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EUR/USD: Euro declines slightly on Wednesday

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

By 8.55 Moscow time the Euro was at 1.3116 against yesterday’s closing level of 1.3126.

In general, external background is quite stable at today’s trading session. Yesterday, International Monetary Fund revised upward forecasts for world economic growth and investors acclaimed this news enthusiastically.

In addition, Spanish auction, which took place yesterday, had rather good outcome- the country was able to place in the debt market all planned volume of Treasury bonds and final sum was above the upper limit of the range (more than 3 billion euro).

However, investors today await information on the U.S. labor market, which is scheduled for the release tomorrow, assuming that the data will be strong.

Most likely, the pair EUR/USD will not go beyond the range of 1.3050-1.3150 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound is still undetermined

The British Pound Sterling rate traded slightly downward again at the Forex currency market on Wednesday as it is still undetermined, due to ambiguous external background.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it started to decline moderately again and is giving a sell signal. Stochastic Oscillator goes up slowly 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 1.5930 the pair GBP/USD will go to 1.5940 and 1.5950. If aggressive buyers will be back in the pair, target for sale will be at the level of 1.5855.

Investors continue to be guided by the situation in Europe.

In the nearest future, however, the GBP will receive momentum to start movement from its own country: minutes of the last meeting of the Bank of England are scheduled for the releases this week, as well as the data on labour market, CPI and retail sales index. In addition to this, it is expected that the UK GDP for Q1 will be made public on 25 April. GDP fell by 0.3% on quarterly basis (+0.5% y/y) in Q4, while economists had predicted less significant decline of 0.2% q/q.

The data released earlier showed that level of retail sales in the UK increased due to warm weather and demand for clothing in March. Thus, index in the shops, which were opened less than one year ago, rose by 1.3% y/y in March, while the index went down in January and February. However, it is worth noting that reaction of the Bank of England to this statistics was not very enthusiastic. The rise in unemployment and high oil prices can impede growth in demand. House price index Rightmove in the UK rose by 2.9% m/m (+3.4% y/y) in April. The Pound has not responded to this statistics and continues to watch over external background where risk aversion is still preserved, due to unfavourable environment. House price index RICS in the UK rose to -10 points in March against the level of -13 points in February. This is the highest level of the index since June 2010.

Unemployment rate amounted to 5.0% in February; number of unemployed increased by 7.2 thousand. Weakness in the sector prevents economic recovery of the country. PMI Markit/CIPS in the manufacturing sector rose to 52.1 points in March against revised value of 51.5 points. This data gave good support to the currency. The index was at highs since May 2011 and the main driver of growth was the volume of new orders: 52.7 points against the level of 50.5 points earlier. This index is also maximal-at the peaks since March last year.

Consumer confidence GFK/NOP declined to -31 points in March against the level of -29 points. The data indicates strong destabilization in the British economy.

 

[LF.Anastasia]

CHF: Swiss Franc goes up slowly

At the Forex currency market Swiss Franc rate goes up slowly in the middle of the week, while external background remains tense to some extent.

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

Forex recommendations: in case of break down at the level of 0.9170 the pair USD/CHF will go to 0.9180 and 0.9200. Consolidation at the current levels is possible.

Marco-economic situation in Switzerland seems stable. External environment determines trend in Franc rate.

Manufacturing sector is still weak in Switzerland, however it shows recovering trend. Index of industrial activity SVME rose to 49.0 points in February against the forecast of 48.5 points. Real retail sales increased by 4.4% y/y in January versus growth of 1.7% in December. GDP in the country 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 quite good and indicates that Swiss economy is getting used to expensive Franc. Thus, the regulator expects that inflation will amount from -0.6% to +0.6% in 2012-2014, GDP growth will be at the level of 1.0% this year.

At the last meeting of Swiss National Bank a three-month Libor rate was left unchanged at the level of 0%. In general, SNB’s view on monetary policy remains unchanged. Despite strong determination of SNB to maintain the level at 1.20, assumption about probability of shifting pegging level of Franc to Euro at 1.25 is getting more persistent in the market.

Currency reserves rose to 237.5 billion in March against previous level of 224.9 billion francs. PMI SVME in Switzerland increased to 51.1 points in March against the forecast of 49.5 points. However other data was weak: retails sales rose only by 0.8% y/y in February against previous value of +4.7% y/y and the forecast of growth of 2.0% y/y. It became known earlier that unemployment rate was at the level of 3.1% in March, as expected. Consumption indicator UBS in Switzerland fell to 0.87 points in February against preliminary level of 0.93 points. CPI rose by 0.6% m/m (-1.0% y/y) in March against the forecast of growth of 0.4% m/m. However, Franc was more focused on the external background and ignored this statistics.

