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[LF.Anastasia]

Forex Analytics of LiteForex of 25.08.10: GBP: British Pound determines movement direction

At the Forex currency market the trading is inertial the British Pound today – the currency determines movement direction for the current external background.
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 has not formed a clear signal today.
Forex recommendations: off the board.
Feasible event scenario at Forex: in case of breakdown at the level of 1.5460 the pair will go to 1.5500 and 1.5550. If the level of 1.5380 is exceeded, sellers’ targets will be the levels of 1.5340 and 1.5300.
According to economists consumer finance index in the UK is at the low of the year – 37.9 points against the previous level of 37.2 points. At the same time the UK quarterly business confidence index has also reduced. All these put together suggests that the spread of pessimism to the households intensifies.
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 the 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.
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 Sterling 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.

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.

 

[Blues]

Good job Ana..

 

[LF.Anastasia]

Forex Analytics of LiteForex of 25.08.10: CHF: Swiss Franc goes up calling attention as a protective currency once again

At the Forex currency market Swiss Franc rate continues to go up on Wednesday and despite the currency fall last morning which was caused by the extremely negative external background, the CHF grew up at the end of the trading session yesterday; ascending trend for the currency continues today.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it is descending which confirms a pair previous sell signal. Stochastic Oscillator is giving a similar signal, being in the oversold area.
Forex recommendations: sellers’ targets today will be the levels of 1.0210 and 1.0150.
It became known earlier that international trade surplus in Switzerland increased to 2.89 billion in July which is the all-time highs. Correction is obvious in the index. The value has been reducing consistently for a few months 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 value.
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.

The daily chart for the pair USDCHF looks interesting: despite its current value which is estimated as high Franc at Forex is not neglected. 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.

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 25.08.10: JPY: Yen gives way to USD due to monetary politicians’ pressure

At the Forex currency market on Wednesday Japanese Yen rate declines – after reaching a new maximum at 83.58 yesterday. It seems that Japanese authorities became seriously concerned and threatened to carry out intervention with the help of the European colleagues.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY today however it is going up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal.

Forex recommendations: buyers’ targets today will be the levels of 84.70 and 85.30.

It became known today that the meeting between Finance Minister Node, Prime-Minister Khan and Chief Secretary of the Cabinet Sengoku scheduled earlier took place today. Politicians discussed current economic situation in the country, however speedy solutions have not been taken.

Following the meeting Noda did not comment on the possible intervention, stressing once again that he will be ready to take steps if situation gets more complicated.

Analyzing the meeting investors came to the conclusion that it had been no more than a verbal intervention for the Yen and there is nothing serious at the back of it.

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 –the level 84.48 was the first to give in; then the pair went to 84.15.

It became known earlier that Finance Minister Khan and the head of the bank Shirakawa discussed currency market issue 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 a chance 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 25.08.10: CAD: Growing oil prices support Canadian Dollar today

At the Forex currency market Canadian Dollar is traded upward due to the support of the growing oil prices.
Forex forecast: MACD indicator is in the positive area for the pair USD/CAD, however it goes down, giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.
Forex recommendations: sellers’ targets today will be the levels of 1.0500 and 1.0450.
This morning Deputy Governor of the Bank of Canada Mr. Murray noted that CB intends to maintain price stability in the country, using additional measures. In particular the CB can reduce target rate of inflation in the country –now the target is 2%.
According to Murray transition to a lower inflation level and target price level is possible currently despite the previous increase in the interest rate.
It became known earlier that retail sales level in Canada increased by 0.1% m/m in June which became a positive moment after the previous index decline by 0.2%.
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.
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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 25.08.10: AUD: Australian Dollar is not waiting for support from internal factors

At the Forex currency market the Australian Dollar consolidates today, supported by the major pairs’ upward correction at the market. Oil prices which grew up for the first time over the last 5 sessions have become another actuator. It is obvious that bulls are not strong enough yet to expand the trend.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, however it is going up, giving ground for the pair purchase. Stochastic Oscillator is giving a similar signal today.

Forex recommendations: buyers’ targets today will be the levels of 0.8870 and 0.8910.

Construction level in Australia increased in QII which runs counter to the crediting level decline in the country. However the fact remains: complete construction volume in Australia increased by 3.5% on quarterly basis in QII. The QI index was also high: +4.2%.

It is interesting that the decline in the recovery rate in the country did not affect this sector, taking into account that a number of approved loans reduced by one third. Economists stress that the sector is going to be revaluated soon: the market will either offer new ideas, which will cause price increase or reduce the level of proposals.

