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[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: CHF: Swiss Franc rate continues to draw back from the highs

Swiss Franc is being corrected at the Forex currency market today – trend reversed last night and the currency rolled back from the highs apparently due to overheating.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is not giving a clear signal being in the neutral zone.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 0.9700 the pair will go to 0.9770 and 0.9825. If the level of 0.9650 is exceeded traders’ targets will be the levels of 0.9590 and 0.9550.
Citigroup believes that GDP in Switzerland will increase by 3% this year which is significantly higher than the average forecast in comparison with the other countries. At the same time inflation levels are still close to the lows.
It is clear that in the light of such forecast the SNB will keep the rate low for a long time since there is no need to tighten monetary policy any more.
Deputy Chairman of the Swiss National Bank Mr. Jordan noted yesterday that CHB risks of excess liquidity level can increase in the current economic situation and at the current rate level. The largest banks of the county such as UBS and Credit Suisse Group can also represent a threat although their interests do not intersect. Jordan stressed that the regulator is aware of the risk of keeping interest rate at the low level for a long period. Earlier the Bank of Switzerland representatives noted that economic incentives have almost no effect on the situation in the country and it is time now to return to the issues of bankruptcies of major players in the financial sector. GDP level in Switzerland rose by 0.9% on quarterly basis (+3.4% y/y) in QII against the forecast of +0.8% (+2.6% y/y) and 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. Thus Franc has become a serene harbor once again amid dollar’s instability.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: AUD: Australian Dollar is sold out on Friday

The Australian Dollar rate goes down at the Forex currency market on Friday just as sharply as it has gone up before.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD however it goes down giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: in case of breakdown at the level of 0.9770 bearish trend will intensify and lead traders to 0.9730 and 0.9700.
According to the Australian traders the AUD value will grow up closer to parity which the currency has not reached since 1983 and by the year 2011 it will consolidate to 1.05.
Earlier the RBA left the interest rate unchanged while market expected the rate increase to 4.75% - Stevens, the head of the Bank, noted in his comments later that at some moment in the future economy may require higher interest rates. In principle such a clause should contain the AUD’s fall however the currency descending movement deprives buyers of the hope for parity with the USD. Interest rate has been maintained at the current level for half a year already.
Leading indicators index in Australia increased by 0.4% to 269.5 in July as per Westpac-Melbourne estimation; at the same time its annual growth rate reduced to 6.8% against the previous level of 7.4%. As the chief Westpac economist Bill Evans noted current forecast assumes that average growth in 2010 will amount to 3.5% and it will be steady until the end of the year despite sudden changes in some sectors. Coincident indicators index also increased by 0.4% (+4.3% y/y) in July; Evans stressed that such data can encourage the RBA to raise interest rate to 4.75% at the next meeting.
The other statistics shows that GDP level in Australia rose to the maximum value of the last three years in QII demonstrating increase 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.
Probably this was the data that put a constraint on the rate growth on Tuesday.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: JPY: Yen continues to grow, however turnover reduces

At the Forex currency market on Friday the Japanese Yen rate continues to move in the ascending trend based on the weak dollar. However the 14th session of growth has led the currency to overheat which could cause the rollback.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go down giving a pair sell signal. Stochastic Oscillator is not giving a clear signal being in the neutral zone.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 82.50 the pair will go to 82.75 and 83.20. If the level of 82.10 is exceeded traders’ targets will be the levels of 81.70 and 81.10.
Deputy Minister of Finance in Japan Mr. Igarashi noted that intentions of Japan to put an end to currency fluctuation have not changed however unsupervised Japanese intervention into the market has not been crowned with success.
He also stressed that devaluation of the currency in order to gain trading preferences affects global economy.
The Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1%. This decision was a surprise to the market as although traders were prepared for the actions of monetary policy easing they could not expect it to turn this way. The head of the Bank of Japan Shirakawa said in the comments that 2-years rates would be also reduced which would help to widespread the effect of soft policy. At the same time the Bank of Japan representative Suda noted later that economy is still in danger of bubbles in the government bonds sector. It also became known this Tuesday that a new fund is going to be founded in the amount of 5 trillion yens to pour liquidity into the Japanese financial system – and in particular for the purchase of the government bonds and other assets.
Japanese Finance Minister Noda stated this week that the country’ s policy should change in regard to deflation and expensive Yen– currency fluctuation in the long term should stabilize and deflation should retreat. As for the rising price of the Yen- it should not be the sole responsibility of the Bank of Japan as authorities also have leverage over currencies rates.
Japanese Finance Ministry reported on the weekly capital movement. Thus Japanese investors sold oversees shares for Y119.0 billion and bought bonds for Y679.5 billion; average volume of purchases amounted to Y557.5 billion.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 08.10.10: CAD: Canadian Dollar retreats today

