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[LF.Anastasia]

CAD: Canadian Dollar is being actively sold out

At the Forex currency market the Canadian dollar rate continues to lose positions in the middle of the week.

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

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

In terms of macro-statistics situation in Canada is neutral.

It became known in December that the regulator had kept interest rate unchanged at the level of 1% per annum. 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 platforms 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro is prepared for high volatility

The pair EUR/USD is traded slightly upward at the Forex currency market on Thursday morning, however activity is low.

By 8.50 MSK the Euro is at 1.2715 against yesterday’s closing level of 1.2706.

A lot of information, which is important for the market, is scheduled for the release today. Most likely investors will make use of it quite vigorously. A meeting of European Central Bank will be held today, interest rate is likely to be kept unchanged this time; however comments of the head of the regulator, Mr Draghi are going to be interesting.

A number of actions of large European countries are planned on Thursday, which will create nervousness in the market- it will be important to track the returns.

In addition, macro-statistics will be also worth of paying attention as industrial output in Eurozone and in the U.S. will become known.

Most likely the pair EUR/USD will not go beyond the range of 1.2680-1.2790 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is still weak

At the Forex currency market the British Pound Sterling rate remains under pressure from sellers on Thursday, although it makes attempts to recover.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the negative area and is going down moderately, while volumes are average, and is giving a sell signal. Stochastic Oscillator had resumed its fall and went to oversold zone, maintaining a similar signal.

Forex recommendations: in case of breakdown at 1.5325 sellers’ targets will be the levels of 1.5310 and 1.5280.

A meeting of the Bank of England will be held today and comments of the MPC members on inflationary situation in the country will be of special interest.

Yesterday’s statistics 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.

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). 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.

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 has not clearly determined movement direction

At the Forex currency market Swiss Franc rate is traded slightly downward on Thursday; and further movement direction has not yet been clearly determined.

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 slowly, 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 0.9530 USD/CHF will go to 0.9510 and 0.9500.

Yesterday, Swiss authorities said that government does not have tools for direct influence on SNB. Representatives of the Finance Ministry of the country stated that politicians have no ground to doubt the Bank’s strategies; however the issue with Hildebrand requires special consideration. Ministry also stressed that new head of SNB will be appointed only after further discussion.

We would remind that the head of Swiss National Bank Phillip Hildebrand resigned this week. 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.

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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen remains cautious in movement

At the Forex currency market the Japanese Yen rate is traded slightly downward on Thursday. Markets’ sympathies are still with the USD, as the day is going to be eventful in terms of macro-statistics.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area, volumes are increasing, which all together gives a sell signal. Stochastic Oscillator has switched into sideways movement and is not giving a 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.

Today’s statistics showed that trade balance in Japan was at the level of -Y496.5 billion in December. In addition, bank lending increased by 0.5% y/y in December against the growth of 0.2% y/y 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.

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; potential impact from the expensive Yen also causes special concern.

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.

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 is waiting for catalysts

The Australian Dollar rate is traded slightly downward at the Forex currency market today, there is no activity in the pair AUD/USD, as investors are waiting for external signals.

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, also giving a buy signal.

Forex recommendations: In case of breakdown at the level of 1.0300, the pair will go to 1.0310 and 1.0330. There is a high possibility that aggressive sellers will be back in the pair.

Meanwhile, markets’ attention is now drawn to Europe where a meeting of the European Central Bank and a meeting of the Bank of England will be held today, as well as a number of auctions of the European countries.

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.

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%. Retail sales 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.

 

[LF.Anastasia]

CAD: Canadian Dollar tends to continue its growth

At the Forex currency market the Canadian dollar rate tends to grow today although market is wary about risk.

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

Forex recommendations: in case of breakdown at 1.0170, the pair will go to 1.0160 and 1.0140.

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

The CAD has received support from oil prices and started grow up from the two-week lows.

The data released last week showed that 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.

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. The regulator had kept interest rate unchanged at the level of 1% per annum. 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 platforms has worsened sharply through the fault of the Euro.

 

[LF.Anastasia]

EUR/USD: Euro is stable on Friday

The pair EUR/USD is traded slightly upward in the currency Forex market on Friday after yesterday’s growth.

By 9.05 MSK the Euro is at 1.2831 against yesterday’s closing level of 1.2825.

Yesterday’s rally was caused by successful auctions of Spain and Italy, where the first one has placed the volume twice as much as had been planned, 9.98 billion euro, and the latter one managed to maintain the yield of bonds at the reasonable level.

A meeting of the European Central Bank held on Thursday was uneventful as expected. Interest rate was left at the level of 1%, unchanged, and the head of ECB Mario Draghi confirmed his intention first to see the results from lowering the rate by 50 points in November and December and then make conclusions.

Market is stable this morning; however profit taking is possible in the end of the trading session. In addition, Greece will come to the debt market today

Most likely the pair EUR/USD will not go beyond the range of 1.2750-1.2850 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is recovering in the end of the week

The British Pound Sterling rate is traded upward at the Forex currency market on Friday in response to optimism in of the markets.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the negative area and is going down moderately, while volumes are increasing, and is giving a sell signal. Stochastic Oscillator remains in the oversold zone, giving a weak signal for going out of the bounds.

Forex recommendations: in case of breakdown at 1.5385 buyers’ targets will be the levels of 1.5395 and 1.5420 as part of correction.

At the meeting of the Bank of England which was held yesterday, interest rate was left at 0.50% per annum, volume of securities repurchase was also unchanged at 275 billion pounds.

In other respects, views of MPC remained unchanged: there is no need to revise interest rate, therefore the Bank will continue to monitor economy and inflation.

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.

Statistics released earlier 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 yesterday, 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.

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). Meanwhile, composite PMI in the UK rose to 53.2 points in December against the level of 51.2 points in November.

 

[LF.Anastasia]

CHF: Activity in Swiss Franc is increasing again

At the Forex currency market Swiss Franc rate is being traded upward on Friday for the third consecutive day, activity in the pair USD/CHF is above average.

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

Forex recommendations: in case of breakdown at 0.9420 USD/CHF will go to 0.9400 and 0.9380.

There has not been any new macroeconomic news in Switzerland. Most likely, increased interest in Franc can be explained by neutral external background and market’s interest to risk in general.

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.

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.

Earlier, Swiss authorities said that government does not have tools for direct influence on SNB. Representatives of the Finance Ministry of the country stated that politicians have no ground to doubt the Bank’s strategies; however the issue with Hildebrand requires special consideration. Ministry also stressed that new head of SNB will be appointed only after further discussion.

We would remind that the head of Swiss National Bank Phillip Hildebrand resigned this week. 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.