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[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 19.10.2010: AUD: AUSTRALIAN DOLLAR CONTINUES TO MOVE DOWN BUT SALES VOLUMES ARE SMALL

In the currency market (forex) on Tuesday AUD continues to move in a downward trend after a rise last week.
Forex (forex) Forecast: MACD indicator is in the positive area for the AUD / USD pair but it is falling and thus confirms a previous signal to sell the pair. Stochastic oscillator has the same signal today.
Forex (forex) recommendations: if the level of 0.9830 is broken and external background doesn’t change the targets of the sellers today will be 0.9775 and 0.9700.
This morning the text of the RBA meeting report of 5 October was published. The text explains the reasons of the regulator’ decision to keep interest rates unchanged at the level of 4.5%.
Thus according to the RBA at the moment the pause is a symbol of flexibility of monetary policy and the regulator stresses that the decision was thoughtful and measured. Also Risks for the economy as well as for the AUD growth were taken into account which ultimately will impact on the inflation.
According to the regulator the inflation will remain in the target range in the short term, and will reach the level of 2.75% by the end of the year. The Bank expects inflation near 3% by mid-2012.
The growth of the economy should increase and be strengthened by 4% in two years from the current 3.25%.
The market believes that the probability of a new growth of rate at the next meeting in November is 34%, in December - 52%.
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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 20.10.2010: EURO WINS BACK THE DROP OF TUESDAY

On Wednesday morning in the currency market (forex) The EUR / USD pair increases after yesterday’s serious decline.
By 10.15 MSK EUR costs 1.3766 against the yesterday’s market close level of 1.3725.
The day before the growth of the USD was urged by the news from China which raised base rates for the first time since 2007. As the Central Bank of China said it had been done in order to restrain the growth of inflation. Nevertheless USD began to increase actively in almost all pairs.
Mr. Lohard, the head of the Federal Reserve Bank of Atlanta, gave a speech on Tuesday night. He hinted again that the U.S. monetary policy can begin the next stage of easing.
The statistics on Germany published this morning is positive: producer prices grew by 0,3% while it was forecasted to grow only by 0.2%.
Today it will be calm in terms of macrostatistics that is why the market will make start from the news it already has.
Most likely the EUR / USD pair will bid in the range of 1.3700-1.3900 on Wednesday.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 20.10.2010: GBP: POUND STERLING WINS BACK THE LOSSES BUT THE SIGNALS ARE AMBIGUOUS

On Wednesday in the currency market (forex) GBP moves up as a rebound after a serious decline yesterday when the markets reacted to China's decision to increase base thanks to large-scale sales.
Forex (forex) Forecast: MACD indicator is in the negative area for the GBP / USD pair and it decreases forming a signal to sell the pair. Stochastic Oscillator signals oppositely being in oversold area.
Forex (forex) recommendations: out of the market.
Possible scenarios of the forex market behavior: if the level of 1.5750 is broken the pair will go to 1.5800 and 1.5850. If the pair breaks the level of 1.5650, the targets of seller will be 1.5610 and 1.5550.
Today NIESR unveiled its new forecast for the UK. According to it economists expect weak economic growth of the country in 2011. The growth of the economy will be about 1.6% in 2010-2011.
In addition the forecast on the level of consumer prices has been updated. CPI will grow by 2,8% next year and by 1,4% in 2012.
The researchers believe that the expansion of quantitative easing program is not currently required.
Yesterday's data on the British economy is not very positive, provoking another wave of GBP decline in the forex market: according to CBI the level of orders in the industrial sector fell to -28 from the previous level of -17 and the level of the index of average prices dropped to+ 6 in October from the previous mark of +15.
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.We would remind that 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 cannot 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 20.10.2010: CHF: SWISS FRANC IS BEING ADJUSTED UPWARDS ON WEDNESDAY; FURTHER MOVEMENT WILL DEPEND ON THE EXTERNAL BACKGROUND

