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[LF.Anastasia]

CHF: Swiss Franc humbly awaits New Year

At the Forex currency market Swiss Franc rate is traded slightly downward on Friday while volumes are low.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal, volumes are increasing. Stochastic Oscillator is going down in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9400, the pair USD/CHF will go to 0.9390 and 0.9380. A chance that the pair will consolidate at the current levels is high.

Macro-economic situation in the country remains stable.

According to observers from Wells Fargo, economic indexes in Switzerland demonstrated slowdown all the year round and there are many indications showing that the weakness will continue for the next six months. According to them, domestic demand is also getting lower which is a negative sign. As for the rate, it is most likely that SNB will adhere to the zero level, due to soft inflation.

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 always have time to start intervention.

Swiss National Bank noted earlier that the regulator is prepared to take additional measures if situation at Forex deteriorates. According to SNB, strong Franc creates extra problems for the economy and the issue of negative interest rates and control over the capital movement is being thoroughly scrutinized in the 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.

The data released in the middle of the week showed that leading indicators index KOF fell to 0.01 points in December against the forecast of 0.23 points and previous revised value of 0.34 points. It became known earlier 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.

 

[LF.Anastasia]

JPY: Japanese Yen still tends to grow

At the Forex currency market the Japanese Yen rate still tends to grow on Friday, due to thin 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 sell signal.

Forex recommendations: in case of breakdown at the level of 77.50, the pair will go to 77.40 and 77.20. If downward breakdown does not take place, the pair will consolidate at the current levels.

There have not been significant changes in Japan in terms of macro-economy this morning. Demand for the JPY is explained by investors’ intention to “sit out” time of turbulence in the safe harbor. Absence of most players in the session and thin market also assist to increase demand.

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.

Minutes of the last meeting of the Bank of Japan, which was released earlier, stated that it is necessary to trace back the effect of the recent soft policy; special concern is caused by the potential impact of the expensive Yen.

We would remind that a meeting of the Bank of Japan, which was held in December, was gloomy. Thus, the regulator noted that growth of economic activity has slowed down and activity in Japanese economy is zero. The Bank has 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.

It became known yesterday that preliminary retail sales in Japan fell by 2.3% y/y in November against the forecast of zero changes, consumer spending reduced by 3.2% y/y in November versus expectations of decline of 1.1% y/y. In addition, preliminary volume of industrial output decreased by 2.6% m/m in November (-1.5% y/y) against projected value of -0.8% m/m (-2.0% y/y). The data is not impressive: the pace of decline is definitely accelerating, which is a negative factor for the recovering economy of Japan and for the forecasts; nevertheless, the JPY feels quite at ease.

 

[LF.Anastasia]

AUD: Australian Dollar concludes this year in low spirits

At the Forex currency market the Australian Dollar rate is moving in the “green” zone in the last trading day of 2011.

Forex forecast: MACD indicator for the pair AUD/USD is moving upward in the negative area and giving a buy signal. Stochastic Oscillator is reversing in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0170, the pair will go to 1.0180 and 1.0100.

It became known today that private sector lending in Australia increased by 0.3% m/m (+3.5% y/y) in November against the growth of 0.2% m/m in October.

Volatility in the high-yielding currencies remain high; however interest to risk is not there among investors who are still in the market a few days before New Year.

It was noted by Australian Central Bank this week, that the country has been fighting against 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.

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 earlier 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro again speeds up its fall

At the Forex currency market the pair EUR/USD is traded downward on Thursday morning, due to instability of the external background.

By 10.20 MSK the Euro is at 1.2919 against yesterday’s closing level of 1.2945.

The Euro continues to react negatively to the news from Greece: Prime Minister of the country Papademos said yesterday that Greece will not be able to pay off debts in March, if trade unions do not start to work in one with the authorities.

In addition, market tracks the development in Hungary where sanctions can be applied to the country as it does not follow the EU regulations.

Market today will deal with eventful macro-economic flow.

