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[LF.Anastasia]

EUR/USD: Major pair is waiting for the outcome of the U.S. Federal Reserve meeting

The pair EUR/USD traded with slight deviation at the Forex currency market on Wednesday morning.

By 8.40 Moscow time the Euro is at 1.3195 against yesterday’s closing session level of 1.3196.

Negative American statistics upset players yesterday, so activity in the major pair is very low today: market is waiting for the outcome of the U.S. Federal Reserve meeting.

Special attention will be drawn to the press-conference of the Chairman of the U.S.FR, Mr. Ben Bernanke. Main trends in the market will be developed based on his statements.

Most likely the pair EUR/USD will not go beyond the range of 1.3080-1.3220 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound is stuck in the range

In the Forex currency market the British Pound Sterling rate traded in the rather narrow range in the middle of the week, awaiting external signals.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it goes up, while volumes are high, and is giving a buy signal. Stochastic Oscillator has come into overbought zone and is giving a similar signal.

Forex recommendations in case of breakdown at the level of 1.6140, the pair GBP/USD will go to 1.6150 and 1.6170. Consolidation at the achieved levels is possible.

Yesterday the Pound stood still in the narrow range after publication of statistics on borrowing in the public sector; today the Pound is waiting for external catalysts, such as outcomes of the U.S. Federal Reserve meeting.

Governor of the Bank of England Mr. Miles noted in the middle of the week that his opinion in favour of expansion of the stimulus measures has found support, although GDP statistics for Q1 is expected to be weak.

British monetary politicians emphasized yesterday that economic growth in the UK is still rather slow.

According to representative of the Bank of England Mr. Posen, there is evidence, indicating positive momentum of growth. Monetary politician believes that inflation will not exceed target level of 2% until the end of this year. At the same time, levels of consumer confidence, affected by weak data on GDP, is a cause for concern. It became known earlier that unemployment rate in the UK amounted to 4.9% in March. Level of unemployed people rose by 3.6 thousand.

The data on retail sales, released last Friday, still has beneficial effect for the GBP: thus, volume of retail sales in March increased by 1.8% m/m (+3.3% y/y) against the forecast of growth of 0.4%. This was much above expectations.

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.

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 last week. 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 earlier that inflation in the UK is still above the target level; it is also highly possible that CPI will remain above 3% in throughout 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.

 

[LF.Anastasia]

CHF: Swiss Franc has not determined movement direction

At the Forex currency market Swiss Franc rate cannot determine movement direction in the middle of the week, due to sluggish activity in the market.

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; however it is moving along the signal line, while volume are very low, and is not giving a clear signal. Stochastic Oscillator tends to go out of the oversold zone and started to shape a buy signal.

Forex recommendations: in case of break down at the level of 0.9110, the pair USD/CHF will go to 0.9100 and 0.9080. Consolidation at the current levels is possible.

Macro-economic background in Switzerland remains almost unchanged.

It became known yesterday that consumption indicator UBS in Switzerland rose to 1.22 points in March against provisional estimate of 0.9 points. Franc has ignored this information, as investors’ attention is focused on changes in the external environment.

Manufacturing sector is still weak in Switzerland; however it shows signs of recovery. Index of industrial activity SVME rose to 49.0 points in February against the forecast of 48.5 points. Real retail sales rose 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 be in the range of: -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 views on monetary policy have remained unchanged. Despite strong determination of SNB to maintain the level of 1.20, assumption about probability, that pegging level of Franc to Euro will go up to 1.25, is getting more persistent in the market.

So, after three -month break Swiss National Bank has a new governor now- this 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, views of the new governor found support in SNB. The Bank believes that considering problems in the Eurozone, it is still required to maintain a peg of Franc with the Euro. 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.

 

[LF.Anastasia]

JPY: Japanese Yen is still in the oversold channel

At the Forex currency market the Japanese Yen rate traded downward on Wednesday, remaining in the channel of 80.80-81.77.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and continues to go down, maintaining moderate signal for moderate sales. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 81.30 the pair USD/JPY will go to 81.10 and 80.90. Consolidation near the current levels is possible.

There was an earthquake in Japan this morning, which has driven to slight weakening in the rate of the Yen.

Earlier, the JPY had been corrected- it moved away from local highs sufficiently enough to stop sales. Now, demand for “safe” currency will be increasing, as long as external background remains ambiguous.

