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[LF.Anastasia]

CHF: Swiss Franc maintains positions close to highs

At the Forex currency market Swiss Franc rate is traded close to local highs in the middle of the week.

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 has come back to oversold zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 0.89400 the pair USD/CHF will go to 0.8930 and 0.8910.

According to representative of the SNB Mr. Jordan, situation in Europe arose concerns at the moment; nevertheless it is feasible to overcome difficulties associated with debt crisis.

He also noted that budget costs shall be reduced first of all, after that anti-crisis measures will start functioning automatically.

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.

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 economic progress: 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.

Leading indicators index KOF in February will be known on Wednesday, on Thursday, 1 March, country’s GDP in the previous quarter will be made public, as well as PMI in February.

 

[LF.Anastasia]

JPY: Japanese Yen stands still

Japanese Yen rate almost stands still at the Forex currency market on Wednesday; market is waiting for the outcome of the European auction LTRO to determine further movement direction.

Forex forecast: MACD indicator is going up in the positive area for the pair USD/JPY and maintains a buy signal. Stochastic Oscillator goes down in the neutral 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 80.60 the pair will go to 80.70 and 80.90. If correction intensifies, the pair will go down to 80.20.

Representative of the Bank of Japan Mr. Kamedzski believes that in case of loss of confidence, Japanese government bonds will not be able to act as safe assets. The politician thinks that the regulator shall take preventive steps to avoid such a scenario.

As a whole, these were comments of the Bank of Japan earlier that triggered sales in JPY. 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.

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 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.

 

[LF.Anastasia]

AUD: Australian Dollar is steady again

At the Forex currency market the Australian Dollar rate goes up today continuing movement which 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 buy signal.

Forex recommendations: in case of breakdown at the level of 1.0820 the pair will go to 1.0830 and 1.0850.

The AUD actively responds to market’s expectations of the outcome of European auction LTRO

The data released in the morning showed that retail sales in January agreed with the forecast; so market’s reaction to the news was rather mild.

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. Earlier, 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar easily reaches highs again

At the Forex currency market the New Zealand Dollar rate goes up steadily in the middle of the week, easily rising up the level of the local highs.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is going down, giving a sell signal. Stochastic Oscillator goes up quickly in the neutral zone and is giving a buy signal, closely approaching overbought zone.

Forex recommendations: in case of breakdown at the level of 0.8430 the pair will go to 0.8450 and 0.8460.

Increased interest in risk is favourable for the NZD as great hopes are placed for a new auction of ECB.

Macro-economic situation in New Zealand is stable today.

Business activity index in the service sector BNZ rose to 53.6 points in January against preliminary expectations of 50.9 points. The report showed that growth has been recorded in 4 out of 5 components; however the main catalyst for the growth were the orders of new companies. Employment in the sector increased to 54.2 points which is the maximum since November 2007.

Statistics released earlier showed that house price index REINZ fell by 1.4% m/m (+25.2% y/y) in January against preliminary expectations of decline of 0.1% m/m. Unemployment rate fell to 6.3% in Q4 2011 against the level of 6.6% a quarter earlier. This is positive information indicating that, employment sector, being one of the supportive factors for the economy, will be able to guarantee stability even in case of 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. 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. 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 stagnation. GDP had almost stopped growing, but revived later. Most likely the index will be weaker in Q4.

 

[LF.Anastasia]

EUR/USD: Sales of Euro have suspended

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

By 8.40 Moscow time the Euro is at 1.3338 against yesterday’ level of 1.3321.

The reason for sales was the outcome of the auction of the European Central Bank which is going to grant three-year loans to 800 European financial institutions in the amount of 529.5 billion euro. This is much higher than the results of the first auction in December. Later, the head of the U.S. Federal Reserve Ben Bernanke added fuel into the fire emphasizing that there is steady recovery in the employment sector and there is no need in AE3.

Today players’ attention will be focused on the flow of macro-statistics, which is normal at the beginning of the month, and also in advance of EU summit.

Most likely the pair EUR/USD will not go beyond the range of 1.3280-1.3390 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is undetermined in spring

The British Pound Sterling rate is traded slightly upward at the Forex currency market on Thursday after yesterday’s decline.

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 maintains positions in the overbought zone and is moving sideways.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5920 the pair GBP/USD will go to 1.5930 and 1.5950. If tendency to correction prevails, the pair will aim at 1.5850.

