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[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 27.10.2010: CHF: SWISS FRANC IS DECREASING ON WEDNESDAY BUT THE CURRENCY IS STILL ATTRACTIVE TO PURCHASE

On Wednesday in the currency market (forex) CHF is decreasing under the pressure of USD which got support after the publication of the strong statistical data earlier.

Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CHF and it is growing which gives a signal to buy the pair. The signal of stochastic oscillator today is the same being in oversold area.

Forex (forex) recommendations: the targets of buyers today will be the levels of 0.9880 and 0.9925.

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.


Interestingly, the Swiss National Bank, apparently, continues to diversify its assets – the EUR assets dropped to 56% from previous 70%. The ratio of EUR against the currency basket of the SNB was about 50-60% last year - such situation was before the regulator began intervention in order to weaken the franc.


According to the averaged data 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 27.10.2010: JPY: YEN CONTINUES TO DECLINE; ADDITIONAL PRESSURE COMES FROM JAPANESE AUTHORITIES

On Wednesday in the currency market (forex) JPY continues to decline.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / JPY and it increases which confirms previous signal to buy the pair. The signal of stochastic oscillator today is the same being in the overbought area.
Forex (forex) recommendations: the targets of the buyers will be 82.10 and 82.40.
Apart from the obvious news flow support of USD an additional factor of pressure on the JPY are now market rumors about the possibility of extending currency intervention by the Bank of Japan as the yen has approached the local maxima again.
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.
Japanese Finance Minister Noda in the morning continues to charge the market with his confidence that the economy of the country is all right: today he has said that Japan will seek the cooperation with European countries and the United States only if the fluctuations in the currency market are too harsh.
In his opinion so far Japan is interested in the resistance to further USD weakness and thereby to the increase of JPY.
On Tuesday a representative of The Japan Iron and Steel Federation Mr. Hayashida has noted that the optimal rate of the yen is now at the level of 90.0.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 27.10.2010: CAD: CANADIAN DOLLAR IS GOING DOWN; THE TARGET IS 1.0375

On Wednesday in the currency market (forex) CAD continues to decline. On the one hand USD has good support now in the form of statistics on the USA; on the other hand - main currencies are in need of correction.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CAD and it increases which confirms previous signal to buy the pair. The signal of stochastic oscillator today is the same being in the overbought area.
Forex (forex) recommendations: the targets of buyers today will be 1.0280 and 1.0340. More distant target is 1.0375.
The head of the Bank of Canada Mr. Carney has noted earlier that the regulator can begin to take measures in the currency market if the rate of CAD is risky for the national economy.
The Bank of Canada hasn’t conducted foreign exchange intervention since 1998 to CAD and since 2000 to EUR.
Carney has noted that the tension in the currency markets is obvious; the Central Bank and the authorities will take advantage of their capabilities if it is necessary. "We see now a steady force of CAD which could potentially have an impact on the growth of the economy", - stressed the monetary politician.
Last 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.
It became known last week that the Consumer Prices Index in Canada rose to 1.9% y / y in September while basic consumer price index rose by 0.2% in September from the previous level of 0.1%.
In addition the level of retail sales in Canada rose by 0.5% while retail sales excluding cars strengthened by 0,4% in August.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: THE EURO RECOVERS AGAINST THE BACKGROUND OF RETURNING INTEREST IN RISKS

On Thursday morning in the currency market (forex) the EUR / USD pair recovers after a decline the day before because at the end of the week players are waiting for important publications on the USA; the activity against the dollar declines before these publications.
By 10.15 MSK EUR costs 1.3819 against the yesterday’s market close level of 1.3769.
In the morning EUR is supported by the optimism of Asian capital markets where the Bank of Japan kept the rate in the target range of 0-0,1% and the RBNZ didn’t change its rate keeping it at the level of 3%.
Economists say that recovery is going in the different parts of the world which reinforces the interest of players to take risks and thereby moves the dollar aside as a defensive currency.
The data on the business climate index in the Eurozone in October and the number of applications for unemployment benefits in the U.S. for the week will be interesting for players today.
Most likely the pair EUR / USD will bid on Thursday within the range of 1.3770-1.3980.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: GBP: BRITISH POUND CLARIFIES THE DIRECTION OF ITS MOTION

Today in the currency market (forex) GBP is trading without a definite idea; it is increasing a little bit as the market activity is low on Thursday on the eve of Friday's statistics on the U.S. GDP.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair GBP / USD and it is growing which gives a signal to buy the pair. Stochastic Oscillator hasn’t formed a clear signal today being in the neutral area.
Forex (forex) recommendations: out of the market.
Possible scenarios on forex: if the level of 1.5865 is broken the pair will go to 1.5912 and 1.5960. If the level of 1.5700 is broken the targets of sellers will be 1.5680 and 1.5650.
Today it has become known that house prices (according to the calculations of Nationwide) in the UK continued to decline in October and they fell by 0,7% m/m (1.4% y / y). Nationwide economists stress that if the trend gained impetus at the beginning of the summer continues in November and December prices will have a chance to drop by 1% by the end of the year.
Earlier Posen, a representative of MPC, has said that if the growth of inflation is higher than the target mark even by 1% it won’t be critical and to set monetary policy in the direction of quantitative easing it will take some time - more than it was expected. Posen doesn’t think that now it is necessary to stimulate the British economy additionally.
The head of the Bank of England Mr. King has said earlier that the project Basel III which there have been so many talks about last month won’t be a panacea for a new round of financial crisis. However according to the monetary politician the British regulator will not force the banks to comply with the contract although he himself sticks to more strict views on the problem.
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.
It became known earlier that the level of mortgage lending in the UK dropped to 31,104 in September from the previous level of 31,781 according to the BBA research.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: CHF: SWISS FRANC IS GOING TO WIN BACK LOSSES IN PAIR WITH USD

