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[LF.Anastasia]

JPY: Japanese Yen continues to retreat despite the fact that the USD/JPY is overbought

The Japanese Yen rate continues to decline at the Forex currency market today; Yen is approaching to the lows of October, which we witnessed only
due to the currency intervention, conducted by the Bank of Japan. However, the demand for JPY is going down now as players are convinced that Asian economy develops steadily and buying reserve currency makes no sense. It is possible that this trend is temporary.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it is moving along the signal line, not giving a clear signal. Stochastic Oscillator has not identified a signal today either.

Forex recommendations: off the market.

Feasible event scenarios at Forex: in case of breakdown at the level of 83.60 the pair will go to 84.00 and 84.40. If the level of 83.25 is exceeded, traders' targets will become the levels of 82.20 and 82.50. The following Japanese data was released today:
- Index of coincident indicators revised to -1.2 points m/m in September (previous level was -1.3%);
- Index of leading indicators in September revised to -0.9 points against the previous level of -0.6 points;
- Index of lagging indicators in September revised to +0.9 points against the previous level of +1.0 points.

It became known earlier that activity index in the Japanese service sector reduced by 0.9% m/m in September against the previous level of -0.2% m/m.
Japanese Minister of Economy Mr. Qaeda noted earlier this week that Japanese economy will remain weak for some time; therefore risks should be carefully monitored. At the same time according to the politician, the rise in GDP could have been more rapid in QIII if only the rate of the Yen were not so high as to put pressure on the exports and imports levels.

The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA.

 

[LF.Anastasia]

AUD: Australian Dollar rate goes further away from the many years highs

At the Forex currency market the Australian Dollar rate continues to decrease without support from oil prices and external background.


Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and continues to decline, confirming the previous sell signal for the pair.
Stochastic oscillator is giving a similar signal today, being in the oversold zone.


Forex recommendations: traders' targets today will be the levels of 0.9680 and 0.9650.
The following Australian data was released today:
- Index of leading indicators is 0.0% m/m in September;
- Index of wages price is 1.1% q/q in QIII.

The Australian Minister of Finance updated budget forecast this week. Thus, GDP in 2011 is expected to be at the level of 3.5% (growth), in 2012 - 3.75% (unchanged). Net debt will amount to 6.4% by 2012. At that, new budget deficit will be higher by 41.5 billion AUD in 2010-2011. As for the employment sector: unemployment rate is expected to be at the level of 4.75% in 2011 and at the level of 4.5% in 2012.


The minutes of the RBA last meeting in November was released yesterday. At that meeting on 2 November interest rate was unexpectedly raised. The
document noted that interest rate was raised in order to facilitate the curb in the inflation rise, as mass investments in the mining sector, together with the increase in the employment sector supported the recovery of the national economy. The minutes of meeting emphasized that the balance of risks has shifted and in the current spectrum moderate tightening of the monetary policy seems reasonable.


"If we consider monetary policy in a long run, such progress of situation means that there were reasons to raise interest rate. The trend of the constant rise in inflation will most likely remain relevant in the medium term" - said the document. Market believes that the RBA is unlikely to raise interest rate before QIV of 2011. Current level of the interest rate in Australia is at the level of 4.75% per annum.

 

[LF.Anastasia]

EUR/USD: Euro's attempts to recover are not supported by the market yet

The pair EUR/USD is at the lows of seven weeks at the Forex currency market on Wednesday morning, as it still experiences pressure, caused by the Irish problems.


By 10.20 Moscow time the Euro is at 1.3499 against closing session level of 1.3489 yesterday.


Official Ireland has not appealed for help yet and market believes that the longer the country delays with the request, the harder it is for the Unified
European currency. The situation in Ireland is the same as it was in Greece, when speculative agiotage was stronger than the real fear for the future of
Eurozone. As the EU Commissioner Mr. Rehn noted yesterday Irish problems has already affected the debt market.

In addition some pressure is exerted by China, which intends to introduce monetary tightening policy to avoid excessive inflationary pressure.
A lot of macro statistics is going to be released today; therefore volatility at the market can be kept at the high level. Most likely the pair UR/USD will not go beyond the range of 1.3450-1.3780 at the trading session today.

 

[LF.Anastasia]

EUR/USD: Potential help to the Irish banks supported Euro

The pair EUR/USD continues ascending trend which started last night, as investors place great hopes on the meeting between Ireland, European Union, ICF and European Central bank scheduled for today.


By 10.25 Moscow time the Euro is at the 1.3602 against closing session level of 1.3529 yesterday. Talks of the representatives of Ireland, EU, ICF and ECB will start on Thursday. The meeting shall to assess the needs of the Irish banking system and propose a plan of its stimulation. Market participants hope that help to the country will be provided, however the fear that the problem can spread to the other countries of Eurozone, is still very high at the market.


