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[LF.Anastasia]

GBP: British Pound is at three-day peak

At the Forex currency market the British Pound Sterling rate is traded with slight deviations on Thursday remaining close to the highs of January based on stable 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, and is giving a buy signal. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at 1.5665, the pair will go to 1.5670 and 1.5690. If pessimism prevails, sellers’ target will be the level of 1.5455.

Weakness of the USD after yesterday’s “dove-like” meeting of the U.S. Federal reserve enables the Pound to remain at the highs of 2012.

British Prime Minister Cameron believes that as long as EU authorities do not take energetic measures to implement anti-crisis program, there is no point to raise the issue of increasing reserves of IMF. Therefore, Britain maintains tough stance in regards to the debt situation in Eurozone.

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

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.

Representative of the Bank of England Mr. Posen said earlier that he still adheres to “dove-like” 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 of increasing volumes of assets purchase. Posen stressed that this is not yet sufficient to stabilize situation in British economy.

 

[LF.Anastasia]

CHF: Swiss Franc continues to grow

At the Forex currency Swiss Franc rate remains at the local highs on Thursday supported by external optimism and making use of the authorities’ comments about SNB.

Forex forecast: MACD indicator for the pair USD/CHF is declining in the positive area, 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 0.9200, USD/CHF will go to 0.9190 and 0.9170. Conditions for correction have been created.

Yesterday, Swiss government indicated intention to revise policy of supervision over SNB activity. A week ago Swiss authorities said that government does not have instruments 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.

This news has supported buyers of Franc, which reinforces possibility of new interventions of SNB.

Representative of SNB Mr. Dantin said earlier, that, lowering of Franc rate is possible in perspective, because 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, including leading indicator index KOF in January, is going to be released on Friday.

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. In January, investors’ economic expectations index ZEW was at the level of -50.1 points against -72 points a month earlier. 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.

 

[LF.Anastasia]

JPY: Japanese Yen tries to regain

At the Forex currency market the Japanese Yen rate is traded upward on Thursday after yesterday’s slump.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and started to go up, while volumes are low, giving a buy signal. Stochastic Oscillator moves sideways in the neutral zone and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 78.00 and 78.10.

Macro-economic situation in Japan remains unchanged this morning.

It became known yesterday that trade deficit has been recorded in Japan for the first time in 30 years. Exports in the country fell in December for the third time, which triggered trade deficit on annual basis. According to the Ministry of Finance, 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 tools - its exports.

Edition of Nikkei noted on Friday that budget deficit in Japan will be above 17 trillion yen in 2015, which will be 3.5% of country’s GDP, 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.

At the two-day meeting of the Bank of Japan, which finished earlier, 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.

 

[LF.Anastasia]

AUD: Australian Dollar tends to go up

At the Forex currency market the Australian Dollar rate resumed energetic growth on Thursday.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, volumes are high, which enables a buy signal. Stochastic Oscillator started to go up again in the neutral zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0640, the pair will go to 1.0650 and 1.0670.

Asian session was favourable for the AUD, despite investors’ low activity. Positive external background encourages interest to high-risk currencies. The AUD can continue ascending trend with the help of such support.

The data released yesterday 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 and December, the RBA reduced the rate twice.

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. 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

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. Leading indicators index CB in Australia decreased by 0.3% in November against the fall of 0.6% earlier. Import price index increased by 2.5% q/q in Q4 against zero change in Q3.

 

[LF.Anastasia]

NZD: Interest to New Zealand Dollar is still preserved

At the Forex currency market the New Zealand rate is traded upward on Thursday, due to stable external background.

Forex forecast: MACD indicator for the pair NZD/USD is going up in the positive area and is giving a buy signal. Stochastic Oscillator remains in the overbought zone and maintains a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8230, the pair will go to 0.8240 and 0.8260.

At the meeting of the Reserve Bank of New Zealand which ended today, it was decided to leave interest rate at the minimal level of 2.5% per annum. According to follow-up comments of the regulator this decision is reasonable because world economic risks are still preserved despite internal stability in New Zealand.

RBNZ emphasized that inflationary pressure is being steadily contained; however NZD growth negatively affects earnings of exporters.

In addition, economy of New Zealand demonstrates signs of weak recovery in the housing market and consumer spending.

Nevertheless, Europe and its problems have a strong impact on Australian economy, as well as on other remote counties; forecasts are too difficult to make.

GDP in New Zealand increased by 0.8% q/q in Q3 (+1.9% y/y) against the forecast of +0.6% on quarterly basis. Significant support to the economy of New Zealand was provided by Rugby Championship which attracted a lot of investment into the country. 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 had almost stopped growing, however revived later. Most likely the index will be weaker in Q4. 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 losing momentum

The pair EUR/USD remains close to five-week highs at the Forec currency market on Friday.

By 9.15 MSK the Euro is at 1.3108 against yesterday’s closing level of 1.3102.

