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[LF.Anastasia]

CHF: Swiss Franc is growing again

At the Forex currency market Swiss Franc rate is growing again on Thursday ignoring statistics and statements of the monetary authorities that fiscal policy aimed to curb growth of Franc is still effective.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is in the negative area now, giving a sell signal. Stochastic Oscillator is going down again in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at 0.9100, the pair USD/CHF will go to 0.9080 and 0.9060. Consolidation near current levels is possible.

Statistics released today showed that consumer confidence in the country increased to -19 points in January, against the level of -24 points in December and the forecast of -22 points, as per SECO estimates.

It became know yesterday that unemployment rate in Switzerland amounted to 3.4% in January against the forecast of 3.5% and the previous value of 3.3%. This is the highest level of the index since last spring and quite negative indication in the state of affairs in the national economy.

Representative of SNB Mr. Dantin said earlier that, decline in the rate of Franc is possible in perspective, as 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 earlier that search for the candidate for SNB governor will take several months. Earlier, Swiss government indicated intention to revise policy of supervision over SNB activity.

Monetary politician Mr. Jordan said earlier that SNB is firmly determined to maintain the level of 1.20 in the pair Euro/Franc and is prepared to adopt additional measures if economic situation will require. He also confirmed that economic growth rate has slowed down in Switzerland this year, although there is no risk of rise in inflation. He believes that Franc is still too strong and reduction in its price is necessary. Swiss economists said earlier that second half of this year is going to be better than the first one, Swiss economy is stable enough to survive mild recession. Naturally, it will affect the economic growth rate in the country: slow growth rate of GDP is expected in 2012.

 

[LF.Anastasia]

JPY: Japanese Yen continues to surrender

At the Forex currency market the Japanese Yen rate continues to lose positions today under pressure from the USD and decline in demand for “safe” currency” amid general surge of positive sentiment.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY; it is shifting into sideways movement and is not giving a clear signal. Stochastic Oscillator goes up in the overbought zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 77.30, the pair will go to 77.35 and 77.50. Consolidation near the current levels is not excluded.

The head of the Bank of Japan Mr. Shirakawa said yesterday that the regulator is prepared to reconsider volume of the asset repurchase program depending on the state of economy.

Market has heard such allegations for several months already; however the Yen steps back for neither monetary nor natural reason. Investors have lost interest in currencies which are “safe” harbours and appetite to risk is visible to unaided eye.

Meanwhile, domestic situation in the Country of the Rising Sun is complex. The fact that cannot be disregarded is 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. It seems that political vacuum has been created in Japan; the head of the Bank of Japan Mr. Shirakawa noted this morning that master politicians are required to fight effectively against both expensive Yen and deflation.

Currently, economic stimulus programs for the total amount of 20 trillion yen are being implemented in Japan. They were designed to increase demand and finalize work to eliminate aftermaths of tsunami and earthquake in March. These funds shall also revive employment sector.

According to Japanese statistics released this week, bank lending rose by 0.7% y/y in January against the forecast of +0.5% y/y; current account balance amounted to Y303.5 billion in December against expectations of Y340.1 billion. Unemployment rate rose to 4.6% in December against the level of 4.5% in November. At the same time, the level of unemployed fell by 100 thousand against 80 thousand a month earlier. Nevertheless, this data has not radically affected general trend. Labour sector has been strongly affected by the overall economic slump in the country. Wages in Japan continue to decline; the data in December showed decline of 0.2% y/y, the same as in November. Therefore, Japanese wages have been declining for 8 months out of 12. Some other positive data was more positive – preliminary volumes of industrial output rose by 4.0% m/m in December against expectations of growth of 2.7%.

 

[LF.Anastasia]

AUD: Australian Dollar moderately goes upward

At the Forex currency market the Australian Dollar rate goes up moderately on Thursday; however positions remained almost the same, as players in the global financial markets are waiting for decisions of the European Central Bank and the Bank of England, as well as completion of Greek talks.

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 1.0810, the pair will go to 1.0830 and 1.0850. The pair looks rather overbought.

