LiteForex's analytics

[LF.Anastasia]

JPY: Japanese Yen does not cease efforts to recover

At the Forex currency market the Japanese Yen rate continues to demonstrate weak attempts to recover.

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

Forex recommendations: if bearish sentiments intensify for the pair, traders’ targets will become the levels of 83.10 and 82.80.

The following Japanese news was released today:

- Corporate goods prices in November: +0.9% y/y against +0.8% in October;
- Index of business conditions for large companies: -0.9% in QI, +0.8% - in QII;
- Consumer confidence index in November: 40.4 against 40.9 in October.

Thus, consumer confidence in the Land of the Rising Sun continues to decline for the fifth consecutive month. Is seems that people are still guided by the fears of the economic instability in the country which can affect labour market and salary levels.

People belief that the time is not ripe for purchasing large goods also decelerates recovery of confidence.

Yesterday long-awaited data on the Japanese level of GDP in QIII was published; real GDP was revised to +1.1 q/q (+4.5% y/y) against preliminary estimate of +0.9%. It is interesting that according to the Japanese Cabinet, the rise in index was promoted by the growth in private sector consumption, which usually accounts to about 60% of GDP. Special demand was observed in the energy-efficient cars for the reason that period of subsidy provided for them will expire soon.

However, economists do not console themselves with illusions that results of the fourth quarter will be as inspiring. On the contrary, all predictions are now reduced to the fact that the data in the current quarter will be weak, since the economy continues to decline.

As it became known on Tuesday, index of coincident indicators in Japan declined to 100.7 in October against expectations of 100.8. The data today demonstrated the second consecutive reduction of the indicator. The index of leading indicators fell for the fourth time in a row, to the level of 97.2.

 

[LF.Anastasia]

AUD: Australian Dollar continues to tend upward

At the Forex currency market on Friday the Australian Dollar continues upward trend which started yesterday.

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 giving a similar signal today, being in the neutral zone.

Forex recommendations: if the current external background is maintained and in case of breakdown at the level of 0.9880 the pair will go to 0.9920 and 0.9950.

GDP in Australia increased by 0.2% on quarterly basis in QIII; while analytics had expected the rise by 0.5%; the growth over last quarter positioned as the lowest over the last two years, therefore GDP dynamics seems to be descending. However, the Australian Dollar rate can resume the decline in the medium term because investors’ concern about problems in Eurozone is still strong and the Euro is still too weak.

It became known earlier that retail sales in October amounted to-1.1% m/m against +0.1% in September and trade balance surplus in October was $2.625 billion. It also became known earlier that current account balance amounted to -А$7.83 billion in QIII against the forecast of -А$6.60 billion. All these factors will buck against the AUD.

However the data released later outbalanced existing negativism. Employment rate in Australia demonstrates vigorous growth which is a clear indication of a good recovery rate of the domestic economy. According to the data released today employment rate rose by 54.6 thousand jobs in November; while unemployment rate declined to the level of 5.2% against the previous level of 5.4%.

Investors were very happy to hear the news and the rate of the AUD went up. The importance of the employment growth is hard to overestimate: it will cause the rise in the consumer spending, which will provide additional support to the Australian economy. This explains recent optimism of the head of the RBA Glen Stevens in regards to the outlooks for the economy.

On Tuesday morning a regular meeting of the Reserve Bank of Australia was held, where the regulator decided to keep current interest rate unchanged, at the level of 4.75% per annum. In general it agreed with the market expectations. The accompanying statement, summarizing the results of today’s meeting said that the rate of the AUD at Forex this year has consolidated considerably, reflecting high prices of raw products and expectations of the monetary policy progress in Australia. The RBA expects that inflation levels will change slightly in the coming quarters, although in the medium-term, inflation growth is possible. The regulator believes that current monetary policy complies is in full compliance with economic realities.

