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[LF.Anastasia]

EUR/USD: Euro continues to decline, however volume of sales reduces

The pair EUR/USD has subsided for the fourth consecutive session at the Forex currency market under the pressure of external background.
By 9.50 Moscow time the Euro is at 1.3313 against the closing session level of 1.3335 yesterday.

It is a day off in the USA due to the Thanksgiving Day celebration therefore activity at the trading floors is expected to be low. There is not a lot of news on Thursday and external background will continue to be the major catalyst today. It is worth noting that the USA Dollar continues to fall against the Australian Dollar, which indicates some interest in risk despite the obscure external background. There is still some concern about the intentions of China which reported earlier about measures to cool economy of the country. The Euro, meanwhile, looks oversold. Most likely the pair EUR/USD will not go beyond the range of 1.3290-1.3450at the trading session today.

 

[LF.Anastasia]

GBP: British Pound Sterling can find itself under pressure again

At the Forex currency market the British Pound Sterling rate is still in the positive area today, however the volume of sales at the trading floors is not large and technical factors indicate the possibility of the Pound decline.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it continues to fall, confirming a previous sell signal for the pair. Stochastic Oscillator is giving a similar signal today, being in the oversold area.

Forex recommendations: if bearish sentiments for the pair GBP/USD intensifies and in case of breakdown at the level of 1.5740 the pair will go to 1.5680 and 1.5650.

Speaking yesterday, a member of the Monetary Committee of the Bank of England Mr. Sentence stressed that preservation of the interest rate at the low level for a long time will undermine economy and weakens it. At the same time fiscal discipline of the banks also becomes weaker. Sentence supports the rate increase and he is convinced that the country’s economy will withstand such step of the monetary authorities. As a solid argument the politician offered the value of inflationary levels which will remain above the target level of the regulator for the next two years, if the rate is not increased.

It became known earlier 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.

The UK block of news, released in the middle of the week included in particular the following: index of the UK service sector which increased by 0.6% in September against the growth by 0.2% in August. The level of GDP in the UK remained unchanged in QIII, demonstrating the rise by 0.8% (+2.8% y/y)

Opinion of Sentence contradicts to the view of the representative of the Bank of England Mr. Posen, who 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 goes down on Thursday despite the market stability

At the Forex currency market it seems that prerogative of determining trends directions is in the hands of the speculators again, otherwise what else can explain the current decline of Swiss Franc today.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and it is moving up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if the bullish sentiments intensify for the pair USD/CHF and if the parity level of 1.0000 is broken down, the pair will go to 1.0050 and 1.0090.

According to the data released on Thursday employment in Switzerland excluding agricultural sector increased to 4.08 million people in QIII against the previous level of 3.97 million people. The data is positive for the domestic economy.

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 the National bank of Switzerland is scheduled for 16 December. 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.

 

[LF.Anastasia]

JPY: Yen continues to consolidate in the previous range

The Japanese Yen rate goes up slightly at the Forex currency market today; however the currency has consolidated in the range of 82.90-83.70 since 17 November.

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 has not identified a clear 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 83.80 the pair will go to 84.10 and 84.50. If the level of 83.30 is exceeded, traders’ targets will be the levels of 83.00 and 82.80.

Representative of the Bank of Japan Mr. Nakamura noted on Thursday morning that high rate of the Yen has already left an imprint on the national economy and on the stock market volatility. In his view, growth of the JPY can trigger downward pressure on the level of domestic prices. According to the politician the pace of exports in Japan will remain slow and industrial indicators will be weak.

Nakamura reiterated that Central Bank will take measures in the economy if the need arises, however purchase of assets by the Bank of Japan is not aimed to stimulate the rise in demand for such securities. 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.

The Bank of Japan interest rate has been maintained 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.

 

[LF.Anastasia]

AUD: AUD opposes external background

At the Forex currency market the Australian Dollar rate makes no headway on Thursday, being close to the level of the starting session as it bears pressure from both external background and the recurrence of investors’ interest in risk.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, however it goes up, giving grounds for a pair buy signal. Stochastic Oscillator is in the neutral zone today and it does not give a clear signal.

Forex recommendations: if bullish sentiments intensify and the level of 0.9830 is broken down the pair will go to 0.9870 and 0.9900. The level of capital expenditures in Australia increased by 6.2% on quarterly basis in QIII as per Capex estimations against the previous reduction by 4%. Economists’ forecast amounted to +3.1%, which confirmed high level of confidence to the Australian economy.

However the data released on Wednesday is ambiguous – index of leading indicators CB reduced by 0.1% n September against +0.2% in August; volume of completed construction in QIII declined by 2.1% against the forecast of growth by 2.0%. 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.

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. Tension has also been intensified by the conflict between the South and North Koreas.

 

[LF.Anastasia]

GBP: British Pound Sterling will determine movement direction at the end of the week

At the Forex currency market the British Pound Sterling rate is traded downward on Friday , continuing to follow general market sentiments.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it still directed upward which gives grounds for a pair buy signal. Stochastic Oscillator has not identified a signal at the end of the week, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5790 the pair will go to 1.5840 and 1.5870. If there is a breakdown at the level of 1.5730, traders’ targets will be the levels of 1.5680 and 1.5650. For the time being the pair GBP/USD goes down under the pressure from external background, however it is possible that the Pound will start to reverse.

Several major British monetary politicians expressed their attitude to the current state of economy and outlined their vision of the future. The head of the Bank of England Mervyn King stressed that authorities do not take compulsory measures to decrease the rate of the Pound and they are interested in the steady economic recovery. He also stressed that export levels in the country began to rise and there is no need to revise inflation in the country yet.

