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[LF.Anastasia]

EUR/USD: EURO GROWS UP WITH THE HELP OF OLD IDEAS
The pair EUR/USD is traded slightly upward at the currency Forex market on Thursday while volumes are very low.

By 9.25 Moscow time the Euro isat 1.3260 against yesterday's closing session level of 1.3243.

There are no new drivers for movement in the market yet. Yesterday's news that rating agency Fitch downgraded rating of Greece to the "junk" level was taken for granted by investors, therefore reaction to it was not too stormy.

Meanwhile, market continues to assess news of the week about Greece and drives to conclusion that the country is pushed to selective default. The day is going to be uneventful in terms of macro-economic data.

Most likely, the pair EUR/USD will not go beyond the range of 1.3150-1.3290 at the trading session on Thursday.

 

[LF.Anastasia]

AUD: AUSTRALIAN DOLLAR IS RECOVERING DESPITE NEGATIVE FACTORS
At the Forex currency market the Australian Dollar rate is traded upward on Friday, ignoring news which is not too good for Australia.

Forex forecast: MACD indicator for the pair AUD/USD is in the positive area, it goes down and is shaping a sell signal. Stochastic Oscillator suspended its fall in the neutral zone and started to grow, giving a signal for moderate buying.

Forex recommendations: in case of breakdown at the level of 1.0735, the pair will go to 1.0740 и1.0770.

The AUD has ignored this news; however it became known today that rating agency Fitch downgraded rating of three Australian banks: Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation.

Representative of RBA Mr. Lowe noted that growth in the sector of business investments can reach around 10%this year. In addition, demand in private sector is also quite high.

Earlier Australian currency has been "knocked down" by domestic political news: investors discuss rumours that the head of Ministry of Foreign Affairs of Australia Mr. Radd will leave his post because of disagreements with Prime-Minister Julia Gillard. Usually the AUD takes political news with no worry.

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 associated with households. Nevertheless, AiG noted in the comments, that revival in the index is evident only in three out of nine components.

According to released statistics, index of wages rise has increased by 1.0% on quarterly basis in Q4 against the previous growth of 0.7%. Growth amounted to 3.6% on annual basis. Statistics released earlier showed that lending in the housing sector of Australia rose by2.4% in December against the forecast of growth of 1.8%. Statistics supported the currency. Inflation in the country showed zero growth in Q4 against the forecast of growth of 0.4% on quarterly basis. Retail sales fell by 0.1% m/m in December against the forecast of growth by 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.

 

[LF.Anastasia]

JPY: JAPANESE YEN REMAINS WEAK ON FRIDAY
At the Forex currency market the Japanese Yen rate downward at the end of the week because positive external background is still preserved.

Forex forecast: MACD indicator goes up in the positive area for the pair USD/JPY and maintains 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 80.50, the pair will go to 80.60 and80.80.Consolidation near current levels is highly probable.

According to the rating agency Moody's, Japan has not yet reached the state when economic negative factor would have justified the downgrade of the rating. At the same time economists of the agency noted that weakness of economic policy in the country is still maintained and purchases of bonds would have temporarily nature. It is doubtful that balance of current account will show deficit in the nearest future.

Japanese Prime Minister Mr. Noda said on Thursday that the Bank shall implement its monetary policy more efficiently; measures adopted earlier this month were taken positively by the market and helped to release pressure on the Yen.

Such weak positions, when the JPY fell to 3.5- month lows can be explained by prior statements of the Bank of Japan. At the meeting this week, the Bank of Japan left interest rate at the level of 0.1% per annum; however the Bank has made a step, unexpected for the market increasing volume of the asset repurchase program to 65 trillion yen versus 55 trillion yen previously. This decision was unanimous, as well as the other one: program of purchases of long-term bonds was expanded to Y19 trillion from Y9 trillion. In addition, Central Bank surprised market again, by stating that according to the bank it will be reasonable to set inflation target at 1%,as economic forecasts are extremely hazy.