 

[LF.Anastasia]

EUR/USD: Euro is again under pressure exerted by European controversy

The pair EUR/USD is traded sluggishly, with lack of initiative at the Forex currency market on Monday morning amid controversy in Eurozone.
By 9.50 Moscow time the Euro is at 1.3195 against closing session level of 1.3226 on Friday.

Thus, the situation in Eurozone is quite tricky: there is controversy among EU management in respect of ways and methods of resolving debt problems in the region. The next summit of the European Union leaders will be held this week and this issue is going to be discussed there. Meanwhile, a number of countries agree that bonds issue is the proper way of financing the rescue program of peripheral countries (Italy, Belgium); others, such as France and Germany are firmly against.

The day is going to be uneventful in terms of macro-statistics; therefore external background will set the pitch for the major sentiments at the market.
Most likely the pair EUR/USD will be in the range of 1.3160-1.3290on Monday trading session.

 

[LF.Anastasia]

CHF: Swiss Franc tries to continue its growth

Swiss Franc rate is making new attempts to grow at the Forex currency market at the beginning of the week; however, it is the third consecutive day already when its efforts have not too strenuous.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and it goes down, confirming the previous sell signal for the pair. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: in case of breakdown at the level of 0.9800 the pair will go to 0.9780 and 0.9750.

As it became known on Monday producer prices and import prices in Switzerland declined by 0.2% m/m in November against expected growth by 0.1%

Unemployment rate remained at the level of 3.6% in November which agreed with the forecast. Inflation in Switzerland demonstrates growth (CPI in November: +0.2% m/m, (+0.2% y/y) against the forecast +0.1% m/m, (+0.1% y/y)- it is moderate at the moment however it is a positive factor for the economy which indicates stability. This data will support CHF in short term.

It became known earlier that GDP in Switzerland rose by 0.7% q/q (+3.0% y/y) in QIII against the forecast of +0.5% q/q (+3.1% y/y). The fact that Swiss economy is growing above expectations has confirmed our theory about stability in the country. It is clear that European problems will have an impact there, as well as they will affect Great Britain for example; however situation in Swiss economy seems steadier.

The next meeting of the National Bank of Switzerland is scheduled for 16 December; the quarterly level of interest rate is now in the range of 0-0.75%. The index was revised in March 2009 last time when it was reduced by 0.25%.

Swiss National Bank announced its inflation forecast earlier. The SNB document states that inflation forecast was reduced to 2013: in 1011 inflation forecast is reduced to 0.3% against 1% earlier; in 1012 inflation is expected to be at the level of 1.2% against 2.2 previously. Thus, inflation level will not reach the upper border of the range at least until QII 2012 and it gives CNB another year to rectify economic situation in the country.

 

[LF.Anastasia]

EUR/USD: Traders’ attention is focused on the problems in Eurozone again

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning amid new portion of negative information from Eurozone.

By 9.50 Moscow time the Euro is at 1.3308 against closing session level of 1.3377yesterday.
It became known this morning that International Rating Agency Moody"s Investors Service has submitted rating of Spain, which is now at the level of Aa1. for review with the prospect of downgrade. It provoked a new wave of investor’s escape from risks, which immediately affected exchange rate of the major pair.

Yesterday the U.S. Federal Reserve left the interest rate unchanged in the target range of 0-0.25% per annum, the QE2 volume was also left unchanged (which is now $600 billion), this was the reason of pressure on the USD over the last two days.


Federal Reserve gave to understand that the rate will be kept at the low levels for a long time.

Therefore, investors’ attention shifted to the problems of Eurozone once again, which means that the Euro will go down again.
Most likely the pair EUR/USD will not go beyond the range of 1.3230-1.3450 at the trading session today.

 

[LF.Anastasia]

GBP: British Pound goes down again

At the Forex currency market on Wednesday the British Pound rate has rolled down amid investors’ renewed fears about European problems.

