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[LF.Anastasia]

CHF: Swiss Franc remains active

At the Forex currency market investors’ activity on Swiss Franc positions is still at the high level.

Franc has risen very significantly over the last few days, and SNB could not let it pass unnoticed.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, it declines, while volumes are decreasing, and is giving a sell signal. Stochastic Oscillator remains in the oversold zone and maintains a similar signal.

Forex recommendations: in case of breakdown at 0.9260, USD/CHF will go to 0.9250 and 0.9230. There are all conditions for correction.

In terms of macro-statistics situation in Switzerland is stable.

A week ago 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 cast doubts on Bank’s strategies; however the issue with Hildebrand requires special consideration. Ministry also stressed that new head of SNB will be appointed only after additional discussion.

We would remind that the head of Swiss National Bank Phillip Hildebrand resigned at the beginning of January. The name of successor is still unknown and it is also not clear if a new governor of the Bank will adhere to the same policy as his colleague in monetary issues. Swiss government noted that search for the candidate for SNB governor will take several months.

The data showed in the middle of last week that investor economic expectations index ZEW was at the level of -50.1 points in January against -72 points a month before that. This is a positive signal, indicating some stability in the country. 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. It became known the day before yesterday that producer prices index and import prices in Switzerland increased by 0.3%% m/m (-2.3% y/y) in December against the forecast of -0.1% m/m. The data is of interest; however we shall wait for January figures in order to draw up a conclusion.

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. Interesting statistics on national economy will be published only on Friday; leading indicator index KOF in January is also scheduled for the release then.

 

[LF.Anastasia]

JPY: Japanese Yen determines direction

At the Forex currency market the Japanese Yen rate is traded slightly downward on Tuesday, remaining uncertain about further trend.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.10, the pair will go to 77.30 and 77.40. A chance that the pair will consolidate at the current levels is high.

A two-day meeting of the Bank of Japan ended today; interest rate was left at the level of 0.1%, as expected. At the same time, the regulator issued updated economic forecast for the country and market had to face anticipated, but nevertheless, very unpleasant moments.

The Bank adheres to estimates that GDP growth will be by 2% in 2012, despite development of European crisis. (In April, estimated level was at 2.2%). According to the regulator, economic activity is flat, largely due to external influence and expensive Yen. Economic outlook is rather vague: the situation will remain unchanged for some time and then it will shift to moderate growth.

As a matter of fact, the Bank of Japan still intends to ride out aggravations of crisis in Europe, and after that will try to raise its economy.

Edition of Nikkei noted last Friday that budget deficit in Japan will be above 17 trillion yen in 2015, which is 3.5% of GDP of the country even if government raises tax on consumption. Officially Japan plans to reduce budget deficit to 3.2% of GDP in 2015 in order to reduce the index twice versus to 2010. Japanese statistics demonstrates deceleration in economy: revised average wages in the country fell by 0.2% y/y in November against preliminary decline of 0.1%. The index was stable in October, so it is the first decline in two months. In addition, bank lending rose by 0.5% y/y in December against the growth of 0.2% y/y in November.

 

[LF.Anastasia]

AUD: Australian Dollar is being slightly corrected

At the Forex currency market on Monday the Australian Dollar rate is traded downward on Tuesday in response to the mixed external background.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, volumes are high, which gives a buy signal. Stochastic Oscillator is leaving overbought zone and tends to give a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0490, the pair will go to 1.0480 and 1.0460. it is highly probable that consolidation will be at the current levels.

Morning news showed that leading indicators index CB in Australia decreased by 0.3% in November against the fall of 0.6% earlier. The AUD has ignored this statistics.

Statistics released on Friday showed that Australian price index for import increased by 2.5% q/q in Q4 against zero change in Q3. However, the AUD has ignored this data, as investors’ risk appetite is the main catalyst currently; however investors keep looking back at external background and situation in Eurozone.

Mortgage lending in Australia increased by 1.4% m/m in November against the growth of 0.8% in October. Number of permits to construct increased by 8.4% m/m (-10.0% y/y). The rise of 7% had been predicted. Retail sales showed zero change in November against the growth of 0.2% m/m in October.

Employment rate in November fell by 7.6 thousand against initial estimate of -6.3 thousand. At the same time, unemployment rate remained at the previous level of 5.3%. We would remind that economists expected the rise of jobs by 10 thousand. The index clearly reflects the impact of the European debt crisis on Australian economy. According to government’s estimate, last 12 months were the worst for the labour market over the last 20 years, as the sector has been weakening since the last six month of 2011. 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.

 

[LF.Anastasia]

CAD: Canadian Dollar awaits new catalysts

At the Forex currency market the Canadian Dollar rate is getting slightly weaker on Tuesday, however it is still close to the highs of January.

Forex forecast: MACD indicator for the pair USD/CAD is sliding down in the negative area and is giving a sell signal. Stochastic Oscillator is moving sideways in the neutral zone and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.0080, the pair will go to 1.0070 and 1.0050. Correction at 1.0150 is possible.