It was Bank's view on the CPI target that forced the market to revise trading strategies for the Yen.

Radical measures of the Central Bank are just a continued reaction to statistics: GDP in Japan fell by 2.3% y/yin Q4 2011, since European crisis and slowdown in the global economic rate have prevented recovery after natural disaster.

 

[LF.Anastasia]

CHF: SWISS FRANC HAS REACHED FOUR-MONTH HIGHS
At the Forex currency market Swiss Franc rate is still traded close to the highs of 16 weeks at the end of the week.

Forex forecast: MACD indicator for the pair USD/CHF is in the negative area; it is moving along the signalline again and is not giving a clear signal. StochasticOscillator has gone to oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 0.9010, the pair USD/CHF will go to 0.9000 и 0.8980.

Economic situation in Switzerland has not changed fundamentally on Friday.

Note that actually a new round of strengthening in Franc took place not without interference of the authorities.Earlier, Minister of Economic Affairs of the country added fuel into fire whenhe stated that it would be logical to change pegging level of Franc / Euro to1.40 (now it is 1.20). He believes that in this case, the pair EIR/CHF would becloser to purchasing power. In addition, the politician said that SNB needs a newhead as soon as possible.

We would remind that SNB does not have a leader since resignation of Hildebrand in January.

Earlier Jordan, monetary politician, acting as a head of SNB said that the regulator firmly determined to maintain the level of 1.20 in the pair Euro/Franc. He is also prepared toadopt additional measures if economic situation requires. He also confirmedthat economic growth rate slowed down this year in Switzerland, although thereis no risk of the rise in inflation. He believes that Franc is still too strongand reduction in its price is urgently required.

According to the previous data,inflation in Switzerland fell by 0.4% m/m (_0.8% y/y) in January against expectations of decline of 0.2% m/m. This is the fourth consecutive drop in theindex and at the same time it is maximal fall since October 2009. Expensive Yenseriously hampers the progress of economy: at the beginning of the year importof consumer goods fell by 1.8% m/m (-3.2% y/y), however the goods of Swissproduction rose in price by 0.1% m/m. Therefore, inflation threat is becomingmore tangible in Switzerland. Index of economic expectations ZEW rose to -21.2points in February against the level of -50.1 points in January.

Trade balance in Switzerland amounted to -1.553 billion francs in January against the forecast of -2.50 billion francs. The report showed that exports decreased by 3.4% last monthagainst preliminary estimate of growth of 6.1%; imports increased by 3.6%(preliminary forecast: +7.6% m/m).The data is not too positive, since levels ofexports are in the red again.

 

[LF.Anastasia]

GBP: BRITISH POUND ALMOST STANDS STILL
At the Forex currency market the British Pound Sterling rate hardly moves at the trading session on Friday.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it is going down while volumes are decreasing and is giving a sell signal. Stochastic Oscillator goes down, and giving a similar signal.

Forex recommendations: in case of breakdown at 1.5730 the pair GBP/USD will go to 1.5710 и1.5680.

In general, previous session was neutral for the GDP and recovery of the Pound after sales is attributed to EUR/USD. Position of the GBP/USD has not changed fundamentally.

Last night Pound's good spirit has been spoiled as minutes of the last meeting of the Bank of England showed a split of opinions in the Monetary Committee. Two of its members, Posen and Miles voted for expansion of the assets repurchase program for 75 billion pounds, while other seven monetary politicians were for expansion of the volume of QE for 50 billion. All members of MPC were unanimous in regards to interest rate.

The minutes noted that some members of MPC spoke out in favour of discontinuation of further stimulation.

As a result, "hawks" are back again in the "dove-like" MPC.

Representative of the Bank of England Mr. Bean said earlier that economic growth should accelerate in the second half of the year and the rate of inflation will slowdown; while in the first 6 months of the year economic growth is slow. In general, Mr. Bean thinks that economic growth will recover gradually and will be moderate.

