in the red of the day.

By 9.35 Moscow time the Euro is at 1.3409 against closing level of 1.3403 on Friday.

The pair is above closing level of Friday due to the news that Italian government has approved package of measures to consolidate budget and stimulate economic growth. On Monday the package of measures will be presented to the Parliament.

In addition, the Euro is afloat due to the expectations of the EU summit scheduled for this week; it is assumed that European leaders will report on new measures to overcome crisis in Europe.

Therefore, preservation of EUR/USD above 1.34 is based on expectations.

Most likely the pair EUR/USD will not go beyond the range of 1.3370-1.3480 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound started this week with decline

The British Pound Sterling rate is traded slightly downward at the Forex currency market on Monday due to mixed sentiment at the world financial platforms.

Forex forecast: MACD indicator for the pair GDP/USD has broken through the signal line from top to bottom last week, and is traded in the negative area, giving a sell signal. Stochastic Oscillator goes down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5605 the target for selling will be the levels of 1.5590 and 1.5570.

Activity in the British construction sector declined in November, which was demonstrated by statistics released at the end last week. According to Markit estimates, PMI CIPS amounted to 52.3 points in November against 53.9 points earlier; however dynamics in new houses is positive, and it upward trend can be interpreted as an indication of the future stabilization in the sector.

It became known earlier that PMI index in the manufacturing industry amounted to 47.6 points in November, as per CIPS/MARKIT estimates. The index is above expectations which supported growth of the Pound.

Representative of the Bank of England Mr. Weale believes that 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.

According to 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.

It also became known last week 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 put in question current rating of the country.

 

[LF.Anastasia]

CHF: Swiss Franc weakens in the range

At the Forex currency market Swiss Franc rate is traded downward on Monday, keeping up the trend, charted out last week

Forex forecast: MACD indicator for the pair GBP/USD is in the positive area and started to go down, giving a sell signal; volumes remain above average. Stochastic Oscillator is growing in the neutral zone, maintaining a buy signal.

Forex recommendations: in case of break down at the level of 0.9220, the pair USD/CHF will go to 0.9240 and 0.9250.

Economic situation in Switzerland has not changed significantly this morning.

As the end of last week Switzerland rose interest of players to a block of statistics. Thus, retail sales decreased by 0.2% y/y in October against a decline of 1.4% y/y earlier. GDP rose by 0.2% q/q (+1.3% y/y) in Q3 against the forecast of growth of 0.1% q/q (1.7% y/y). ). The data was positive on quarterly basis indicating that efforts of the Central Bank to curb the rates of the Franc are effective. Last Thursday Swiss government stated that they are prepared to lower interest rate to negative levels in order to use all available means to fight against the rise of Franc. At the same time, politicians noted that the most effective tools are in the hands of SNB.

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.

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.

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.

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 continues to go down

At the Forex currency market rates of the Japanese Yen continues to weaken on Monday for the third day in a row.

Forex forecast: MACD indicator for the pair USD/JPY is growing in the positive area and is giving a buy signal. Oscillator also goes up in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 78.05, the pair will go to 78.10 and 78.30. If upward breakdown does not take place, the pair can go back to 77.40.

Situation in Japanese economy has not changed fundamentally. The JPY is getting weaker following a decline in interest to safe currencies and also due to expectations of new intervention of the Bank of Japan.

Last week, the head of the Bank of Japan Mr. Shirakawa noted that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by 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.

Statistics released last Friday 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. It became known earlier 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.

Another “fly in the ointment” came from rating agencies: Japanese agency R&I forwarded AAA rating of country for the review 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.

Therefore, mixed investors’ sentiment at the world financial platforms has more impact on the JPY than the threat of intervention of the regulator into the trading process.

 

[LF.Anastasia]

AUD: Australian Dollar started this week in low spirits

At the Forex currency market the Australian Dollar rate started to decline moderately at the beginning of the week,external signals are mixed on Monday, which affects dynamics of the high risky currencies.

Forex forecast: MACD indicator for the pair AUD/USD is in the negative area and is going up, while volumes are low, giving a buy signal. Stochastic Oscillator is ready to move away from overbought zone, shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: : in case of breakdown at the level of 1.0230, the pair will go to 1.0210 and 1.0200. As part of rebound, the pair can reach the level of 1.0280.

It became known today that inflation TD-MI in Australia decreased by 0.1% m/m (+2.1% y/y) in November against the forecast of growth of 0.1% m/m. The AUD reacted discreetly to the news.

A meeting of the Reserve Bank of Australia will be held this week; changes in the interest rates are not expected. Comments of the RBA about the impact of the European crisis on the economy of the country in general will be of interest. 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.

Financial situation in the country is ambiguous: previous statistics showed that lending in the private sector of Australia increased by 0.2% m/m (+3.5% y/y) in October against the forecast of growth of 0.4% m/m. Previous block of statistics demonstrated 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.

It became known earlier that Australian authorities have revised forecast of GDP growth downward, to 3.5% in 2012. Previously, forecast had been at 3.75%

Retail sales in Australia increased to the minimum value of +0.2% m/m over 4 months in October. In September the index rose by 0.4%, and by 0.6% in August. This data upset investors who are concerned that such precarious balance in the economy can be disturbed. Last week, rating agency Fitch upgraded rating of Australia’s obligations in foreign currency to the level of AAA from the previous notch AA+, due to positive revision public debts levels, which are now slightly above 26%.

 

[LF.Anastasia]

CAD: Canadian Dollar has not determined movement direction at the beginning of the week

At the Forex currency market the Canadian Dollar rate almost stands still on Monday due to ambiguous external background.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and is moving along the signal line, not giving a clear signal, while volumes are below average. Stochastic Oscillator remains in the oversold zone, and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0150, the pair will go to 1.0140 and 1.0120.

It became known on Friday that unemployment rate in Canada increased by 0.1% in November, up to 7.4%, while the number of employees reduced by 18 thousand. Moreover, share of labour force decreased by 0.1%, to 66.6% last month. GDP in Canada rose by 3.5% y/y in Q3 against the revised decline of 0.5% in April-June. Economists predicted growth of 3%.

CPI rose by 0.2% (+2.9% y/y) in October against the forecast of growth of 0.1% (+2.7% y/y). The indicator happened to be lower than the previous level of 3.1% y/y, however, it is still within the range of 1-3% specified by the Bank of Canada. Last month, prices in Canada increased mostly for gasoline and food.

Earlier the head of the Bank of Canada Mr. Carney said that the regulator will maintain the rate at the level of 1% due to the influence of European developments. He believes that situation with European debt has deteriorated prospects of the global economy and spread panic in the financial markets. Taking into account the foregoing it is obvious that the program of providing help to the banks will be continued. The bank of Canada along with other largest world’s banks supported the idea of the U.S. FR to lower swop interest rates which will enable to increase liquidity of the USD at the market and stabilize monetary situation. Canadian monetary politician Mr. Flaherty noted this week that situation in the world economy would not change until Europe allocates more resources to fight against crisis. He shares point of view of German politicians and IMF that lost time will cost expensive price to Eurozone.

The Bank of Canada believes that country’s GDP will amount to 2.8% in 2011 (decline by 0.1% against the forecast in April), in 2012 it will be: 2.6% and in 2013: 2.1%. According to the Bank, export performance in Canada is weak, because low demand in the U.S. impedes progress in the index and expensive CAD also offers a challenge. The rise in the interest rate in Canada will directly depend on stability in economic growth.