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[LF.Anastasia]

CAD: Canadian Dollar weakened due to the lack of interest to risk

At the Forex currency market the Canadian Dollar rate makes attempts to recover in the middle of the week after two-days of significant sales.

Forex forecast: MACD indicator for the pair USD/CAD is going down in the positive area and almost merged with the signal line, giving a sell signal. Stochastic Oscillator is in the overbought zone, continuing to grow and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0340, the pair will go to 1.0350 and 1.0360. As part of the technical correction the pair can go to 1.0285.

The head of the Bank of Canada Mr. Carney said commenting on the last week’s EU summit that he did not have any illusions in regards of the efficiency of the measures proposed by European Union. Apparently monetary politician thinks that actions of the EU are insufficient in the current situation.

Earlier Carney noted that Canadian enterprises and companies shall become the mover of economic growth in the country and it would be better for the households to reduce the level of debts.

According to observers from Standard & Poor's, economy of Canada is in the favourable position now, since exports grow, despite strengthening of the CAD and consumer spending remains at the high levels.

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%. 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.

It became known yesterday that the Canadian regulator left interest rate unchanged at the level of 1% per annum. The news did not become a surprise for the players, as investors had assumed that interest rate would be kept at the current levels for a least another 12 months.

In the follow-up comments the Bank of Canada said that the impact of recession in the global economy can be projected onto the Canadian economic system and that through the fault of Eurozone conditions at the global financial platforms have deteriorated sharply.

 

[LF.Anastasia]

GBP/JPY: Sales of cross-rate are more preferable

At the Forex currency market the rate of the cross-pair GDP/JPY ceased being on sale this morning, since external background is neutral and the market has already make use of the news released earlier.

Forex forecast: MACD indicator for the pair USD/JPY has slowed down growth in the negative area, while volumes are below average and maintains a buy signal. Stochastic Oscillator is below the border of Ichimoku cloud, which proves that sellers dominate over buyers.

Forex recommendations: in case of breakdown at the level of 120.50, the pair will go to 120.30 and 120.00, to the lows of November.

From a fundamental point of view investors have been trying to get rid of the pair since the beginning of the week, as European external background was not in favour of risk; however position of the Japanese Yen, which once again proved its status of a protective currency, is quite stable.

There are no risks for the Yen from Japan: The head of the Bank of Japan Mr. Shirakawa noted earlier that interventions against Yen are acceptable and effective. However, practical steps to support the words have not been made: apparently the Japanese regulator is in the “fly-through mode” presently moreover, the Yen does not give grounds for intervention due to its moderate activity.

 

[LF.Anastasia]

EUR/USD: Euro is still weak

The pair EUR/USD grows very slowly at the Forex currency market on Thursday morning, remaining under intense pressure from the market.

By 9.12 Moscow time the Euro is at 1.2988 against yesterday’s closing level of 1.2981.

The reason for such aggressive sales was the position of the U.S. Federal Reserve in the closed meeting with representatives of Congress. In particular the Mass Media informed that Bernanke ruled out chances of granting additional aid to the European Banks. Republican representatives in the Senate noted that Bernanke’s remark sounded like “I have neither authority, nor plans to provide financial aid to the countries and banks of Europe”.

This information caused collapse of the Euro below the lows of January and closing level of the pair was 1.30, for the first time since 11 January 2011.

The day is going to be strenuous, as Europe will react to the opinion of FR.

Most likely the pair EUR/USD will not go beyond the range of 1.2950-1.3050 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound continues to decline

At the Forex currency the British Pound Sterling rate is traded downward on Thursday, still being under pressure from external negative factors.

Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is going down in the oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.5430 the target for selling will be the levels of отметки 1.5420 and 1.5400, if negative factors in the market will be preserved.

The picture remains the same: the British Pound is still under strong pressure from external background. Negative factors come from Europe and consequently affect the status of the Pound Sterling.

At the meeting last week, the Bank of England decided to keep interest rate unchanged at the level of 0.50% per annum, as expected. The British regulator did not bring any surprises: program of asset purchase remained unchanged and the rate is the lowest level since May 2009. Yesterday, the Bank of England announced about introduction of an additional instrument ensuring liquidity –ECTR. The objective of a new monetary mechanism is to reduce the levels of risk caused by European debt problems. With the help of this method the Bank of England can guarantee the sufficiency of the capital for commercial financial structures.

Position of Great Britain played important role at the EU summit: earlier, the UK opposed revision of the document about European Union, thus refusing to sign a financial package. Prime Minister of the country David Cameron said that proposals of the summit are not in the sphere of interest of the UK and opt-out to take part in the package will not impact on the country. Meanwhile the UK will continue to try stay away from the problems of the Euro and European crisis. London also required exceptional conditions for its economy within a new package, so that new measures tightening inspection for expenditures and the increase of financial integration will not apply to the British system. As a result 26 countries of EU have approved new conditions, and Great Britain stood aside of a new package of agreements.