The prospect of helping out Ireland has already encouraged interest to riskat the market and if help will provided in full volume, the Euro can receive a short run support. A lot of statistics is going to be released today: the U.S. data on the number of unemployment benefit requests will be known this afternoon, which is expected to be weak. Most likely the pair EUR/USD will not go beyond the range of 1.3570-1.3800 on Thursday trading session.

 

[LF.Anastasia]

GBP: British Pound Sterling began to recover

At the Forex currency market the British Pound Sterling rate goes up amid positive external background, however purchase of the Pound has been delayed due to the expectations of the UK statistics today.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, it is moving along the signal line, not giving a clear signal. Stochastic
oscillator has not formed a clear signal either on Thursday, being in the neutral zone.


Forex recommendationsи: off the market. Feasible event scenario at Forex: in case of breakdown at the level of 1.5940 the pair will go to 1.5990 and 1.6040. If the level of 1.5850 is exceeded, traders 'targets will be the levels of 1.5810 and 1.5780.

In spite of positive external factor, daily charts for the pair GBP/USD looks like bearish. The UK statistics released yesterday was positive in general. Unemployment rate remained at the level of 4.5% in October; while the number of unemployed reduced by 3.7 thousand (in September: +1.3 thousand). Average weekly earnings in the UK increased by 2.2% in September excluding bonuses.

In addition, the minutes of the Bank of England last meeting was released in the middle of the week, in general it did not say anything new. Thus,
Sentance is still of the opinion that the rates should be raised to 0.75%. The document also stressed that it will be wrong to start monetary policy
tightening, having a lot of spare capacity in economy. The regulator believes that monetary committee does not assess in full the effect of the budget expenses reduction.

The Bank of England believes that the upper limit of the inflation range should be at the level of 3%. However the data released earlier showed CPI
growth by 3.2%. At the same time the UK Inflation in September was 3.1%. According to Mervin King, the Governor of the Bank of England:"if inflation
expectations increase significantly above the target indicator, then, important measures in the monetary policy could be taken to reduce expectations of the prices rise."

 

[LF.Anastasia]

CHF: Swiss Franc recovers from decline however it is not yet a trend reverse

At the Forex currency market Swiss Franc rate is traded upward on Thursday, however the currency still follows after external background, where the
optimism today is based on the expectations of the Irish news. The pair USD/CHF seems overbought, therefore its decline today can be considered as technical correction. We can speak about reverse trend if the pair approaches to 0.9770-0.9750.


Forex forecast: MACD indicator is in the positive area for the pair USD/CHF; however is started to decline, giving a pair sell signal. Stochastic
Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: the target of the pair's USD/CHF corrective decline will be the levels of 0.9820 and 0.9770.
The following Swiss data was released today:
- Foreign trade surplus in October is 2.1 billion francs;
- Imports in October: 5.5% y/y to 14.6 billion francs;
- Exports in October: +6.8 y/y to 16.7 billion francs.


Despite the Franc's previous growth, demand for the goods, manufactured in Switzerland is still very high. Swiss data, published this week was not too positive so far: index of the import prices reduced by 0.9% m/m (+0.2% y/y), producer prices index dropped by 0.2% m/m (+0.4% y/y) last month. Besides, producer price index and index of import prices (total) subsided by 0.4% m/m.


While Franc is far from its highs, the SNB will not need to make decisions on the rate increase. Representative of Swiss National Bank Mr. Jordan noted not once that prolonged retention of the interest rates at the low level can cause additional risks for the economy. SNB intends to closely monitor the dynamics of the real estate sector. We would remind that Dantin noted earlier that crisis in the developing countries has slowed down and almost
finished and economies of Japan and the West are recovering however recovery is very unstable. In his opinion estimation of the Swiss GDP for September is justified. Dantin noted that strong Franc and slow pace of the recovery in the world finance system have a negative impact on Switzerland.

 

[LF.Anastasia]

JPY: Japanese Yen determines movement direction on Thursday

The Japanese Yen rate is traded close to the starting level of today's session at the Forex currency market on Thursday, trying to determine movement direction.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it goes down today, giving grounds for a pair sell signal.
Stochastic oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: traders' targets today will be the levels of 82.75 and 82.30. The last Japanese statistics released this week was not too impressive (index of leading indicators was revised to -0.9 points in September against the previous level of -0.6 points; index of coincident indicators was revised tp -2.3 points m/m in September (previous level: -1.3). In addition activity index in the Japanese service sector reduced by 0.9% m/m in
September against the previous level of -0.2% m/m .

