LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 23.08.10: CHF: Swiss Franc determines movement direction

At the Forex currency market on Monday Swiss Franc rate determines movement direction amid unstable external background and the statement issued by the head of the Swiss National Bank.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is growing, giving grounds for a pair buy signal; at the same time Stochastic Oscillator is giving a pair sell signal.

Forex recommendations: off the board.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0370 the pair will go to 1.0400 and 1.0460. If the level of 1.0330 is exceeded, the pair will go to 1.0280 and 1.0200.

Today’s press report says that Swiss National bank exhausted all the possibilities for carrying out currency intervention to curb national currency growth; the head of the bank Phillip Hilderbrand stressed particularly that continuation of the Franc emission causes long term inflation risks.

The next SHNB meeting will be held on 16 September. Market believes that even if the issue of the interest rate is raised at the meeting, the discussion will be superficial: first of all aid package shall be developed to prevent second bottom of recession and the issue of the expensive Franc which impacts on Swiss economy is also a matter to be discussed.

It became known earlier that international trade surplus in Switzerland increased to 2.89 billion in July which the all-time high. Index obviously demonstrated correction. Some months ago the results have been reducing due to the Franc’s rapid growth. At the same time exports level in real terms increased by 1.9% in July, although nominally it decreased by 0.1% due to the CHF cost.

Meanwhile exporters in Switzerland do not feel too confident considering the Franc increase by 12% against the USD since the beginning of the year.

The latest Swiss statistics (producer price index and imports prices in July: -0.5% m/m, +0.5% y/y; unemployment rate: 3.8% in July against the level of 3.9% earlier) seems to be mixed; intensified by the high level of volatility at Forex, it made Swiss Franc fluctuate.

Meanwhile the economist Fabia Hiller stressed last week that labour market improvement will be gradual and according to the forecast unemployment rate will amount to 3.9% in 2010 on average.

According to the data released earlier consumer activity indicator in Switzerland rose to 1.81 in June against the level of 1.71 a month earlier – UBS noted in the review that index growth was mainly actuated by the increase in the number of the registered cars. However business activity index in Switzerland is still not the most optimistic.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 23.08.10: JPY: investors have a preference for Yen

At the Forex currency market at the beginning of the week the Japanese Yen rate is growing – Forex investors have aversion to risk and so they are shifting to a more stable JPY.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it goes down, confirming a previous sell signal for a pair. Stochastic Oscillator is giving a pair sell signal as well, being in the neutral zone.

Forex recommendations: sellers’ targets today will be the levels of 84.90 and 84.70.

Japanese Democratic Party representatives stated that national currency growth and current state of the labour market are not encouraging and require serious economic measures.

It became known this morning that Finance Minister Khan and the head of the bank Shirakawa discussed the issue of the currency market over the telephone and concluded that it is required to boost economic cooperation to ensure stability and immunity of the economic recovery in the country. Markets had expected such discussion for over a week and it is clear now that possibility of intervention at Forex is very remote.

Economists believe that overactivity of the Japanese monetary authorities will only cause the pair USD/JPY decline below the level of 84.72 which is considered a pair historical minimum.

The Bank of Japan representatives noted commenting JPY growth issue that the rise in price of JPY is a risk factor for the country’s economy however the last increase of the JPY did not cause much damage. If the growth of the Yen intensifies the Bank of Japan will be forced to assume measures. The market is convinced that possible interventions will not actually affect Yen rate.

Officials in Japan said earlier that additional measures to stimulate economy are not required so far as consumer spending supports the growth of economic system. Although spending on durable goods is almost unchanged, it is still at a high level which was also assessed as a positive factor.

It became known a week earlier that Japanese economy grew only by 0.4% on annual basis in QII, while the growth by 2.3% had been predicted. GDP rose by 4.4% in QI.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 23.08.10: NZD: Kiwi is growing on Monday, however prospects are obscure

