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[LF.Anastasia]

EUR/USD: Euro is disposed pessimistically

At the Forex currency market the pair EUR/USD is traded with minimal increase on Tuesday morning.

By 9.30 Moscow time the Euro is at 1.3006 against yesterday’s closing level of 1.2994.

In general, external background is stable; it became known yesterday that countries of European Union approved allocation of 150 billion euro, thereby strengthening anti-crisis fund. Great Britain is still aloof, stating that its final position on the issue will be voiced in 2012. Four countries, which are not included in the European zone, also promised to participate in building up reserves of IMF.

However the growth is contained by expectations of Spanish auction today.

Most likely the pair EUR/USD will not go beyond the range of 1.2970-1.3050 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound makes attempt to regain

At the Forex currency on Friday the British Pound Sterling rate is traded upward on Tuesday after yesterday’s sales. External background is neutral so far, which gives market a chance to regain from previous sales.

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

Forex recommendations: in case of breakdown at the level of 1.5530, target for sales will be the levels of 1.5540 and 1.5560. Meanwhile, at the moment, buying is a part of correction.

Great Britain is still trying to keep away from European debt problems: yesterday, during discussions of ways to increase International Monetary Fund with the help of collective contributions, London stated that it would announce its decision at the beginning of 2012.

Minutes of the last meeting of the Bank of England will be released this week and it will be interesting to know comments of the members of the MPC about prospects of inflation in the country.

House price index Rightmove in the UK fell by 2.7% m/m (+1.5% y/y) in December against preliminary level of -3.1% m/m (+1.2% y/y). Looking at the past performance of the index we can say that in the first 6 months of the year, house prices went up, however in the next six months volatility in the sector increased and the rise in October was smoothed over by the decline in November. In 2011 British housing sector distinguished by both record low rates and tougher mortgage conditions.

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

According to Markit estimates, PMI CIPS amounted to 52.3 points in November against 53.9 points earlier; however dynamics in the sector of new houses is positive and upward trend in the sector can be interpreted as an indication of the future stabilization. In general, the latest data from Markit looks good and does not rule out prompt recovery of the economic sectors in the future. 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.

 

[LF.Anastasia]

CHF: Swiss Franc stands still watching what is going on

At the Forex currency market on Tuesday Swiss Franc rate is being traded with no changes for the second consecutive day. As soon as Swiss National Bank announced that intentions to curb SHF growth are still in force, activity in the pair reduced dramatically.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is moving along the signal line today, not giving a clear signal. Stochastic Oscillator goes down in the neutral zone and s giving a sell signal.

Forex recommendations: in case of break down at the level of 0.9350, the pair USD/CHF will go to 0.9340 and 0.9330. If downward breakdown does not take place, the pair will consolidate at the current levels.

Today, investors are waiting for the data on Swiss trade balance in November.

Apart from this, macro-economic background is stable: Swiss National Bank was the main newsmaker last week. The meeting of Swiss National Bank, which had been expected so eagerly by players, was neutral. Three-month Libor rate was left in the range of 0-0.25%, closer to zero; the Bank did not change pegging level of Franc to Euro, maintaining the actual level of 1.20. In the follow up comments the head of SNB Mr. Hildebrand stressed that the regulator will continue to maintain the target rate of CHF, with the help of purchases of foreign currency in unlimited quantities and additional package of measures if situation requires. SNB is ready to maintain high level of liquidity, as inflation growth is not expected. In general, economy of the country depends a lot on the European crisis.

Apparently, SNB has adopted attitude of an onlooker, keeping in place existing management tools, being pretty confident that they can start intervention any time.

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, 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%.

Retail sales fell 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: Slight correction in Japanese Yen does not revoke general weakness

At the Forex currency market the Japanese Yen rate is traded upward on Tuesday after yesterday’s decline. Presently, there is almost no interest in JPY; most sensitive investors “sit out” in the USD which is clearly demonstrated in the pair’ daily chart.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and continues to move along the signal line, not giving a clear signal. Stochastic Oscillator is going down in the neutral zone and is giving a pair sell 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 78.20. If upward breakdown does not take place, the pair will consolidate at the current levels.