According to Rightmove, house price index in the UK rose by 4.1% m/m (+1.4% y/y) in February against preliminary expectations of decline of 0.8% m/m. Thus, the index demonstrates maximum increase since April 2002 on monthly basis. The rise in price was triggered by small number of deals in the market and some easing of the lending conditions.

We would remind that at the regular meeting in February, the Bank of England increased asset repurchase program by 50 billion pounds, to the level of 325 billion pounds, as expected. Mr. Osborn stated 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.

 

[LF.Anastasia]

EUR/USD: EURO SKYROCKETED TO LOCAL HIGHS
The pair EUR/USD is traded at the local peaks at the Forex currency market on Friday morning.

By 9.10 Moscow time the Euro is at 1.3372 against yesterday's closing level of 1.3371.

Good U.S. statistics and expectations of positive data on GDP in Germany caused a new round of rally in Euro/USD

In general, a lot of speculative positions are still opened in the major pair, which increases degree of volatility.

Most likely, the pair EUR/USD will not go beyond the range of 1.3150-1.3390 at the trading session on Friday.

 

[LF.Anastasia]

EUR/USD: Euro remains at highs

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

By 8.10 Moscow time the Euro is at 1.3456 against closing level of 1.3465 on Friday.

Strong American statistics released at the end of last week supported investors. In addition, a positive factor is that Greece has sent to its creditors an official proposal for exchanging bonds, which actually means writing off more than 53% of debts.

In general, currency market remains at the local highs on Monday morning.

Some rollback is not excluded today.

Most likely the pair will not go beyond the range of 1.3370-1.3490 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound soared up to the highs of November

The British Pound Sterling rate is traded slightly downward at the Forex currency market after the rise to the highs 15-weeks.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it goes down while volumes are decreasing and is giving a sell signal. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5870 the pair GBP/USD will go to 1.5880 and 1.5910. Correction at 1.5750 is not ruled out.

According to statistics released this morning UK house prices Hometrack have not changed on monthly basis in February (-1.4% y/y). The Pound has ignored this statistics yet.

Growth of the pair GBP/USD on Friday is explained by correlation with the major pair, which had been pushed up investors positive sentiments who expect prompt resolution of the debt problem in Eurozone.

Representative of the Bank of England Mr. Bean said yesterday that economic growth should accelerate in the second half of the year and the rate of inflation will slowdown; while in the first 6 months of the year economic growth is slow. In general, Mr. Bean thinks that economic growth will recover gradually and will be moderate.

According to Rightmove, house price index in the UK rose by 4.1% m/m (+1.4% y/y) in February against preliminary expectations of decline of 0.8% m/m. Thus, the index demonstrates maximum increase since April 2002 on monthly basis. The rise in price was triggered by small number of deals in the market and some easing of the lending conditions. We would remind that at the regular meeting in February, the Bank of England increased asset repurchase program by 50 billion pounds, to the level of 325 billion pounds, as expected. Mr. Osborn stated 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.

Last night the Pound’s good mood was spoiled: the minutes of the last meeting of the Bank of England showed a split of opinions in the Monetary Committee. Two of its members, Posen and Miles voted for expansion of the assets repurchase program for 75 billion pounds, while other seven monetary politicians were for expansion of the volume of QE for 50 billion. All members of MPC were unanimous in regards to interest rate. As a result, “hawks” are back again in the “dove-like” MPC.

 

[LF.Anastasia]

CHF: Swiss Franc has reached many –week highs

At the Forex currency market Swiss Franc rate is being slightly corrected on Monday, although it is still close to the local highs.

Forex forecast: MACD indicator for the pair USD/CHF is in the negative area; it is moving along the signal line again and is not giving a clear signal. Stochastic Oscillator has gone to oversold zone and is giving a sell signal.

Forex recommendations: in case of breakdown at 0.8950 the pair USD/CHF will go to 0.8940 and 0.8920.