It became known earlier that CPI in the UK increased by 0.2% m/m (+4.8% y/y) in November, as expected. British inflation slows down its pace, however the index is still too far from the target level of the Bank of England. The data released earlier showed that retail sales BRC in the similar trading floors of the UK fell by 1.6% y/y in November against the forecast of -0.5%. It was the lowest level of the index since May this year. 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. In general, the latest data from Markit looks good and does not rule out prompt recovery of the economic sectors in the future.

 

[LF.Anastasia]

CHF: Swiss Franc collapsed to new lows

At the Forex currency market Swiss Franc rate fell to new local lows on Thursday under pressure of expectations that SNB will adopt aggressive measure against the rise of the Franc at the meeting today.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and started to go up, giving a buy signal. Stochastic Oscillator remains in the overbought zone and maintains a similar signal.

Forex recommendations: in case of break down at the level of 0.9540, the pair USD/CHF will go to 0.9560 and 0.9580. If upward breakdown does not take place, the pair will consolidate at the current levels.

All attention today will be focused on the meeting of National Bank of Switzerland; i is possible that the Bank will make decisions about negative rate for Libor and the rise in the exchange rate of Franc to Euro. Earlier, 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.

In advance of the meeting Franc weakens dramatically this week.

Earlier, SECO released economic forecast, according to which economic growth in Switzerland will amount to 0.5% in 2012 against the previous expectations of growth of 0.9%.

As per 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.

Earlier, Switzerland has awakened interest of players by 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 on quarterly basis was positive, indicating that efforts of the Central Bank to curb the rates of the Franc are effective. Statistics of this week showed that unemployment rate in Switzerland remained at the level of 3.1% in November. In addition, CPI fell by 0.2% m/m in November, while expected growth had been of 0.1%. Inflation is clearly affected by external background.

 

[LF.Anastasia]

JPY: Japanese Yen retreats under pressure from USD

At the Forex currency market the Japanese Yen rate continues to weaken gradually which is the consequence of increased interest to the USD which became the main protective currency at the moment.

Forex forecast: MACD indicator for the pair USD/JPY grows moderately in the positive area and is giving a buy signal. Stochastic Oscillator has come into overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 78.15, the pair will go to 78.25 and 78.50. If upward breakdown does not take place, the pair will consolidate at the current levels.

Statistics released today showed that business sentiment in Japan deteriorated: Study from Tankan indicates that index of large producers amounted to -4 points in Q4 against preliminary +2 points and the forecast of March has shifted to -5 points against previously predicted +4.

This is a negative signal for the prospects of Japanese economy.

The data released this week showed that consumer confidence index in Japan fell for the first time in 7 months in November (38.1 against 38.6 previously), as global economy significantly affects Japan and its expensive Yen as well.

The head of the Bank of Japan Mr. Shirakawa noted earlier 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. However, practical steps to support the words have not been made: apparently the Japanese regulator is in the “fly-through mode” presently moreover, the Yen does not give grounds for intervention due to its moderate activity.

Real GDP in Japan was revised downward to +1.4% q/q (+5.6% y/y) in Q3 against preliminary +1.5% q/q (+6.0% y/y). New block of statistics showed that surplus of current account in Japan amounted to Y562.4 billion in October, demonstrating a fall of 62.4% y/y. Morning statistics also showed that volume of credit outstanding in the country increased by 0.2% y/y last month. It indicates the increase in demand for corporate financing and can be perceived positively. Level of bank lending is also growing steadily (+0.2% y/y in November: +0.1% y/y in October; -0.3% y/y in September).

 

[LF.Anastasia]

AUD: Australian Dollar declines due to market risks

At the Forex currency market the Australian Dollar rate continues to decline on Thursday, still being under pressure, since players’ interest to risk is still very low and external background is negative.

Forex forecast: MACD indicator for the pair AUD/USD has broken the signal line from top to bottom and maintains a buy signal; volumes are minimal. Stochastic Oscillator has gone to oversold zone and maintains a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9900, the pair will go to 0.9880 and 0.9850.

According to the released statistics, inflationary expectation in Australia reduced to 2.4% in December against preliminary level of 2.5%, as per Melbourne University. Comments of MI stated:”Decline in inflationary expectations reflects consumers’ concern about worsening international situation”. The decrease in CPI is logically associated with slowdown in the rate economic development.

GDP in Australia rose by 1.0% q/q (+2.5% y/y) in Q3 against the forecast of growth of 0.8% on quarterly basis. The data on economic growth in Australia was based on the rise in consumer expenditures and investments in the mining industry. Note that earlier Australian authorities have revised forecast of GDP growth downward, to 3.5% in 2012. Previous forecast had been at 3.75%

Unemployment rate increased to 5.3% in November against the forecast of 5.2%. Employment rate fell by 6 thousand against the growth of 16.8 thousand earlier. The indicator reflects the impact of European debt problems on the Australian economy. 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.