The rate of the New Zealand Dollar at the Forex currency market is growing on Monday – oil prices give support to the primary goods currency.
Short term trend as well as medium term trend looks like trades in range.
NZD/USD
Support levels: 0.7000, 0.6825.
Resistance levels: 0.7190, 0.7355.
Current rebound of the NZD at Forex after consolidation on Friday seems to be just technical growth as investors’ risk aversion at Forex is obvious at the moment.
The head of the Reserve Bank of New Zealand Mr. Bollard noted уфкдшук that GDP growth will continue in the future however economic recovery process has been gradual. Bollard also stated that inflationary pressure will intensify in the nearest future. Interest rate is at the level of 3.0% per annum in New Zealand now. Two weeks ago the Reserve Bank of New Zealand raised the interest rate for the second time at a run – to 25 basis points, then an interval in the sequence of the rises was announced. “Cessation of the further monetary incentive measures is appropriate. The pace and scope of the further rate increases is likely to be more moderate than anticipated in the June statement”, said the Head of the Bank, Alan Bollard in his comment. He stressed that previous NZD growth runs counter to the plans to mitigate New Zealand economy prospects. “Growth in the economies of our trading partners proved to be better than we predicted, however outlooks have worsened. Although prices for the raw materials are still high, they have become more moderate”.
The data released earlier showed unexpected growth of unemployment rate in QII in New Zealand, therefore domestic demand in the country remains limited and economy does not receive additional support for the growth, as has been expected by the Reserve Bank of New Zealand.
Labour market growth in the country has apparently faced some difficulties, which the RBNZ passed over in silence while saying that pace of the interest rate increases will be moderate in the future. Thereby an interval in the chain of the interest rate increases can be quite long lasting.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 23.08.10: CAD: Canadian Dollar regains from previous fall

At the Forex currency market on Monday the Canadian Dollar regains from the last week fall which was caused by the Canadian poor statistics.
Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and it is going up giving grounds to buy a pair. Stochastic Oscillator has not formed a clear signal today, being in the neutral zone.
Forex recommendations: if correction sentiment prevails, sellers’ targets today will be the levels of 1.0450 and 1.0420.
It became known late last week that CPI index in Canada increased by 0.5% in July which made economists happy as they did not expect changes in the index. At the same time inflation consolidated to 1.8% on annual basis against the level of 1.0% in June.
However the data released later was not too encouraging. Core price index declined by 0.1% (+1.6% y/y), keeping up a fall, started in April this year. This is the index that analytics use to make conclusions about monetary policy building by the Bank of Canada.
It became known the day before yesterday that wholesale level in Canada declined by 0.3% in June while analytics expected growth by 0.4%. Stock growth amounted to 0.6% which also became a bad indication for the Canadian economy. Leading indicators index in Canada increased by 0.4% in June, although market growth expectation had been up to 0.7%.
Thus, proximity of the U.S., where economic recovery rate slows down significantly, and statistics is not too good, does not turn to advantage of Canada. If we also add to it jobs reduction and decline in consumer prices level overall picture will look cheerless.
In June the Bank of Canada announced a decision to raise interest rate to 0.75% per annum which was the second consecutive rate increase. In spite of positive development, the last comments of the Bank’s representatives poured cold water on those who were interested in buying CAD. The Bank noted that the world economy recovery is still in progress; however it is slow and constraint. Bank’s representatives also stressed that further interest rate increase will be carried out with extreme prudence based on the progress in both Canadian and world economy. Most likely by such comment the Bank ensured that they have wiggle room left, not implying that the interest rate increase is impossible in the foreseeable future. The Bank of Canada expects that the country’s economy will grow by 3.5% this year; while the growth forecast in April was by 3.7%. Growth forecast for 2011 was reduced to 2.9% from 3.1%.
The next Bank of Canada meeting will be held on 8 September.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 24.08.10: Sales of Euro continues

The pair EUR/USD continues to fall at the Forex currency market on Tuesday morning – investors are still concerned about slowing down of the world economic revival and reduce positions in risky currencies.
By 10:00 Moscow time the Euro is at 1.2638 against closing session level of 1.2656 yesterday.
The day was uneventful in terms of macro-statistics yesterday, however today in the afternoon, the U.S. data on the houses sales in the secondary market is expected to be released –economists believe that the index value will be low.
GDP in QII in Germany became known today – the index rose by 2.2% on quarterly basis (+3.7% y/y) which agreed with market expectations and kept the Euro from the further subsidence.
The Euro sales will last as a risk aversion measure, until traders notice even vague allusion of stabilization in the Eurozone, and it can lead the currency to the level of 1.25.
Most likely the pair EUR/USD will be in the range of 1.2600-1.2720 at the trading session today.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 24.08.10: GBP: Pound is on sale once again

At the Forex currency market the British Pound Sterling goes down on Tuesday – the rise yesterday morning was no more than technical rebound and traders sell out currency again today escaping from risks

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down, giving a pair sell signal. Stochastic Oscillator is giving a similar signal, being in the oversold zone.

