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[LF.Anastasia]

GBP: British Pound continues to grow in the thin market

At the Forex currency market the British Pound Sterling in traded upward today, continuing yesterday’s upswing.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and resumed the decline, giving grounds for a pair sell signal. Stochastic oscillator is giving an antipodal signal, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5520 the pair will go to 1.5550 and 1.5570. If, however, the level of 1.5500 is broken down, traders’ targets will be the levels of 1.5470 and 1.5450.

CIPD, the UK Institute of Personnel Development believes that the situation in the employment sector can be complicated for UK economy in 2011, because unemployment rate can rise to 9% and employment reduce to 200 thousand jobs.

According to CIPD estimates reduction in the public sector will amount to about 120 thousand jobs and about 80 thousand in the private sector. We would remind that British Government plans to reduce the number of staff in public sector by 330 thousand by 2015.

However, OBR, Committee on Budget Responsibility claimed that dismissal will be compensated by creation more that 1.5 million jobs in private sector. Anyhow, the year 2011 is not going to be easy for the UK economy.

Note that unemployment rate in the UK increased to 7.9% in QIII against the previous level of 7.8% and the forecast of 7.7%. Number of unemployed in the UK decreased only by 1.2 thousand against the expected reduction by 3 thousand.

It became known earlier that according to Hometrack estimate houses prices in the UK has been declining for the six consecutive months. This had a negative impact on the Pound and resulted in sale at the thin market.

 

[LF.Anastasia]

CHF: Swiss Franc reached new historical high versus USD

At the Forex currency market Swiss Franc continues to rise steadily against the USD, reaching a new historical high.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, confirming a previous sell signal. Stochastic Oscillator has come into oversold area today, giving a similar signal.

Forex recommendations: if current investors’ sentiments will be maintained, traders’ targets will become the levels of 0.9370 and 0.9350.

So, historical low for the pair USD/CHF has been upgraded, which is now at the level of 0.9374.

According to the data released yesterday, KOF indicator in Switzerland fell to the level of 2.10 in December against its previous value of 2.13; however it still remains at a high level, confirming the belief that country’s economy continues to recover.

The boost in the Eurozone, in Germany in particular helps to normalize the levels of exports in Switzerland, however the world’s economists think that country‘s economy can slow down in 2011, largely due to the strong CHF.

According to KOF estimates (Swiss institute of research on economic cycles) Swiss Franc will retain the status of a protective asset and a refuge as long as the period of tension will be maintained in Europe.
KOF has also revised its forecast for GDP growth upward in 2011; is it projected that Swiss economy will increase by 1.9% in 2011 against the previous forecast of 1.8%. In 1012 national economy is expected to rise by 2%.
At the meeting of the regulator which was held earlier it was decided to maintain three -month rate Libor in the previous target range of 0-0.75, as expected by the market. Index was revised in March 2009 last time when it was reduced by 0.25%.

 

[LF.Anastasia]

JPY: Japanese Yen continues to grow, approaching local highs

Japanese Yen rate continues to grow at the Forex currency market on Thursday. It looks like the JPY decided to close this year in the status of the overbought currency, which will not let monetary authorities chill out.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and goes down, confirming a previous sell signal for the pair. Stochastic Oscillator remains in the oversold zone today.

Forex recommendations: if current bearish sentiments will be maintained, targets of the pair’s traders will become the levels of 81.40 and 81.10.
The latest Japanese statistics is still on the side of the JPY buyers. Traders’ sentiments in regards to the USD amid recovering world economy also speak in favor of this scenario.

In general the situation in Japanese economy remains almost unchanged.

Unemployment in the country in November (5.1% against 5.1% in October; change in employment rate in November: 80 thousand y/y) has remained in the previous level as expected.

Worth noting fact is that although deflation started it retreat its effect is still quite strong. The levels of industrial output showed positive rise for the first time over a few months which can became an indication of the recovery in the sector, which will lead to the recovery of the entire Japanese economy.
At the meeting which was held this week, the Bank of Japan announced the decision to leave interest rate unchanged in the target range of 0-0.1% per annum. The vote was unanimous. In the follow-up comments the regulator emphasized that assessment of economic situation remained unchanged and economic growth will be slow and small for some time. Nevertheless, Japanese economy continues to demonstrate signs of moderate recovery. In addition, the Bank of Japan lowered its forecasts for industrial output and drew attention to the need to keep track of the downward risks to the national economy.

 

[LF.Anastasia]

AUD: Australian Dollar is prevented from correction in thin market

At the Forex currency market the Australian Dollar rate has made an attempt of correction on Thursday after the rapid upswing for over a week, however thin market factors and demand of the buyers prevented to develop technical rebound.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go up, confirming a previous buy signal for the pair. Stochastic Oscillator is still moving in the overbought zone, giving a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0180 the pair will go to the new local highs of 1.0200 and 1.0230. If the level of 1.0160 is broken down, traders’ targets will be the levels of 1.0150 and 1.0130Note, that option barriers are located at the level of 1.2000
It is interesting that decrease in yield of the U.S. governments bonds has become a catalyst for the AUD growth; buyers have shifted to the high-yielding currencies amid weak bucks.

