LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 26.08.10: AUD: Australian Dollar rate has been growing for the second day, however prospects are obscure

At the Forex currency market today the Australian Dollar rate keeps up the growth started earlier; positive external background as well as growing oil prices supports purchases. However further prospects for the currency movements seem obscure.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it is going up, giving a pair buy signal. Stochastic Oscillator is giving a similar signal.
Forex recommendations: buyers’ targets today will be the levels of 0.8880 and 0.8930.
It became known today that private construction spending in Australia reduced by 0.4% (-4.8% y/y) in QII. For economists statistics became another stroke to portray a cheerless picture in the construction sector of the country. Thus, the decline in the sector is the highest since the beginning of the 2000’s; nevertheless sluggish growth still continues.
It is interesting that statistics on the sector released earlier was different: 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%. Note 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.
The market does not exclude that building boom will start to decline in the autumn which will also reduce the Reserve Bank zeal in the matter of the interest rates. 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.
Political situation in the country is unstable: Parliament elections took place last weekend and resulted in the so called suspended parliament in the country: 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 26.08.10: CAD: Canadian Dollar began to grow again

At the Forex currency market the Canadian Dollar consolidated today due to the favourable news about 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, being in the neutral zone.

Forex recommendations: sellers’ targets today will be the levels of 1.0500 and 1.0450.

The following Canadian data is scheduled to be released today:

– 16.30 Moscow time – employment rate as per payrolls in June; for the previous period: -0.2%;

– 16.30 Moscow time – average weekly earnings in June; for the previous period: +0.4%.
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.
Earlier, 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 might reduce target rate of inflation in the country –which is now amounts to 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%.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: Day is going to be hectic for EUR/USD

The pair EUR/USD is traded slightly upward at the Forex currency market this morning amid investors’ expectations of the U.S. statistics and a milestone of the week – speech of the Federal Reserve head Mr. Ben Bernanke.

By 9:40 Moscow time the Euro is at 1.2723 against closing session level of 1.2715 yesterday.

This week has come to an end with disadvantage for the USD – market believes that the U.S. economy is quite weak which was indicated in the latest statistics. Traders are also waiting with suspense for the GDP index release in QII revised to the downside and Ben Bernanke’s speech this night as well.

Most likely Bernanke will not say anything new – however traders are ready to hear a new, weaker forecast for the country’s economy.
Thus, the day is going to be hectic.

Most likely the pair EUR/USD will be in the range of 1.2590-1.2790 today.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: GBP: British Pound Sterling determines its trend

At the Forex currency market the British Pound is traded downward today, traders cannot make up their mind what direction the trend will choose further.

Forex forecast: MACD indicator for the pair GBP/USD is close to the signal line. Stochastic Oscillator is not giving a clear signal, being in the neutral zone.

Forex recommendations: off the board.

Feasible event scenario at Forex: in case of break down at the level of 1.5580 the pair will go to 1.5660 and 1.5700. In case of breakdown at the level of 1.5500 sellers’ targets will be 1.5450 and 1.5400.

Investors are waiting for the release at 12.30 Moscow time on the UK GDP second value in QII as well as private consumption level statistics for June.

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.

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 in August – 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 suggest that the spread of pessimism to the households intensifies.
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.

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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: CHF: Franc tends to stand still on Friday

At the Forex currency market the trades are dull for Swiss Franc on Friday as traders are not going to risk until evening when the FR head Ben Bernanke will give a speech.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however it is not giving a clear signal as it moves in parallel to the signal line. Stochastic Oscillator is in the oversold area on Friday and has not formed a clear signal either.

Forex recommendations: off the board.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0270 the pair will go to 1.0300 and 1.0340. If the level of 1.0220 is exceeded, sellers’ targets will be 1.0150 and 1.0100.

Statistics on the leading indicators index KOF in Switzerland for August is going to be released today (13.30 Moscow time).

In general domestic situation in Swiss economy is stable.

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.

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.

Market believes that the CHF position is strong due to the low risks of the of the currency intervention in the country.

We would remind that It became known yesterday 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 next 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: JPY: Japanese Yen gave way to USD with reluctance

The Japanese Yen rate on Friday continues to decline at the Forex currency market - through the fault of the verbal intervention of the monetary politicians in the country.

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

Forex recommendations: buyers’ targets today will be the levels of 85.25 and 85.75.

Press conference with the Finance Minister Khan scheduled for 10 am this morning did not take place – the reason is not known yet as well as the possible start time.