Last week Mr. Jordan from Swiss National Bank explained that Central Bank is ready to make greater efforts to maintain monetary stability after markets’ attacks against the level of 1.20 in the pair EUR/CHF. He also emphasized that opinions about lack of determination in SNB are incorrect. According to him, CB is still prepared to buy currency in unlimited quantities.

 

[LF.Anastasia]

JPY: Japanese Yen is moving away from local highs

The Japanese Yen rate traded downward at the Forex currency market on Wednesday, continuing yesterday’s trend. Demand for “safe” currency has declined, so the JPY is going down too. The pair USD/JPY seems very much oversold and market participants are making use of this.

Forex forecast: MACD indicator for the pair USD/JPY goes down in the positive area, while volumes are low and is giving a sell signal. It is prepared to break through the signal line from top to bottom. Stochastic Oscillator remains in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 81.30 the pair USD/JPY will go to 81.40 and 81.60.

According to representative of the Bank of Japan Mr. Nasimury, measures taken by the Bank of Japan in February helped to stabilize exchange rate of the Yen and stimulate stock market; therefore, the regulator is ready to take more actions if required.

Monetary politician stressed today that Central Bank is going to make vigorous efforts in the sphere of monetary policy in order to achieve planned inflation target at 1%, the major risk factor is overall slowdown in the world economy.

Consumer confidence index in Japan rose to 40.3 points in March against the level of 39.9 points in February. It is a good indicator which gives another ground for expectations of “new shoots” in the economy of the country.

Levels of bank lending continue to increase in Japan, which is a positive factor, and this has been proved by statistics. In addition, number of orders for industrial rates unexpectedly rose in February which is also a good indication.

This data is perfectly consistent with the previous indexes: retail sales increased by 3.5% in February against expectations of growth of 1.3%. Real GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. Current account balance amounted to -Y437.3 billion in Q4 against the forecast of +Y322.3 billion. Personal consumption rose by 0.4% q/q last quarter against the forecast of growth of 0.3% q/q.

Regular meeting of the Bank of Japan last week was rather quiet. Interest rate was left at the level of 0.1% per annum; volumes of assets repurchase program have not been revised either. In the follow-up comments the regulator noted that European negative influence on the economy is still there, although to a lesser extent; however there is still no progress in the economic system. In general, the views of the Bank contradicted the opinion of Japanese government, who would like to see more dynamic stimulation of the economy. Unemployment rate in Japan fell to 4.5% in February against the forecast of 4.6%.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar has been temporarily suspended

At the Forex currency market the Australian dollar rate traded with minimal deviation in the middle of the week, while investors are determining short term catalysts for movement. Mass sales in the pair AUD/USD has been suspended, however if negative factors in the external background will intensify, aggressive sellers will come back rapidly into the pair.

Forex forecast: MACD indicator for the pair AUD/USD goes up moderately in the negative area and is giving a buy signal while volumes are average. Stochastic Oscillator is sliding down in the neutral zone and is giving a signal for moderate selling.

Forex recommendations: in case of breakdown at the level of 1.0380 the pair will go back to 1.0360 and 1.0350. Consolidation near the current levels is possible.

It became known this morning that leading indicator index Westpac in Australia rose by 0.2% in February, up to 284.2 points against preliminary expectations of growth of 0.6%. At the same time, growth rate amounted to 2.4% against predicted 2.5%. Representatives of Westpac commented that negative dynamics in the growth rate over the past six months does not raise enthusiasm about prospects and experts do not expect improvements in the nearest future. In general, current indexes meet expectations of the Australian economic development in 2012 (3%), however growth rate of GDP remains below trend.

Minutes of the meeting of the Reserve Bank of Australia held in April noted that slow down of economic growth increased chances that interest rate will be decreased this year. The documents also said that monetary politicians had lowered their forecasts for economic growth in the country. It also specified that if decline in inflation will be more evident, the RBA will have to commence further softening of the monetary policy.

Next report on inflation will be released on 24 April; it will show CPI for Q1.