In general, fundamental situation in the Australian economy remains unchanged.Statistics released earlier showed that 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.

The minutes of the RBA meeting of 7 December which was made public last week, showed that the rate was left unchanged, since the regulator believes that current situation can be described as moderately restrictive, because consumers are cautious, while inflation pressure does not intensify. The interest rate in Australia is now at the level of 4.75% per annum. The document reported that households might continue to rein in spending and in this case it will lead to the short term rise in inflation and also to the lack of aggregate demand in economy.

 

[LF.Anastasia]

CAD: Canadian Dollar consolidates positions amid weakness of USD

At the Forex currency market the Canadian Dollar rate continues to rise in the thin market amid weak positions of the USD.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is moving along the signal line, preventing from forming a signal. Stochastic Oscillator is in the oversold zone and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0015 the pair will go to 1.0030 and 1.0050. If the level of 1.0000 is broken down, traders’ targets will become the levels of 0.9990 and 0.9950.

Worth noting that currencies’ pairs movement can be hardly predictable in the thin market.
In general, the situation in the Canadian economy remains unchanged.

Interest rate in Canada is at the level of 1% per annum. The last increase which took place in September this year was by +25 basis points. There is an opinion at the market now that the Bank of Canada will not change the interest rate until QII next year as economic recovery rate has slowed 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.
We would remind that core consumer price index in Canada remained unchanged in November, following the growth by 0.4% in October; at the same time growth on annual basis has declined to 1.4% against the previous level of 1.8%.

Therefore, inflation demonstrated minimal increase last month for over then 2 years. It became an indicator for the Bank of Canada that interest rates will remain unchanged for quite a long time.

Last week Finance Minister of Canada Mr. Flaherty noted that the budget for 2011 will contain measures to support economic growth of the country, with significant spending on infrastructure, education and retraining programs, which will become nearly the main items.
According to Flaherty there is no need to extend economic incentives program at the moment; however its reduction is not provided for either, as economic upturn is required in the country.

 

[LF.Anastasia]

EUR/USD: Euro is being corrected on the first trading day of the year

The pair EUR/USD goes down on the first trading day of this year, after three sessions of growth in the conditions of the thin market, correction is quite natural.

By 10.55 Moscow time the Euro is at 1.3269 against closing session level of 1.3371 on Friday.

It is not excluded that the pair will make attempts to rise again in the coming days, however level of volatility remains high.

The U.S. macro-statistics will be released this afternoon, including ISM index and levels of construction costs.

Most likely the pair EUR/USD will not go beyond the range of 1.3200-1.3350 at the trading session on Monday.

 

[LF.Anastasia]

GBP: Pound Sterling started this week with corrective rollback

At the Forex currency market the British Pound Sterling rate is going down on Monday as part of corrective rollback in the condition the thin market which still prevails; trading floors in many counties including Great Britain are closed due to the New Year holidays.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and is moving along the signal line, preventing from forming a signal. Stochastic Oscillator is giving a pair sell signal, being in the neutral zone.

Forex recommendations: as it is illogical to trust just a single signal, it would be wiser to await when bearish sentiments intensify for the pair and a breakdown at the level of 1.5500 will take place, then, traders’ targets will be the levels of 1.5480 и 1.5450. Otherwise, the pair will consolidate close to the current levels.

Statistics on the housing market released on Friday showed that, as per Nationwide estimates, houses prices in the UK increased by 0.4% m/m (+0.4% y/y) in December. At the same time the index has lost 1.0% on quarterly basis in QVI.

In other respects the situation in British economy remained unchanged.

К CIPD, the UK Institute of Personnel Development believes that the situation in the employment sector can be complicated for UK economy in 2011, because unemployment rate can rise to 9% and employment can reduce to 200 thousand jobs.

According to CIPD estimates reduction in the public sector will amount to about 120 thousand jobs and about 80 thousand in the private sector. We would remind that British Government plans to reduce the number of staff in public sector by 330 thousand by 2015.

However, OBR, Committee on Budget Responsibility claimed that dismissal will be compensated by creation more that 1.5 million jobs in private sector. Anyhow, the year 2011 is not going to be easy for the UK economy.

Note that unemployment rate in the UK increased to 7.9% in QIII against the previous level of 7.8% and the forecast of 7.7%. Number of unemployed in the UK decreased only by 1.2 thousand against expected reduction by 3 thousand.