There was no new information on Australian economy today; nevertheless the AUD is full of strength even without this driver.

At the regular meeting this week, the Reserve Bank of Australia decided to keep interest rate at the level of 4.25% per annum, while market predicted downward revision of the index by 25 basis points.

According to comments made by RBA, domestic economy is stable and resists external negative pressure from Europe quite well. The head of RBA Mr. Stevens believes that situation in the European economy has slightly improved since December, although sentiments remain very pessimistic. It is logical that the regulator does not abandon possibility of lowering the rate: Stevens noted that the cost of lending can be revised downward if conditions require so.

Meanwhile, Australian monetary politician Mr. Swan believes that currently, strong rate of the Australian Dollar represents real threat to local exporters and their incomes. Note that the day before yesterday the rate of the pair AUD/USD has reached the highs of August 2011.

Retail sales fell by 0.1% m/m in December against the forecast of 0.2%. According to statistics released earlier, activity index in the manufacturing sector rose by 1.4% in January, up to 51.6 points, as per AI GROUP estimates. Aggregate activity index Aig in the service sector increased to 51.9 points in January (+2.9 points) against growth of 1.3 points a month earlier. The index has been growing for the third month in a row, while major growth in activity is related to households. Nevertheless, AiG noted in the comments that revival in the index took place only in three out of nine components of the index.

Inflation in the country showed zero growth in Q4 against the forecast of growth of 0.4% on quarterly basis. 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar stands still in anticipation of new information

At the Forex currency market the New Zealand Dollar almost does not move on Thursday being in the very narrow range and waiting for catalysts.

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 is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: : in case of breakdown at the level of 0.8360, the pair will go to 0.8370 and 0.8390. Consolidation near current levels is probable.

It became known today that unemployment rate fell to 6.3% in Q4 2011 against the level of 6.6% a quarter earlier. The data is positive, indicating that employment sector, being one of the supportive factors for the economy, will be able to guarantee stability even in case ofr pessimistic external influence.

According to the report of the Reserve Bank of New Zealand, the regulator is ready to act if conditions, appropriate for his intervention will be created. In case if the slump of 2008 will be repeated, the RBNZ has a number of measures to avoid the slump of economy in the global scale. It is all about the level of liquidity in the banks. The document was submitted to authorities in December; however the contents of it have been made public only last week.

Activity index in the service sector of New Zealand fell to 50.6 points (-5.6 points) in December. Trade balance amounted to +NZ$338 billion in December against the level of -NZ$307 billion in November. However, positive factor of the index has already been incorporated into the price. Consumer confidence index ANZ fell to 108.4 points in December against 109.0 points earlier. Therefore, 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, but revived later. Most likely the index will be weaker in Q4.

At the meeting in the end of January, the Reserve Bank of New Zealand 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.

 

[LF.Anastasia]

GBP: British Pound is pending decision of the Bank of England at trades today

The British Pound Sterling is traded slightly upward, activity is sluggish at the Forex currency market in advance of the meeting of the Bank of England and possible decision to expand the volume of assets repurchasing program.

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from bottom to top and came into the positive area; it is going up and is giving a buy signal. Stochastic Oscillator goes down a little, moving away from the overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5850, the pair will go to 1.5860 and 1.5890. A chance is high that the pair will consolidate at the current levels.

A regular meeting of the Bank of England will be held today, it is quite possible that comments of the MPC will be rather aggressive, as reaction to slowdown in British economy is definitely expected from the Bank. According to the head of the Bank of England Mr. King, decline in inflation assumes possibility of additional QE; however, rates will likely remain at the current levels. It is assumed that QE will be increased least by 50 billion pounds.

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.

We would remind that complex situation preserves in the labour sector. 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 the previous three months. Situation is similar in the retail sector as well.

According to estimates of the National Institute of Economic Research NIESR, British economy will lose 0.1% this year; however in 2013 will resume its growth up to 2.3%. Situation with the households, that have a lot of debts and are not willing to spend money because of obscure economic outlooks, acts as a “hindrance” for the system. In addition, labor market also of importance, the Institute predicts that unemployment rate in 2012 will be over 9%. There is probability that inflation will drop to 2.2% from the current 4%, CPI can be at 1.4% in 2013.