The Reserve Bank of Australia stated earlier that funding problems can be preserved in the country this year, although access to funding has become easier for many banks. The RBA emphasized that uncertainty in Europe and slowdown in the global economy can affect Australian economic system adversely. It became known earlier that employment rate in Australia increased by 44 thousand in February against expectations of growth of 6.5 thousand. Unemployment rate amounted to 5.2% against previous level of 5.3%.

 

[LF.Anastasia]

CAD: Canadian Dollar was able to strengthen considerably

The Canadian dollar rate traded upward at the FOrex currency market on Wednesday, continuing yesterday’s trend.

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

Forex recommendations: in case of breakdown at the level of 0.9880 the pair will go to 0.9870 and 0.9850.Consolidation near current levels is possible.

Meeting of the Bank of Canada was very lively, although he Regulator has left interest rate at the level of 1% per annum, as expected. Nevertheless, Nevertheless, comments which were made by the Governor of the Bank of Canada Mr. Carney were unexpected for the market.

Thus, monetary politician noted that the rise in the interest rate can be a reasonable decision in the future, as both inflation and economic growth may accelerate.

According to the forecasts made by the Bank of Canada, economy of the country will have maximal productivity starting from the first part of 2013.

According to the data released earlier, GDP in Canada rose by 0.1% m/m (+1.75% y/y) in January versus revised value of +0.5% m/m (+1.9% y/y) which in general agreed with the forecast. Previous statistics demonstrated that economic growth in Canada slowed down: real GDP amounted to +0.4% m/m in December against the forecast of +0.3% m/m. All in all Canadian economy grew only by 0.4% in the last quarter last year against +1.0% in Q3.

It became known earlier that sales in the secondary housing market of the country increased by 2.5% m/m (+1.6% y/y) in March, which is a good indicator.

Unemployment rate in Canada fell to 7.2% (-0.2%) in March. Level of employed increased by 82 thousand. Note, that it is a positive trend, as unemployment rate in February fell by 0.2%, although number of jobs did not rise significantly in the last month of winter. In addition, permits to construct in Canada rose by 7.5% m/m in February to C$6.51 billion against the fall of 11.4% in January.

The head of the bank of Canada Mr. Carney noted earlier that economy of the country is growing slightly above the forecast and government has number of tools in order to protect housing market from overheating. However, monetary policy tools will be used only as the last resort.

 

[LF.Anastasia]

EUR/USD: Euro remains in the narrow range

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

By 8.50 Moscow time the Euro was at 1.3112 against yesterday’s closing level at 1.3121.

Investors are waiting for new Spanish auctions today France is also preparing to participate in the debt market.

In addition, American statistics on a number of claims for unemployment benefits over week, which is scheduled for release this afternoon, will represent special interest to investors.

In general, major pair will continue to fluctuate in the narrow range.

Most likely, the pair EUR/USD will not go beyond the range of 1.3070-1.3180 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is ready to grow

The British Pound Sterling rate traded smoothly at the Forex currency market on Thursday, awaiting new catalysts to continue yesterday’s growth.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it is moving along the signal line again, while volumes are average 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 the level of 1.6020 the pair GBP/USD will go to 1.6030 и 1.6050. Consolidation near the achieved levels is possible.

It became known earlier that unemployment rate in the UK amounted to 4.9% in March. Level of unemployed rose by 3.6 thousand.

Information, that rating agency A&P has confirmed rating of Great Britain at the top level of AAA, has become a new catalyst for growth. Prime-Minister Cameron commented that the rates should be kept low in order to be able to stimulate economic growth.

Representative of the Bank of England Mr. Tucker said yesterday that inflation in the UK is still above the target level; it is also highly possible that CPI will remain above 3% in Q2 or probably through the whole period of the second half of 2012. At the same time, Tucker did not rule out that due to construction sector economic growth in Q1 can be zero.

The data released earlier showed that level of retail sales in the UK increased due to warm weather and demand for clothing in March. Thus, index in the shops, which were opened less than one year ago, rose by 1.3% y/y in March, while the index went down in January and February. However, it is worth noting that reaction of the Bank of England to this statistics was not very enthusiastic. The rise in unemployment and high oil prices can impede growth in demand.

Consumer confidence GFK/NOP declined to -31 points in March against the level of -29 points. The data indicates strong destabilization in the British economy.