In the currency market (forex) Swiss franc rises using the situation of uncertain mood in the market and winning back past losses.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CHF but it decreases and thereby gives a signal to sell the pair. The signal of stochastic oscillator is the same today being in the overbought area.
Forex (forex) recommendations: if the level of 0.9860 is broken the pair will go to 0.9820 and 09790.
The market believes that CHF can fall if the USA announces a more modest economy support than it is now built into market prices. In addition talks are more frequent about the fact that QE is not a panacea for the American economy which may impede the further growth of CHF.
According to the averaged data 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).
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.Interestingly, the Swiss National Bank, apparently, continues to diversify its assets – the EUR assets dropped to 56% from previous 70%. The ratio of EUR against the currency basket of the SNB was about 50-60% last year - such situation was before the regulator began intervention in order to weaken the franc.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: JPY: YEN IS RISING; THE BANK OF JAPAN REMAINS EVEN-HANDED

On Thursday in the currency market (forex) JPY resumed growth based on investors' hesitancy on the eve of the publication of important statistics on the United States as well as before the Fed meeting next week.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / JPY and it starts rising which gives a signal to sell the pair. The signal of stochastic oscillator is the same being outside the overbought area.
Forex (forex) recommendations: if the level of 81.50 is broken the targets of sellers will be 81.10 and 80.90.
Today the Bank of Japan decided to keep interest rate in the range of 0-0,1%; the decision was unanimous.
The regulator has stressed in the follow-up comments that the measures of the Bank will depend on prices and the market situation; the effect of soft monetary policy can be seen next year when the economy returns to positive indicators.
The Bank of Japan is sure that Japanese economy will come back to the path of moderate growth in 2011 and the averaged forecast for base inflation is 0,4%. The averaged forecast of real GDP for the next fiscal year is at the level of 2.1% against the June forecast of 2.6%.
The head of the Bank Mr. Shirakawa has said that the easing of monetary policy will be more active than previously as the economy is recovering.
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.
However the yen is now quite low taking into account the trend of recent days and we can assume that the next bidding for the pair will be steady.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: AUD: ON THURSDAY AUSTRALIAN DOLLAR IS BEING ADJUSTED AFTER A DECLINE THIS WEEK

On Thursday in the currency market (forex) AUD strengthens moving within the correctional growth.
Forex (forex) Forecast: MACD indicator is in the negative area for the pair AUD / USD but it increases thus giving 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 level of 0.9770 is broken the pair will go to 0.9830 and 0.9900.
Today the following data on Australia has been published:
- Index of Leading Indicators Conference Board rose by 0.2% in August against 0.8% previously.
Today players' attention was drawn to the neighbor of Australia - New Zealand where the RBNZ kept interest rate at the level of 3% thus the rate remained unchanged the second month in a row.
It has become known earlier that the base consumer price index in Australia has grown by 0,6% in the III quarter from the previous level of 0.5%. In addition the consumer price index rose by 0.7% in the III quarter from the previous level of 0.6%.
The head of the Reserve Bank of Australia Stevens has said at the beginning of the week that the complete elimination of imbalances in the economy will take some time as the global economy needs a strong and sustainable demand. Against such background the changes in the currency market will only perform the function of redistribution of growth of the global economic system.
Stevens has also noted that the increase in flexibility of the yuan will help to work on sharpening of imbalances. Thus Australian politician took the view of the USA.
Last week 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 28.10.2010: CAD: CANADIAN DOLLAR STARTS GROWING BUT THE BUYERS ARE STILL CAUTIOUS

On Thursday in the currency market (forex) Canadian dollar strengthens after two days of a serious decline having support in the form of positive market mood. However the buyers of the currency are not too active because they are waiting for the publication of U.S. GDP at the end of this week which may shake the market.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CAD but it decreases and thereby gives a signal to sell the pair. The signal of stochastic oscillator is the same today.
Forex (forex) recommendations: if the level of 1.0250 is broken the targets of sellers will be the levels of 1.0210 and 1.0170.
The Bank of Canada has made a pretty aggressive statement earlier. Thus, the head of the Bank of Canada Mr. Carney has noted that the activity in the consumption sector in Canada will slow and the growth of the country's economy will become more moderate.
At the Bank of Canada will go for currency intervention only if the situation in the market is extreme - when the economy is under threat.
Carney has noted earlier that the tension in the currency markets is obvious; the Central Bank and the authorities will take advantage of their capabilities if it is necessary. "We see now a steady force of CAD which could potentially have an impact on the growth of the economy", - stressed the monetary politician.
The Bank of Canada hasn’t conducted foreign exchange intervention since 1998 to CAD and since 2000 to EUR.
Thereafter Mr. Macklem, a representative of the Bank of Canada, has noted that the global economy is under threat of a full stop if all countries stop the stimulation altogether.
Last 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 29.10.2010: INVESTORS SELL EUR AGAIN AVOIDING RISKS

Today in the currency market (forex) the EUR / USD pair is decreasing against the background of investors avoiding risks after the publication of weak statistics for Asia and a decline in the Asian sites.
By 9.50 MSK EUR costs 1.3880 against the yesterday’s market close level of 1.3930.
This morning it has become known that the process of deflation in Japanese economy continues - the base consumer price index fell by 1.1% y/y exceeding previous decline in August.
A decline in business confidence has been noted in South Korea as well as reduction of industrial production levels which was another factor of pressure on the risks.
There will be a lot of statistics today. In the afternoon there will be statistics on Eurozone and its particular countries; in the evening there will be publication of the key indicator of the week and the preliminary level of the U.S. GDP for the third quarter that is why the volatility in the markets can be high.
Most likely the EUR / USD today will bid in the range of 1.3780-1.3980.