 

[LF.Anastasia]

EUR/USD: Euro was granted time for reflection

The pair EUR/USD is traded slightly downward at Forex currency market on Friday morning.

By 8.30 Moscow time the Euro is at 1.3268 against closing yesterday’s level of 1.3284.

Meeting of the Central European Bank on Thursday did not bring sudden decision: interest rate was left unchanged at the level of 1.0% per annum; ECB also approved pledge of preferred debts in some countries. Austria, Spain, Italy, France, Cyprus, Ireland and Portugal were included in the list of such countries.

These countries will be granted special risk control measures and debt security from ECB.

Good news were received from Greece: political parties in the country have agreed on new economic measures, however EU Finance Ministers have postponed discussions of the second aid package till 15 February to make sure that Greek promises are faithful.

Therefore, market has a lot of information to analyze at the beginning of the trading session on Friday.

Most likely, the pair EUR/USD will not go beyond in the range of 1.3200-1.3290 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound is losing positions at the end of the week

The British Pound Sterling is traded downward at the Forex currency market on Friday, due to several factors. Market has already exhausted the Greek subject, it also matters that it is the end of the week now.

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from bottom to top and came into the positive area; it is going up and is giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 1.5770, the pair GBP/USD will go to 1.5760 and 1.5740.

A meeting of the Bank of England was held yesterday: asset repurchase program was increased by 50 billion pounds, up to 325 billion pounds, as expected.

Mr. Osborn said commenting this decision that the increase of QE will help achieve inflation target (official target is 2% and it has not been changed for about two years.) According to Osborn, current monetary policy is still the primary instrument of influence on economic changes. Analysis of the Bank of England proved efficiency of QE.

According to MPC estimates, economic activity in the country went down slightly in Q4 2011, however recent studies showed a positive picture. MPC believe that volume of industrial output will gradually increase in 2012 and recovery in household income will help economic growth .

Another important factor is reduction of CP as it will boost demand. However, tough lending conditions and cost-saving measures can be an obstacle. Unemployment will restrain inflationary pressure.

QE program is planned for 3 months.

The head of the Bank of England Mr. King emphasized earlier 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.

We would remind that complex situation preserves in the labour sector. 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 the previous three months. Situation is similar in the retail sector as well.

 

[LF.Anastasia]

CHF: Swiss Franc slowed down its growth temporarily

Swiss Franc rate has slightly weakened at the trades in the Forex currency market on Friday after testing local market yesterday.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is in the negative area now, giving a sell signal. Stochastic Oscillator tends to come out of the neutral zone; however there is no clear signal yet.

Forex recommendations: in case of breakdown at 0.9120, the pair USD/CHF will go to 0.9110 and 0.9000. Consolidation near current levels is possible.

Macro-economic situation in Switzerland is stable.

The fact that Swiss National Bank does not react to the rise in Franc’s price is raising a lot of questions.

Statistics released yesterday showed that consumer confidence in the country increased to -19 points in January, against the level of -24 points in December and the forecast of -22 points, as per SECO estimates.

Representative of SNB Mr. Dantin said earlier that, decline in the rate of Franc is possible in perspective, as 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 earlier that search for the candidate for SNB governor will take several months. Earlier, Swiss government indicated intention to revise policy of supervision over SNB activity.

Monetary politician Mr. Jordan said earlier that SNB is firmly determined to maintain the level of 1.20 in the pair Euro/Franc and is prepared to adopt additional measures if economic situation will require. He also confirmed that economic growth rate has slowed down in Switzerland this year, although there is no risk of rise in inflation. He believes that Franc is still too strong and reduction in its price is necessary. Swiss economists said earlier that second half of this year is going to be better than the first one, Swiss economy is stable enough to survive mild recession. Naturally, it will affect the economic growth rate in the country: slow growth rate of GDP is expected in 2012.