Trade deficit in Japan amounted to Y82.6 billion in March against the level of Y226.3 billion in February. This data is positive; other sections of the report also demonstrated that exports rose by 5.9% y/y last month, imports increased by 10.5% y/y.

Regular meeting of the Bank of Japan last week was rather uneventful. 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.

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.

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 grounds to expect “new shoots” in the economy of the country. Retail sales rose by 3.5% in February against expectations of growth of 1.3%. Real revised GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. In addition, 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.

 

[LF.Anastasia]

AUD: Activity in Australian Dollar is minimal

At the Forex currency market the Australian dollar rate is hardly moving in the middle of the week.

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 goes down in the neutral zone and is giving a signal a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0320 the pair will go back to 1.0330 and 1.0340. If pessimistic sentiments dominate in the pair, target for sale will be the level of 1.250.

Statistics released this week, was very weak: CPI rose by 0.1% q/q in Q1 (+1.6% y/y) against expectations of growth of o.6% q/q (+2.2% y/y). These data increases the likelihood that interest rate will be revised downward at the nearest meeting of the RBA. It became known earlier that import price index in Australia fell by 1.2% q/q in Q1 against the forecast of -0.6% q/q. At the same time, export prices fell to the lowest level since Q4 2010. Theoretically, decline in export prices was caused by reduction in price for crude ore in Australia and fall in the price for metal scrap. At the same time, slump in imports was caused by expensive AUD.

It became known earlier, leading indicators index Westpac in Australia rose by 0.2% in February, up to the level of 284.2 points against provisional expectations of growth of 0.6%. Growth rate amounted to 2.4% against the forecast of 2.5%. Representatives of Westpac clarified in the comments that negative dynamics in the growth rate, which has been preserved for the past six months, does not help to instill enthusiasm about prospects; experts do not expect that the rate will rise in the nearest future either. At the same time, economic development performance complies with forecasts for Australian economy for 2012 (3%); nevertheless, pace of growth in GDP remains below trend.

Final PPI in Australia rose by 0.3% q/q (+1.4% y/y) in Q1 against the forecast of growth of 0.4% on quarterly basis. Employment rate in Australia rose by 44 thousand 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 does not desist from intention to strengthen

At the Forex currency market for the Canadian dollar rate continues to be traded upward.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area, it goes down and is ready to break throught he signal line from top to bottom, giving a sell signal. Stochastic Oscillator is going down in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9870, the pair will go to 0.9860 and 0.9840.

Canadian economy seems quite stable presently, especially in comparison with the state of affairs in the European economies.

Mr. Carney, governor of the Bank of Canada, reiterated that probability of monetary policy toughening is increasing with the progress in economic recovery. Meanwhile, stimulus policy will be preserved.

We would remind that, as it became known last week that, the Bank of Canada is going to gradually raise interest rate throughout the year 2014; in general, it is consistent with the policy that the regulator has outlined earlier. Meeting of the Bank of Canada was rather brisk despite the fact that the Regulator had left interest rate at the level of 1% per annum, as expected. However, 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 could be a reasonable decision in the future, since both, inflation and economic growth might accelerate.

According to the forecasts made by the Bank of Canada, economy of the country will regain its full capacity in the first half of 2013. 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 instruments will be used only as the last resort.

Statistics released last Friday showed that inflation in Canada rose by 0.4% m/m (+1.9% y/y) in March. At the same time, base CPI went up by 0.3% m/m (+1.9% y/y) last month. Unemployment rate fell to 7.2% (-0.2%) in March. Employment rate rose by 82 thousand. In addition, permit 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. Wholesale sales in Canada rose by 1.7% in February against forecast of decline of 0.3%. Wholesale stocks increased by 1.1% against growth of 1.0% in January.

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 has slowed down in Q4: real GDP amounted to +0.4% m/m in December against the forecast of +0.3% m/m. All in all, economic growth in Canada went up only by 0.4% in the last quarter last year against +1.0% in Q3.

 

[LF.Anastasia]

EUR/USD: Euro is backed up by American enthusiasm

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

By 8.25 Moscow time the Euro is at 1.3223 against yesterday’s closing level of 1.3216.

Today moderate enthusiasm was raised by the outcome of two-day meeting of the U.S. Federal Reserve which finished yesterday. Interest rate was kept unchanged in the range of 0-0.25% per annum, forecast for economic growth was slightly upgraded.

