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[LF.Anastasia]

GBP: British Pound continues to recover

The British Pound Sterling rate is traded upward at the Forex currency market on Tuesday, continuing yesterday’s trend.

Forex forecast: MACD indicator for the pair GBP/USD which is traded in the negative area, has shifted into sideways movement, not giving a clear signal. Stochastic Oscillator has stopped its fall in the neutral zone and hovered close to lateral line, not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 1.5485, targets for buying will be the levels of отметки 1.5490 and 1.5520. There is a high chance that sellers will be back in the pair.

According to the data released today, house prices in the UK fell by 16% in December, as per RICS estimates. The Pound has neglected this statistics, concentrating on the external background.

British Prime Minister Mr. Cameron noted earlier that rebalancing of economy is well within expectations: 2012 promises to be a real challenge for the major economies: although inflation in the UK will go down this year.

Meanwhile, PMI in the UK rose 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 worth noting that the Bank of England expects stagnation in the economy in Q4 2011 and GDP growth in Q1 2012. 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.

 

[LF.Anastasia]

CHF: Swiss Franc tries to regain after the Hildebrand’s resignation

At the Forex currency market Swiss Franc rate continues to rise in price on Tuesday, regaining mostly from domestic news.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is gradually going down while volumes remain average, however the movement is very slow, due to which a sell signal is limited. Stochastic Oscillator started to go out of the overbought zone, shaping a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9470, the pair USD/CHF will go to 0.9460 and 0.9450.

News of the week for Switzerland is resignation of the head of SNB, Phillip Hildebrand. The news became known last night, after which ex-governor of the regulator stated that SNB would continue to protect the level of 1.20 in pair EUR/Franc, as it is of strategic importance. The name of successor is still unknown and it is also not clear if new governor of the Bank will adhere to the same policy as his colleague in monetary issues.

Meanwhile, Franc has strengthened in response to the news, but moderately: investors are clearly afraid of new interventions from CNB, as no one mentioned about changes in the fiscal policy.

It became known yesterday that unemployment rate in Switzerland increased to 3.3% in December against expectations of 3.2% and the level of 3.1% in November. Obviously, slowdown in the national economy still goes on.

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. 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. 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.

 

[LF.Anastasia]

JPY: Japanese Yen stands still

The Japanese Yen rate is traded sluggishly at the Forex currency market on Tuesday.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from top to bottom and is traded downward; volumes are increasing which all together gives a sell signal. Stochastic Oscillator is traded downward, changing direction once again and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.80, the pair will go to 76.70 and 76.40.

Yesterday Japanese trading floors were closed due to a holiday. Macro-economic situation has not changed significantly.

Minutes of the last meeting of the Bank of Japan 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 from 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.

The fall in the exports levels can be easily attributed to the Euro: Finance Minister of Japan Mr. Azumi said last Friday that the fall of the Euro had caused significant damage to the exports levels, while financial authorities of Europe are wasting time and do not take essential measures. Attitude of Japan to this issue is logical: EU shall create a kind of barrier to prevent expansion of the debt problems.

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: Australian Dollar does not slacken its growth rate

At the Forex currency market the Australian Dollar rate continues to grow rapidly today.

Forex forecast: MACD indicator for the pair AUD/USD has broken through the signal line from bottom to top and is traded upward, giving a buy signal. Stochastic Oscillator has changed direction and is now going upward in the neutral zone, giving a buy signal.

Forex recommendations: In case of breakdown at the level of 1.0320, the pair will go to 1.0330 and 1.0350.

Statistics released today showed that number of construction permits in Australia increased by 8.4% m/m (-10.0% y/y) in November. Expected rise had been of 7%, therefore the data cheered up the market. Chinese statistics also provided support to the AUD, indicating that exports continue to grow, although growth rate is below expectations.

It became known yesterday that retail sales in Australia showed a zero change in November against the growth of 0.2% m/m in October. In addition, sales of new houses HIA grew by 6.8% m/m in November against revised level of +2.8% m/m in October.

In other respects, macro-economic background in Australia is stable. 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. 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.

According to the data released earlier, business activity index AiG in the service sector of Australia increased 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 in November against expectations of +А$2.0 billion.

 

[LF.Anastasia]

CAD: Canadian Dollar steadily goes up

At the Forex currency market the Canadian Dollar rate goes up on Tuesday, as it finally received a long-awaited catalyst which was some revival in demand for risky assets.

Forex forecast: MACD indicator for the pair USD/CAD is going down in the negative area and is giving a sell signal. Stochastic Oscillator reversed downward in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 1.0185, the pair will go to 1.0170 and 1.0150.

Situation in Canada is neutral in terms of macro-statistics.

GDP in Canada rose by 3.5% y/y in Q3 against revised decline of 0.5% in April-June. Economists predicted growth of the index 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 earlier that CPI in Canada increased by 0.1% m/m (+2.9% y/y) in November which agreed with the forecast. The growth is within the ball park, which meets with expectations and does not involve risk for the economy.

It became known in December that the regulator had kept the rate unchanged at the level of 1%. The news did not take players by surprise, as investors assumed that the rate would be maintained at the current levels for at least another 12 months. The Bank of Canada said in the comments that negative factor, which was caused by deceleration of the global economy, can affect Canadian economic system as well, especially now when situation in the world financial trading floors has worsened sharply through the fault of the Euro.

According to the data released last week, unemployment rate rose to 7.5% in December against the forecast of 7.4%, employment rate increased by 175 thousand versus expectations of growth of 15 thousand.