Most likely the pair EUR/USD will not go beyond the range of 1.2890-1.2990 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: Sale of British Pound still goes on

The British Pound Sterling rate is traded downward at the Forex currency market on Thursday, as investors’ interest in risk remains very low.

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 going up in the neutral zone and is giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5600, targets for selling will be the levels of 1.5590 and 1.5570. If downward breakdown does not take place, the pair will consolidate at the current levels. Sale of the GBP is of emotional nature, as from the fundamental point of view, situation in the British economy is stable.

According to the data released yesterday, PMI in the construction sector rose to 53.2 points against expectations of 52 points. In addition it became known in the middle of the week that net consumer lending amounted to 0.394 billion pound in November against the forecast of 0.3 billion pounds. Number of approved mortgage applications in the same month increased to 52.854 thousand against the previous level of 52.786 thousand. It became the maximal level since December 2009.

The data released earlier showed that PMI CIPS in manufacturing sector increased to 49.6 points in December against 47.7 points in November. It is definitely the positive data; however the fact that the index is below the level of 50 points proves that downward risks are still preserved. It is quite clear that European debt crisis continues to harm economy of the UK. It is also obvious that in the next quarter economic growth rate in Britain can drop even more significantly.

It became known earlier that CPI in Great Britain increased by 0.2% m/m (+4.8% y/y), as expected. Therefore, British inflation is slowing down its pace; however the index is still too far from the target level for the Bank of England. The Bank of England announced earlier that average inflationary expectations reduced to 4.1% in November against the level of 4.2% in August. At the same time, the level of two-year inflationary expectations was around 3.4% (3.5% previously). It is also worth noting that the Bank of England expects stagnation in the economy in the next quarter and GDP growth in Q1 next year. Revised GDP in the UK rose by 0.6% q/q (+0.5% y/y) in Q3, statistics released earlier has supported buyers. The index is above preliminary assessment, which was appreciated in the market.

 

[LF.Anastasia]

CHF: Swiss Franc is getting weaker

At the Forex currency market Swiss Franc rate is traded downward in response to obscure external background.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal, volumes are average. Stochastic Oscillator is going up gradually in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9430, the pair USD/CHF will go to 0.9450 and 0.9480. A chance that the pair will consolidate at the current levels is high.

Yesterday, the head of Swiss National Bank, Mr. Hildebrand received a vote of confidence from Swiss government: earlier market had discussed information about wife of the monetary politician, ex trader, who bought USD a few weeks before the Franc was pegged to the Euro.

Statistics released earlier showed that business activity index PMI SVME in Switzerland increased to 50.7 points in December against 44.8 points in November. 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 always have time to start intervention.

Swiss National Bank noted earlier that the regulator is prepared to take additional measures if situation at Forex deteriorates. According to SNB, strong Franc creates extra problems for the economy and the issue of negative interest rates and control over the capital movement is being thoroughly scrutinized in the 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. According to the data released in the end of December leading indicators index KOF fell to 0.01 points in December against the forecast of 0.23 points and previous revised value of 0.34 points. It became known earlier 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. Observers from Wells Fargo believe that economic indexes in Switzerland demonstrated slowdown all the year round; many indexes give indication that weakness will continue for the next six months. According to them, domestic demand is also getting lower which is a negative sign. As for the rate, it is most likely that SNB will adhere to the zero level, due to soft inflation.

 

[LF.Anastasia]

JPY: Japanese Yen gives way to USD

The Japanese Yen rate is traded downward at the Forex currency market on Thursday after the period of steady growth.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and is descending, giving a sell signal. Stochastic Oscillator started to reverse in the oversold zone, and tends to go upward.

Forex recommendations: in case of breakdown at the level of 76.80, the pair will go to 76.90 and 77.00. If upward breakdown does not take place, the pair will consolidate at the current levels.

The head of Nippon Keidanrenг, Mr. Yokunera said today that strong yen affects competitiveness of Japan in a whole, which is taking a shape of trend now.