At the Forex currency market the Canadian Dollar goes down on Friday keeping up a trend started earlier. Weakness of the economy of the U.S- the nearest neighbor, affected Canada significantly.
Forex forecast: MACD indicator is in the negative area for the pair USD/CAD today however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is not giving a clear signal today.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.0190 the pair will go to 1.0270 and 1.0300. If the level of 1.0150 is exceeded, targets will be the levels of 1.0100 and 1.0060.
The Bank of Canada next meeting will be held only on 19 October and market thinks that the interest rate increase is probable. At the meeting two weeks ago the Bank of Canada decided to raise interest rate level to 1% per annum (+25 basis points). Although the decision was entirely predictable Forex market responded to this by buying up CAD, ignoring monetary politicians accompanying comments that the situation in the economy is vague and uncertain.
Number of began constructions in Canada reduced by 3% m/m at the same time number of new houses foundations totaled to 183 thousand. If the situation does not improve in the nearest 3-4 months, the CAD will be under significant pressure. The Canadian trade balance deficit increased to 2.7 billion CAD in August against 1.8 billion in July. It was caused by the exports volume reduction which traditionally supports economy.
Leading indicators index in Canada increased by 0.5% in August, retail sales reduced by 0.1% in July.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 11.10.10: Day for EUR/USD is going to be quiet

The pair EUR/USD is traded close to its 8 months highs at the Forex currency market on Monday morning however it is going down after 2 days which ended near the opening.
By 10.15 Moscow time the Euro is at 1.3958 against closing session level of 1.3928 on Friday.
Investors at the market still await that the U.S. Federal Reserve will announce quantitative easing program expansion primarily based on the labour market weakness. In addition expectation of the tomorrow’s transcripts of the FR meeting is also a pressing factor for the USD.
The day is going to be quiet today in terms of the macro-statistics therefore traders will rely on the external background and will regain from the last week data.
Most likely the pair EUR/USD will be in the range of 1.3850-1.4020 on Monday trading session.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 11.10.10: GBP: British Pound Sterling is irresolute at the beginning of the week

At the Forex currency market the British Pound Sterling is traded slightly upward – last week’s growth can be continued this week if relevant external background is maintained.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD at the beginning of the week which confirms a pair previous buy signal. Stochastic Oscillator has not identified a signal yet being in the neutral area.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.6000 the pair will go to 1.6050 and 1.6090. If the level of 1.5880 is exceeded, traders’ targets will be the levels of 1.5820 and 1.5750.
The situation in the UK is peaceful – nothing new has happened since the Bank of England meeting last week. We would remind that the Bank of England left the interest rate unchanged at the level of 0.5% per annum; no accompanying documents have been issued which indicates that monetary politicians keep their intentions in force. The rate has been maintained at this level since 5 March 2009 and there are no plans to change it.
The Bank of England representative Posen noted earlier that one should not underestimate the potential for economic growth in the UK; measures to increase incentives are perfectly logical in this situation. According to him there are evident reasons now for buying British bonds and it would be better if Central Banks coordinated their efforts. The Bank of England representative Bean noted before that the main purpose of the regulator’s soft policy is to stimulate consumer spending which will support the country’s economy in the medium-term. Bean described MRS current approach as aggressive and directed exclusively to combat financial crisis.
The UK employment data released earlier showed that labor market in the country is still weak, jobs are not created as companies still cannot estimate exactly the prospects (temporary jobs index is 52.8 in September against 54.0 in August; permanent jobs index is 54.6 in September against 56.3 in August).

 

[LF.Anastasia]

Forex Analytics of LiteForex of 11.10.10: CHF: Swiss Franc might continue to grow however trades are sluggish now

At the Forex currency market Swiss Franc is traded with slight decrease at the beginning of the week however market trends indicate bullish strength for the pair USD/CHF.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it moves downward on Monday confirming a pair sell signal. Stochastic Oscillator is giving a similar signal today being in the neutral zone.
Forex recommendations: if the bearing trend intensifies traders’ targets today will be the levels of 0.9510 and 0.9430.
Switzerland continues to be a stronghold of stability and confidence even despite some imbalance in the macro-economic news: data on Swiss GDP level in QII was released earlier: GDP rose by 0.9% on quarterly basis (+3.4% y/y) against the forecast of +0.8% (+2.6% y/y) and 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. Thus Franc has become a serene harbor once again amid dollar’s instability.
Citigroup believes that GDP in Switzerland will increase by 3% this year which is significantly higher than the average forecast in comparison with the other countries. At the same time inflation levels are still close to the lows.
It is clear that in the light of such forecast the SNB will keep the rate low for a long time since there is no need to tighten monetary policy any more.
Deputy Chairman of the Swiss National Bank Mr. Jordan noted that CHB risks of excess liquidity level can increase in the current economic situation and at the current rate level. The largest banks of the county such as UBS and Credit Suisse Group can also represent a threat although their interests do not intersect. Jordan stressed that the regulator is aware of the risk of keeping interest rate at the low level for a long period. Earlier the Bank of Switzerland representatives noted that economic incentives have almost no effect on the situation in the country and it is time now to return to the issues of bankruptcies of major players in the financial sector. The Franc looks stable compared with other currencies and its medium term growth is probable.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 11.10.10: JPY: Yen retreats at the beginning of the week