Thus, invariably negative pattern in the Canadian employment market, which took shape in the last six months of 2011, still persists. Meanwhile, significant rise in jobs in the production sector is obvious.

 

[LF.Anastasia]

EUR/USD: Euro stepped downward again

At the Forex currency market the pair EUR/USD stepped downward again on Wednesday.

By 9.15 MSK the Euro is at 1.2737 against yesterday’s closing level of 1.2772.

Yesterday’s meeting between President of France Nikolas Sarkozy, Chancellor of Germany Angela Merkel and the head of the International Monetary Fund Christine Lagarde was devoted to crisis management plan; parties agreed that it is necessary to stimulate economic recovery as well as employment sector, which can become a good support for economic growth.

Auctions of Austria and Greece on Tuesday were generally neutral.

It seems that market expects something new again; moreover that bad news can be expected from Eurozone almost all the time.

The day is going to be uneventful in terms of macro-statistics; therefore, external background will continue to be the main catalyst.

Most likely the pair EUR/USD will not go beyond the range of 1.2700-1.2790 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound suspended its growth

The British Pound Sterling rate started to decline at the Forex currency market on Wednesday , because investors are shifting to a standby” mode before the events scheduled for tomorrow.

Forex forecast: MACD indicator for the pair GBP/USD which is traded in the negative area, has shifted into sideways movement today, not giving a clear signal. Stochastic Oscillator has stopped its fall in the neutral zone and hovered close to lateral line, not giving a clear signal either.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5465, targets for buying will be the levels of отметки 1.5480 and 1.5510. There is a high chance that sellers will be back in the pair.

A regular meeting of the Bank of England will be held on Thursday, comments of the Monetary Police Committee members on inflationary situation in the country will represent a special interest.

Statistics released today showed that the UK retail price index BRC increased by 1.7% m/m in December against the rise of 2.0% a month earlier. Thus, the index fell to 16-month lows, largely due to Christmas sales, when retailers reduced prices. Prices declined by 0.1% on monthly basis.

According to the data released today, house prices in the UK fell by 16% in December, as per RICS estimates. The Pound has neglected this statistics, concentrating on the external background.

Meanwhile, composite PMI in the UK rose to 53.2 points in December against the level of 51.2 points in November. According to the data released earlier, 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 worth noting that the Bank of England expects economic stagnation in Q4 2011 and GDP growth in Q1 2012. Revised GDP in the UK rose by 0.6% q/q (+0.5% y/y) in Q3.

 

[LF.Anastasia]

CHF: Swiss Franc gives way to USD

At the Forex currency market Swiss Franc rate started to retreat in the middle of the week.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and has gradually shifted sideways, not giving a clear signal. . Stochastic Oscillator is going down, after leaving overbought zone and is shaping a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9525, the pair USD/CHF will go to 0.9540 and 0.9550. If the level of 0.9470 is exceeded, the pair will go to 0.9460 and 0.9450.

Situation in Switzerland is stable in terms of macro-statistics.

The market continues to assess the main news of the week for Switzerland: resignation of the head of SNB, Phillip Hildebrand. It became known on Monday night, and later ex-governor of the regulator made a declaration which stated that SNB would continue to protect the level of 1.20 in pair EUR/Franc, as it is of strategic importance. The name of successor is still unknown and it is also not clear if new governor of the Bank will adhere to the same policy as his colleague in monetary issues.

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. 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. It became known earlier that unemployment rate in Switzerland increased to 3.3% in December against expectations of 3.2% and the level of 3.1% in November. Obviously, slowdown in the national economy still goes on.

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. 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.

 

[LF.Anastasia]

JPY: Japanese Yen weakens

At the Forex currency market the Japanese Yen rate started to weaken on Wednesday, as investors’ sympathies are now focused on the USD.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area, volumes are increasing, which a;; together gives a sell signal. Stochastic Oscillator is traded downward, giving a weak sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 76.95, the pair will go to 77.00 and 77.15. If upward breakdown does not take place, the pair will focus on testing the level of 76.70.

According to statistics released today, preliminary index of coincident indicators in Japan was at the level of -1.1% in November. However, preliminary index of leading indicators in Japan was at the level of +0.9% in November.

One of significant changes which is worth noting is the position of Japan on sanctions against Iran: Japan stated that the country is not going to support them, as it is concerned about the situation with oil prices and other energy products in the global market.

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.

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

Mr. Shirakawa, the head of the Bank of Japan 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.

 

[LF.Anastasia]

AUD: Australian Dollar has lost its ascending momentum

The Australian Dollar rate is traded downward at the Forex currency market on Wednesday, while market is assessing world economic outlook.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, giving a buy signal. Stochastic Oscillator is also rising up in the neutral zone, giving a buy signal.

Forex recommendations: In case of breakdown at the level of 1.0300, the pair will go to 1.0310 and 1.03301. There is a high possibility that aggressive sellers will be back in the pair.

There have not been any changes in the Australian macro-economic situation this morning.

Statistics released today showed that number of construction permits in Australia increased by 8.4% m/m (-10.0% y/y) in November. Expected rise had been of 7%, therefore the data cheered up the market. Chinese statistics also provided support to the AUD, indicating that exports continue to grow, although growth rate is below expectations. Retail sales in Australia showed a zero change in November against the growth of 0.2% m/m in October. In addition, sales of new houses HIA grew by 6.8% m/m in November against revised level of +2.8% m/m in October.

According to the data released earlier, business activity index AiG in the service sector of Australia increased 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 in November against expectations of +А$2.0 billion.

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 increase of jobs by 10 thousand. The indicator reflects the impact of European debt problems on the Australian economy. 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. 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.