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[LF.Anastasia]

AUD: Australian Dollar is being sluggishly sold out

At the Forex currency market the Australian Dollar rate continues to go down slowly at the beginning of the new week, although there are no apparent reasons for sales.

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: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.0665, the pair will go to 1.0640 and 1.0620. However, the pair can go back to 1.0750 in case of a new surge of market optimism.

Macro-economic situation in Australia remains stable on Monday.

At the moment, sales of the AUD are regarded as sluggish movement, due to lack of constructive trading ideas.

At the end of last week, 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. 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 by 2.4% in December against the forecast of growth of 1.8%. 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.

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.

 

[LF.Anastasia]

CAD: Canadian Dollar is ready to give way to American currency

At the Forex currency market the Canadian Dollar rate goes down at the beginning of the week, as it seems that investors have fired off all trading ideas.

Forex forecast: MACD indicator for the pair USD/CAD is in the negative area and is going up slightly, giving a buy signal. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at 1.0020 the pair will go to 1.0030 and 1.0050.

The head of the Bank of Canada Mr. Carney believes that current levels of the rates comply with monetary situation. Recall that in the middle of the week, the Bank of Canada kept interest rate at the level of 1.0% per annum, which was not a surprise for the market.

The Bank of Canada expressed concern about the state of the housing sector; according to the regulator 10% -decline in the sector can lead to reduction in consumption by 1% although the bulk of credits on property were used to finance consumption.

The data released earlier showed that new orders in the manufacturing sector fell by 2.8% in December against prior expectations of +3.6%. Number of outstanding orders in this sector fell by 1.6% (versus +1.2% previously); Sales in this sector were low: growth amounted 0.6% in December against expected +1.9%.

According to the data released earlier, real GDP in Canada fell by 0.1% m/m in November (+2.0% y/y) against expectations of 0.2% m/m.

Statistics 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro still tends to grow

The pair EUR/USD is traded upward at the FOrex currency market on Tuesday morning after yesterday’s correction.

By 8.20 Moscow time the Euro is at 1.3422 against yesterday’s closing session at 1.3396.

There are still no tangible grounds for optimism in the market; however due to mass speculative positions opened in long, the major pair is still above 34th figure.

Yesterday S&P agency has downgraded rating of Greece from CC to the level of “selective default” emphasizing once again that the fact that the concept “collective action clauses” has been included in the process of bonds exchange, indicates proximity of the default status. Spain also reported recession;, however the country is ready to reform fiscal policy to overcome this state.

The day is going to be eventful in terms of macro-statistics; therefore sharp currency fluctuation is not excluded.

Most likely the pair EUR/USD will not go beyond the range of 1.3340-1.3450 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is traded in three-day range

The British Pound Sterling rate is traded upward at the Forex currency market on Tuesday; none the less, it is still in the channel of 1.5720-1.5901.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and is going 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 1.5850 the pair GBP/USD will go to 1.5860 and 1.5910. Correction at 1.5750 is not ruled out.

So far, situation at the currency exchange remains unchanged for the GBP; macro-economic background is tranquil.

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

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. 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.

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 moderately goes up after correction

At the Forex currency market Swiss Franc rate is traded slightly upward on Tuesday, remaining in the oversold range of 0.8930-0.9020.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving along the signal line again, not giving a clear signal. Stochastic Oscillator tends to leave oversold zone and have started to shape a weak buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 0.8980 the pair USD/CHF will go to 0.8990 and 0.9010. It is possible that the pair will go to 0.8920.

New round of strengthening in Franc, which goes on for over a week, has happened with the help of involvement 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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen remains at the six -month lows

Positions of the Japanese Yen remain stable at the Forex currency market on Tuesday: the JPY is still under pressure, however it does not lose hope to be corrected and regain part of its losses.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and goes up maintaining a buy signal. Stochastic Oscillator goes down 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 the level of 80.60 the pair will go to 80.70 and 80.90. If correction intensifies, the pair will go down to 80.30.

Position of the Yen has not changed much in the two last trading sessions: market is still in confusion, and it is not clear yet which direction will currencies choose in the future.

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

We would remind that sales in JPY have been triggered by the comments of the Bank of Japan made earlier. 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 last week 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. 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.

 

[LF.Anastasia]

AUD: Australian Dollar has revived

At the Forex currency market the Australian Dollar rate goes up today, keeping on the movement started last night.

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 goes up in the neutral zone, giving a signal for moderate buying.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0770 the pair will go to 1.0780 and 1.0810. It is possible that the pair will go back to 1.0650.

Previous sales of the AUD indicated the lack of the trading ideas; today the currency is being bought because the pair has come to attractive levels due to correction.

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 by 2.4% in December against the forecast of growth of 1.8%. 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.

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. At the end of last week, 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.

 

[LF.Anastasia]

CAD: Canadian Dollar strengthens again

At the Forex currency market the Canadian Dollar rate resumed strengthening on Tuesday after yesterday’s rebound oil has provided strong support.

Forex forecast: MACD indicator for the pair USD/CAD is in the negative area and is going up slightly, giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a moderate sell signal.

Forex recommendations: in case of breakdown at 0.9950 the pair will go to 0.9940 and 0.9910. It is possible that the pair will go back to the level above 1.0020.

Macro-economic situation in Canada is stable today.

The head of the Bank of Canada Mr. Carney believes that current levels of the rates comply with monetary situation. Recall that in the middle of the week, the Bank of Canada kept interest rate at the level of 1.0% per annum, which was not a surprise for the market.The Bank of Canada expressed concern about the state of the housing sector; according to the regulator 10% -decline in the sector can lead to reduction in consumption by 1% although the bulk of credits on property were used to finance consumption.

According to the data released earlier, real GDP in Canada fell by 0.1% m/m in November (+2.0% y/y) against expectations of 0.2% m/m. New orders in the manufacturing sector fell by 2.8% in December against prior expectations of +3.6%. Number of outstanding orders in this sector fell by 1.6% (versus +1.2% previously); Sales in this sector were low: growth amounted 0.6% in December against expected +1.9%. Leading indicator index rose by 0.8% m/m in December against the forecast of +0.6% m/m.

CPI 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro is waiting for auctions outcome

The pair EUR/USD is traded upward at the Forex currency market on Wednesday morning

By 8.30 Moscow time the pair is at 1.3479 against yesterday’s closing level of 1.3462.

Expectations of today’s auction of the European Central Bank became the reason for optimism. It is predicted that demand for three-year loans at the low interest rate is going to be rather high among financial institutions of Europe: ranging from 500 to 750 billion euro.

Later market will shift attention to the speech of the head of the U.S. Federal Reserve Ben Bernanke.

Therefore, EUR/USD is making use of probably the last real opportunity for the rise.

Most likely the pair EUR/USD will not go beyond the range of 1.3380-1.3520 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound tends rise

The British Pound Sterling rate is traded upward at the Forex currency market on Wednesday, on the last winter day.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area, it has shifted to sideways movement, and is not giving a clear signal. Stochastic Oscillator goes up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at 1.5940 the pair GBP/USD will go to 1.5950 and 1.5970.

Statistics released this morning showed that consumer sentiment index GFK/NOP in the UK was at the level of -29 points. House prices Hometrack have not changed on monthly basis in February (-1.4% y/y). The Pound has ignored this statistics.

According to the representative of the bank of England Mr. Tucker, as soon as recovery rate in the local economy stabilize, stimulus can be abandoned. At the same time, on-going stimulation activity can be continued only in case of thorough monitoring of inflation.

According to him, presently, imbalance in macro-economic policies can cause risks. Monetary policy should support domestic demand in the country.

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. 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. 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.