Meanwhile, market completely ignored weak statistics which came from the USA

Today investors will analyze outcome of the meeting held by American regulator; in the afternoon they will await news on the U.S. labour market.

Most likely the pair EUR/USD will not go beyond the range of 1.3150-1.3250 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound tends to go up

The British Pound Sterling traded upward at the Forex currency market on Thursday, continuing to go upward.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it goes up, while volumes are high, and is maintaining a buy signal. Stochastic Oscillator has come into overbought zone and is giving a similar signal.

Forex recommendations in case of breakdown at the level of 1.6190, the pair GBP/USD will go to 1.6200 and 1.6200. Consolidation at the achieved levels is possible.

British economic statistics released yesterday was weak: GDP in Q1 fell by 0.2% in the first reading against decline of 0.3% on quarterly basis (+0.5% y/y) a quarter earlier. It proves that country’s economy has been in recession for the second quarter. This negative factor was smoothed over by favourable external background; however this factor is negative in general.

According to the data released today, consumer confidence Nationwide rose to 53 points in March against the level of 44 points in February. This is a positive indicator as the index is at the nine-month highs at the moment.

Representative of the Bank of England Mr. Miles has noted in the middle of the week that his view in favour of expansion of the stimulus measures has found support, although GDP statistics for Q1 is expected to be weak. British monetary politicians emphasized earlier that economic growth in the UK is still rather slow.

According to representative of the Bank of England Mr. Posen, there is evidence, indicating positive momentum of growth. Monetary politician believes that inflation will not exceed target level of 2% until the end of this year. At the same time, levels of consumer confidence, affected by weak data on GDP, is a cause for concern. It became known earlier that unemployment rate in the UK amounted to 4.9% in March. Level of unemployed people rose by 3.6 thousand.

The data on retail sales, released last Friday, still has beneficial effect on the GBP: thus, volume of retail sales in March increased by 1.8% m/m (+3.3% y/y) against the forecast of growth of 0.4%. This was much above expectations.

Representative of the Bank of England Mr. Tucker said earlier that inflation in the UK is still above the target level; it is also highly possible that CPI will remain above 3% in throughout 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.

 

[LF.Anastasia]

CHF: Swiss Franc continues to rise in price

At the Forex currency market Swiss Franc rate is still traded upward on Thursday, amid positive external background.

Forex forecast: MACD indicator for the pair USD/CHF goes down in the positive area and is giving a weak signal for selling. Stochastic Oscillator tends to stay in the overbought zone, maintaining a similar signal.

Forex recommendations: in case of break down at the level of 0.9075, the pair USD/CHF will go to 0.9060 and 0.9050. Consolidation at the current levels is possible.

Economic situation in Switzerland remains stable.

It became known earlier that consumption indicator UBS in Switzerland rose to 1.22 points in March against provisional estimate of 0.9 points. Franc has ignored this information, as investors’ attention is focused on changes in the external environment.

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 signs of recovery. Index of industrial activity SVME rose to 49.0 points in February against the forecast of 48.5 points. Real retail sales rose 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 be in the range of: -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 views on monetary policy have remained unchanged. Despite strong determination of SNB to maintain the level of 1.20, assumption about probability, that pegging level of Franc to Euro will go up to 1.25, is getting more persistent in the market.

So, after three -month break Swiss National Bank has a new governor now- this 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, views of the new governor found support in SNB. The Bank believes that considering problems in the Eurozone, it is still required to maintain a peg of Franc with the Euro.

 

[LF.Anastasia]

JPY: Japanese Yen preserves momentum to strengthen

At the Forex currency market the Japanese Yen rate preserves momentum to strengthen on Thursday despite that fact that interest to the currency “quiet harbor” in minimal in the market.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and continues to go down, maintaining moderate signal for moderate sales. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 81.15 the pair USD/JPY will go to 81.10 and 80.90. Consolidation near the current levels is possible.

Statistics released this morning showed that activity index in all sectors fell by 0.1% in February versus expectations of decline of 0.2%. Trade deficit amounted to Y82.6 billion in March against the level of Y226.3 billion in February. The data is positive and plus to this, other sections of the report showed that exports rose by 5.9%y/y last month and imports grew by 10.5% y/y.

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 grounds to expect “new shoots” in the economy of the country.

Retail sales rose by 3.5% in February against expectations of growth of 1.3%. Real revised GDP amounted to -0.2% q/q (-0.7% y/y) in Q4. In addition, 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 uneventful. 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.

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.