Macro-economic calendar will contain positive Swiss data this week: Employment statistics excluding agricultural sector in Q4 is expected on Tuesday; leading indicators index KOF will be known on Wednesday, on Thursday, 1 March, country’s GDP in the previous quarter as well as PMI in February will be made public.

Note that although it could sound funny but a new round of strengthening in Franc took place not without interference of authorities. Earlier, Minister of Economic Affairs of the country added fuel into fire when he stated that it would be logical to change pegging level of Franc / Euro to 1.40 (now it is 1.20). He believes that in this case, the pair EIR/CHF would be closer to purchasing power. In addition, the politician said that SNB needs a new head as soon as possible. We would remind that SNB does not have a leader since resignation of Hildebrand in January.

According to the previous data, inflation in Switzerland fell by 0.4% m/m (_0.8% y/y) in January against expectations of decline of 0.2% m/m. This is the fourth consecutive drop in the index and at the same time it is maximal fall since October 2009. Expensive Yen seriously hampers the progress of economy: at the beginning of the year import of consumer goods fell by 1.8% m/m (-3.2% y/y), however the goods of Swiss production rose in price by 0.1% m/m. Therefore, inflation threat is becoming more tangible in Switzerland. Index of economic expectations ZEW rose to -21.2 points in February against the level of -50.1 points in January. Trade balance in Switzerland amounted to -1.553 billion francs in January against the forecast of -2.50 billion francs. The report showed that exports decreased by 3.4% last month against preliminary estimate of growth of 6.1%; imports increased by 3.6% (preliminary forecast: +7.6% m/m).The data is not too positive, since levels of exports are in the red again.

Earlier monetary politician Jordan acting as a head of SNB said that the regulator firmly determined to maintain the level of 1.20 in the pair Euro/Franc. He is also prepared to adopt additional measures if economic situation requires. He also confirmed that economic growth rate slowed down this year in Switzerland, although there is no risk of the rise in inflation. He believes that Franc is still too strong and reduction in its price is urgently required.

 

[LF.Anastasia]

JPY: Japanese Yen remains under pressure

At the Forex currency market the Japanese Yen rate is traded slightly upward on Monday, although it is still under pressure. The pair USD/JPY rose significantly last week, therefore current movement can be considered as technical correction before further growth.

Forex forecast: MACD indicator goes up in the positive area for the pair USD/JPY and maintains 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 81.10, the pair will go to 81.20 and 81.40.If correction intensifies, the pair can go down to 80.50.

Japanese politicians are still carried away by verbal attacks: Finance Minister Deputy noted today that his department continues to monitor Yen’s rate and sharp fluctuation at the currency market seem not desirable. He did not say anything new; however it looks like in this case, it seems that participation is more important than final result.

According to the rating agency Moody's, Japan has not yet reached the state when economic negative factor would have justified the downgrade of the rating. At the same time economists of the agency noted that weakness of economic policy in the country is still maintained and purchases of bonds would have temporarily nature. It is doubtful that balance of current account will show deficit in the nearest future.

Such weak positions, when the JPY fell to 3.5- month lows can be explained by prior statements of the Bank of Japan. At the meeting this week, the Bank of Japan left interest rate at the level of 0.1% per annum; however the Bank has made a step, unexpected for the market increasing volume of the asset repurchase program to 65 trillion yen versus 55 trillion yen previously. This decision was unanimous, as well as the other one: program of purchases of long-term bonds was expanded to Y19 trillion from Y9 trillion. In addition, Central Bank surprised market again, by stating that according to the bank it will be reasonable to set inflation target at 1%, as economic forecasts are extremely hazy.

It was Bank’s view on the CPI target that forced the market to revise trading strategies for the Yen. Radical measures of the Central Bank are just a continued reaction to statistics: GDP in Japan fell by 2.3% y/y in Q4 2011, since European crisis and slowdown in the global economic rate have prevented recovery after natural disaster. Japanese Prime Minister Mr. Noda said on Thursday that the Bank shall implement its monetary policy more efficiently; measures adopted earlier this month were taken positively by the market and helped to release pressure on the Yen.