Forex recommendations: sellers’ targets today will be the levels of 1.5350 and 1.5300.

Market believes that British Government plans to reduce expenditures made GBP an excellent target for sales. Traders’ sentiments for the currency are pessimistic given S&P announcement earlier that highest credit rating revision is possible, which is now at AAA level.

Traders do not exclude that the Pound can lose about 15% at Forex before the end of the year, currency growth prospects look extremely bad.

David Blanchflower, a former MPC member is convinced that authorities shall abandon the use of austerity measures to reduce budget deficit and cut down taxes as a chance to bring the country on the firm ground. Worth noting that Blanchflower is an opponent of the tightening measures for the economy, assuming that people having jobs shall be offered tax incentives to stimulate expense items which will involve some economic growth. In his view there is a danger at the moment that any measures taken by the government will inevitably lead to the unemployment rate growth in the country.

Finance Minister Osborne stated a week earlier that average income of about 61 billion pounds is expected due to the reduction in the departmental expenditures as a remedy for the budget deficit. Osborne also stressed that if efforts to reduce budget deficit are not taken and measures are not implemented it will look much like a shady enterprise, and authorities will not agree to it. Finance Minister noted that the politicians who speak about extra work to reduce debts lead the country to collapse and economic downfall.
Economists forecast for the British Pound by the end of the year is 1.400 as per BNP Paribas; and: 1.3500 as per UBS AG. We believe that if negative background maintains, the GDP will decline to 1.4000-1.3800, however if traders choose to purchase the Pound rate can fly up to 1.6500.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 24.08.10: CHF: Swiss Franc continues to fall, forfeiting protective asset status

At the Forex currency market on Tuesday Swiss Franc rate continues to go down – investors have shifted to the Dollar and Yen amid the traders’ concern regarding the world economy state.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it is going up fast, forming a pair buy signal. Stochastic Oscillator has not formed a clear signal today.

Forex recommendations: if the current external background maintains, buyers’ targets will be the levels of 10550 and 1.0590.

If earlier Swiss National bank presence at the market was obvious to the traders, now monetary politicians assure that there is no reason to intervene. It became known earlier that Swiss National bank exhausted all the possibilities for carrying out currency intervention to curb national currency growth; the head of the bank Phillip Hilderbrand stressed particularly that continuation of the Franc emission causes long term inflation risks.

It became known earlier that international trade surplus in Switzerland increased to 2.89 billion in July which the all-time high. Index obviously demonstrated correction. Some months ago the results have been reducing due to the Franc’s rapid growth. At the same time exports level in real terms increased by 1.9% in July, although nominally it decreased by 0.1% due to the CHF cost.

Meanwhile exporters in Switzerland do not feel too confident considering the Franc increase by 12% against the USD since the beginning of the year. The latest Swiss statistics (producer price index and imports prices in July: -0.5% m/m, +0.5% y/y; unemployment rate: 3.8% in July against the level of 3.9% earlier) seems to be mixed; intensified by the high level of volatility at Forex, it made Swiss Franc fluctuate.

Meanwhile the economist Fabia Hiller stressed last week that labour market improvement will be gradual and according to the forecast unemployment rate will amount to 3.9% in 2010 on average.

According to the data released earlier consumer activity indicator in Switzerland rose to 1.81 in June against the level of 1.71 a month earlier – UBS noted in the review that index growth was mainly actuated by the increase in the number of the registered cars. However business activity index in Switzerland is still not the most optimistic. The next SHNB meeting will be held on 16 September. Market believes that even if the issue of the interest rate is raised at the meeting, the discussion will be superficial: first of all aid package shall be developed to prevent second bottom of recession and the issue of the expensive Franc which impacts on Swiss economy is also a matter to be discussed.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 24.08.10: JPY: Yen rises in price, Noda’s comments became a catalyst

At the Forex currency market trading session today the pair USD/JPY has exceeded many- years lows and reached the level of 84.15.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it is descending, confirming a previous sell signal for the pair. Stochastic Oscillator is giving a similar signal.

Forex recommendations: sellers’ targets today will be the levels of 84.10 and 83.80.

On Tuesday Japanese Finance Minister Mr. Noda said that he is dissatisfied with the sharp currency fluctuation which impacts country’s economy. He noted that exchange rate of the pairs USD/JPY and EUR/JPY is skewed; therefore current situation requires flexible and well-balanced policy.