It became know earlier that unemployment rate in Switzerland amounted to 3.4% in January against the forecast of 3.5% and the previous value of 3.3%. This is the highest level of the index since last spring and quite negative indication in the state of affairs in the national economy.

 

[LF.Anastasia]

JPY: Japanese Yen assesses situation at the end of the week

At the Forex currency market the Japanese Yen rate almost stands still on Friday: after three days of active sales caused by the surge of euphoria among investors, the currency will probably be in demand as a “safe” harbor again.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY; it has shifted into sideways movement and is not giving a clear signal. Stochastic Oscillator has come into overbought zone and maintains a buy signal.

Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.85 and 78.10. Consolidation near the current levels is not excluded.

It is quite possible that after resolution of Greek issue, investors will resume buying of the JPY again.

The head of the Bank of Japan Mr. Shirakawa said earlier that the regulator is prepared to reconsider volume of the asset repurchase program depending on the state of economy. Market has heard such allegations for several months already; however the Yen steps back for neither monetary nor natural reason. Investors have lost interest in currencies which are “safe” harbours and appetite to risk is visible to unaided eye.

Meanwhile, domestic situation in the Country of the Rising Sun is complex. The fact that cannot be disregarded is 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. It seems that political vacuum has been created in Japan; the head of the Bank of Japan Mr. Shirakawa noted this morning that master politicians are required to fight effectively against both expensive Yen and deflation.

Unemployment rate rose to 4.6% in December against the level of 4.5% in November. At the same time, the level of unemployed fell by 100 thousand against 80 thousand a month earlier. Nevertheless, this data has not radically affected general trend. Labour sector has been strongly affected by the overall economic slump in the country. Wages in Japan continue to decline; the data in December showed decline of 0.2% y/y, the same as in November. Therefore, Japanese wages have been declining for 8 months out of 12. Some other positive data was more positive – preliminary volumes of industrial output rose by 4.0% m/m in December against expectations of growth of 2.7%.

Currently, economic stimulus programs for the total amount of 20 trillion yen are being implemented in Japan. They were designed to increase demand and finalize work on eliminating aftermaths of tsunami and earthquake in March. These funds should also revive employment sector. According to Japanese statistics released this week, bank lending rose by 0.7% y/y in January against the forecast of +0.5% y/y; current account balance amounted to Y303.5 billion in December against expectations of Y340.1 billion.

 

[LF.Anastasia]

AUD: Australian Dollar declines on Friday

At the Forex currency market the Australian Dollar rate is traded downward at the end of the week.

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 has left overbought zone and is going down in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0710, the pair will go to 1.0700 and 1.0670. The pair still looks rather overbought.

Rapid growth of the AUD has caused considerable overbought in the pair; therefore some correction will be logical.

At the regular meeting this week, the Reserve Bank of Australia decided to keep interest rate at the level of 4.25% per annum, while market predicted downward revision of the index by 25 basis points. According to comments made by RBA, domestic economy is stable and resists external negative pressure from Europe quite well. The head of RBA Mr. Stevens believes that situation in the European economy has slightly improved since December, although sentiments remain very pessimistic. It is logical that the regulator does not abandon possibility of lowering the rate: Stevens noted that the cost of lending can be revised downward if conditions require so.

Meanwhile, Australian monetary politician Mr. Swan believes that currently, strong rate of the Australian Dollar represents real threat to local exporters and their incomes. Note that the day before yesterday the rate of the pair AUD/USD has reached the highs of August 2011.

Inflation in the country showed zero growth in Q4 against the forecast of growth of 0.4% on quarterly basis. 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. Retail sales fell by 0.1% m/m in December against the forecast of 0.2%. According to statistics released earlier, activity index in the manufacturing sector rose by 1.4% in January, up to 51.6 points, as per AI GROUP estimates. Aggregate activity index Aig in the service sector increased to 51.9 points in January (+2.9 points) against growth of 1.3 points a month earlier. The index has been growing for the third month in a row, while major growth in activity is related to households. Nevertheless, AiG noted in the comments that revival in the index took place only in three out of nine components of the index.