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[LF.Anastasia]

JPY: Japanese Yen can resume growth in mid-week

The Japanese Yen rate determines movement direction at the Forex currency market in the mid-week and it is possible that the JPY will resume consolidation in the coming days.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to descend, confirming a previous sell signal for the pair. Stochastic Oscillator is giving an antipodal 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 82.10 the pair will go to 82.40 and 82.65. If the level of 81.90 is broken down, traders’ targets will be the levels of 81.70 and 81.50. A more distant bearish target is 81.30.

Further developments for the pair USD/JPY will largely depend on the U.S. statistics, in particular employment rate excluding agricultural sector in the USA, if data is positive the USD will start to regain from the losses in the pair.

Internal political shifts in Japan can be the reason for a short term decline of the JPY; the press says that on 14 January Prime Minister Khan can arrange cabinet reshuffle.

At the meeting which was held at the end of December, 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 meetings of the Regulator will be held on 18 February, 16 March, 8 April, 23 May, 15 June, 16 August, 15 September, 14 October, 14 November, 13 December.

Note that on 13 January meeting of the (DPJ) Democratic Party of Japan will be held, which will also affect the pair USD/JPY on short terms.

 

[LF.Anastasia]

AUD: The fall of the Australian Dollar has continued for the third day

At the Forex currency market the Australian Dollar rate continues its fall, affected by both technical and external factors.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and goes up, conforming a previous buy signal for the pair. Stochastic oscillator is giving a pair AUD/USD sell signal, being in the neutral zone.

Forex recommendations: if bearish sentiments intensify for the pair, traders’ targets will become the levels of 1.0010 and 0.9980.

As it became known this morning, sales of new houses in Australia reduced by 0.2% m/m in November, as per HIA estimates, against the previous forecast of growth by 6.12% m/m

Information about flooding in Queensland which caused a lot of damage became the factor which triggered the AUD sales yesterday. Market is still awaiting the exact numbers and reaction from RBA to the disaster.

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.

Current correction for the AUD has become the first successful attempt of the currency to rollback from the local highs; the first two failed in the wake of interest of the players to the high- yielding currencies in late December. It is quite possible that later the AUD will continue moderate consolidation in the short term (if the RBA reaction to the natural disaster will be adequate).

 

[LF.Anastasia]

EUR/USD: Euro continues to decline under the pressure of external negative factors

The pair EUR/USD is traded downward at the Forex currency market, continuing to move in the descending channel.
By 11.30 Moscow time the Euro is at 1.3136 against closing session level of 1.3149 yesterday.

The main catalyst for the Euro’s decline today became the news that Swiss National Bank refuses to accept Irish government bonds as collateral for repo transactions – it was the first time in the market when the regulator refused to approve a loan for the EU member state. Markets did not react to this information very actively at the beginning, however when American players came to the trading floors, selling of the Euro has accelerated.
If the SNB position will be supported by the large banks in the future, most likely the European currency will not avoid a breakdown at 1.31 and falling below. It all means that investors do not have credibility to the EUR yet.

Some statistics on Eurozone will be released today; information on number of unemployment benefits requests in the USA for a week will also attract investors tonight.

Most likely the pair EUR/USD will not go beyond the range of 1.3080-1.3250 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is recovering while still being in the range

At the Forex currency market the British Pound Sterling is traded upward on Thursday while still being in the four -days range of 1.5430-1.5650.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, however it continues to regain, confirming a previous buy signal for the pair. Stochastic oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if market’s bullish sentiments will be maintained and in case of moderate prudence, buyers’ targets will be the levels of 1.5570 и 1.5590. Otherwise the pair will continue to consolidate within a range.

The UK statistics released earlier has become a good support for the GBP (level of money supply in Great Britain increased by 3.3% on monthly basis in November; number of approved mortgage requests rose slightly, although level of net mortgage lending declined to 788 million pounds sterling in November against the level of 1.172 billion pounds in October.)

In addition, representative of the Treasury Mr. Osborne stressed on Tuesday that country’s authorities do not yet plan to raise taxes, which urged traders to buy GBP.

According to the British financial press, all those measures on budget savings adopted by the authorities of Great Britain earlier will be continued in order to reduce the level of budget deficit in the country. Observers believe that the risk of repeated recession is low and the reduction of government expenditures along with the rise of taxes does not give grounds for this.

However, many experts continue to assess reduction of budget spending in Great Britain as an excessively risky step.

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.

In general, at least first half of the year 2011 will be complicated for the British economy.

 

[LF.Anastasia]

CHF: Swiss Franc continues to rebound

Swiss Franc rate continues to lower at the Forex currency market on Thursday, falling back due to the pressure from USD

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however it goes up, giving grounds for a pair buy signal. Stochastic Oscillator still remains in the overbought zone.

Forex recommendations: if bullish sentiments will be preserved at the market, buyers’ targets will be the levels of 0.9695 and 0.9730.

Swiss National Bank reported yesterday that it will not accept Irish government bonds as collateral for repo transactions any more. Although this decision was made at the end of December- its announcement caused collapse of all high-yielding currencies and strengthen the USD position as a safe harbor.

It became known today that consumer price index in Switzerland remained unchanged on monthly basis in December, demonstrating the rise by 0.5% on annual basis; while analytics had expected the growth by 0.2% m/m and +0.3% y/y.

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.

We would remind that business activity index in Swiss industries fell to 59.6 points n December against the forecast of 61 points and 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, supporting the belief that country’s economy continues to recover.

