LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 01.09.10: Interest in risk is being observed at the market

The pair EUR/USD is traded slightly upward at the Forex currency market today amid revival of the world financial markets and growing oil prices.
By 9:55 Moscow time the Euro is at 1.2713 against the closing session level at 1.2679 yesterday.
Positive statistics from China where manufacturing activity rose in August and from Australia, where GDP level increased unexpectedly in QII support interest in risk today.
In addition, oversold currency gives a good opportunity for purchases at lower levels.
Investors’ attention will be focused today to the daily statistics from Eurozone and Great Britain. European Central Bank meeting will be held tomorrow.
Most likely the pair EUR/USD will be in the range of 1.2680-1.2780 on Wednesday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 01.09.10: GBP: British Pound began to recover

At the Forex currency market the British Pound Sterling began to recover on Wednesday; however considering previous weakness of the currency we cannot expect solid growth.
Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, however it moves in parallel to the signal line and does not give a clear signal. Stochastic Oscillator is giving a pair buy signal, being in the oversold area.
Forex recommendations: if positive external background maintains, buyers’ targets will be the levels of 1.5440 and 1.5490.
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 soar 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.
Newspaper “Independent” said today that housing market in the UK can gain effect of a double bottom as the current houses prices and ratio between collateral value and credit debts is negative
Credit sector is half-way to the state of full recovery.
It became known earlier, that as per Hometrack, the UK houses prices declined by 0.3% m/m (+1.5% y/y) 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 01.09.10: CHF: Swiss Franc gives way to USD reluctantly

At the Forex currency market Swiss Franc is traded downward today after two sessions of rapid growth and traders at the market are not convinced yet that the pair USD/CHF is going to reverse trend.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it is going down, giving a pair sell signal. Stochastic Oscillator has not formed a clear signal yet today.
Forex recommendations: considering external background: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.0135, the pair will go to 1.0100 and 1.0050. The bearish long term target is the level of 0.9975. If positive sentiment prevails, buyers’ targets will be the levels of 1.0175 and 1.0210.
It became known today that business activity index in Switzerland (PMI) reduced to 61.4 in August against the previous level of 66.9 and forecast of 65.8.
Information released on Tuesday 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 a positive 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.
Market believes that the CHF position is strong due to the low risks of the of the currency intervention in the country.
We would recall that according to the data released yesterday private consumption index in Switzerland increased to 1.86 in July against the previous 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 01.09.10: JPY: Yen is standing still trying to determine movement activator

At the Forex currency market the Japanese Yen rate is at a standstill today amid investors’ sentiments stabilization at the global capital markets.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY on Wednesday, however it is going up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: buyers’ targets today can be the levels 85.00 and 85.50.
Japanese Prime Minister Khan stated that authorities are planning to review the issue of the radical tax reform soon: they are also going to discuss the issue of fiscal reform.
Khan noted also that government intends to stimulate new jobs creation to help economy.
Following a special meeting on Monday morning 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. According to the Bank of Japan such measure will enable 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.
It became known earlier that 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 authorities’ program new edition. 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.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 01.09.10: AUD: Australian Dollar makes use of the external background to regain

At the Forex currency market the Australian Dollar rate is traded upward today amid growing oil prices and investors’ overall favourable sentiments.
Forex forecast: MACD indicator is in the positive area for the pair on Wednesday and is going up giving a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: buyers’ targets today will be the levels of 0.9030 and 0.9070.
As it became known on Wednesday morning GDP level in Australia rose to the maximum of the last three years in QII demonstrating consolidation by 1.2% against the forecast of 0.9%. Previous index value was at the level if 0.7%.
Economists believe that Chinese demand for iron ore is an activator of the Australian economic growth. New interest rate increase hardly threatens Australia. Interest rate in Australia is at the level of 4.50%per annum now. 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.
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 the level of proposals will be reduced.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 02.09.10: Investors are waiting for comments from ECB

The pair EUR/USD is traded steadily at the Forex currency market on Thursday morning – however trade is slack as the European Central Bank decision on interest rate and ECB’s comments on the economic outlooks are expected today.
By 10:28 Moscow time the Euro is at 1.2816 against the closing session level of 1.2807 yesterday.
Investors, however await that ECB will announce the necessity to expand emergency lending program. Concerns about the U.S. economy put additional pressure on the traders’ purchase interest - unemployment benefit requests number will be known today, which can once again demonstrate continued decline.
In any case we should not expect any jerks at Forex until midday.
Most likely the pair EUR/USD will be in the range of 1.2700-1.2900 on Thursday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 02.09.10: GBP: British Pound is going down despite trading signals