Representative of MPC Mr. Sentence said again that it is necessary to raise interest rates because next year the regulator will have to combat inflation growth. Sentence had already explained earlier this week that preservation of the interest rate at the low level for a long time undermines economy and weakens it. At the same time fiscal discipline of the banks also becomes weaker. Sentence supports the rate increase and he is convinced that the country’s economy will withstand such step of the monetary authorities. As a solid argument the politician offered the value of inflationary levels which will remain above the target level of the regulator for the next two years, if the rate is not increased.

Sentence’s opinion contradicts to the view of the representative of the Bank of England Mr. Posen, who 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.

 

[LF.Anastasia]

EUR/USD: Euro reverted to decline again at the end of the week

The pair EUR/USD is traded downward again at the Forex currency market on Friday –despite redound yesterday and stable external background in Asia, negative factor for the Euro is still effective.

By 9.20 Moscow time the Euro is at 1.3302 against closing session level of 1.3359 yesterday.

Trading floors in the U.S. are closed to the Thanksgiving Day celebration. Important statistics is not going to be released today, however Black Friday starts in American shops –the beginning of the Christmas sales and it is expected that people will spend 3% more this year than a year earlier. Later this will have a positive effect on the country’s statistics.

Japanese news was released this morning in Asia which showed that deflation in the country is coming out of recession, and in general this can become a catalyst to restore interest in risk in the market. However the effect has not become apparent yet. Activity can be added by the daily news on Europe and GermanyMost likely the pair EUR/USD will not go beyond the range of 1.3280-1.3450 on Friday trading session.

 

[LF.Anastasia]

CHF: Swiss Franc continues to retreat

At the Forex currency market Swiss Franc continues to slide down –external background remains unchanged today and the day will be uneventful in terms of statistics, therefore there is a great possibility that the current movement will continue.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and however it is moving along the signal line and does not give any signal. Stochastic Oscillator is giving a pair sell signal, being in the overbought area.

Forex recommendations: off the market.

Feasible event scenario at Forex: if bearish corrective sentiments intensify for the pair, traders’ targets will be the levels of 0.9925 and 0.9870. It breakdown will not take place we will see subdued purchase and consolidation close to the current levels.

It is unlikely that someone will wish to take risk before the New Year and the parity level can continue only to loom on the horizon.
The situation in Switzerland remains stable.

The next meeting of the National bank of Switzerland is scheduled for 16 December. We will remind that interest rate in Switzerland remains unchanged for 19 months already at the level of 0.25% per annum. The head of the Swiss national Bank Mr. Hilderbrand is convinced that current level of the interest rate is acceptable and he noted that the situation now is ideal for the rise of the risks.

Philipp Hilderbrand, the head of Swiss National Bank, said yesterday 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.

According to the data released on Thursday employment in Switzerland excluding agricultural sector increased to 4.08 million people in QIII against the previous level of 3.97 million people. The data is positive for the domestic economy. 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. However it can be only short term growth- until December for sure.

 

[LF.Anastasia]

JPY: Yen sunk to the 8 months lows

At the Forex currency market the rate of the pair USD/JPY soared to the highs of 8 months, however the Yen continued to decline despite quite favourable news from Japan.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY on Friday and it goes up, confirming a previous buy signal for the pair. Stochastic Oscillator is giving a similar signal today, being in the oversold area.

Forex recommendations: buyers’ targets today will be the levels of 84.30 and 84.50.

As the data released today showed, level of deflation began its recession in Japan. Thus, consumer prices continued to decline in October, which became the twentieth consecutive reduction of the index; although its pace has obviously slowed down.

Economists note that deflationary spiral began to unwind, following the introduction of high taxes on tobacco products in the country. CPI reduced by 0.6% y/y last month against the fall by 1.1% y/y in September.

Nevertheless, Japanese economy will suffer from the consequences of deflation for a long time, which will result in slow pace of the GDP growth in the country and in the levels of exports too. Note, it is not clear yet whether this trend will consolidate or not.

The JPY has hardly responded to the morning’s statistics.

Representative of the Bank of Japan Mr. Nakamura noted on Thursday morning that high rate of the Yen has already left an imprint on the national economy and on the stock market volatility. In his view, growth of the JPY can trigger downward pressure on the level of domestic prices.
Nakamura reiterated that Central Bank will take measures in the economy if the need arises, however purchase of assets by the Bank of Japan is not aimed to stimulate the rise in demand for such securities.

The rates of the Bank of Japan have been maintained in the target level of 0-0.1% per annum. In addition 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 is in a sale

At the Forex currency market the Australian Dollar rate goes down on Friday – there was a strong signal for the currency sale, which was intensified by the external background.

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

Forex recommendations: traders’ targets today will be the levels of 0.9610 and 0.9580.

The head of the Reserve Bank of Australia Glenn Stevens stressed this morning that GDP growth in 2011 and 2012 amounted to about 3.5%. At the same time he foresees the risks of overheating in Asian economy; therefore it is urgently required to reduce growth rate.
The politician clarified that world economic growth in his opinion, will exceed 4% this year and current policy of Australia in the field of credit and monetary relations is quite adequate so far.

The AUD’s response to Stevens’ statement was inactive.
The level of capital expenditures in Australia increased by 6.2% on quarterly basis in QIII as per Capex estimations against the previous reduction by 4%. Economists’ forecast amounted to +3.1%, which confirmed high level of confidence to the Australian economy.
However the data released on Wednesday is ambiguous – index of leading indicators CB reduced by 0.1% n September against +0.2% in August; volume of completed construction in QIII declined by 2.1% against the forecast of growth by 2.0%.

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.