 

[LF.Anastasia]

CHF: Correction started for Swiss Franc, however signals are ambiguous

At the Forex currency market Swiss Franc rate started to decline on Monday, however taking into account that trading volumes are still low, it is too early to speak about trend reversal. Rollback of the Franc is regarded as a technical correction of the pair USD/CHF.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and began to descend, confirming a previous sell signal for the pair. Stochastic Oscillator remains in the oversold zone not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9380 the pair will go to 0.9400 and 0.9440. If the level of 0.9330 is exceeded, traders’ targets will become the level of 0.9300.

It became known today that index of business activity in industry of Switzerland declined to 59.6 points in December against the forecast of 61 points and the previous value of 61.8 points.

According to the data released at the end of December, KOF indicator in Switzerland fell to the level of 2.10 in December against its previous value of 2.13; however it still remains at a high level, confirming the belief that country’s economy continues to recover.

The boost in the Eurozone, in Germany in particular helps to normalize the levels of exports in Switzerland, however the world’s economists think that country‘s economy can slow down in 2011, largely due to the strong CHF. We would remind that Franc broke a new historical record in pairing with the USD in the last days of December 20120.

According to KOF estimates (Swiss institute of research on economic cycles) Swiss Franc will retain the status of a protective asset and a refuge as long as the period of tension will be maintained in Europe.

KOF has also revised its forecast for GDP growth upward in 2011; is it projected that Swiss economy will increase by 1.9% in 2011 against the previous forecast of 1.8%. In 1012 national economy is expected to rise by 2%.

Interest rate in Switzerland (Libor) is currently in the target level of 0-0.75%; the next meeting of the Swiss National Bank is scheduled for 17 March. Subsequent meeting of 2011 will be held on 16 June, 15 September, 15 December.

 

[LF.Anastasia]

JPY: Japanese Yen gives way to USD, following rapid growth previously

At the Forex currency market the Japanese Yen rate is being corrected on Monday, after reaching local highs at the end of last week. The JPY has been consistently strengthening for 4 sessions, amid investors’ confidence that the world economy will carry on recovering, which reduced demand for USD as a security asset.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to decline, confirming a previous sell signal for the pair. Stochastic oscillator is still in the oversold zone not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.20 the pair will go to the local low of 80.90 and below. If the level of 81.55 is broken down the pair will move to 81.80.

Worth noting that this morning the pair has reached the level of 80.93, which became the lows of many weeks. recall that the low of the 31 October 2010 was the level of 80.29. Such movement of the Yen attracts attention of the Bank of Japan to the currency market which increases the possibility of intervention or any other interference in the course of trading.

The situation in the economy of Japan remains unchanged in general. Unemployment in the country in November: (5.1% against 5.1% in October; change in employment rate in November: 80 thousand y/y) has remained in the previous level as expected.

Worth noting fact is that although deflation started it retreat its effect is still quite strong. The levels of industrial output showed positive rise for the first time over a few months which can became an indication of the recovery in the sector, which will lead to the recovery of the entire Japanese economy.

At the meeting which was held this week, the Bank of Japan announced the decision to leave interest rate unchanged in the target range of 0-0.1% per annum. The vote was unanimous. In the follow-up comments the regulator emphasized that assessment of economic situation remained unchanged and economic growth will be slow and small for some time. Nevertheless, Japanese economy continues to demonstrate signs of moderate recovery. In addition, the Bank of Japan lowered its forecasts for industrial output and drew attention to the need to keep track of the downward risks to the national economy.

The next meeting of the Bank of Japan is scheduled for 26 January. Subsequent meeting of the Regulator will be held on 18 February, 16 March, 8 aApril, 23 May, 15 June, 16 August, 15 September, 14 October, 14 November, 13 December.

 

[LF.Anastasia]

AUD: Australian Dollar makes another attempt of correction

At the Forex currency market the Australian Dollar rate is making another attempt to of technical correction on the first trading week of January, still being in the local highs.

Forex forecast: MACD indicator is in the positive area for the pair and continues to grow, confirming a previous buy signal for the pair. Stochastic oscillator remains in the overbought zone today

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0185 the pair will go to 1.0160 and 1.0145. If the level of 1.0200 is broken down, buyers’ targets will be at the levels of 1.0220 and 1.0245.

In general the situation in Australian economy remains unchanged at the beginning of January.

Statistics released earlier showed that 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.

It is possible that when investors will resume trading in January the AUD will be corrected downward; it will be only technical correction as yet.

The minutes of the RBA meeting of 7 December which was made public last week, showed that the rate was left unchanged, since the regulator believes that current situation can be described as moderately restrictive, because consumers are cautious, while inflation pressure does not intensify. The interest rate in Australia is now at the level of 4.75% per annum. The document reported that households might continue to rein in spending and in this case it will lead to the short term rise in inflation and also to the lack of aggregate demand in economy.

The RBA meetings in 2011 are scheduled for: 31 January, 28 February, 4 April, 2 may, 6 June, 4 July, 1 August, 5 September, 3 October, 31 October, 5 December.