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[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 29.10.2010: GBP: BRITISH POUND IS BEING ADJUSTED AT THE END OF THE WEEK IN SPITE OF THE SIGNALS

On Friday in the currency market (forex) GBP is being corrected following the market and ignoring technical signals. It proves again our supposition that speculative pressure on GBP is now very high.
Forex (forex) 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 being in the overbought area.
Forex (forex) recommendation: Taking into account the external background and trends - out of the market.
However if the optimism prevails in the market the targets of buyers will be 1.6000 and 1.6050.
According to the data released on Friday GfK consumer confidence in the UK rose to -19 from the previous mark of -20. Economists expected to see a decline to -22.
According to GfK over the past 12 months the mood of consumers showed signs of improvement; their perception of the economic picture improved as well. However the expectations for the future 12 months have deteriorated and fell to -20.
It has become known earlier 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 29.10.2010: CHF: SWISS FRANC IS WAITING FOR THE SIGNALS TO FORM THE DIRECTION OF ITS MOTION

On Friday in the currency market (forex) Swiss franc is being adjusted under the pressure of general-market trends.
Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / CHF and it decreases which gives a signal to sell the pair. Stochastic Oscillator shows the opposite signal today being in the neutral area.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 0.9880 is broken the pair will go to 0.9910 and the local maximum of 0.9930. If the level of 0.9800 is broken the targets of buyers will be 0.9750 and 0.9720.
Today at 13.30 MSK the October KOF leading indicators index is about to be published in Switzerland.
It is worth noting that the market is again concerned about the possibility of intervention by the SNB because of the high CHF rate.

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).
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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 29.10.2010: JPY: YEN RISES INTENSIFYING ALREADY SEVERE ECONOMIC SITUATION IN JAPAN

On Friday in the currency market (forex) JPY strengthens in pair with USD.
Forex (forex) Forecast: MACD indicator is in the negative area for the pair USD / JPY and it decreases which confirms previous signal to sell the pair. The signal of stochastic oscillator is the same today being in the oversold area.
Forex (forex) recommendation: if the current market mood remains the same the targets of sellers will be 80.35 and 79.75.
Today the following data has been published in Japan:
- the volume of industrial production fell by 1.9% q / q in the III quarter against the growth by 1.5% in the II quarter;
- the unemployment rate in Japan dropped to 5.0% in September from the level of 5.1% in August;
- Net national CPI fell by 1.1% y/y in September against -1.0% in August;
- Real household spending remained unchanged in September against +1.7% in August.
Thus the deflationary spiral in the Japanese economy continues to twist in spite of all measures taken by local authorities.
The Bank of Japan decided earlier 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.

 

[LF.Anastasia]

FOREX ANALYTICS OF LITEFOREX OF 29.10.2010: CAD: CANADIAN DOLLAR HAS NO IDEAS FOR MOVING; OUT OF THE MARKET

On Friday in the currency market (forex) Canadian dollar is trading indefinitely falling down a little.
Forex (forex) Forecast: MACD indicator is along the signal line for the pair USD / CAD and it doesn’t give a definite signal. Stochastic oscillator gives a signal to buy the pair being in the neutral region.
Forex (forex) recommendations: out of the market.
Possible scenarios: if the level of 1.0230 is broken the pair will go to 1.0270 and 1.0335. If the level of 1.0180 is broken the targets of the sellers will 1.0140 and 1.0110.
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.
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.

 

[LF.Anastasia]

Forex Analytics from LiteForex of 01.11.10: Euro is growing at the beginning of the week

The pair EUR/USD is traded upward at the Forex currency market on Monday in advance of the U.S. Federal reserve meeting scheduled for the end of this week; it is anticipated that the decision to increase economy priming will be taken there.
By 9.55 Moscow time the Euro is at 1.3986 against the closing level session of 1.3917 on Friday.
Thus, long-awaited meeting of the U.S. Federal Reserve will be held on 2-3 November; market participants expect it to take new measures to stimulate U.S. economy. Furthermore the expectations of the U.S. industrial production statistics for October also put pressure on the USD.
Data on business activity index in the U.S. manufacturing sector ISM Manufacturing will be released tonight; according to the economists it reduced to 54 points in October against the value of 544 points in September. If the data agrees with the forecast the Euro will receive support.
Most likely the pair EUR/USD will be in the range of 1.3900-1.4050 on Monday trading session.