However the fall of the Yan this week at Forex gave local authorities a chance to focus their attention on the daunting problems in economy- in
particular, on deflation. The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA.

It was noted earlier that in accordance with the Bank of Japan expectations, domestic economy will revert to the moderate growth path in 2011; while
average forecast of basic inflation amounts to 0.4% so far. Average forecast of the real level of GDP for the next fiscal year is at the level of +2.1%
against the forecast of 2.6% in June. The head of the Bank, Mr. Chirakawa noted that they will carry out monetary policy easing more actively than it
was before, as the economy follows the way of development.

The Japanese GDP growth was 2.5% in QIII (in QII the index increased by 1.5%) - this was the economists' average forecast. The data will be released on 15 November, on Monday. However, market believes that after some acceleration in QIII, Japanese economy will slow down by the end of the year, as the high rate of JPY affects exports' levels.

If this forecast comes true, the Bank of Japan will have to take additional measures to support economy.

 

[LF.Anastasia]

AUD: Australian Dollar continues to grow

At the Forex currency market the Australian Dollar rate continues growth that started last night when oil retreated from the two weeks lows.


Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, giving ground for a pair buy signal. Stochastic Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: if the current external background is maintained and in case of breakdown at the level of 0.9900, buyers' targets will be the levels of 0.9950 and 1.0000.


The situation in the country's economy remains unchanged. Worth noting external news was that oil prices retreated from the two weeks' lows which
encourages the growth of the commodity currencies. It became known yesterday that index of leading indicators remained unchanged in September which indicates some uncertainty in the producers and investors' sentiments after the release of the minutes of the RBA meeting of 2 October, when the interest rate was raised unexpectedly. The document noted that interest rate was raised in order to facilitate the curb in the inflation rise, as mass investments in the mining sector, together with the increase in the employment sector supported the recovery of the national economy. The minutes of meeting emphasized that the balance of risks has shifted and in the current spectrum moderate tightening of the monetary policy seems reasonable.


"If we consider monetary policy in a long run, such progress of situation means that there were reasons to raise interest rate. The trend of the constant rise in inflation will most likely remain relevant in the medium term" - said the document. Market believes that the RBA is unlikely to raise interest rate before QIV of 2011. Current level of the interest rate is 4.75% per annum.

The Australian Minister of Finance updated budget forecast this week. Thus, GDP in 2011 is expected to be at the level of 3.5% (growth), in 2012 - 3.75% (unchanged). Net debt will amount to 6.4% by 2012. As for the employment sector- unemployment rate is expected to be at the level of 4.75% in 2011 and at the level of 4.5% in 2012.

 

[LF.Anastasia]

CAD: Canadian Dollar is determined to regain from the previous fall

At the Forex currency market the Canadian Dollar rate increases steadily, using growing oil prices and positive external background as a support.


Forex forecast: MACD indicator is in the positive area for the pair USD/CAD, however it goes down, giving ground for a pair sell signal. Stochastic
Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: if the current external background is maintained and in case of breakdown at the level of 1.0180 the pair will go to 1.0155 and 1.0110. There is an opinion at the market that the Bank of Canada will not change the interest rate until QII next year, as economic recovery rate slows down in the country. The rate was increased 3 times in a row this year and at the last meeting of 19 October the regulator decided not to change it again.

Close proximity to the USA with QE2 is unlikely to bring positive factor to Canada. Therefore it is too early to say about the rate growth. It is possible that while policy of easing is conducted in America, Canadian rate will remain unchanged. The head of the Bank of Canada Mr. Carney noted earlier that economy needs regulation system reforms, as the risk of collapse of the financial institutions "which are too large to become bankrupt"' is still too high at the moment.

He also stressed that the banks themselves should comply with market discipline and currencies' rates should reflect the fundamentals. According
to Carney increasing tension at the currency market bears risks for Canada itself. Interest rate in Canada is at the level of 1% per annum. The last increase took place in September this year (+25 basis points).

 

[LF.Anastasia]

EUR/USD: Euro continues to grow on Friday

The pair EUR/USD continues to be traded upward at the Forex currency market on Friday morning.

By 10.40 Moscow time the Euro is at 1.3681 against closing session level of 1.3641 yesterday. Players are still waiting for the news from Ireland, which started talks with European Union, International Currency Fund and European Central Bank yesterday to discuss the issue of providing a package of financial aid to the country's banking system. The second area of discussion at the trading floors is Chinese issue. Investors believe that the regulator of the country will increase the rate before December this year.

The day is going to be quiet in terms of macro statistics therefore all investors' attention will be focused on the external background. Most likely the pair EUR/USD will not go beyond the range of 1.3620-1.3800 at the trading session on Friday.