There have not been publications of any important Japanese information today; news of minor importance was neglected by the market. Minutes of the last meeting of the Bank of Japan released earlier, states that it is necessary to trace back the effect of the recent soft policy; special concern is caused by the potential impact of the expensive Yen.

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.

We would remind that a meeting of the Bank of Japan, which was held in December, was gloomy. Thus, the regulator noted that growth of economic activity has slowed down and activity in Japanese economy is zero. The Bank has 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.

 

[LF.Anastasia]

AUD: Sale of Australian Dollar has begun

At the Forex currency market the Australian Dollar rate is traded downward on Thursday in response low interest in risk at the market.

Forex forecast: MACD indicator for the pair AUD/USD has returned to the position below the signal line on the side of the negative zone and is not giving a clear signal. Stochastic Oscillator is moving sideways into overbought zone and is not giving a clear signal either.

Forex recommendations: in case of breakdown at the level of 1.0320, the pair will go to 1.0300 and 1.0280.

According to statistics released this morning, business activity index AiG in the service sector of Australia rose to 49.0 points in November against the level of 47.7 points in October. In addition, trade balance amounted to +А$1.38 billion against expectations of +А$2.0 billion.

In the result of mixed statistics, the AUD is affected by external background where risk aversion is increasing.

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 earlier 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.

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. Economists expected the the increase of jobs by 10 thousand. 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. It became known earlier that private sector lending in Australia increased by 0.3% m/m (+3.5% y/y) in November against the growth of 0.2% m/m in October. It was noted by Australian Central Bank last week, that the country has been fighting against 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 by RBA in December was just a safeguard against external negative factors.

 

[LF.Anastasia]

EUR/USD: Euro has reached local lows

At the Forex currency market the pair EUR/USD is traded downward on Friday morning continuing to slide down under influence of external negative news.

By 9.00 MSK the Euro is at 1.2772 against yesterday’s closing level of 1.2793.

Investors are pending negative news: a lot of macro-economic information is scheduled for publication today including the data on the employment market in the US and Eurozone, which is expected to be weak.

France had sold out almost all bonds planned for placement, although it did not make market too anxious.

Therefore, statistics has all chances to add black colours to the market in the end of the week.

Most likely the pair EUR/USD will not go beyond the range of 1.2720-1.2830 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound continues to go down

The British Pound Sterling rate is traded downward at the Forex currency market on Friday, as the flow of negative factors is too strong.

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 going down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.5480, targets for selling will be the levels of 1.5460 and 1.5440. If downward breakdown does not take place, the pair will consolidate at the current levels.

Sale of the GBP is still of emotional nature, as from the fundamental point of view, situation in the British economy is stable. Investors in the market are moving away from risks because of the threat that European debt problem will expand. Meanwhile, the latest statistics is quite positive. Thus, composite PMI in the UK increased to 53.2 points in December against the level of 51.2 points in November.

According to the data released yesterday, PMI in the construction sector rose to 53.2 points against expectations of 52 points. In addition it became known in the middle of the week that net consumer lending amounted to 0.394 billion pound in November against the forecast of 0.3 billion pounds. Number of approved mortgage applications in the same month increased to 52.854 thousand against the previous level of 52.786 thousand. It became the maximal level since December 2009.

The data released earlier showed that PMI CIPS in manufacturing sector increased to 49.6 points in December against 47.7 points in November. The data is definitely positive; however the fact that the index is below the level of 50 points proves that downward risks are still preserved. The Bank of England announced earlier that average inflationary expectations reduced to 4.1% in November against the level of 4.2% in August. At the same time, the level of two-year inflationary expectations was around 3.4% (3.5% previously).

It is also worth noting that the Bank of England expects stagnation in the economy in the next quarter and GDP growth in Q1 next year. Revised GDP in the UK rose by 0.6% q/q (+0.5% y/y) in Q3, statistics released earlier has supported buyers. The index is above preliminary assessment, which was appreciated in the market. It became known earlier that CPI in Great Britain increased by 0.2% m/m (+4.8% y/y), as expected. Therefore, British inflation is slowing down its pace; however the index is still too far from the target level for the Bank of England.