Forex forecast: MACD indicator is in the negative area for the pair; however it demonstrates growth, thereby creating conditions for the purchase of the pair. Stochastic oscillator is giving a pair sell signal, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5740, the pair will go to 1.5700 and 1.5650. If the level of 1.5770 is exceeded, buyers’ targets will become the levels of 1.5790 and 1.5820.

Yesterday’s data showed that inflation in the UK increased by 0.4% (+3.3% y/y) in November against the growth by 3.2% y/y in October. The fact, that the rate has been growing for the ninth consecutive month made economists worried. It is possible that the Bank of England will have to raise interest rate earlier to demonstrate that the inflation is under control.

The data from RICS Agency, released on Tuesday showed that the UK housing market is still at the lows of 18 months. The main reason for this is the reduction of demands for houses. Thus, houses prices index in London went up to -32% against the previous level of -49%, while index of new buyers’ requests dropped to -1-8% last month against the previous level of -12%.

Last week the Bank of England decided to leave current interest rate unchanged at the level of 0.50% per annum, the volume of the assets redemption program was also left unchanged. These decisions agreed with the market expectations. In addition it also became known that foreign trade deficit with the exception of the Eurozone countries was revised to the level of 8.4% billion pounds sterling.

The situation at the UK real estate market is still one of the most complicated parts of economy. It became known earlier that, as per RIGHTMOVE estimations, houses prices declined by 3% on monthly basis in December (+0.4% y/y). However, the bulletin of the Bank of England stressed that British households have already experienced repercussions of the significant reduction of the budget costs.

 

[LF.Anastasia]

CHF: Swiss Franc has been demonstrating impressive growth for the sixth consecutive session

At the Forex currency market Swiss Franc rate continues to grow on Wednesday – ascending trend for the CHF has been in progress for the sixth consecutive session.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and continues to go down, confirming a previous sell signal for the pair. Stochastic oscillator has come into oversold area and has not formed a signal yet.

Forex recommendations: in case of ascending corrective movement for the pair, buyers’ targets will become the levels of 0.9670 and 0.9720. If upward breakdown will not take place, the pair will consolidate close to the current levels.

The next meeting of the National Bank of Switzerland is scheduled for 16 December; quarterly level of interest rate is now in the range of 0-0.75%. The index was revised in March 2009 last time when it was reduced by 0.25%. Is seems unlikely that SNB will decide to raise interest rate – current state of economy makes it possible not to take drastic decisions.

Recent growth of Swiss Franc has once again opened a question of intervention of the regulator in the trading process; for Swiss Franc risks of currency intervention by Swiss National Bank seems minimal at the moment; according to regulator’s opinion, one-sided intervention will not lead to the long term desired result.

As it became known on Monday, producer prices and import prices in Switzerland declined by 0.2% m/m in November against expected growth by 0.1%.

Unemployment rate remained at the level of 3.6% in November which agreed with the forecast. Inflation in Switzerland demonstrates growth (CPI in November: +0.2% m/m, (+0.2% y/y) against the forecast +0.1% m/m, (+0.1% y/y)- it is moderate at the moment however it is a positive factor for the economy which indicates stability. This data will support CHF in short term.

It became known earlier that GDP in Switzerland rose by 0.7% q/q (+3.0% y/y) in QIII against the forecast of +0.5% q/q (+3.1% y/y). The fact that Swiss economy is growing above expectations has confirmed our theory about stability in the country. It is clear that European problems will have an impact there, as well as they will affect Great Britain for example; however situation in Swiss economy seems steadier.

 

[LF.Anastasia]

JPY: Japanese Yen has quickly started reversed motion

At the Forex currency market the Japanese yen has reversed movement direction as soon as the U.S. Federal Reserve decision to keep interest rate and volume of QE2 program at the previous level became public. The decline of the Yen continues today.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it moves along the signal line, therefore it has not formed a clear signal. Stochastic Oscillator is giving a pair buy signal, being in the neutral zone.