On Wednesday in the currency market (forex) Swiss franc is recovering after a decline yesterday but the technical signals are multidirectional yet.
Forex (forex) Forecast: MACD indicator is in the positive area for the USD / CHF pair continues to strengthen and thereby confirms previous signal to buy the pair. Stochastic oscillator signals today to sell the pair while it is in the neutral region.
Forex (forex) recommendations: out of the market.
Possible scenarios of the forex market behavior: the level 0.9730 is broken the pair will go to 0.9780 and 0.9830. If the pair breaks the level of 0.9650 the targets of the sellers will be 0.9610 and 0.9550.
We would remind that in the second quarter 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).
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.
CHF is still attractive currency to purchase - but after reaching the historical maximum last week is clearly in need of correction which was observed yesterday.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 20.10.2010: JPY: YEN IS RECOVERING IN THE MIDDLE OF THE WEEK; A DISTANT BEARISH TARGET FOR USD / JPY - 79.75

On Wednesday in the currency market (forex) JPY rises after declining yesterday when China announced an increase in their base rates.
Forex (forex) Forecast: MACD indicator is in the negative area for the USD / JPY pair and it is decreasing which gives a signal to sell the pair. Stochastic oscillator signal hasn’t changed being in the neutral area.
Forex (forex) recommendations: the targets of the sellers today will be 80.50 and 80.10.
Today it became known that the composite index of coincident indicators which was revised in August showed an increase by 0,3% against the earlier value of 0.5%. Revised value of the leading indicators index rose to -0.5% in August from the previous mark of -0.9%.
This year JPY rose in pair with USD by 12%; overall it rose by 84% since 1886.
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.
On Tuesday 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 20.10.2010: AUD: AUSTRALIAN DOLLAR IS GROWING TODAY BUT IT IS BETTER TO STAY OUT OF THE MARKET

On Wednesday in the currency market (forex) AUD is rising as fast as it was falling earlier by 2,6% after China's decision to raise base rates for the first time since 2007 in order to combat rising inflation.
Forex (forex) Forecast: MACD indicator is in the negative area for the AUD / USD pair and it is decreasing which gives a signal to sell the pair. On Wednesday Stochastic Oscillator signals oppositely being in the neutral region.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 0.9775 is broken the pair will go to 0.9835 and 0.9900. If the level of 0.9670 is broken the targets of sellers will be 0.9630 and 0.9570.
On Wednesday it became known that Westpac leading index in Australia dropped to 0.1% m / m in August against the decline by 0,3% in July. However AUD ignored this information.
The Australian Finance Minister Swan thinks that current growth of AUD against the USD which we all have seen earlier 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 the 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.

On Tuesday the text of the RBA meeting report of 5 October was published. The text explains the reasons of the regulator’ decision to keep interest rates unchanged at the level of 4.5%.
Thus according to the RBA at the moment the pause is a symbol of flexibility of monetary policy and the regulator stresses that the decision was thoughtful and measured. Also risks for the economy as well as for the AUD growth were taken into account which ultimately will impact on the inflation.According to the regulator the inflation will remain in the target range in the short term, and will reach the level of 2.75% by the end of the year. The Bank expects inflation near 3% by mid-2012.
The growth of the economy should increase and be strengthened by 4% in two years from the current 3.25%. The market believes that the probability of new growth of rate at the next meeting in November is 34%, in December - 52%.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 21.10.2010: GBP: BRITISH POUND IS BEING SOLD AGAIN - OUT OF THE MARKET

On Thursday in the currency market (forex) GBP is being sold as external background again left the currency without support and British pound doesn’t have its own catalyst for growth.

Forex (forex) Forecast: MACD indicator is in the negative area for the pair GBP / USD but it is strengthening a little and thus gives a signal to buy the pair. Stochastic Oscillator signals oppositely today.

Forex (forex) recommendations: out of the market.

Possible scenarios: if the level of 1.5860 is broken the pair will go to 1.5900 and 1.5935. If the level of 1.5780 is broken the targets of sellers will be 1.5740 and 1.5700.
Earlier the UK Finance Minister Osborne has noted that the retirement age in the country will be increased up to 66 years in 2020 which will allow the economy to get extra 5 billion pounds. At the moment in Britain the pace of budget cuts are about 6% per annum the budget itself will be reduced by 33% according to the plan of the authorities.

Osborne has also explained that the government's budget in 2014-2015 will be reduced by 55 million pounds the receipt of further 7 billion pounds is expected due to unpaid taxes.

As for the situation of the labor sector Osborne has explained that the reduction of the number of jobs in the public sector is expected on average by 500 thousand.

