LiteForex's analytics

[LF.Anastasia]

Forex Analytics of LiteForex of 15.10.10: CAD: Canadian Dollar retreats at the end of the week

The Canadian Dollar rate is losing positions at the Forex currency market at the end of the week after reaching parity and reaching higher levels in pairing with the USD yesterday.
Forex forecast: MACD indicator is in the negative area on Friday however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: buyers’ targets today will be the levels of 1.0140 and 1.0190.

Finance Minister of Canada Mr. Flaherty said on Wednesday that Canada intends to balance its budget by 2015 and will become the first country in the Big Seven which will cope with the task successfully. The monetary politician noted that authorities’ stance on the income outlooks and new incentives measures remains cautious. Flaherty believes that in the fiscal year which starts on 1 April 1015 the budget of Canada will show a surplus; and the return to the surplus will require much more efforts amid the U.S. slow recovery.
As the published document (financial forecast of Finance Ministry) showed - growth of Canadian economy in 2010 will amount to 3% (2.6% earlier); in 2011 – 2.5% (3.6% earlier)
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 a month 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 18.10.2010: GBP: BRITISH POUND IS DECREASING REPEATING THE ATTITUDE OF PLAYERS IN THE CAPITAL MARKET

In the currency market (forex) rate of British Pound is decreasing repeating the mood of the market - it is interesting that this factor lately determines the direction of GDP motion, while the basic data remain without special attention of the players.

Forex (forex) Forecast: MACD indicator is in the positive area for the GBP / USD pair, but it is decreasing and thereby gives the signal to sell the pair. Stochastic oscillator signals today are similar being in the neutral area.

Forex (forex) recommendations: If the current external background is the same the targets of sellers today will be the levels of 1.5880 and 1.5800.

Today it became known that the house price index (according to the Righmove estimations) grew by 3.1% in monthly terms in October. The market almost has not reacted at the statistics, despite its positivity - but for GDP recently such behavior is typical.

Today it became known that British civil servants are ready to strike - if the government reduces wages and changes the pension system as it has been planned. Such protests are happening very actively now in France.

One of the problems in the UK yet is the confidence in the current policy - or rather, lack of confidence. It is not excluded that the forex players expectations of measures of quantitative easing will be decreasing, which with the inflation levels and the general nervous condition of the population will lead to a drop of GDP.

Two weeks earlier, the regulator upheld the level of interest rates saving it at 0.5% per annum and hasn’t published an accompanying document which shows the preservation of the intentions of monetary politics in the previous frame. Rate is at that point since March 5, 2009, and, apparently, it is not planned to change yet. According to the data on British employment situation released the day before labor market in the country is still weak, the jobs are not being created because companies still can not accurately calculate the prospects for (index of temporary jobs in September, 52.8 against 54.0 in August, the index of permanent jobs 54.6 in September against 56.3 in August).

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 18.10.2010: EURO FALLS REMOVING OVERHEATING

The EUR / USD pair is decreasing early in the beginning of the week at the forex market, continuing the trend of Friday after reaching the next local maximum.

By 9:50 MSK Euro costs 1.3865 against the level of 1.3974 at Friday market close.

An additional factor of pressure today is the expectation by players of the data publication on business confidence in Germany, which is expected weak.

The market continue to discuss the question of the so-called currency wars, the same issue will be discussed at a meeting of G20 in South Korea in the end of this week.

Today, investors will be focused on the block of statistics on the U.S which is about to be published this evening.
Presumably, today the EUR / USD pair will bid within the range of 1.3780-1.3950.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 18.10.2010: CHF: SWISS FRANC CONTINUES TO DECLINE IN THE BEGINNING OF THE WEEK

In the beginning of the week in the currency market (forex) Swiss franc continues to decline after reaching a new historic maximum earlier.
Forex (forex) Forecast: MACD indicator is in the negative area for the USD / CHF pair, but it is growing, thus giving the signal to buy the pair. The signal of Stochastic oscillator today remains the same being in the overbought area.
Forex (forex) recommendations: The targets of the buyers today will be the levels of 0.9675 and 0.9750.
The situation in the Swiss economy continues to be stable.
Earlier Deputy Chairman of the Swiss National Bank Mr. Jordan noted that CHB risks of excess liquidity can be increased in the current economic situation and at the current rate level. Earlier representatives of the Bank of Switzerland 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.