Forex recommendations: if bullish sentiments intensify for the pair, buyers’ targets will be the levels of 84.00 and 84.40.

A lot of Japanese statistics was released today. Worth noting is Tankan report which showed decline for the first time in 7 quarters – up to the level of 5 against the previous level of 8 and the forecast of 3. Quarterly report of the Bank of Japan which shows sentiments in the business circles of the country once again confirmed the fact that Japanese indicators of QIV will be weak, which will indicate downturn in economy.
Market believes that Tankan indicator will go down to -2 by March 2011 which will mean that pessimists dominate over optimists in the business-class of Japan.

Previous long awaited Japanese GDP data for QIII looks fabulous against this background. Real GDP was revised to +1.1 q/q (+4.5% y/y) against preliminary estimate of +0.9%. It is interesting that according to the Japanese Cabinet, the rise in index was promoted by the growth in private sector consumption, which usually accounts to about 60% of GDP. Special demand was observed in the energy-efficient cars for the reason that period of subsidy provided for them will expire soon. It is unlikely that we will be able to see similar results in QIV.

Last Friday the Bank of Japan stated that they intend to continue implementing the program of financial stability further on; they also emphasized that the world financial system is still far from being stable.

Consumer confidence in the Land of the Rising Sun continues to decline for the fifth consecutive month. Is seems that people are still guided by the fears of the economic instability in the country which can affect labour market and wage levels. People belief that the time is not ripe for purchasing large goods also decelerates recovery of confidence.

Therefore, a run of bad luck continues for Japanese economy.

 

[LF.Anastasia]

AUD: Correction started for Australian Dollar

At the Forex currency market the Australian Dollar rate started to decline on Wednesday, following steady growth yesterday.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, however it goes up, confirming a previous buy signal for the pair. Stochastic oscillator has come out of the overbought zone today and is giving an antipodal signal.

Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 0.9900 the pair will go to 0.9870 and 0.9810. If the level of 0.9980 is exceeded, buyers’ targets will be the levels of 1.0000 and 1.0030.

Macro-economic environment is tranquil for Australia today – new data was not published and reduction today can be regarded as a technical correction.

Moreover, investors do not risk coming into highly profitable pairs on Wednesday amid aggravation of problems in Eurozone.
Earlier Australian statistics, which was published this week turned out to be weak.

Thus, GDP in Australia increased by 0.2% on quarterly basis in QIII; while analytics had expected the rise by 0.5%; the growth over last quarter positioned as the lowest over the last two years, therefore GDP dynamics seems to be descending. It became known earlier that retail sales in October amounted to-1.1% m/m against +0.1% in September and trade balance surplus in October was $2.625 billion. It also became known earlier that current account balance amounted to -А$7.83 billion in QIII against the forecast of -А$6.60 billion.

At the moment the Australian Dollar rate can resume the decline in the medium term because investors’ concern about problems in Eurozone along with the weakness of the Euro and instability of Australian economy will bring pressure.

 

[LF.Anastasia]

EUR/USD: Euro can again find itself under pressure

The pair EUR/USD looks stable at the Forex currency market on Thursday morning after a significant slump yesterday.

By 9.35 Moscow time the Euro is at 1.3228 against closing session level of 1.3213 yesterday.

The reason for another sale of the Unified European currency became the news background in Eurozone. Yesterday Moody's has submitted Spanish rating for revision and possible downgrading, which evoked a new wave of risk aversion at Forex. In addition, the last placement of Spanish government bonds this year is expected, therefore market is discussing the possibility that the country will appeal for aid, following Greece and Ireland.

A lot of macro-statistics is scheduled for publication today – data on European counties in the morning and indicators on new houses sales and data on the U.S. unemployment benefit requests in the afternoon.

Most likely the pair EUR/USD will not go beyond the range of 1.3160-1.3390 at the trading session on Thursday.