Minutes of the meeting of the Bank of England are going to be released before the end of this week, as well as the data on CPI and retail sales. CPI и розничным продажам. In addition, it is expected that the UK GDP for Q1 will be made public on 25 April. GDP fell by 0.3% on quarterly basis (+0.5% y/y) in Q4, while economists had predicted less significant decline of 0.2% q/q.

 

[LF.Anastasia]

CHF: Swiss Franc continues to retreat slowly

At the Forex currency market Swiss Franc rate continues to weaken slowly on Thursday and does not respond actively to the news from SNB.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to the top and is now in the positive area, giving a buy signal. Stochastic Oscillator is moving along the signal line in the neutral zone not giving a clear signal.

Forex recommendations: in case of break down at the level of 0.9170 the pair USD/CHF will go to 0.9180 and 0.9210. Consolidation at the current levels is possible.

So, after three month break Swiss National Bank has a new governor now- it is Mr. Jordan who has performed the duties since January when Mr. Hildebrand left his post. Jordan has already said that he would continue to adhere to the old monetary policy and is going to preserve the level of 1.20 in the pair EUR/ CHF. According to him, Franc is still overvalued.

In general, the SNB supports this view of the new governor. They believe that pegging of Franc to the Euro is still required, considering problems in the Eurozone

Currency reserves rose to 237.5 billion in March against previous level of 224.9 billion francs. PMI SVME in Switzerland increased to 51.1 points in March against the forecast of 49.5 points.

Manufacturing sector is still weak in Switzerland, however it shows recovering trend. Index of industrial activity SVME rose to 49.0 points in February against the forecast of 48.5 points. Real retail sales increased by 4.4% y/y in January versus growth of 1.7% in December. GDP in the country 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 quite good and indicates that Swiss economy is getting used to expensive Franc. Thus, the regulator expects that inflation will amount from -0.6% to +0.6% in 2012-2014, GDP growth will be at the level of 1.0% this year.

At the last meeting of Swiss National Bank a three-month Libor rate was left unchanged at the level of 0%. In general, SNB’s view on monetary policy remains unchanged. Despite strong determination of SNB to maintain the level at 1.20, assumption about probability of shifting pegging level of Franc to Euro at 1.25 is getting more persistent in the market.

 

[LF.Anastasia]

JPY: Japanese Yen continues to weaken

At the Forex currency market the Japanese Yen continues to weaken, as investors do not have much interest in currencies- “safe” habours.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from top to bottom and continues to go down, maintaining a signal for moderate sales. Stochastic Oscillator grows in the neutral zone and is giving a buy signal, approaching overbought zone.

Forex recommendations: in case of breakdown at the level of 81.50 the pair USD/JPY will go to 81.60 and 81.80.

It became known this morning that trade deficit in Japan amounted to Y82.6 billion in March against the level of Y226.3 billion in February. This data is positive, the report also demonstrated that exports rose by 5.9% y/y last month, imports increased by 10.5% y/y.

According to representative of the Bank of Japan Mr. Nasimury, measures taken by the Bank of Japan in February helped to stabilize exchange rate of the Yen and stimulate stock market; therefore, the regulator is ready to take more actions if required. Monetary politician stressed yesterday that Central Bank is going to make vigorous efforts in the sphere of monetary policy in order to achieve planned inflation target at 1%, the major risk factor is - overall slowdown in the world economy.

Regular meeting of the Bank of Japan last week was rather quiet. Interest rate was left at the level of 0.1% per annum; volumes of assets repurchase program have not been revised either. In the follow-up comments the regulator noted that European negative influence on the economy is still there, although to a lesser extent; however there is still no progress in the economic system. In general, the views of the Bank disagreed with the opinion of Japanese government, who would like to see more dynamic stimulation of the economy.

Unemployment rate in Japan fell to 4.5% in February against the forecast of 4.6%.

Consumer confidence index in Japan rose to 40.3 points in March against the level of 39.9 points in February. It is a good indicator which gives another ground for expectations of “new shoots” in the economy of the country.

Levels of bank lending continue to increase in Japan, which is a positive factor, and this has been proved by statistics. In addition, number of orders for industrial rates unexpectedly rose in February which is also a good indication.

This data is perfectly consistent with the previous indexes: retail sales increased by 3.5% in February against expectations of growth of 1.3%. Real GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. Current account balance amounted to -Y437.3 billion in Q4 against the forecast of +Y322.3 billion. Personal consumption rose by 0.4% q/q last quarter against the forecast of growth of 0.3% q/q.