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[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 21.10.2010: AUD: AUSTRALIAN DOLLAR IS DECREASING ON THURSDAY; THE MARKET DOESN’T HAVE ONE UNIFIED TRADING IDEA

On Thursday in the currency market (forex) AUD is going down again under the pressure of USD which has received support from the authorities. In addition the market doesn’t have one unified trading idea in the pair.
Forex (forex) Forecast: MACD indicator is in the negative area for the AUD / USD pair but it is growing and thus gives a signal to buy the pair. Stochastic Oscillator today doesn’t give a clear signal being in the neutral area.
Forex (forex) recommendations: out of the market.
Possible scenarios on forex: if the level of 0.9900 is broken the pair will go to 0.9950 and the parity value of 1.0000. If the level of 0.9810 is broken the targets of the sellers will be 0.9770 and 0.9730.
On Tuesday the text of the RBA meeting report of 5 October was published. The text explains the reasons of the regulator’s 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%.
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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 22.10.2010: GBP: BRITISH POUND IS TRADING IN A THREE-DAY RANGE - IT IS BETTER TO REFRAIN FROM TAKING ACTION

Today in the currency market (forex) GBP is increasing slightly but the pair remains within a three-day range and its volatility indicates the speculative operations on the pair.
Forex (forex) Forecast: MACD indicator is in the negative area for the pair GBP / USD and it is decreasing which confirms previous signal to sell the pair. Stochastic Oscillator today signals ambiguously.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 1.5700 is broken the pair will go to 1.5650 and 1.5620. If this doesn’t happen the pair will continue to haggle within the corridor.
Earlier Posen, a representative of MPC, has noted that inflation expectations in the UK continue to be restrained; the markets know that the CPI must go to 2% and the Bank of England will help to do that.
Posen has also emphasized that monetary policy should not be an instrument to combat market bubbles.
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.
The medium-term trend for the pair GBP / USD is downward.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 22.10.2010: THE CURRENCY MARKET IS WAITING FOR THE COMMENTS OF THE G20

On Friday morning in the currency market (forex) the pair EUR / USD is decreasing but still there are no serious purchases of EUR: meeting of representatives of the G20 starts today in South Korea where it is supposed to discuss topical issues related to fluctuations in the currency market.
By 9.45 MSK EUR costs 1.3959 against the yesterday’s market close level of 1.3920.
On Thursday EUR strengthened to 1.4050 after the release of positive data from Eurozone and the U.S. but the impetus to growth has been lost quickly as players don’t want to take risks without getting new information on the markets.
It is not excluded that the decision on ceasing of the national currencies devaluation will be taken during the current G20 summit which will certainly affect the situation on the market.
Today EUR can be supported by daily data for Germany (12.00 MSK).
Most likely the EUR / USD pair will bid on Friday without going outside the range of 1.3850-1.4020.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 22.10.2010: CHF: SWISS FRANC STRENGTHENED SLIGHTLY; THE SIGNALS ARE CONTRADICTORY

On Friday morning in the currency market (forex) CHF is increasing after yesterday’s decline. However the technical signals on the pair USD / CHF are still controversial.
Forex (forex) Forecast: today MACD indicator is in the positive area for the pair USD / CHF but it moves along the signal line and has not formed a clear signal yet. On Friday Stochastic Oscillator signals to buy the pair being in the neutral region.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 0.9725 is broken the pair will go to 0.9780 and then to 0.9830. If the level of 0.9650 is broken the targets of the sellers will be 0.9610 and 0.9550.
This week the Swiss National Bank announced its forecast for inflation and 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 the inflation is expected 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.
The market believes that GDP in Switzerland will have risen by 3% by the end of the year which is substantially higher in comparison with other countries. The levels of inflation will remain close to low. According to the official statistics 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). The 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 22.10.2010: JPY: YEN IS MOVING UP AGAIN

On Friday morning in the currency market (forex) JPY shows the intention to strengthen despite the fact that yesterday's desire to grow for JPY ended in failure when USD got support last evening.
Forex (forex) Forecast: today MACD indicator is in the negative area for the pair USD / JPY; it is decreasing and confirms previous signal to sell the pair. On Friday the signal of Stochastic Oscillator is the same being in the neutral region.
Forex (forex) recommendations: if the external background is the same and the level of 80.80 is broken the pair will go to 80.50 and 80.10.
On Friday morning Japanese Finance Minister Noda has noted that during upcoming summits the country will confirm its need to stabilize the financial sector and foreign exchange market and will clarify its position concerning currency fluctuations; he has said that the competitive devaluation damages the economy.
Today the governor of the Bank of Japan, Mr. Shirakawa, has also outlined his position. He has said that he understands the reason for increasing the base rates by China and has noted that during the G20 summit taking place now it is necessary to discuss in detail the situation in exchange sites.
According to the text of monthly report of Japanese authorities released earlier 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 the 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. 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 22.10.2010: AUD: AUSTRALIAN DOLLAR DOESN’T MOVE; SIGNALS SHOW THE GROWTH

