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[LF.Anastasia]

JPY: the Japanese Yen is still moving away from the maximum values

The Japanese Yen continues to drop on the Forex market under the pressure of the USD, which was supported the day before by positive statistical data on the labour market.

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.

Forex recommendations: if bullish sentiments are preserved on the market, buyers’ targets will be the levels of 83.65 and 84.00.
Meanwhile, the Japanese economy state 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.
Representatives of the Monetary Policy Committee of the Bank of Japan stated the day before that situation in the national economy is fully consistent with the expectations that had been 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.

 

[LF.Anastasia]

CHF: the Swiss Franc stands still, deciding on the future trend

Swiss Franc rate remains the same at the Forex currency market on Friday morning, deciding on the trend direction in front of a restless market.

Forex forecast: MACD indicator is in the negative area for the USD/CHF pair, nevertheless it plans to grow thus proving the previous currency pair buy signal. Stochastic Oscillator is still in the overbought area.

Forex recommendations: off the market.

Possible events scenario at Forex: in case of the 0.9670 level breakout the pair will head towards 0.9690 or 0.9720. If it breaks down the level of 0.9620, the buyers’ aims will be levels 0.9600 and 0.9580.

The Switzerland economy state remains without any significant changes. Swiss interest rate (Libor) is currently in the target level of 0-0.75%; the next Swiss National Bank meeting is scheduled for March 17. Then in 2011 the meeting will be also held on June 16, September 15, and December 15. We are reminding that the Swiss manufacturing activity index fell to 59.6 points in December compared to the expected 61 points and the previous rate of 61.8 points. According to the data made public at the end of December, the Swiss KOF indicator declined to the level of 2.10 in December from 2.13, nevertheless it is still high that proves an opinion that the state economy keeps rehabilitating.

It became known yesterday that the Swiss consumer price index, month on month, remained unchanged in December, showing growth by 0.5% year on year, when it was expected by analysts to grow by 0.2% m/m or by 0.3 y/y.

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

KOF has also revised its forecast for GDP growth upward in 2011; Swiss economy is prognosticated to firm by 1.9% in 2011 compared to the previous forecast of 1.8%. In 1012 national economy is expected to rise by 2%.

 

[LF.Anastasia]

AUD: the Australian dollar continues to drop keeping the pace

The Australian dollar continues to drop on the Forex market because of 2 reasons. Firstly, the American dollar was considerably supported by macro-economic data; secondly, inundations in North-Eastern Australia are going to be the most harmful ones over the last 50 years.
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving downwards, confirming the sell-signal for the pair. Stochastic Oscillator is remaining in the oversold zone.
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 0.9880 and 0.9860. If the level of 0.9950 is broken down, buyers’ targets will be the levels of 0.9970 and 0.9990. The parity level will be the further bullish target.
The inundations in North-Eastern Australia and Queensland are likely to become the largest ones over the last 50 years, what can induce the Reserve Bank of Australia to defer the interest rate increase. About 95% of sugar production in Australia and considerable coal stocks are centered in Queensland. In general, Queensland accounts for about 20% of the Green continent’s economy. As per different assessments, natural cataclysms can reduce the Australian economy growth by 0,2% in the first quarter of 2011.
The minutes of the RBA meeting of 7 December which were 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.

 

[LF.Anastasia]

EUR/USD: Euro’s sales are continued amid problems in Eurozone

The pair EUR/USD is traded close to the local lows at the Forex currency market on Monday morning, continuing movement in the downward channel.
By 10.40 Moscow time the Euro is at 1.2886 against closing session level of 1.2906 on Friday.

The situations in Eurozone and the USA are opposite now like black and white. American authorities reported about decrease of the unemployment rate and increase of the jobs along with the positive indications in the economy, while employment rate in Eurozone remains unchanged and economists’ forecast are gloomy. Thus, on Friday Swiss National Bank stopped accepting Portuguese government bonds as collateral for repo transactions, the same as they had done with the Irish bonds earlier. In addition the head of the Irish Central Bank Mr. Honohan stated that his country has a lot of debts both public and private, therefore wait and see policy of the market in regard to Ireland is not random.

Honohan also stressed that assistance from European regulators will certainly give Ireland a temporary handicap to solve its internal problems; however it will not help to resolve all critical problems.

Sales of the Euro accelerated after this statement as investors have fewer illusions regarding stability of the Eurozone.
Publication of the important macro-statistics on the U.S and Eurozone is not scheduled for today, therefore traders will guided by the external background.

Most likely the pair EUR/USD will be in the range of 1.2980-1.2820 on Monday trading session.