Consumer sentiment index Westpac-MI fell to 94.7 points, -8.3% m/m in December against the value of 103.4 points in November. Business confidence index NAB in Australia increased to 1 point in November against zero level in October. This data is positive at the moment as current conditions have stabilized; however levels of business confidence are still unvaried. It became known yesterday that trade balance in Australia fell to +A$1.60 billion in October against expectations of +A$2.0 billion. Slump in the global demand has played its part here as well.

At the last meeting, the Reserve Bank of Australia reported that interest rate was lowered by 25 basis points, to 4.25% per annum. In the follow-up comments the RBA said that currently, inflationary forecast enables to decrease the rate gradually because in 2012-2013 CPI will be probably in the range of 2-3%. The RBA also stressed that crisis in Eurozone and slow down in the Chinese economy adversely affect Australia; in addition, probability of further slowdown in the world economy also intensifies. The next meeting of the Reserve Bank of Australia will be held only in February, so lowering of the rate can be partly explained by the fact that the regulator wanted to secure the situation before summer holidays (according to Australian seasons).

 

[LF.Anastasia]

NZD: Sales of New Zealand Dollar do not cease

At the Forex currency market the New Zealand rate continues to weaken on Thursday because investors try to escaep all possible risks.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the negative area and is giving a buy signal; volumes are minimal. Stochastic Oscillator fell into oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7470 the pair will go to 0.7450 and 0.7430.

Macro-economic background in New Zealand is neutral. The main impact on the NZD is caused by investors’ aversion to risk, as they do not believe in stability in Eurozone or in prevention of slowdown in the world economy. Strong oversold is not important for the NZD now.

GDP 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. Permits to construct in New Zealand increased sharply by 10,0% in October against the fall of 1.3% y/y in September.

Decision of the Reserve Bank of New Zealand last week was of no surprise to anyone. Interest rate was left at the level of 2.5% per annum, since its level has already been revised last month. In addition, the data released on Thursday showed that activity in the manufacturing industry fell by 1.4% q/q and remained unchanged on annual basis in Q3, against the fall of 0.7% in Q2, which is the consequence of slowdown in the world economy.

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. Consumer confidence index ANZ in New Zealand declined to 108.4 points in December against 109.0 points earlier. The NZD regained from this information due to pressure from sellers.

 

[LF.Anastasia]

EUR/USD: Euro is moderately recovering

The pair EUR/USD is traded slightly upward at the Forex currency market on Friday morning, continuing to make attempts to recover from the fall this week.

By 9.30 Moscow time the Euro is at 1.3024 against yesterday’s closing level of 1.3013.

The news, that European Central bank intends to study the issue of changing capital requirement for banks in order to avoid crisis in the system, continues to support market.

Yesterday’s U.S. statistics was quite good which also helps the recovery.

Most likely the pair EUR/USD will not go beyond the range of 1.2990-1.3090 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is being successfully corrected

At the Forex currency on Friday the British Pound Sterling rate continues to regain from losses of this week, however only as part of corrective Forex forecast: MACD indicator for the pair GDP/USD is traded in the negative area and is rebound.

moving along the signal line, not giving a clear signal. Stochastic Oscillator is going out of the oversold zone and starts to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 1.5530 the target for buying will be the levels of отметки 1.5540 and 1.5560.

Since mass flow of negative factors from Europe had dried out, the British Pound was able to regain part of the losses of this week. However, the growth is based purely on the technical correction.

The Bank of England announced earlier that average inflationary expectations in November fell to 4.1% in November versus the level of 4.2% in August. At the same time, two-year inflationary expectations were at the level of 3.4% (3.5% previously).

It became known earlier that CPI in the UK increased by 0.2% m/m (+4.8% y/y) in November, as expected. British inflation slows down its pace, however the index is still too far from the target level of the Bank of England. The data released earlier showed that retail sales BRC in the similar trading floors of the UK fell by 1.6% y/y in November against the forecast of -0.5%. It was the lowest level of the index since May this year. 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. In general, the latest data from Markit looks good and does not rule out prompt recovery of the economic sectors in the future.

Earlier in December at the regular meeting, the Bank of England decided to keep interest rate unchanged at the level of 0.50% per annum, as expected. The British regulator did not bring any surprises: program of asset purchase remained unchanged and the rate is the lowest level since May 2009. Yesterday, the Bank of England announced about introduction of an additional instrument ensuring liquidity –ECTR. The objective of a new monetary mechanism is to reduce the levels of risk caused by European debt problems. With the help of this method the Bank of England can guarantee the sufficiency of the capital for commercial financial structures.