The data released earlier showed that leading indicators index in Canada rose by 0.8% m/m in December against the forecast of +0.6% m/m. Latest statistics showed that CPI in Canada fell by 0.6% m/m (+2.3% y/y) in December against the forecast of -0.1% m/m. Despite this obvious fact, the data requires some clarification. Annual growth of CPI has been minimal since February 2011, and inflation reduced due to decline in prices for gasoline and other fuel.

Therefore, basing on the current inflationary situation, the Bank of Canada can keep inflation at the existing level for some more time with no damage for its monetary policy.

At the same time, according to the forecast of the Bank of Canada, inflation will slow down to +1.5% on annual basis in April-June.

We would remind that, last week the Bank of Canada left interest rate at the level of 1.0% per annum, which did not become a surprise for the market.

According to the updated estimates of the Bank of Canada, GDP in the country will amount to 3.1% in Q1 2013; inflation will reduce to 1.5% in Q2 this year. At the same time, interest rate can go up in the moderate pace during all the year of 2013, while decline in mortgage rates will encourage boost in the volumes of lending to households.

Statistics demonstrated that sales of new cars in Canada reduced by 1.0% in November, to 137.640 thousand, smoothing over the rise achieved over the few previous months. It became known earlier that house price index in Canada rose by 0.3% in November against the growth of 0.2% in October and expectations of the same level.

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 data showed that sales increased by 0.2% in the manufacturing sector of Canada against expectations of 1.2%, the main driver of the growth was general rise in the sector and improvement in some of its sections: such as industrial equipment sector, for example. Number of new orders in the sector rose by 3.7% in November, stocks in the warehouses: by 0.4%.

 

[LF.Anastasia]

EUR/USD: Euro is waiting for new signals

The pair EUR/USD is traded slightly downward at the Forex currency market on Wednesday morning because there is no favourable news.

By 9.15 MSK the Euro is at 1.3020 against yesterday’s closing level of 1.3026.

There is no information on the outcome of negotiations between Greek and private capital yet, therefore drivers for the pair’s growth are receding. Yesterday negative information came from International Monetary Fund which lowered forecast for world economic growth for the current and next year because of European debt crisis. IMF expects recession in Eurozone in 2012 and slump of the economy by 0.5%, in 2013 GDP can increase by 0.8%.

A two-day meeting of the U.S. Federal Reserve will finish tonight; in the afternoon, investors’ attention will be drawn to it.

Most likely, the pair EUR/USD will not leave the range of 1.2970-1.3050.

 

[LF.Anastasia]

GBP: British Pound has not determined movement direction

At the Forex currency market the British Pound Sterling rate is traded slightly downward; it is still uncertain because of mixed external background.

Forex forecast: MACD indicator for the pair GBP/USD is traded in the negative area and is going up while volumes are low, giving a buy signal. Stochastic Oscillator tends to reverse in overbought zone and started to shape a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5590, the pair will go to 1.5600 and 1.5620. If external pessimism prevails, sellers’ target will be the level of 1.5455.

According to the head of the Bank of England Mr. King, expected decline in inflation assumes possibility of additional QE; however rates will likely remain at the current levels. King emphasized that recovery of the British economy will be slow and jerky. He also said that terms of lending are detrimental for economic recovery.

At the same time the Bank of England is ready to provide liquidity to banks if a need will be.

Representative of the Bank of England Mr. Posen said earlier that he still adheres to “pigeon” attitude to monetary policy in the country. Thus he believes that inflation pressure is decreasing rapidly and economic growth is increasing, although in a slow pace. Decision on QE will be adopted at the meeting in February, now members of MPC are discussing possibility to increase volume of assets purchase. Posen stressed that this is not yet sufficient to stabilize situation in British economy.

Unemployment continues to thrive in Britain. According to estimates, unemployment rate rose to 8.4% in November against the forecast of 8.3%, level of unemployed increased by 118 thousand over three months against +128 thousand in three months before that.

Statistics released earlier showed that consumer confidence Nationwide in the UK reduced to 38 points in December against the level of 40 points in November. It seems that the latest data has smoothed over the rise achieved in November, although it has not been unexpected. The end of 2011 was not simple for the British consumers, which is reflected in statistics. 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 stands still

At the Forex currency Swiss Franc rate almost stands still on Wednesday as external background and positions of Swiss national Bank do not give grounds for further steps in any directions.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, it declines, while volumes are minimal, and is giving a sell signal. Stochastic Oscillator remains in the oversold zone and maintains a similar signal.

Forex recommendations: in case of breakdown at 0.9260, USD/CHF will go to 0.9250 and 0.9230. Conditions for correction have been created.

Representative of SNB Mr. Dantin said yesterday that lowering of Franc rate is predicted in perspective, since measures to restrict its growth are going to be introduced. He once again outlined well-known positions of SNB about possibility of unlimited purchases of foreign currency in order to keep Franc in permissible price limits.

Interesting economic statistics of the country is going to be released on Friday, including leading indicator index KOF in January.