To all appearance, optimism, which had increased after the meeting of the U.S. Federal Reserve this week, started to subside. New movement drivers have not turned up in the market. According to press reports, Greek lending banks see some progress in negotiations between the country and private capital; however favourable outcome has not yet been announce in the market, which intensifies tension about the issue of receiving a second financial aid package by Athens from ECB, IMF and EU. Greece will not be able to pay off its debts in March without this cash infusion, which will inevitably lead to a default in the country.

Friday is going to be eventful in terms of macro-statistics, which will give the market momentum to determine new movement directions for trades.

Most likely, the pair EUR/USD will not go beyond the range of 1.3050-1.3130 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is not in a hurry on Friday

At the Forex currency market the British Pound Sterling rate is traded slightly downward on Friday, maintaining its positions close to the highs of January.

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

Forex recommendations: in case of breakdown at 1.5670, the pair will go to 1.5680 and 1.5700. Correction is possible.

Buyers failed to keep retailers happy in January: following the rise in volumes of sales in December, retail sale fell by 22% in January against +9 in December. This has been the lowest value since March 2009.

Retailers’ outlook is not too optimistic. Thus, companies in this sector can go to three-year lows again in February, as volumes of orders have declined once again.

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.

Representative of the Bank of England Mr. Posen said earlier that he still adheres to “dove-like” 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 of increasing volumes of assets purchase. Posen stressed that this is not yet sufficient to stabilize situation in British economy.

British Prime Minister Cameron believes that as long as EU authorities do not take energetic measures to implement anti-crisis program, there is no point to raise the issue of increasing reserves of IMF. Therefore, Britain maintains tough stance in regards to the debt situation in Eurozone. The head of the Bank of England Mr. King, believes that 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 to economic recovery. At the same time the Bank of England is ready to provide liquidity to banks if a need will be.

 

[LF.Anastasia]

CHF: Swiss Franc started to smoothly move away from the highs

At the Forex currency Swiss Franc rate started smooth correction from local highs at the end of the week.

Forex forecast: MACD indicator for the pair USD/CHF is declining in the positive area, while volumes are minimal, and is giving a sell signal. Stochastic Oscillator tends to go out of the oversold zone and started to shape a buy signal.

Forex recommendations: in case of breakdown at 0.9230, USD/CHF will go to к 0.9240 and 0.9260.

In addition to the fact, that it is the end of the week, when investors prefer profit taking for some of the positions, statistics is not favourable for Franc either. Index of leading indicators KOF fell by 17% in January against the forecast of decline of 10%.

This is the consequence of expensive currency, and this only increases possibility of another currency intervention against CHF.

Representative of SNB Mr. Dantin said earlier, that, lowering of Franc rate is possible in perspective, because 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.

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.

In January, investors’ economic expectations index ZEW was at the level of -50.1 points against -72 points a month earlier. 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. Earlier, Swiss government indicated intention to revise policy of supervision over SNB activity. A week ago Swiss authorities said that government does not have instruments 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.

 

[LF.Anastasia]

JPY: Japanese Yen is regaining rapidly following previous fall

At the Forex currency market the Japanese Yen rate is traded upward on Friday; investors’ interest to the currency is growing up while main external catalysts for trades have already been used.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and started to go up, while volumes are low, giving a weak buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 77.00, the pair will go to к 76.80 and 76.50.

It became known today that retail sales increased by 2.5% y/y in December against decline of 2.2% in November. These findings are extremely interesting because they demonstrate that, despite significant slump in economy, retail sales can be in favourable position. The latest data was the strongest one over the last six months; apparently, consumers’ optimism and appetite for buying is back again.

At the same time we cannot disregard the fact that, due to continuing decline of export levels and losses in the manufacturing sector, income of Japanese people will decrease as well, and this will inevitable affect retailers.

Deflation still preserves in the country: net consumer prices fell by 0.1% in December, this has been the third consecutive fall in the index. Factors are the same: rising Yen, decline in global demand and prices for imports.

It became known earlier that trade deficit has been recorded in Japan for the first time in 30 years. Exports in the country fell in December for the third time, which triggered trade deficit on annual basis. According to the Ministry of Finance, 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 tools - its exports. Edition of Nikkei noted on Friday that budget deficit in Japan will be above 17 trillion yen in 2015, which will be 3.5% of country’s GDP, 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 does not reduce growth rate

At the Forex currency market the Australian Dollar rate ignores the fact that investors’ optimism is declining at the end of the week, and is not going to reduce growth rate.

Forex forecast: MACD indicator for the pair AUD/USD is going up in the positive area, while volumes are high; and is giving a buy signal. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0650, the pair will go to 1.0660 and 1.0680.

Economic situation in Australia remains stable. The AUD feels rather confident although markets in China are closed.

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. 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.

Leading indicators index CB in Australia decreased by 0.3% in November against the fall of 0.6% earlier. Import price index increased by 2.5% q/q in Q4 against zero change in Q3.

The data released yesterday 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 and December, the RBA reduced the rate twice.