 

[LF.Anastasia]

JPY: Japanese Yen is being corrected after yesterday’s downfall

At the Forex currency market the Japanese Yen rate is being corrected on Thursday after severe downfall yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is still descending, confirming a previous sell signal for the pair. Stochastic Oscillator remains in the overbought zone, not forming a clear signal.

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 83.90 and 84.10. If the level of 82.95 is exceeded, traders’ targets will be the levels of 82.70 and 82.50.

Representatives of the Monetary Policy Committee of the Bank of Japan stated today that situation in the national economy is fully consistent with the expectations that were reflected in the October release; however, regulator’s attention is still focused on the risks to the economy, as the downward risks can hamper transition from deflation to inflation in the country.

In other respects the situation in the Japanese economy remains unchanged.

At the meeting which was held at the end of December, 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 meetings of the Regulator will be held on 18 February, 16 March, 8 April, 23 May, 15 June, 16 August, 15 September, 14 October, 14 November, 13 December.

Note, that on 13 January meeting of the (DPJ) Democratic Party of Japan will be held, which can also affect pair USD/JPY on short term.
Further developments for the pair USD/JPY will largely depend on the U.S. statistics, in particular employment rate excluding agricultural sector in the USA, if data is positive, the USD will continue to strengthen.

 

[LF.Anastasia]

AUD: Sale of the Australian Dollar is suspended

At the Forex currency market the fall of the Australian Dollar rate has slowed down and volume of currency sale has reduced, as the pair has reached local oversold level.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving in parallel to a signal line, not forming a signal yet. Stochastic Oscillator has come into oversold zone today and has not identified a clear signal either.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9985 the pair will go to 0.9970 and 0.9950. If the level of 1.0010 is broken down, buyers’ targets will be the levels of 1.0030 and 1.0050.

Information about flooding in Queensland which caused a lot of damage became the factor which triggered sales of the AUD at the beginning of the week. Market is still awaiting the exact numbers and reaction from RBA on the disaster. Yesterday sales of the AUD intensified under the pressure of the news that Swiss National Bank made a decision not to accept Irish government bonds as collateral for repo transactions. A surge of sales started for the Major pairs due to the fact that credibility to Eurozone was undermined.

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.

According to the data released yesterday, sales of new houses in Australia reduced by 0.2% m/m in November, as per HIA estimates, against the previous forecast of growth by 6.12% m/m.

 

[LF.Anastasia]

CAD: Moderate growth of Canadian Dollar continues for the second consecutive day

The Canadian Dollar rate continues to rise at the Forex currency market; taken into account that major trading currencies were on sale yesterday, CAD looks very attractive considering its stability.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is going down, confirming a previous sell signal for the pair. 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 0.9910 the pair will go to 0.9890 and 0.9875. Otherwise the pair will continue to consolidate close to the current levels.
The following Canadian statistics was released yesterday:
– Raw material prices in November: +3.5% m/m;
– Industrial prices in November:+0.5% m/m.
The data was positive as a whole, providing good support to the CAD.

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.
Schedule of the Bank of Canada meetings for 2011 is as follows: 18 January, 1 March, 12 April, 31 may, 19 July, 7 September, 25 October, 6 December.

Core index of consumer prices in Canada remained unchanged in November after the rise by 0.4% in October, the growth has slowed down to 1.4% on annual basis against the previous level of 1.8%.

 

[LF.Anastasia]

EUR/USD: active euro sales

The pair EUR/USD continues to decline in the Forex market on Friday morning. The day before the Euro dropped below the level of the 200-day moving average, and the sales go on today.

By 9:50 Moscow time the Euro costs 1.2996 against the closing session level of 1.3003 yesterday.

After some quite stable information on the USA’s labour market state had been published the day before, investors considered again the American economy to be rapidly restoring, the European economy turned out to be overloaded with loan notes.

They continue to fear in the market that the peripheral countries of the eurozone will finally get stuck due to their own debts.

Today investors will be absorbed in the information on the employment outside the agricultural sector of the USA, which will be released this evening: they have every reason to hope for the positive statistics. If the expectations are true, the Euro may drop below 1,2950.

The pair EUR/USD is likely to hold a tender in the range of 1.3030-1.2940 today.

 

[LF.Anastasia]

GBP: the British Pound Sterling actively sold following the Euro

On the Forex market the British Pound Sterling is traded downward on Friday, correlating with the pair EUR/USD, which has been declining for the fourth consecutive day.

Forex forcast: MACD indicator is in the negative area for the pair GBP/USD, however it continues to regain, confirming a previous buy signal for the pair. Stochastic oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: out of the market

Feasible event scenario at Forex: in case of breakdown at the level of 1.5410 thepair will go to 1.5390 и 1.5370. If there is no breakdown, the pair will be consolidating in the range of current values.

The day before George Osborne, a monetary politician, stated that the country undertook every measure that would stimulate economic growth, and the March budget revision would also provide for some new measures to stimulate it.

Moreover, Mr Osborne stressed that the work on the reforms in the country must be continued since the budget reduction plan could increase the confidence in the economy.

The earlier statistics on Great Britain was quite a good support for the “cable” (level of money supply in Great Britain increased by 3,5% in quarter calculation in October; number of approved mortgage requests rose slightly, although level of net mortgage lending declined to 788 million pounds sterling in November against the level of 1.172 billion pounds in October).

As it became known on Thursday PMI index in the service sector of Great Britain fell to the level of 49.7 in December against the forecast of 52.9 and the previous value of 53.0.

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.

In general, at least first half of the year 2011 will be complicated for the British economy.