On Friday in the currency market (forex) AUD is near the marks of opening however the signals indicate continuation of a growing trend for the currency.
Forex (forex) Forecast: MACD indicator is in the negative area for the pair AUD / USD but it is growing and thus gives a signal to buy the pair. The signal of stochastic oscillator is the same today.
Forex (forex) Recommendations: In order to make sure that the pair continues to grow you need to see a breakdown of the 0.9900 level then the targets of buyers will be 0.9940 and 1.0000.
Today the following data has been published in Australia:
- The import price index rose by 0.7% in the III quarter
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.
On Tuesday the text of the RBA meeting report of 5 October was published. The text explains the reasons of the regulator’s 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 rate growth at the next meeting in November is 34%, in December - 52%.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 22.10.2010: CAD: CANADIAN DOLLAR IS SLOWLY STRENGTHENING TODAY

On Friday in the currency market (forex) CAD is slightly increasing after a slump earlier which could be considered as a technical rebound. The pair is within the range of 1,0161-1,0350.
The bidding will be in the range in the short term; a similar situation will be in the medium term.
Possible scenarios: if the level of 1.0300 is broken the pair will go to 1.0380 and then to 1.0510. If the level of 1.0165 is broken then the targets of the USD / CAD sellers will be the level of 0.9930.
On Friday Canadian Finance Minister Mr. Flaherty has noted that the current account balance is an objective indicator for the achievement of strong growth foundation by the G20 countries.
Thus Canada is at one with the U.S. in establishing a plan of actions in order to stop the countries from the control of their own currencies. However Flaherty himself is not sure whether at the G20 summit in South Korea he can arrange for the introduction of quantitative measures of the economy.
This week a meeting of the Bank of Canada took place. At the meeting it was decided to keep interest rates unchanged at 1% per annum. The previous increase was in September (+25 basis points). According to the regulator who left the rates unchanged against market expectations - while the global economy tries to recover after the crisis it is necessary to examine carefully the aspects of reduction of the incentives in monetary policy.
The Bank of Canada has also reported this week that the forecast of economic growth paces was reviewed downwardly to 2.3% from the previous level of 2.9%. It looks like it is the result of the neighborhood with the USA where the economic situation remains difficult.

The situation in the U.S. continues to affect Canadian economy which increases some risks for the national economy.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 25.10.2010: EUR IS GROWING AGAIN; THE CURRENCIES ARE DECIDED NOT TO DEVALUE

On Monday morning in the currency market (forex) the EUR / USD pair is growing after the G20 decision not to use schemes of currency devaluation in order to maintain good levels of exports.

By 9.15 MSK EUR costs 1.4034 against the Friday’s market close level of 1.3928.

According to the final declaration of the G20 countries after the summit held on October 22-23 in South Korea the members of the G20 agreed not to use the schemes of the devaluation of their currencies in order to maintain the levels of their own exports. Moreover the developed countries should try to reduce excessive levels of volatility as well as to eliminate the chaos in the exchange rates movement.

Timothy Geithner, U.S. Treasury Secretary, has said in South Korea that the decisions made by the G20 will reduce the pressure on a number of developing countries which are now facing the problem of growth of their currencies in spite of all measures that are being taken.

Today it will be a fairly quiet day in terms of the macro statistics publication. The speech of Fed chairman Bernanke is scheduled for the afternoon - the very fact of his speech is likely to reduce activity in the exchange markets but it is unlikely that the monetary politician will report something radically new.

Most likely the EUR / USD pair will bid in the corridor of 1.3900-1.4080 on Monday.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 25.10.2010: GBP: TODAY BRITISH POUND HAS AN OPPORTUNITY TO GROW

At the beginning of the week in the currency market (forex) GBP is growing while the external background is positive.

Forex (forex) Forecast: MACD indicator is in the negative area for the pair GBP / USD but it is growing and thus gives a signal to buy the pair. The signal of Stochastic oscillator today is the same being in the neutral area.

Forex (forex) recommendations: if the external background is the same the targets of buyers today will be 1.5830 and 1.5870.

It is expected that British Prime Minister Cameron will report about the establishment of so-called new economic dynamism in the country during his speech today. The ruling party is now making efforts to convince the population of Britain of the rightness of their actions.

Last week the UK Finance Minister Osborne noted that the retirement age in the country would be increased up to 66 years in 2020 which would 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.

Earlier Posen, a representative of MPC, has noted that inflation expectations in the UK continue to be restrained; the markets know that the CPI must go to 2% and the Bank of England will help to do that.

Posen has also emphasized that monetary policy should not be an instrument to combat market bubbles.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 25.10.2010: CHF: SWISS FRANC WINS BACK ITS LOSSES AT THE BEGINNING OF THE WEEK

On Monday in the currency market (forex) CHF increases after rebound from historic maximums last week. This morning the external background puts pressure on the U.S. dollar allowing to equalize the situation.

Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CHF but it decreases and thus gives a signal to sell the pair. The signal of stochastic oscillator today is the same being in the neutral area.

Forex (forex) recommendations: if the level of 0.9700 is broken bearish sentiment on the pair will intensify and the targets of USD/CHF sellers will be 0.9660 and 0.9630.

Last week the Swiss National Bank announced its forecast for inflation and 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 the inflation is expected 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.

The market believes that GDP in Switzerland will have risen by 3% by the end of the year which is substantially higher in comparison with other countries. The levels of inflation will remain close to low. According to the official statistics 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). The private consumption index in Switzerland increased to 1.86 in July against the previous value of 1.81 (revised data: 1.80).

CHF is regaining interest for investors while USD is declining. Judging by the technical picture of the bidding the pair USD / CHF has a good chance to go down this week.