Political situation in the country is unstable: Parliament election in the country took place last weekend, and resulted in the so called suspended parliament: neither of the parties got votes to set up the government. Observers believe that it is not good for the Australian economy and it is not clear in particular how the issue of the 30% tax introduction in the mining sector is going to be discussed.
The interest rate now is at the level of 4.50% per annum. The main and official version of the last RBA meeting is as follows –current level of the inflation decline cannot prevent from undertaking drastic measures to tighten monetary policy- and it is true in general: the latest inflation report in Australia released on 28 July showed that net prices increased by 2.7% on annual basis in QII. The head of RBA Stevens is planning to hold inflation level in the range of 2-3%. He says that the core inflation is expected to be approximately in the center of the indicated range until mid- 2011, however CPI inflation can rebound above 3% due to the introduction of tobacco and utilities taxes.
The minutes of the last meeting of the Reserve Bank of Australia in August, stated that GDP growth is expected to be above average in the next two years; while core inflation level is expected to be about 2.75% in 2011 and in 3% in 2012. According to the document the Central Bank finds that current interest rate level is comfortable and will wait for the new data to analyze. RBA noted also that risks for the inflation forecast are both upward and downward, and expansion in the sector of natural resources will become the growth actuator.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 26.08.10: Euro is going up amid poor U.S. data

At the Forex currency market on Thursday morning the pair EUR/USD demonstrated a steady growth for half a figure: yesterday investors were daunted by the extremely poor data on the U.S. economy, which triggered the USD sales.
By 10:10 Moscow time the Euro is at 1.2715 against the closing session level of 1.2656 yesterday.
Traders are under pressure awaiting important statistics release in the next 2 days: First of all a number of unemployment benefit applications will be known today – market expects decline by 10 thousand, although in the last couple of weeks expectations were not justified . And secondly, the data on the U.S. GDP in QII is scheduled to be release on Friday - analytics believe that country’s economy has grown by 1.4%, although originally the growth by 2.4% had been expected.
This morning positive German data was released: it showed that consumer sentiments increased to 4.1 points in September against the forecast growth by 4 points. Statistics gives short term support to the Euro.
Most likely the pair EUR/USD will be in the channel of 1.2620-1.2800 at the trading session today.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 26.08.10: GBP: British Pound Sterling continues to grow amid positive external background

At the Forex currency market the British Pound Sterling rate is going up on Thursday, supported by the positive external background and investors’ favourable sentiments at the global capital markets.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it is going up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the overbought area.

Forex recommendations: buyers’ targets today will be the levels of 1.5620 and 1.5650.

Released data showed that level of average wages transaction maintained at the previous level of 2%, observers note however that at the same time a number of costly transactions has increased. As per Incomes Data Services, wages market remains static in the last 3 months although the Bank of England traditionally gives higher priority to this indicator.

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 the 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.

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 Sterling 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.

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.
According to economists consumer finance index in the UK is at the low of the year – 37.9 points against the previous level of 37.2 points. At the same time the UK quarterly business confidence index has also reduced. All these put together suggests that the spread of pessimism to the households intensifies.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 26.08.10: CHF: Franc is at the point of consolidation at the current levels

At the Forex currency market Swiss Franc rate is going up on Thursday, however consolidation rate is not as significant as a few days earlier. Most likely the currency is going to consolidate close to the achieved levels.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it demonstrates attempt to grow which will help to form a pair buy signal. Stochastic Oscillator is giving a dollar buy signal against the Franc, being in the neutral zone.

Forex recommendations: if the bullish sentiments for the pair intensify, buyers’ targets will be the levels of 1.0370 and 1.0400. If the previous trend maintains, the pair will continue to consolidate.

It became known today that unemployment rate in Switzerland increased by 0.6% on annual basis in QII (3.97 million people) against the predicted growth by 0.8% y/y.

The data nevertheless appears to be poor which can well influence on the SHNB interest rate decision at the nest meeting. It will be held on 16 September – and 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 is the all-time highs. Correction is obvious in the index. The value has been reducing consistently for a few months 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 value.

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.

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 26.08.10: JPY: Yen retreats in full; intervention probability recedes

At the Forex currency market the Japanese Yen goes down – the pressure on the currency has been too high over the last few days.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, however it steadily goes up, confirming a pair buy signal. Stochastic Oscillator is giving a similar signal today.

Forex recommendations: buyers’ targets today will be the levels of 85.25 and 85.70.

Cooperation between the Central Bank and Japanese authorities will become very close. Regulators should combine efforts to confront expensive Yen. Next week the details of the government’s new program to stimulate economic system will be unveiled.

If two agencies really integrate efforts, deflation threat for the Japanese economy should retreat quickly and the Yen’s influence will smooth over.

Yesterday the meeting between Finance Minister Node, Prime-Minister Khan and Chief Secretary of the Cabinet Sengoku scheduled earlier at last took place. Politicians discussed current economic situation in the country, however speedy solutions have not been taken. Following the meeting Noda did not comment on the possible intervention, stressing once again that he would be ready to take steps if situation gets more complicated. Analyzing the meeting investors came to the conclusion that it had been no more than a verbal intervention for the Yen and there is nothing serious at the back of it.

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 –the level 84.48 was the first to give in; then the pair went to 84.15.

It became known earlier that Finance Minister Khan and the head of the bank Shirakawa discussed currency market issue 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 a chance of intervention at Forex is very remote.