Split of opinions continues in the Bank of England: now Mr. Weale noted that the rates could be raised before the regulator will roll back stimulus measures. At the same time, Weale does not think that easy attitude to inflation for the sake of economic stimulus is a good idea. Minutes of the meeting of the Bank of England was made public in February. It did not give surprises. Thus, 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 showed that some members of MPC expressed opinion that further stimulation should be discontinued. So, “hawks” are back again in the pure “dove-like” MPC.

Consumer sentiment index GFK/NOP was at the level of -29 points in February. House prices Hometrack have not changed on monthly basis (-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. He believes that 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.

 

[LF.Anastasia]

CHF: Swiss Franc has been corrected

At the Forex currency market Swiss Franc rate is going up slightly on the first day of March, after yesterday’s correction.

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 has left oversold zone and is going upward, giving a buy signal.

Forex recommendations: in case of breakdown at 0.9045 the pair USD/CHF will go to 0.9050 and 0.9070.

According to the data released today, GDP in Switzerland rose by 0.1% q/q (+1.3% y/y) in Q4 against the forecast of zero change (+1.1% y/y).

The data is good and proves that Swiss economy is getting used to expensive Franc. It is still unclear why Swiss National Bank does not take any steps; probably the reason is that the regulator does not have official leader.

According to representative of the SNB Mr. Jordan, situation in Europe arose concerns at the moment; nevertheless it is feasible to overcome difficulties associated with debt crisis. He also noted that budget costs shall be reduced first of all, after that anti-crisis measures will start functioning automatically. 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.

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 economic progress: 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.

 

[LF.Anastasia]

JPY: Japanese Yen remains in the oversold channel

Japanese Yen rate is traded slightly upward at the Forex currency market on Thursday, remaining in the five-day range of 79.92-81.66.

Forex forecast: MACD indicator is going up in the positive area for the pair USD/JPY and maintains a buy signal. Stochastic Oscillator has shifted to sideways movement and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.15 the pair will go to 81.20 and 81.40. If correction intensifies, the pair will go down to 80.20.

Financial infusion of the Bank of Japan into economy has had its effect. According to statistics released in the morning, capital expenditures rose by 7.6% y/y in Q4 against the forecast of decline of 6.4% and preliminary expectations of -9.8%.

The data showed the highest increase since 2007, which is more than favourable for the global outlooks of the Japanese economy.

Representative of the Bank of Japan Mr. Kamedzski believes that in case of loss of confidence, Japanese government bonds will not be able to act as safe assets. The politician thinks that the regulator shall take preventive steps to avoid such a scenario.

In general, these were comments of the Bank of Japan that triggered sales of JPY. 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.

 

[LF.Anastasia]

AUD: Australian Dollar went back to the range of tranquil trading

The Australian Dollar meets spring with steady moderate growth at the Forex currency market.

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 reverses in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0730 the pair will go to 1.0720 and 1.0690.

It became known today that index of industrial activity AiG in Australia fell by 51.3 points in February against preliminary expectations of 51.6 points. In addition, number of permits to construct rose by 0.9% m/m in January against the forecast of growth of 0.2% m/m (-14.6% y/y).

The AUD ignores this statistics as it usually does, seeking support in the external background.

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 in January fell by 0.1% m/m against forecast of growth of 0.2%. Statistics released earlier showed that 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]

NZD: New Zealand Dollar is traded quietly

At the Forex currency market the New Zealand Dollar rate is traded moderately downward on Thursday after the rise to the new local highs.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is going down, giving a sell signal. Stochastic Oscillator is losing positions in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8330 the pair will go to 0.8320 and 0.8300.

According to statistics released this morning, export prices in New Zealand increased by 1.7% q/q in Q4 against the level of -4.0% in Q3. Import prices rose by 3.2% on quarterly basis for the reported period against previous decline of 3.4%.

Activity index in the service sector reduced to 50.6 points in December (-5.6 points). 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. 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 stagnation. GDP had almost stopped growing, but revived later. Most likely the index will be weaker in Q4. Business activity index in the service sector BNZ rose to 53.6 points in January against preliminary expectations of 50.9 points. The report showed that growth has been recorded in 4 out of 5 components; however the main catalyst for the growth were the orders of new companies. Employment in the sector increased to 54.2 points which is the maximum since November 2007.

House price index REINZ fell by 1.4% m/m (+25.2% y/y) in January against preliminary expectations of decline of 0.1% m/m. Unemployment rate fell to 6.3% in Q4 2011 against the level of 6.6% a quarter earlier. This is positive information indicating that, employment sector, being one of the supportive factors for the economy, will be able to guarantee stability even in case of 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 maintenance of liquidity level in banks.