At the Forex currency market the Japanese Yen rate is going down on Monday after two weeks of the sustainable growth.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY today however it demonstrates growth giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal on Monday.
Forex recommendations: in case of breakdown at the level of 82.10 bullish trends for the pair will intensify which will lead buyers to the levels of 82.50 and 82.90.
It is a day off in Japan today.
The Bank of Japan decided to lower the interest rate to the level of 0% against the previous level of 0.1%. This decision was a surprise to the market as although traders were prepared for the actions of monetary policy easing they could not expect it to turn this way. The head of the Bank of Japan Shirakawa said in the comments that 2-years rates would be also reduced which would help to widespread the effect of soft policy. At the same time the Bank of Japan representative Suda noted later that economy is still in danger of bubbles in the government bonds sector. It also became known this Tuesday that a new fund is going to be founded in the amount of 5 trillion yens to pour liquidity into the Japanese financial system – and in particular for the purchase of the government bonds and other assets. Japanese Finance Minister Noda stated this week that the country’ s policy should change in regard to deflation and expensive Yen– currency fluctuation in the long term should stabilize and deflation should retreat. As for the rising price of the Yen- it should not be the sole responsibility of the Bank of Japan as authorities also have leverage over currencies rates.
Japanese Finance Ministry reported on the weekly capital movement. Thus Japanese investors sold oversees shares for Y119.0 billion and bought bonds for Y679.5 billion; average volume of purchases amounted to Y557.5 billion.
Deputy Minister of Finance in Japan Mr. Igarashi noted on Friday that intentions of Japan to put an end to currency fluctuation have not changed however unsupervised Japanese intervention into the market has not been crowned with success. He also stressed that devaluation of the currency in order to gain trading preferences affects global economy.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 11.10.10: AUD: Australian Dollar rate is going down today as a part technical rollback

At the Forex currency market the Australian Dollar rate goes down on Monday after reaching 27 year highs last week in pairing with the USD.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD however it goes down giving grounds for a pair sell signal. Stochastic Oscillator is not giving a clear signal being in the neutral zone.
Forex recommendations: in case of breakdown at the level of 0.9820 bearish sentiments for the pair will intensify and traders’ targets will be the levels of 0.9780 and 0.9730.
The Australian Finance Minister Swan thinks that current growth in the Australian Dollar against the USD is a challenge to the national economy as it can affect the levels of tax collection and create complications in the management of country’s economy.
Agriculture, tourism and manufacturing divisions were indicated as the most vulnerable sectors of economy. “There is no doubt that the AUD growth will impact on corporate profits while there is also downside risk to earnings” –said Swan.
According to him global growth outlooks still remain vague as economic growth in the developing countries is anemic and growth prospects in these countries are delusive.
GDP level in Australia rose to the maximum value of the last three years in QII demonstrating increase 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.
We would remind that earlier the RBA left the interest rate unchanged while market expected the rate increase to 4.75% - Stevens, the head of the Bank, noted in his comments later that at some moment in the future economy may require higher interest rates. In principle such a clause should contain the AUD’s fall however the currency descending movement deprives buyers of the hope for parity with the USD. Interest rate has been maintained at the current level for half a year already.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 12.10.10: EUR/USD awaits momentum to continue growing

The pair EUR/USD continues to go down at the Forex currency market on Tuesday morning.
By 9:55 Moscow time the Euro is at 1.3858 against closing session level of 1.3875 yesterday.
Daily graphs show that there are no serious catalysts for sales; the pair has been corrected enough to continue growing however the pair definitely needs a catalyst.
The minutes of the FR last meeting which was held in September can become such a catalyst. Some traders expect that amid weakness of the labour market and recent negative news on the employment the FR will somehow send a firm signal about quantitative easing policy expansion.
Eurozone statistics released today will support the Euro in case of positive indicators.
Presumably the pair EUR/USD will be in the range of 1.3800-1.4000 on Tuesday trading session.