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[LF.Anastasia]

GBP: British Pound Sterling is under sale again

At the Forex currency market the British Pound Sterling is traded downward on Tuesday morning, continuing the rollback which started yesterday when the currency followed the trend of external background.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down which gives a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: taking into account external background and possibility that bears can be back for the pair, in case of breakdown at the level of 1.5860 the pair will go to 1.5820 and 1.5770.

Great Britain actively participated in the talks regarding Irish debts and problems in the banking sector of the country; British Finance Minister Osborn stressed yesterday that Irish government had to make difficult decisions and that the country did not have flexible currency rate. However, the politician emphasized that the UK will not take part in the developing of a constant anti-crisis mechanism, as they have domestic problems to settle. And the UK has them plenty.


The UK statistics released last week 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 last 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 stresses that it will be wrong to start monetary policy
tightening, while having a lot of spare capacity in economy. The regulator believes that monetary committee has not assessed in full the effect of the
budget expenses reduction.

Representative of the Bank of England Mr. Posen noted earlier that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption. According to him instruments, which are available to the regulator cannot always be fully effective in combating the bubbles -Posen is convinced that inflation of the stock market bubbles would be very difficult to track.


The UK macro-economic calendar is uneventful again today, therefore the pair GBP/USD will move in compliance with external background.

 

[LF.Anastasia]

EUR/USD: Instability in Europe buries Euro again

The pair EUR/USD goes down for the second consecutive day at the Forex currency market - investors have analyzed situation in Ireland and they fear
that elections in Ireland can become an obstacle for the talks with ICF and EU.


By 9.55 Moscow time the Euro is at 1.3545 against closing session level of 1.3627 yesterday. Political limbo in Ireland has been actively discussed this morning at the market. Prime-Minister of Ireland Cowen stated that in January as soon as the budget is adopted, the country's parliament will be dissolved and elections for a new parliament will take place; while Cowen is not going to resign yet. Market participants weigh the risks of this factor which impacts on the sales of the Euro.

The day is going to be eventful today. The data on the Eurozone countries (Germany, France) will be released and in the afternoon important news from the U.S will become known including revised GDP value in QIII. All these together will intensify volatility at the market. Most likely the pair UR/USD will not go beyond the range of 1.3500-1.3750 on Tuesday trading session.

 

[LF.Anastasia]

CHF: Swiss Franc rate continues to go down gradually

At the Forex currency market Swiss Franc rate slides down slowly on Tuesday morning and it has been going on for the third consecutive session under the pressure of external background. However, it is possible that due to high degree of uncertainty at the market investors' interest in the CHF will grow because the currency can serve as a safe habour.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF, however it goes down, confirming a previous sell signal for the pair.
Stochastic Oscillator has not identified a clear signal today, being in the oversold zone.

Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 0.9925 the pair will go to 0.9970 and to the parity level. If the level of 0.9860 is exceeded, traders' targets will become the levels of 0.9820 and 0.9780. The situation in Switzerland still remains almost unchanged.

We will reiterate our opinion that while Franc is far from its highs, the SNB will not need to make rate increase decisions. 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 also 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 process 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. As it became known earlier Swiss surplus of trade balance increased to 2.102 billion francs in October while a month earlier the index amounted to 1.690 billion francs.

Note that situation in Ireland can change in favour of Franc - if investors will continue to avoid risks, the CHF stability will enable it to grow.

 

[LF.Anastasia]

JPY: The rate of Yen is being corrected from the highs of November

At the Forex currency market the Japanese Yen rate regains from the previous fall amid instability at the capital markets.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it goes up, giving a pair buy signal. Stochastic oscillator also gives the same signal, being in the neutral zone.

Forex recommendations: if bullish sentiments intensifies and in case of breakdown at the level of 83.80 the pair will go to 84.10 and 84.50.
It is a day off in Japan today therefore there is no economic news in the country.

Note that the Yen has responded to the investors’ withdrawal from risks for the first time over a long period; slight recovery today should be regarded as correction, however in case of consolidation of this result we will be able to speak about possibility of the trend reversal.

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. As was noted earlier 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.

Japanese Finance Minister Mr. Noda stressed yesterday that authorities intend to take decisive measures when required and if the Yen starts to grow rapidly. He also noted that the Bank of Japan shall provide full support to the country’s economy.

Noda also expressed hope that consumer prices in Japan will begin to grow in the new fiscal year which starts in April 2012.

 

[LF.Anastasia]

AUD: Decline of Australian Dollar resumed with renewed force

The Australian Dollar rate resumed its decline at the Forex currency market on Tuesday under the pressure of external background.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and it continues to go down, confirming a pair previous sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: in case of breakdown at the level of 0.9770 traders’ targets today will be the levels of 0.9720 and 0.9675.
Information background remains unchanged for Australia. Statistics, which is scheduled for publication this week, will be of minor importance; tomorrow for example, the data on completed construction costs will be released; on Wednesday - the index of the capital expenditure in private sector will become known.

Chief newsmaker for Australia is China – the country increased the level of reserve requirements for the banks for the fifth time this year, which suggests that the Celestial Empire intends to raise the level of the interest rate further. This is a negative signal for Australia and AUD.
According to the average forecast of economists and analytics 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 its 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.

It became known earlier 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.

 

[LF.Anastasia]

EUR/USD: Euro’ growth in the morning was not more than technical rebound

The pair EUR/USD is traded with slight increase at the Forex currency market on Wednesday morning following significant fall yesterday caused by the pressure from external background and speculative activity at the market.

By 10.00 Moscow time the Euro is at 1.3390 against the closing session level of 1.3368 yesterday.