Citigroup believes that GDP in Switzerland will increase by 3% by the end of the 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 low.
It is obvious 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 now.
GDP in Switzerland 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).
In the beginning of last week Finance Minister of Switzerland Mr. Mertz said that currency intervention against the Franc is unlikely to take place however it is not completely excluded. In his opinion deflation does not threaten Switzerland; however the talk about the so called “wars of currencies” undermines investors’ confidence in the global economy which is not too high.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 18.10.2010: JPY: YEN INCREASES PREPARING TO BREAK THE LEVEL OF 81.0

On Monday in the currency market (forex) JPY continues to strengthen and prepares to break, apparently, an important level of 81.0.

Forex (forex) Forecast: MACD indicator is in the negative area for the USD / JPY pair and it is decreasing which confirms previous signal to sell the pair. Stochastic Oscillator is now also declining being in the neutral area.

Forex (forex) recommendations: The targets of the sellers today will be 80.50 and 80.10.

Last week it became known that industrial production in Japan in August (revised data) fell by 0.5% instead of 0.3%, as it was reported earlier. On Friday the head of the Bank of Japan Shirakawa admitted that national economy recovery rate slows down; among the reasons causing it he mentioned strong Yen along with the negative dynamics of the foreign economies. Shirakawa also noted that downward risks in the economy require attention from both monetary politicians and government of the country.

JPY continues to strengthen and, since 1986, has grown against USD by 84% (particularly this year - by 12%).

The currency continues to grow, even despite of currency intervention of the Bank of Japan in 15 September which has amounted to 2 trillion yens; it was the first such intervention in the course of the bidding since 2004 year. However, according to the market authorities' attempts to weaken JPY will not succeed: the intervention was doomed to failure because it was directed against the fundamentals of the currency.

We would remind that two weeks ago 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 easing actions of monetary policy 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 the economy is still in danger of bubbles in the government bonds sector.

It also became known 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 last week that the country’ s policy should be changed 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 exchange rates.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 18.10.2010: AUD: AUSTRALIAN DOLLAR IS BEING CORRECTED AFTER PARITY LEVEL

On Monday In the currency market (forex) AUD is decreasing second session in a row after Australian dollar reached parity in the pair with USD last week for the first time since 1983.

Forex (forex) Forecast: MACD indicator is in the positive area for the AUD / USD pair, but it is falling and thus it gives the signal to sell the pair. The signal of Stochastic Oscillator today is the same being in oversold area.

Forex (forex) Recommendations: the downward movement of the pair has a chance to continue and the targets of buyers today will be the levels of 0.9780 and 0.9720.

Today's decline of AUD is quite natural – taking into account the long-term maximum of the currency.

The news from New Zealand today exerts additional pressure on AUD in the forex market. On Monday the prime minister of New Zealand said that expensive NZD creates serious difficulties for exporters whole the mechanism of the intervention doesn’t work.

The Australian Finance Minister Swan thinks that current growth of AUD 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 the country’s economy. Agriculture, tourism and manufacturing divisions were indicated as the most vulnerable sectors of economy. “No doubt that the AUD growth will impact on corporate profits while there is also downside risk to earnings” –stressed 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.
Swan noted earlier that the strength of the Australian Dollar reflects the strength of the national economy and Australia is not going to introduce any restrictions on the growing AUD. Excellent service of the Australian banking system is obvious - thinks Swan.

The interest rate in Australia is at the level of 4.5% per annum for more than 6 months; the next meeting of RBA will be held in 2, November.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 19.10.2010: THE EURO CORRECTION CONTINUES

On Tuesday morning the EUR / USD pair in the currency market (forex) continues to decline, but the pace of sales of EUR is not large-scale.
By 9.30 MSK EUR costs 1.3902 against the yesterday’s market close level of 1.3933.
At the same time during the Asian session USD remained stable in pair with EUR. The U.S. currency is still influenced by players’ expectations of any actions to support the economy from the Federal Reserve System.
Furthermore an additional factor of pressure on USD is the expectation of today's publication of the volume of construction of new homes in the U.S. (16.30 MSK). It is assumed that the data will show decline in comparison with August.
Correction of the EUR / USD pair was required the pair reached 1.41. It is not excluded that after decline to 1,37-3650 EUR will continue to grow with renewed vigour.
Presumably the EUR / USD pair will bid within the range of 1.3840-1.3980 on Tuesday.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 19.10.2010: GBP: THE DECLINE OF BRITISH POUND CONTINUES