This Noda’s statement caused the pair USD/JPY collapse – at first the level 84.48 gave in; then the pair went to 84.15.

It became known yesterday that Finance Minister Khan and the head of the bank Shirakawa discussed the issue of the currency market over the telephone and concluded that it is required to boost economic cooperation to ensure stability and immunity of the economic recovery in the country. Markets had expected such discussion for over a week and it is clear now that possibility of intervention at Forex is very remote.

Meanwhile economists believe that over activity of the Japanese monetary authorities will only cause the pair USD/JPY decline below the level of 84.72 which is considered to be the pair’s historical lows.

The Bank of Japan representatives noted commenting JPY growth issue that the rise in JPY price is a risk factor for the country’s economy however the last increase of the JPY did not cause much damage. If the growth of the Yen intensifies the Bank of Japan will be forced to assume measures. The market is convinced that possible interventions will not actually affect the Yen’s rate.

Officials in Japan said earlier that additional measures to stimulate economy are not required so far as consumer spending supports the growth of economic system. Although spending on durable goods is almost unchanged, it is still at a high level which was also assessed as a positive factor.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 24.08.10: CAD: Canadian Dollar continues to be under pressure

The Canadian Dollar is traded in the same downward trend in pairing with the USD as the previous three sessions. Low oil prices and investors’ overall pessimism prevents the currency from regaining at least partially.
Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and it is ascending, giving a pair buy signal. Stochastic Oscillator on Tuesday is giving a similar signal, being in the overbought area.
Forex recommendations: buyers’ targets today will be the levels of 1.0650 and 1.0700.
The following Canadian data is going to be released today:
– 16.30 Moscow time – retail sales: forecast: +0.4%; previous period: -0.2%;
– 16.30 Moscow time – retail sales excluding vehicles: forecast +0.1%; previous period: -0.1%.
The data released last week showed that CPI index in Canada increased by 0.5% in July which made economists happy as they did not expect changes in the index. At the same time inflation consolidated to 1.8% on annual basis against the level of 1.0% in June.
However the data released later was not too encouraging. Thus, core price index declined by 0.1% (+1.6% y/y), keeping up a fall, started this April. This is the index that analytics use to make conclusions about monetary policy setting by the Bank of Canada.
It became known a day before that wholesale level in Canada declined by 0.3% in June while analytics expected growth by 0.4%. Stock growth amounted to 0.6% which also became a bad indication for the Canadian economy. Leading indicators index in Canada increased by 0.4% in June, although market growth expectation had been up to 0.7%.
Thus, proximity of the U.S., where economic recovery rate slows down significantly, and statistics is not too good, does not turn to advantage of Canada. If we also add to it jobs reduction and decline in consumer prices level, overall picture will look cheerless.
In June the Bank of Canada announced a decision to raise interest rate to 0.75% per annum which was the second consecutive rate increase. In spite of positive development, the last comments of the Bank’s representatives poured cold water on those who were interested in buying CAD. The Bank noted that the world economy recovery is still in progress; however it is slow and constraint. Bank’s representatives also stressed that further interest rate increase will be carried out with extreme prudence based on the progress in both Canadian and world economy. Most likely by such comment the Bank ensured that they have wiggle room left, not implying that the interest rate increase is impossible in the foreseeable future. The Bank of Canada expects that the country’s economy will grow by 3.5% this year; while the growth forecast in April was by 3.7%. Growth forecast for 2011 was reduced to 2.9% from 3.1%. The next Bank of Canada meeting will be held on 8 September.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 25.08.10: downward trend for Euro is strong despite today’s rebound

At the Forex currency market on Wednesday morning the pair EUR/USD is traded with slight advantage enjoying support of the growing oil prices to regain partially from the previous fall.
By 9:55 Moscow time the Euro is at 1.2639 against yesterday’s closing session level of 1.2630.
Market says that the growth of the Euro today was caused by the investors concern regarding new liquidity inflow in the U.S. economy by the FR. However, judging by the technical picture current movement of the pair EUR/USD is more appropriate to be called a technical rebound as traders’ withdrawal from claims is clearly visible in all major currency pairs.
A lot of macro -economic statistics is scheduled to be released today, therefore the pair UR/USD direction can change – downward trend is quite strong.
Most likely the pair EUR/USD will be in the channel of 1.2590-1.2700 on Wednesday trading session.