The fall for more than two points a day – that has not happened to the Euro for a long time. External background which has already been overshadowed by the speech of the German Chancellor Ms. Merkel and her opinion that the Unified European currency is in the difficult situation and it is weak was amplified by the morning information about the conflict between South and North Koreas. The negative factor for the Euro yesterday was the information about the increase revision of the U.S. DGP in QIII (2.5% against 2% earlier).

The day will be eventful today: trading floors in the USA are closed due to the Thanksgiving Day celebration; therefore the main statistics will be released today and volatility on the trading floors is going to be high.

Most likely the pair EUR/USD will not go beyond the range of 1.33320-1.3550 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound Sterling will determine movement direction against the unstable external background

The British Pound Sterling rate is traded slightly upward at the Forex currency market on Wednesday however it looks more like a technical correction at the moment after yesterday’s fall.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down, giving a pair sell signal. Stochastic Oscillaotr is giving a pair buy signal, being in the oversold zone.

Forex recommendations: off the market.

Feasible event scenarios at Forex: in case of breakdown at the level of 1.5850 the pair will go to 1.5900 and 1.5950. If the level of 1.5770 is exceeded, traders’ targets will be the levels of 1.5700 and 1.5660.

It became known yesterday that a number of approved mortgage requests in the UK declined to 30.8000 in October against the previous figure of 31.100. It has become one more indication that real estate market in the country is running down. A lot of statistics will be released today. The data on the revised UK GDP in QIII will become known, and also preliminary data on the business investments in QIII and service sector index in September. In addition a member of the Monetary Policy Committee of the Bank of England, Andrew Sentence will make a speech this afternoon.

Great Britain actively participated in the talks regarding Irish debts and problems in the banking sector of the country; British Finance Minister Osborn stressed earlier that Irish government had to make difficult decisions and that the country did not have flexible currency rate. However, the politician emphasized that the UK will not take part in the developing of a constant anti-crisis mechanism, as they have domestic problems to settle. And the UK has them plenty.

Representative of the Bank of England Mr. Posen noted earlier that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption. According to him, instruments, which are available to the regulator cannot always be fully effective in combating the bubbles –Posen is convinced that inflation of the stock market bubbles would be very difficult to track.

 

[LF.Anastasia]

CHF: Swiss Franc tries to rebound

At the Forex currency market on Wednesday Swiss Franc is recovering slightly, however general tone of the trading is still negative.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and it goes up, giving a pair buy signal. Stochastic oscillator has not formed a clear signal today, being in the overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0000 the pair will go to 1.0050 and 1.0085. If the level of 0.9925 is exceeded traders’ targets will become the levels of 0.9900 and 0.9870.

Philipp Hilderbrand, the head of Swiss National Bank, said today that his belief in the stability of Eurozone remains unchanged. In his view, European leaders are able to adopt measures to restore financial stability which, in its turn, will reduce pressure on the CHF“. “I am convinced that European Union and Eurozone will cope with challenges. Stability of the Eurozone is an important factor which affects the Franc and economy.” –he emphasized in his speech.

The CHF rose by 11% against the Euro since the beginning of the year because of financial problems in Eurozone. Hilderbrand also noted in the middle of the week that the regulator of Switzerland is still focused on the maintaining levels of price stability in the country while the Bank is ready to take the extreme measures if the need arises. It became known earlier that Swiss surplus of trade balance increased to 2.102 billion francs in October while a month earlier the index amounted to 1.690 billion francs.

Note that situation in Ireland can be favourable for the Franc – if investors continue to avoid risks, stability of the CHF will encourage its growth.
The next meeting of National bank of Switzerland is scheduled for 16 December.

 

[LF.Anastasia]

JPY: Yen regains its previous status of safe harbor; signals however are mixed

The Japanese Yen rate continues to grow gradually at the Forex currency market on Wednesday which is still difficult to identify as trend reversal; however it is obvious that amid global instability the Yan is again in demand as a safe harbor.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it goes down which gives a pair sell signal. Stochastic Oscillator is giving a pair buy signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.30 the pair will go to 83.50 and 83.95. If the level of 82.80 is exceeded, traders’ targets will be the levels of 82.50 and 82.10.

Markets in Japan were closed yesterday due to the holiday in the country.

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. As was noted earlier 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.

Japanese Finance Minister Mr. Noda stressed earlier that authorities intend to take decisive measures when required and if the Yen starts to grow rapidly. He also noted that the Bank of Japan shall provide full support to the country’s economy.

Noda also expressed hope that consumer prices in Japan will begin to grow in the new fiscal year which starts in April 2012. In general, the situation in Japanese economy remains unchanged, since attention of the monetary authorities is focused on the anti-deflation move and on the support to economy.

 

[LF.Anastasia]

AUD: Bullish interests are obvious for Australian Dollar

At the Forex currency market the Australian Dollar rate goes up on Wednesday despite market sentiments, such as weak macro data, conflict in Koreas and external background.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD however it started to go up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: considering that bullish sentiments for the pair will probably intensify, and in case of breakdown at the level of 0.9830, buyers’ targets today will be the levels of 0.9860 and 0.9900.

The following Australian data was released today:
– Volume of complete construction in QIII declined by 2.1% against the growth forecast by 2.0%;
– Leading indicators index CB decreased by 0.1% in September against +0.2% in August.

In general, statistics today did not give rise to optimism. Current growth was caused entirely by the markets participants’ belief that the last events in Ireland and South Korea do not annul global economy recovery.

Chief newsmaker for Australia is China – the country has increased the level of reserve requirements for the banks for the fifth time this year, which suggests that the Celestial Empire intends to raise the level of the interest rate in the future. This is a negative signal for Australia and AUD.
According to the average forecast of economists and analytics 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 its 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.