According to preliminary calculations the total expenditure budget in 2010-2011 will amount to 702 billion pounds in 2012-2013 - 665 billion pounds.

In fact the population of the country was afraid of exactly such extent of reduction of the government spending. Based on the current situation in the British economy we cannot see any chance for the GBP growth in terms of fundamental data. We would remind once again that the previous growth of the currency was purely speculative that’s why such major fluctuations in the GBP / USD pair can be seen in the market.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 21.10.2010: USD CONTINUES TO FEEL THE SUPPORT FROM THE U.S. AUTHORITIES

On Thursday morning in the currency market (forex) the EUR / USD pair is decreasing after yesterday's growth; USD has support thanks to publication of the Beige Book; the text of it is neutral as well as the comments of the U.S. Treasury Geithner who considers the situation on the forex market quite balanced.
By 9.30 MSK EUR costs 1.3902 against the yesterday's market close level of 1.3965.
According to the publications in foreign press U.S. Treasury Secretary Timothy Geithner has said earlier that exchange rates are now balanced which supported USD. Geithner has stressed once again that the USA doesn't devalue its currency deliberately.
On the other hand the text of the "Beige Book" which is based on the content of the Fed's assessment of the situation in the economy turned out to be neutral. It is reported in the release that the pace of growth of economic activity is moderate and the level of consumer spending remains the same.
This afternoon a large block of statistical data on the UK and Eurozone is expected; macro data on the U.S. will be published in the afternoon. The expectation of the statistics publication will retain the increased level of volatility in the foreign exchange market.
Most likely the EUR / USD will bid today in the range of 1.3850-1.3980.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 21.10.2010: CHF: SWISS FRANC IS DECREASING AGAIN WHILE USD ENJOYS SUPPORT

Today in the currency market (forex) CHF is decreasing after rebound earlier - in the middle of the week USD got support from the U.S. authorities thus it is growing. While watching the bidding there is a feeling of a large number of speculators in the positions.
Forex (forex) Forecast: MACD indicator is in the positive area and it is growing which gives a signal to buy the pair. The signal of Stochastic oscillator is the same today while it is in the neutral area.
Forex (forex) recommendations: if the external background is the same and the level of 0.9725 is broken the pair will go to the 0.9780 and 0.9825.
After CHF left the path of successive growth and the Swiss National Bank announced its forecast for inflation the pressure on CHF decreased. In the SNB document it is noted that the forecast for inflation in the country is reduced until 2013: in 2011the inflation forecast is reduced to 0.3% from 1% earlier; in 2012 it is expected inflation at the level of 1.2% from 2.2% earlier.
Thus inflation will not touch the top of the range at least until the second quarter of 2012 - this gives the SNB another year to rectify the situation in the country's economy. Interestingly the CHF decline in the pair with EUR helps the economic system of Switzerland since the lion's share of exports is directed to the countries of the Eurozone.
A new forecast for the economy and inflation has played in favor of the SNB - the intervention would have the same downward effect on CHF; in this case it would have caused greater resonance in the market. Regulator eased the pressure of strong CHF receiving a temporary advantage to make decisions.We would remind that in the second quarter 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).
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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 21.10.2010: JPY: JAPANESE YEN CLARIFIES THE DIRECTION OF ITS MOTION

On Thursday in the currency market (forex) JPY doesn’t move - it is waiting for the catalysts for the formation of its direction.
Forex (forex) Forecast: MACD indicator is in the negative area for the pair USD / JPY and it is decreasing which confirms previous signal to sell the pair. Stochastic Oscillator today signals oppositely being in the neutral area.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 81.70 is broken the pair will to 82.10 and 82.50. If the level of 80.80 is broken the targets of sellers will be 80.50 and 80.10.
The governor of the Bank of Japan, Mr. Shirakawa, has said today that the regulator continues to watch carefully the effect on the growth of JPY and that the currency rate may be influenced by quite a number of factors.
After this the USD / JPY pair weakened sharply coming close to 81.0 and then stabilized; now it is waiting for new signals.
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.
On Tuesday morning Japanese Finance Minister Noda 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.
This year JPY rose in pair with USD by 12%; overall it rose by 84% since 1886.