 

[LF.Anastasia]

Forex Analytics from LiteForex of 01.11.10: GBP: Pound stands still, signals indicate purchase

At the Forex currency market the British Pound Sterling rate stands still on Monday amid uncertain sentiments at the global capital markets while signals indicate that it will be consistent to buy the GBP.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it goes up confirming a previous buy signal for the pair. Stochastic Oscillator is giving a similar signal today being in the overbought zone.
Forex recommendations: in case of breakdown at the level of 1.6070 buyers’ targets will be the levels of 1.6100 and 1.6130.
It became known today that houses requested prices reduced by 0.9% m/m (-0.1% y/y) as per Hometrack estimation. Economists pointed that pace of decline accelerated after some stagnation while the annual rate of decline had been observed for the first time in January this year.
It became known last week that the UK houses prices as per Nationwide estimation continued to decline in October and fell by 0.7% on monthly basis (+1.4% y/y). Nationwide economists point that if the trend which started in the early summer continues in November and December the prices will have chances to drop by 1% by the end of the year.
It seems that both investors and economists became accustomed to the low levels of the UK real estate market, otherwise what else can explain observers’ tranquility in this matter.
Earlier Posen, representative of the Bank monetary committee pointed that the rise in inflation above the target level even by 1% will not be crucial and it will take some time – longer than previously expected to set quantitative easing of monetary policy. Posen does not believe that additional stimulation is required for the British economy now.
The head of the Bank of England Mr. King noted that the draft Basel III which has been discussed last month will not become a miracle cure for the new round of financial crisis. However according to the monetary politician, British regulator will not force banks to comply with the contract although he holds more stringent views on the problem.

 

[LF.Anastasia]

Forex Analytics from LiteForex of 01.11.10: CHF: Swiss Franc remains in the range awaiting signals

At the Forex currency market Swiss Franc rate is traded slightly downward on Monday however the pair remains in the range of 0.9890-0.9950.
Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and it goes down which gives grounds for a pair sell signal. Stochastic Oscillator has not indentified a clear signal today being in the oversold area.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 0.9880 the pair will go to 0.9900 and 0.9950. If the level of 0.9810 is exceeded, traders’ targets will be the levels of 0.9760 and 0.9720.
According to the head of the Swiss National Bank, Mr. Hildebrand it is evident now that low levels of the interest rate can become a catalyst for the emergence of new bubbles in the real estate sector. “The longer the monetary policy remains of expansionary nature, the higher the risks of unwanted effects. Some signs of which have already been noticeable. It is especially evident in the real estate market where there is a great imbalances risk in case the rates are maintained at the current low level for a quite a long time”- he stressed last week.
We would remind that Swiss interest rate has remained unchanged at the level of 0.25% for 19 months per annum.
Hildebrand also noted that current level of the interest rate in Switzerland is still acceptable, he pointed however that current situation is ideal for the emergence of risks.
Worth noting that investors’ concern regarding the possibility of the Swiss Bank intervention due to the Franc high rate is back at the market. It is also noteworthy that Swiss National Bank apparently continues to diversify their assets while the assets in the Euro reduced to 56% against 70% previously. A year earlier the ratio of the Euro in the SNB currency basket amounted to about 50-60% - this was before the regulator started interventions to ease the rate of the Franc.
We would remind that according to the average forecast GDP in Switzerland will increase by 3% in 2010 which is much higher than the average forecast in comparison with other European countries. At the same time inflationary levels will remain close to the lows. According to the official statistics GDP in Switzerland will increase by 0.9% on quarterly basis (+3.4% y/y) against the forecast of +0.8% (+2.6% y/y) Private consumption index in Switzerland increased to 1.86 in July against the previous level of 1.81 (revised data of 1.80)

 

[LF.Anastasia]

Forex Analytics from LiteForex of 01.11.10: JPY: Japanese Yen remains at the high; off the market