A week ago 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 cast doubts on Bank’s strategies; however the issue with Hildebrand requires special consideration. Ministry also stressed that new head of SNB will be appointed only after additional discussion.

We would remind that the head of Swiss National Bank Phillip Hildebrand resigned at the beginning of January. The name of successor is still unknown and it is also not clear if a new governor of the Bank will adhere to the same policy as his colleague in monetary issues. Swiss government noted that search for the candidate for SNB governor will take several months.

Investors’ economic expectations index ZEW was at the level of -50.1 points in January against -72 points a month before that. This is a positive signal, indicating some stability in the country.

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. 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. The index is positive; 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.

 

[LF.Anastasia]

JPY: Japanese Yen gives way to USD

At the Forex currency market the Japanese Yen rate continues yesterday’s trend of falling back.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is growing on small volumes, giving a buy signal. Stochastic Oscillator demonstrates similar trend in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 77.90, the pair will go to 78.10 and 78.30.

It became known today that trade deficit has been recorded in Japan for the first time over 30 years. Exports in the country fell in December for the third time, which triggered trade deficit on annual basis.

According to Finance Ministry, shipments reduced by 8% y/y last month.

Budget deficit in Japan amounted to $32 billion (2.49 trillion yen)

It seems that Japanese economy has been deprived of one of the main supportive items - its exports

A two-day meeting of the Bank of Japan ended yesterday; interest rate was left at the level of 0.1%, as expected. At the same time, the regulator issued updated economic forecast for the country and market had to face anticipated, but nevertheless, very unpleasant moments. The Bank continues to adhere to estimates that GDP growth will be by 2% in 2012, despite development of European crisis. (In April, estimated level was at 2.2%). According to the regulator, economic activity is flat, largely due to external influence and expensive Yen. Economic outlook is rather vague: the situation will remain unchanged for some time and then it will shift to moderate growth. As a matter of fact, the Bank of Japan still intends to ride out aggravations of crisis in Europe, and after that will try to raise its economy.

Edition of Nikkei noted on Friday that budget deficit in Japan will be above 17 trillion yen in 2015, which is 3.5% of GDP of the country even if government raises tax on consumption. Officially Japan plans to reduce budget deficit to 3.2% of GDP in 2015 in order to reduce the index twice versus to 2010.

 

[LF.Anastasia]

AUD: Australian Dollar remains within three-day range

At the Forex currency market on Monday the Australian Dollar rate is traded upward on Wednesday despite mixed external background and ambiguous statistics.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, volumes are high, which gives a buy signal. Stochastic Oscillator is leaving overbought zone and tends to give a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0520, the pair will go to 1.0530 and 1.0550. It is highly probable that the pair will consolidate at the current levels.

The data released this morning was mixed. Inflation in the country showed zero growth in Q4 against the forecast of growth of 0.4% on quarterly basis. The report is interesting: core inflation rose to 2.6% in the previous quarter, exceeding average target of RBA by 2-3%.

Market believes that probability is 50% now, that at the next meeting the Bank of Japan will reduce interest rate to 4%. At the end of last year, in November, December, the RBA reduced the rate twice.

Employment rate in November fell by 7.6 thousand against initial estimate of -6.3 thousand. At the same time, unemployment rate remained at the previous level of 5.3%. We would remind that economists expected the rise of jobs by 10 thousand. The index clearly reflects the impact of the European debt crisis on Australian economy. According to government’s estimate, last 12 months were the worst for the labour market over the last 20 years, as the sector has been weakening since the last six month of 2011. 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.

Leading indicators index CB in Australia decreased by 0.3% in November against the fall of 0.6% earlier. Price index for import increased by 2.5% q/q in Q4 against zero change in Q3. However, the AUD has ignored this data, as investors’ risk appetite is the main catalyst currently; however investors keep looking back at external background and situation in Eurozone. Mortgage lending in Australia increased by 1.4% m/m in November against the growth of 0.8% in October. Number of permits to construct increased by 8.4% m/m (-10.0% y/y). The rise of 7% had been predicted. Retail sales showed zero change in November against the growth of 0.2% m/m in October.

 

[LF.Anastasia]

EUR/USD: Euro maintains at the highs of January

The pair EUR/USD is traded with no significant deviations at the Forex currency market on Thursday morning, remaining at the highs of the month.

By 9.15 MSK the Euro is at 1.3109 against yesterday’s closing level of 1.3112.

The reason for sharp decline in the USD positions was “dove” speech of the U.S. Federal Reserve Chairman, Ben Bernanke on the outcome of the meeting of the Regulator which finished yesterday. Interest rate was preserved in the target range of 0-0.25% per annum, however comments convinced market that most of the committee members do not believe that interest will be changed before mid-2014. Investors have already dubbed this statement as a kind of new QE.

Market will continue to analyze and make use of the FR release, awaiting the data on the labour market tonight and resolution of the Greek problem.

Most likely, the pair EUR/USD will not go beyond the range of 1.3020-1.3140 at the trading session on Thursday.