Finance Minister of Japan Mr. Azumi has noted today that markets keep confidence in the USD. Declaration about intention of Japan to buy Chinese bonds was of interest. Azumi said that final decision has not been adopted yet and prospects of assets purchase should not be interpreted as a complete abandonment of dollar’s investments. On the other hand it is quite clear that Japan takes preventive measures in the hope of protecting the country from risks in the future.

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.

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. 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). According to statistics, business sentiments in Japan are deteriorating: Tankan study proves 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.

 

[LF.Anastasia]

AUD: Australian Dollar is in a state of complete uncertainty

At the Forex currency market the Australian Dollar rate is increasing on Tuesday, smoothing over yesterday’s sales, however short-term trend of trades is still uncertain due to mixed external background.

Forex forecast: MACD indicator for the pair AUD/USD started to move downward from the signal line in the negative area and is giving a sell signal. Stochastic Oscillator is coming out of the oversold zone and started to shape a weak buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9950, the pair will go to 0.9960 and 0.9980.

Australian Central Bank said on Tuesday that the country is fighting off repercussions of European debt crisis with the help of investment boom: minutes of the last meeting of the Reserve Bank of Australia showed that there is no urgent need at the moment in lowering rate and current steps directed to ease monetary policy is sufficient to support economy.

Observers believe that lowering of the rate of RBA in December was just a safeguard against external negative factors.

According to released statistics, inflationary expectation in Australia reduced to 2.4% in December against preliminary level of 2.5%, as per Melbourne University. MI stated in the comments:”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.

 

[LF.Anastasia]

NZD: New Zealand Dollar follows after market

At the Forex currency market the New Zealand rate is traded upward on Tuesday, following market’s trend. However, the growth is a part of a corrective rebound.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and resumed its decline, giving a sell signal. Stochastic Oscillator is going up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7595 the pair will go to к 0.7600 и 0.7630.

Situation in New Zealand remains unchanged in terms of macro-statistics today. Current rise in the NZD today is explained by relatively quiet external background, as long as Europe does not give new negative reasons to avoid risks yet.

It became known yesterday that business activity index in the service sector amounted to 56.6 points in November, as per BNZ estimates, against preliminary level of 51 points; thus the index has reached twenty-month highs now. The report also showed that new orders of companies and enterprises, as well as sales became a catalyst for activity. In addition, the rise in activity was recorded in the four major regions of the country for the first time this year.

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 slump 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 it was higher than 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.

 

[LF.Anastasia]

EUR/USD: Euro is supported by coming Christmas and also by ECB

The pair EUR/USD is traded upward at the Forex currency market on Wednesday morning in response to rally in stock indexes.

By 9.35 Moscow time the Euro is at 1.3111 against yesterday’s closing level of 1.3076.

Apparently, this is what Christmas rally is all about, but this year it is limited in time. There is no news background either. Investors await the outcome of the first auction of the European Central Bank which offered three-year loans to the banks. Previously European Banks were able attract about 293 billion euro in order to normalize situation with liquidity.

In general, external background is neutral this morning and current growth of the Euro is favourable for purchase keeping in mind future sales.

Most likely the pair EUR/USD will not go beyond the range of 1.3040-1.3150 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound has been successfully corrected

At the Forex currency market on Wednesday the British Pound Sterling rate keeps on ascending trend which started last night. This week correction is quite significant from the oversold levels; however it is unlikely that it will last after this Friday.

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

Forex recommendations: in case of breakdown at the level of 1.5670, target for buying will be the levels of 1.5680 and 1.5700. Meanwhile, buying is a part of correction.

It became known today that consumer confidence GFK/NOP in the UK declined to-33 points in December against the level of -31 points in November. Judging by small real expenditures and low income of households, the British are getting more conscious about spending. Index is still at 35-year lows and it is a negative indication.