Cooperation between the Central Bank and Japanese authorities will become closer. 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 effect will smooth over.

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.

It is expected today that Khan will announce the measures authorities are going to take in the fight against deflation and growing cost of the Yen.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: AUD: Australian Dollar continues to grow slowly

At the Forex currency market the Australian Dollar is traded upward on Friday, ascending trend has been going on for the third consecutive session.
Forex forecast: MACD indicator is in the negative area for the pair AUD/USD; however it continues to go up, confirming a previous buy signal for the pair. Stochastic Oscillator has not formed a clear signal today.
Forex recommendations: if external environment maintains buyers’ targets will be the levels of 0.8940 and 0.8970.
The following Australian data was released yesterday:
– Leading indicators index increased by 0.1% m/m against the previous growth by 0.3%;
– Private capital expenditure reduced by 4% on quarterly basis in QII.
In general the situation remains unchanged in Australia.
Political situation in the country is unstable: parliamentary elections which took place last weekend resulted in the so called suspended parliament in the country: neither of the three parties got enough votes to form its own 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.
It became known yesterday that private construction spending in Australia reduced by 0.4% (-4.8% y/y) in QII. For economists statistics became another stroke to portray a cheerless picture in the construction sector of the country. Thus, the decline in the sector is the highest since the beginning of the 2000’s; nevertheless sluggish growth still continues.
It is interesting that statistics on the sector released earlier was different: 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%. Note 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.
The market does not exclude that building boom will start to decline in the autumn which will also reduce the Reserve Bank zeal in the matter of the interest rates. 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 27.08.10: CAD: Canadian Dollar declines slightly; investors do not make any serious transactions

At the Forex currency market the Canadian Dollar rate is going down slightly today without oil prices support. Investors are also apprehensive about making serious transactions in advance of the speech by Bernanke, FR head, today.
Forex forecast: MACD indicator is in the positive area for the pair USD/CAD, however it goes down, giving a pair sell signal. Stochastic Oscillator is giving an antipodal signal.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.0590 the pair will go to 1.0620 and 1.0660. If the level of 1.0540 is exceeded, sellers’ targets will become the levels of 1.0500 and 1.0440.
Canadian Finance Minister Mr. Flaherty noted yesterday that country’s economy will grow by 3% this year, at the same time monetary politician noted that although economic growth is moderate it is quite manageable.
Earlier, 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 might reduce target rate of inflation in the country –which is now amounts to 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 30.08.10: Euro is sold out again

The pair EUR/USD is going down at the Forex currency market on Monday morning, as affected by the Bank of Japan decision to expand its loan program – market believes that the situation in one of the largest world economic systems is rather complicated.
By 10:05 Moscow time the Euro is at 1.2734 against the closing session level of 1.2733 on Friday.
At the special meeting this morning the Bank of Japan decided to keep the interest rate unchanged at the level of 0.1%, however it also decided to expand loan program, increasing it to 30 trillion yen. Loan period was also extended up to 6 months.
Traders expected that the Central Bank would take more serious steps to resolve existing problems in the Japanese economy- the growing cost of Yen in particular.
Although statistics on both Eurozone and USA is scheduled to be released today, it seems that investors’ sentiments will dictate terms at the market today.
Presumably the pair EUR/USD will be in the range of 1.2680-1.2790 on Monday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 30.08.10: GBP: British Pound Sterling fails to determine movement direction

At the Forex currency market the British Pound Sterling continues to be traded in the narrow range on Monday, the same as has been observed on Friday amid general uncertainty for the pair GBP/USD- new catalysts have not turned up; while old ideas ran out of steam.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it is going up, giving ground for a pair buy signal. Stochastic Oscillator has not formed a clear signal on Monday.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.5580, the pair will go to 1.5640 and 1.5680. If the pair exceeds the level of 1.5450, buyers’ targets will be the level of 1.5490 and local minimum of 1.5370.

It became known today that as per Hometrack, the UK houses prices declined by 0.3% m/m against the previous fall by 0.1% m/m.
Thus the situation in the housing sector is getting worse. As per the Rightmove report, number of people who buy a house for the first time can decline to the new low even before the end of this year – according to the survey the number of those who planned and bought a house in QIII 2010 amounted to 22.2% against 30.8% a quarter earlier.
If experts’ forecast justifies the situation in the UK housing market will get more complicated; analytics note that there is ground for concern even now.
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.

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 in August – 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 suggest that the spread of pessimism to the households intensifies.
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.

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.