LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 30.08.10: CHF: Swiss Franc has been slackening off for the second consecutive session

At the Forex currency market Swiss Franc rate continues to go down on Monday –traders think that the pair USD/CHF has hit the bottom.
Forex forecast: MACD indicator for the pair is in the negative area at the beginning of the week; however it is going up, confirming a pair’s previous buy signal. Stochastic Oscillator is giving a similar signal today, being in the overbought area.
Forex recommendations: if current market environment maintains, buyers of the pair USD/CHF targets will be the levels of 1.0370 and 1.0400 today.
Worth noting that leading indicator index in Switzerland reduced to 2.18 points in August against the previous level of 2.22 points – economists believe that the data is not too positive, as the slump expectations were not that low; however this factor did not make the overall picture of Swiss economy negative. Swiss National Bank continues to work hard to keep inflation in the positive area which is an important factor for Switzerland.
The fact that investors are averse to risks at Forex counts in favor of CHF at Forex – public debts as well as budget deficit is at a low level in Switzerland; which is another merit of the CHF.
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.

It became known earlier 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.

The following data is also worth of noting: 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 30.08.10: JPY: Japanese Yen is growing up regardless of the authorities’ measures

The rate of the Japanese Yen is going up at the Forex currency market on Monday despite the outcomes of the Bank of Japan meeting today and measures taken by the local authorities.
Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it is going 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 84.30 and 84.00.
At a special meeting today the Bank of Japan decided to keep the interest rate unchanged at the previous level of 0.1% per annum; however the bank’s members decided to increase loan program by 10 trillion yen up to 30 trillion yen, loan period was also extended to 6 months from the previous 3 months.
According to the Bank of Japan such measure will make it possible to keep market rates at a low level which in its turn will help to improve monetary situation.
Meanwhile the market expected that the Central Bank would take more drastic measures. It is expected that on 2 September, Thursday, monetary politicians would unveil all the details of the program to stimulate economy.
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 impact of the Yen will smooth over.

Earlier the meeting between Finance Minister Noda, Prime-Minister Khan and Chief Secretary of the Cabinet Sengoku scheduled earlier took place at last. 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 last week 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 30.08.10: CAD: Canadian Dollar is moving in the ascending trend

At the Forex currency market at the beginning of the week the Canadian Dollar rate is going down. Ascending movement has been going on for the fourth consecutive session, giving a chance to build up a trend.
Forex forecast: MACD indicator is in the negative area for the pair and is going down, confirming a pair’s previous sell signal. Stochastic Oscillator is giving a similar signal on Monday.
Forex recommendations: sellers’ targets today will become the levels of 1.0460, 1.0440.
The following Canadian data is expected to be released today:
– 16.30 Moscow time – raw material price index in July; forecast is 0.3% m/m; previous value is -0.3% m/m.
– 16.30 Moscow time – producer price index for July; forecast 0.5% m/m; previous value is -0.9%m/m.
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. 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 30.08.10: AUD: Australian Dollar does not display activity

At the Forex currency market at the beginning of the week the Australian Dollar rate is going down, not finding a catalyst for the growing trend. In general the situation for the pair AUD/USD seems obscure.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it is going up, giving ground for a pair buy signal. Stochastic Oscillator is giving a pair sell signal on Monday.
Forex recommendations: off the market.
Feasible event scenarios at Forex: in case of breakdown at the level of 0.9030, the pair will go to 0.9070 and 0.9150. If the pair exceeds the level of 0.8960, sellers’ targets will be the levels of 0.8930 and 0.8875.
As the data released today showed Australian companies’ operating profit increased by 18.9% in QII against the previous level of 4.3% a quarter earlier.
It became known earlier 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 31.08.10: Pressing on Euro is building up

The pair EUR/USD continues to decline at the Forex currency market on Tuesday – investors are risk averse amid uncertainty at the global capital markets.
By 11:40 Moscow time the Euro is at 1.2654 against closing session level of 1.2662 yesterday.
Traders are focused once again on instability of the world economic revival and on the vague prospects as well. Traders are risk averse, shifting to safer currencies, to the Franc and Yen in particular, which break new records.
Today in the afternoon investors’ attention will be drawn to the U.S. news; until then the major pair will continue to be traded downward.
Presumably, the pair EUR/USD will be in the channel of 1.2600-1.2750 at the trading session today.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 31.08.10: GBP: Brisk market for Pound Sterling; bears keep situation under control

At the Forex currency market the pair GBP/USD is going down today, stepping out of the yesterday’s sideways trend. There is no positive news for the Pound yet.
Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it is going down, giving a pound sell signal. Stochastic Oscillator is giving a similar signal, being in the oversold area.
Forex recommendations: sellers’ targets today will be the levels of 1.5450 and 1.5370.
As the data released today showed the UK consumer confidence index increased in August to -18 against the previous value of -22 and a forecast of -24 as per GfK assessment. According to economists this statistics should be treated without too much enthusiasm: government measures to reduce budget deficit are too significant for consumers and the next month’s index can be quite low.
Observers point out that actual consumer confidence level is somewhere close to the level of June, 2009.
It became known yesterday, 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.
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.
По мнению экономистов, индекс потребительских финансов в Великобритании в августе находится у минимального значения за год, – 37,9 пунктов против прежнего уровня в 37,2 пункта. При этом квартальный индекс делового доверия британцев также сокращается. Вкупе это говорит о том, что пессимизм охватывает домохозяйства все больше и больше.
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 31.08.10: CHF: Swiss Franc is in demand as a protective currency