In the currency market (forex) GBP continues to decline the third session in a row as it doesn’t have any internal catalysts for growth.
Forex (forex) forecast: MACD indicator is in the negative area for the GBP / USD pair and it is decreasing which confirms previous signal to sell the pair. Stochastic oscillator signals are the same today.
Forex (forex) recommendations: if the external background doesn’t change and decline of the pair continues and also if the level of 1.5860 is broken, the targets of the sellers will be 1.5810 and 1.5750.
By this morning the situation in British economy hasn’t changed. The level of interest rates of the Bank of England is 0.5% per annum and the regulator hasn’t published an accompanying document which shows the preservation of the intentions of monetary politics in the previous frame. Rate is at that point since March 5, 2009, and, apparently, it is not planned to change yet.
According to the data on British employment situation released earlier labor market in the country is still weak, the jobs are not being created because companies still can not accurately calculate the prospects for (index of temporary jobs in September, 52.8 against 54.0 in August, the index of permanent jobs 54.6 in September against 56.3 in August).
At the beginning of the week it became known that the house price index (according to the Righmove estimations) grew by 3.1% in monthly terms in October. The market almost has not reacted at the statistics, despite its positivity - but for GDP recently such behavior is typical.
On Monday it became known that British civil servants are ready to strike - if the government reduces wages and changes the pension system as it has been planned. Such protests are happening very actively now in France.
One of the problems in the UK yet is the confidence in the current policy - or rather, lack of confidence. It is not excluded that the forex players expectations of measures of quantitative easing will be decreasing, which with the inflation levels and the general nervous condition of the population will lead to a drop of GDP.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 19.10.2010: CHF: SWISS FRANC CONTINUES TO DECREASE AGAINST USD ON TUESDAY

In the currency market (forex) on Tuesday Swiss franc continues to decline against the U.S. dollar moving within the correction.
Forex (forex) Forecast: MACD indicator is in the positive area for the USD / CHF pair and it continues the growth started earlier which confirms previous signal to buy the pair. Stochastic oscillator being in the neutral area has the same signal.

Forex (forex) recommendations: the targets of the buyers today will be 0.9700 and 0.9740.
CHF is still attractive currency to purchase - but after reaching the historical maximum last week is clearly in need of correction.
Early last week Finance Minister of Switzerland Mr. Mertz said that currency intervention against the Franc is unlikely to take place however it is not completely excluded. In his opinion deflation does not threaten Switzerland; however the talk about the so called “wars of currencies” undermines investors’ confidence in the global economy which is not too high.
Earlier Deputy Chairman of the Swiss National Bank Mr. Jordan noted that CHB risks of excess liquidity can be increased in the current economic situation and at the current rate level. Earlier representatives of the Bank of Switzerland 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.

Citigroup believes that GDP in Switzerland will increase by 3% by the end of the year which is significantly higher than the average forecast in comparison with other countries. At the same time inflation levels are still close to low.
It is obvious 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 now.
GDP in Switzerland 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).

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 19.10.2010: JPY: YEN GIVES USD A CHANCE TO WIN BACK SOME LOSSES

In the currency market (forex) on Tuesday JPY is declining against USD - three days of growth of JPY led to other 15-year maximums which required a corrective pullback.
Forex (forex) Forecast: MACD indicator is in the negative area for the USD / JPY pair but today it is increasing and thus gives a signal to buy the pair. Stochastic oscillator has the same signal being in the neutral area.
Forex (forex) recommendations: if the level of 81.70 is broken the pair will go to 82.10 and 82.50.
According to the text of monthly report of Japanese authorities released today the economic situation of Japan is deteriorating - the last time similar assessment was voiced in the summer of 2008. In addition, the first time in 2 months the production forecast estimate is reduced - weak global economy does not contribute to the demand for high-tech products produced by Japan.
As it is noted in today's report the unemployment situation remains difficult. Levels of unemployment are high, and the prospects so far are uncertain. The main factor of downside risks for corporate profits is low levels of exports and industrial production. The increase of JPY exerts a negative impact on economic sentiments.
This morning Japanese Finance Minister Noda whose performances are already traditional has noted that the situation in the labor market is still extremely heavy, but the main problem of the authorities at the moment is deflation.
Last week it became known that industrial production in Japan in August (revised data) fell by 0.5% instead of 0.3%, as it was reported earlier. On Friday the head of the Bank of Japan Shirakawa admitted that national economy recovery rate slows down; among the reasons causing it he mentioned strong Yen along with the negative dynamics of the foreign economies. Shirakawa also noted that downward risks in the economy require attention from both monetary politicians and government of the country.
JPY continues to strengthen and, since 1986, has grown against USD by 84% (particularly this year - by 12%).