At the Forex currency market the British Pound Sterling rate is going down on Thursday although trading signals are favourable. Poor housing market statistics released in the morning is putting pressure on the currency.
Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it is going up enabling the pair purchase. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: if ascending trend intensifies buyers’ targets today will be the levels 1.5550 and 1.5580. If the pressure on the currency intensifies the pair will go to 1.5400.
Houses prices in August declined by 0.9% on monthly basis as per Nationwide estimation, while in July they fell by 0.5% - the index declined twice in a run only once before that, in the winter of 2009.
It appears that unbalance increases in the UK housing market: demand and supply vary and prices are going down due to the high supply.
However, according to economists current decline in prices is just a regular adjustment after a rapid growth rate at the beginning of the year.
According to the data released earlier UK houses prices declined by 0.3% m/m (+1.5% y/y) against the previous fall by 0.1% m/m as per Hometrack. 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. 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 soar 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.
Newspaper “Independent” said yesterday that housing market in the UK can gain effect of a double bottom as the current houses prices and ratio between collateral value and credit debts is negative
Credit sector is half-way to the state of full recovery currently.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 02.09.10: CHF: Swiss Franc is going up, supported by the favourable GDP data

At the Forex currency market on Thursday Swiss Franc rate is going up despite trade signals; the currency has received support from the Swiss GDP statistics in QII.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it is going up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal.
Forex recommendations: considering external background, off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.0190 the pair will go to 1.0220 and 1.0270. If the pair exceeds the level of 1.0150, sellers’ targets will be 1.1030 and 1.0090.
As became known on Thursday GDP level in Switzerland increased by 0.9% on quarterly basis (+3.4% y/y) in QII against the forecast of +0.8% (+2.6% y/y).
Retails sales in Switzerland rose by 3.0% y/y in nominal terms in July and moreover, retail sales demonstrated growth by 4.8% in July against the previous level of 1/0%
We would recall that according to the data released earlier private consumption index in Switzerland increased to 1.86 in July against the previous 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.
Information released on Tuesday 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 a positive 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.
Market believes that the CHF position is stable due to the low risks of the of the currency intervention in the country.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 02.09.10: JPY: Yen is going up again

At the Forex currency market the Japanese Yen rate is going up again on Thursday: investors are risk averse.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it is going down, confirming a pair sell signal. Stochastic Oscillator is giving a similar signal on Thursday.
Forex recommendations: sellers’ targets will be the levels 83.90 and 83.60.
Today the camp of expensive Yen opponents was reinforced by one more member: Democratic Party representative Mr. Ozzava said that it is necessary to halt the rise of Yen; however he did not suggest any ways to do it, specifying only that resources of the Bank of Japan in this respect are limited.
In general Ozzava stressed that the Yen’s growth is not that crucial in the long term prospects.
Following a special meeting on Monday morning 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. According to the Bank of Japan such measure will enable 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.
Japanese Prime Minister Khan stated earlier that authorities are planning to review the issue of the radical tax reform soon: they are also going to discuss the issue of fiscal reform.
Khan noted also that government intends to stimulate new jobs creation to assist economy.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 02.09.10: AUD: Australian Dollar rate is being corrected

At the Forex currency market the Australian Dollar rate is being corrected today, without oil support and after the rise yesterday.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD on Thursday however it started to descend, giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the overbought area.
Forex recommendations: sellers’ targets today will be the levels of 0.9000 and 0.8950.
The following Australian data was released today:
– Trade balance in July: +A$1.89 billion against the previous value of +A$3.44 billion;
– Imports level: +2% on monthly basis;
– Exports levels: -4% m/m.
The narrowing of the trade balance of Australia puzzled experts, although the decline in the iron ore and coal exports has been already observed earlier.
It is interesting that according to the data released yesterday GDP level in Australia rose to the maximum of the last three years in QII demonstrating consolidation by 1.2% against the forecast of 0.9%. Previous index value was at the level of 0.7%. Economists believe that Chinese demand for iron ore is an activator of the Australian economic growth. New interest rate increase hardly threatens Australia. Interest rate in Australia is at the level of 4.50%per annum now. 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. 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.