At the Forex currency market Swiss Franc rate is growing up rapidly on Tuesday amid volatile external environment.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it is going down, confirming 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 1.0150 and 1.0100.
According to the data released today private consumption index in Switzerland increased to 1.86 in July against the value of 1.81 (revised data-1.80). Index is calculated on the basis of the several indicators and the fact that it is above 1.50 is an indication of the favourable economic development in the country.
There was also a piece of information released on Tuesday which helped to clarify Swiss exports situation in 2009. Thus more than 50% of exports were concentrated in the West European countries, in Japan and the USA. For comparison: Swiss GDP in 2009 was 536 billion francs, while exports volume amounted to 181 billion francs – ie 34% of GDP.
Worth noting that leading indicator index in Switzerland reduced to 2.18 points in August against the previous level of 2.22 points – economists believe that the data is not too positive, as the slump expectations were not that low; however this factor did not make the overall picture of Swiss economy more negative. Swiss National Bank continues to work hard to keep inflation in the positive area which is an important factor for Switzerland.
The fact that investors are averse to risks at Forex counts in favor of CHF at Forex – public debts as well as budget deficit is at a low level in Switzerland; which is another merit of the CHF.
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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 31.08.10: JPY: Japanese Yen is growing up, regardless

At the Forex currency market the Japanese Yen rate continues to consolidate although consolidation rate is lower than it used to be.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it is going down, confirming 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 84.05 and 83.50.
Loan program activated by the Bank of Japan currently, includes regulators’ intention to issue credit to 47 financial institutions in the amount of 462.5 billion yen – this step will become the first phase of the new edition of the authorities’ program.
Each payment shall not exceed 1 trillion yen; upper threshold of credit is set to 3 trillion yen.
Market believes however that measures, taken by the Bank of Japan are not sufficient, and the decisions have been taken a bit too late. Traders think that only currency intervention will be able to keep the Yen’s growth under control.
At a special meeting on Monday the Bank of Japan decided to keep the interest rate unchanged at the previous level of 0.1% per annum; however the bank’s members decided to increase loan program by 10 trillion yen up to 30 trillion yen, loan period was also extended to 6 months from the previous 3 months. According to the Bank of Japan such measure will make it possible to keep market rates at a low level which in its turn will help to improve monetary situation. Meanwhile the market expected that the Central Bank would take more drastic measures. It is expected that on 2 September, Thursday, monetary politicians would unveil all the details of the program to stimulate economy.

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 impact of the Yen will smooth over.

Earlier the meeting between Finance Minister Noda, Prime-Minister Khan and Chief Secretary of the Cabinet Sengoku scheduled earlier took place at last. Politicians discussed current economic situation in the country, however immediate actions 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 31.08.10: AUD: Australian Dollar continues to decline

The Australian Dollar rate is going down at the Forex currency market for the second consecutive session – the currency was left without oil support and the interest outflow due to the risks level is obvious for the currency.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, however it is going down, giving grounds for a pair sell signal. Stochastic Oscillator is giving an Aussie sell signal on Tuesday.
Forex recommendations: sellers’ targets today will be the level of 0.8840 and 0.8790.
The following Australian data was released today:
– Retail sales in July: +0.7% m/m against: +0.4% m/m in June;
– Construction permissions in July: +2.3% m/m against:-3.4% m/m in June;
– Current account balance deficit in QII: A$5.64 billion against A$16.46 billion in QI.
It should be noted that the retail sales data appeared to be better than forecasts which along with the housing market data would give the AUD the medium term support. It seems that demand on market responses more seriously to the statistics and current situation and as a result the Australian Dollar looks more attractive at Forex than its colleagues from the raw material producing countries.
It became known earlier 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 31.08.10: CAD: Canadian Dollar is still under pressure due to poor statistics

At the Forex currency market the Canadian Dollar rate on Tuesday is still under pressure from the USD as investors move away from risks amid volatile external environment; oil prices decrease and poor Canadian economy statistics have also impacted on the CAD’s pullback.
Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and it is going up, which gives ground for the pair purchase. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: buyers’ targets today will be the levels of 1.0645 and 1.0665.
Canadian statistics released earlier (negative current account of 11 billion CAD; producer prices in July +0.1% against forecast of +0.5%; raw products prices +1.8%, forecast +0.3%) did not make traders happier. Canadian Dollar is sold out and as a result it has been in the downward channel for the second consecutive session.
Traders are waiting for the Canadian GDP data release today.
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%.