Great Britain is still trying to keep away from European debt problems: yesterday, during discussions of ways to increase International Monetary Fund with the help of collective contributions, London stated that it would announce its decision at the beginning of 2012. Minutes of the last meeting of the Bank of England will be released this week and it will be interesting to know comments of the members of the MPC about prospects of inflation in the country.

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

According to Markit estimates, PMI CIPS amounted to 52.3 points in November against 53.9 points earlier; however dynamics in the sector of new houses is positive and upward trend in the sector can be interpreted as an indication of the future stabilization. In general, the latest data from Markit looks good and does not rule out prompt recovery of the economic sectors in the future. 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.

House price index Rightmove in the UK fell by 2.7% m/m (+1.5% y/y) in December against preliminary level of -3.1% m/m (+1.2% y/y). Looking at the past performance of the index we can say that in the first 6 months of the year, house prices went up, however in the next six months volatility in the sector increased and the rise in October was smoothed over by the decline in November. In 2011 British housing sector distinguished by both record low rates and tougher mortgage conditions.

 

[LF.Anastasia]

CHF: Swiss Franc tends to grow

At the Forex currency market on Tuesday Swiss Franc rate is traded upward in the middle of the week

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is growing, giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal, coming closely to oversold zone.

Forex recommendations: in case of break down at the level of 0.9275, the pair USD/CHF will go to 0.9260 and 0.9250. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known yesterday that trade balance in Switzerland rose by 3.0 billion francs in November against the forecast of +2.00 billion francs and previous value of +2.15 billion francs. Index is favourable, however it is based on the efforts of the local regulator to curb the rate of the Franc.

Apart from this, macro-economic background is stable: Swiss National Bank was the main newsmaker last week. The meeting of Swiss National Bank, which had been expected so eagerly by players, was neutral. Three-month Libor rate was left in the range of 0-0.25%, closer to zero; the Bank did not change pegging level of Franc to Euro, maintaining the actual level of 1.20. In the follow up comments the head of SNB Mr. Hildebrand stressed that the regulator will continue to maintain the target rate of CHF, with the help of purchases of foreign currency in unlimited quantities and additional package of measures if situation requires. SNB is ready to maintain high level of liquidity, as inflation growth is not expected. In general, economy of the country depends a lot on the European crisis.

Apparently, SNB has adopted attitude of an onlooker, keeping in place existing management tools, being pretty confident that they can start intervention any time.

Retail sales fell 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.

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, 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%.

 

[LF.Anastasia]

JPY: Japanese Yen temporarily got rid of pressure from USD

At the Forex currency market the Japanese Yen rate is increasing on Wednesday in response to positive sentiments in the market.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and continues to move along the signal line, not giving a clear signal. Stochastic Oscillator is going down in the neutral zone and is giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.60 and 77.40. If downward breakdown does not take place, the pair will consolidate at the current levels.

Japanese statistics is negative today. Trade balance deficit amounted to Y684.7 billion in November against the forecast of -Y442.4 billion; at the same time exports decreased by 4.5% y/y in November, while imports increased by 11.4% y/y.

It is getting more difficult for Japan to maintain economic growth rate, as both serious weakness of the world economy and strong Yen complicate the process.

Today’s meeting of the Bank of Japan was gloomy. Thus, the regulator noted that economic activity growth has slowed down and activity in Japanese economy e/z. The Bank revised economic situation assessment downward in comparison with November, which is logical. Japanese economy will start to recover as soon as pressure from Europe diminishes.

In addition, interest rate in the country was left unchanged at the level of 0.1%. This decision had been expected.

Finance Minister of Japan Mr. Azumi has noted today that markets keep confidence in the USD. Declaration about intention of Japan to buy Chinese bonds was of interest. Azumi said that final decision has not been adopted yet and prospects of assets purchase should not be interpreted as a complete abandonment of dollar’s investments. On the other hand it is quite clear that Japan takes preventive measures in the hope of protecting the country from risks in the future.

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.