At the Forex currency market at the beginning of a new week the Japanese Yen rate is at the local high, the USD however bounced up following a few sessions of decline.
Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it goes down confirming a previous sell signal for the pair. Stochastic Oscillator is giving a pair buy signal being outside the oversold zone.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 80.90 the pair will go to 81.10 and 81.30. If the pair exceeds the level of 80.20, traders’ targets will become the levels of 79.75 and 79.40.
As the data today evidenced average basic salary in Japan increased by 0.1% y/y in September against the previous decline by 0.2% which became the first growth factor over the past 25 months.
It became known on Friday that unemployment rate in September was 5.0% against 5.1% in August which became the only bright spot in Friday’s block of statistics. Other data was too poor: industrial production volume in QIII: -1.9% q/q against +1.5% in QII; net national CPI in September: 1.1% y/y against 1.0% in August; actual household expenditures in September remained unchanged against +1.7% in August. Thus, based on the statistics it can be said that deflation spiral in the Japanese economy continues to twist despite all measures taken by the authorities.
The Bank of Japan believe that Japanese economy will be back on the path of the moderate growth in 2011 while basic inflation average forecast still amounts to 0.4%. Average forecast of the actual GDP level for the next fiscal year is at the level of +2.1% against the forecast of 2.6% in July. The head of the Bank Shirakawa noted that monetary policy easing will be carried more active than before as the economy proceeds along the course of recovery
Last week the Bank of Japan decided to keep interest rate in the range of 0-0.1%; the decision was unanimous. In the follow up comments the regulator noted that the measures of the Bank will depend directly on price and market situation; the effect of the monetary policy easing will be seen as early as next year when the economy will return to positive indicators.

 

[LF.Anastasia]

Forex Analytics from LiteForex of 01.11.10: AUD: Australian Dollar continues to grow confidently

At the Forex currency market the Australian Dollar rate continues to go up keeping on the growth started last week.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it goes up which gives a pair buy signal. Stochastic Oscillator has not formed a clear signal.
Forex recommendations: in case of breakdown at the level of 0.9900 the pair will go to 0.9950 and further to 1.0010.
The following Australian data was released today:
– ABS: QIII, houses price index: +0.1% q/q, +11.5% y/y against revised +2.0% q/q, +16.3% y/y in QII.
Thus, the situation in the Australian real estate market is not notable for stability.
According to International Monetary Fund the Reserve Bank of Australian shall raise interest rates as the inflation should chill out and the outlook risks shall be reduced. As the IMF report stated regulator agreed that if the downside risks weakens the policy of the rates will dictate their growth.
The IMF believes that the Australian economy looks quite strong due to the demand in iron ore from China. The IMF report also stressed that the AUD rate seems overrated by 5-15%.
Earlier the minutes of the Reserve Bank of Australia last meeting held on 5 October was released. It explained the reasons which made the regulator keep interest rate unchanged at the level of 4.5%. According to RBA the interval at the moment is a sign of the monetary policy flexibility and the regulator stressed that it was considered and deliberate decision. Risks to the economy as well as risks to the AUD growth were considered which finally will affect inflation. According to the regulator inflation will remain in the target range and will reach the level of 2.75% by the end of the year. By the end of 2012 the Bank expects inflation to be close to 3%.
It became known earlier that basic index of consumer prices in Australia increased by 0.6% in Australia in QIII against the previous level of 0.5%. Consumer prices index increased by 0.7% in QIII against the previous level of 0.6%.

 

[LF.Anastasia]

Forex Analytics of LiteForex of 01.11.10: CAD: Canadian Dollar needs a break after the rapid growth

At the Forex currency market the Canadian Dollar rate declined slightly on Monday following the last week growth.
Forex forecast: MACD indicator is in the negative area for the pair USD/CAD, however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today.
Forex recommendations: in case of breakdown at the level of 1.0170 the pair will go to 1.0210 and 1.0270.
It became known earlier that the Canadian economy resumed its growth –following the recession in July GDP in Canada increased by 0.3% in August which agreed with the forecast. Production sector provided support to the economy demonstrating recovery after the decline in summer. Oil and gas production also supported the country’s economy (+1.5%).
Industrial sector increased by 0.5% in August; growth in the retail sales sector amounted to 1.1%.
Economists warn however that it is too early to rejoice at the Canadian economy growth as the real GDP growth in QIII can only amount to 1.5%.
The Bank of Canada meeting was held a week earlier; it was decided at the meeting to keep interest rate unchanged at the level of 1% per annum. The last rate increase took place in September (+25 basis points). According to the regulator who left the interest rate unchanged despite market expectations while the world economy tries to recover after the crisis it is necessary to study carefully aspects to reduce incentives in the monetary policy. Bank of Canada also reported the downward forecast revision on the economic growth pace for this year –to 2.3% against the level of 2.9%; apparently it is impacted by the neighborhood with the USA where the economic situation remains difficult.
The Bank of Canada made quite aggressive statement recently. Thus, the head of the Bank Mr. Carney noted that activity in the consumption sector in Canada will slow down and economic growth of the country will become more moderate. The Bank of Canada will only commence currency intervention in the event of extreme situation in the market, if economy will be under threat.