 

[LF.Anastasia]

GBP: Pound Sterling is consolidating however it still remains in a range

At the Forex currency market the British Pound Sterling rate continues the growth on Monday which had started on Friday, while remaining in the channel of 1.5400-1.5645.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and is growing, giving a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if investors’ current sentiments will be maintained, buyers of the pair will have targets of 1.5550 и 1.5580 today. If upward breakdown will not take place the pair will consolidate close to the current levels.

Ex-member of the Bank of England Mr. Blanchflower noted on Friday that possible raise of the interest rates by the Central bank can become a real nightmare for the UK Finance Minister Mr. Osborne in a new year. He stressed once more that rates should be kept at a low levels, as their rapid growth will strike a blow on the houses prices and consumption levels.

Osborn noted earlier, that all measures required to improve economic growth have been taken by the country, and budget edition in March will include both new and old steps to stimulate growth. British Finance Minister also stressed the need to continue reforms the country, as the plan of the deficit reduction can stimulate the growth of confidence in the economy.

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.

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 increased 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.) However as it became known on Thursday PMI index in the UK service sector fell to the level of 49.7 in December against the forecast of 52.9 and the previous value of 53.0.

 

[LF.Anastasia]

CHF: Franc makes attempt of correction

At the Forex currency market Swiss Franc rate moves down on Monday, making an attempt of correction after the drawdown last week.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it goes up, confirming a previous buy signal for the pair. Stochastic Oscillator remains in the overbought zone; however it tends to go out of it.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9670 the pair will go to 0.9710 and 0.9730. If the level of 0.9595 is broken down, traders’ targets will become the levels of 0.9580 and 0.9550.

It became known on Friday that Swiss national Bank refused to accept Portuguese state bonds as collateral for the repo transactions –earlier the same action has been taken for Irish securities. Thus, SNB abandoned unnecessary risks, becoming the first regulator who acknowledged big problems of sovereign debts in the peripheral countries of Eurozone.

Unemployment rate in Switzerland increased to 3.8% in December against the forecast of 3.7% and the previous value of 3.7%. It is a negative indication for the Franc at the moment; however attention of the traders is focused on the Eurozone.

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.

 

[LF.Anastasia]

JPY: Correctional rollback is being continued for Japanese Yen; however, purchase volume is low

The Japanese Yen rate continues to be corrected at the Forex currency market after the slump last week. Japanese markets are closed today.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to move along the signal line, not forming a clear signal. Stochastic Oscillator remains in the overbought zone at the beginning of the week and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in cease of breakdown at the level of 83.30 the pair will go to 83.50 and 83.80. If the level of 83.00 is exceeded, traders’ targets will be the levels of 82.80 and 82.50.

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 the meeting of the Democratic Party of Japan (DPJ) will be held, which can also have a short term impact on the pair USD/JPY.

Representatives of the Monetary Policy Committee of the Bank of Japan stated earlier 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.

 

[LF.Anastasia]

AUD: Australian Dollar is on sale again at the beginning of the week

At the Forex currency market the Australian Dollar rate is on sale again on Monday amid withdrawal of the players from risky positions caused by the intensification of fears about debt problems in Eurozone. Moreover, the effects of natural disaster in Australia continue to put pressure on the AUD.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it goes down, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone today, not giving a clear signal.

Forex recommendations: if bearish sentiments for the pair AUD/USD intensifies and in case of breakdown at the level of 0.9900 the pair will go to 0.9880 and 0.9850.

The following Australian statistics was released today:
– Retail sales in November:+0.3% against -0.8% in October:
– Currency reserves in December: $41.6 billion against $43.6 billion in November;
– Job vacancies in December: 0.3% m/m;
– Activity index in construction in December: 43.8.

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.
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.

Apparently, the flooding which took place in the North East part of Australia has been the largest in the last 50 years which can cause the delay in the interest rate raise by the Reserve Bank of Australia. 95% of sugar production of Australia is concentrated in Queensland, as well as large amounts of coal. In general, about 20% of the entire economy of the Green Continent is located in the state of Queensland. According to various estimates, the growth of Australian economy can slow down by 0.2% in QI 2011, due to natural disasters.

 

[LF.Anastasia]

CAD: Canadian Dollar cannot escape from the range

At the Forex currency market the Canadian Dollar rate goes down at the beginning of the week, remaining in the range of 0.9910-1.0035.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and is moving along the signal line not giving a clear signal. Stochastic oscillator is giving a pair buy signal today, being in the neutral zone.

Forex recommendations: if investors’ current sentiments will be maintained and in case of breakdown at the level of 0.9970, the pair will go to 0.9985 and 1.0000.

Statistics on the employment rate in Canada released at the end of last week has inspired investors. Thus, number of jobs increased for the third time in a row in December, by 22 thousand, following the growth by 15.2 thousand in November. At the same time unemployment rate remained at the same level of 7.6% (forecast was 7.7%) in December which has become the lows since January 2009.

The main driver for such positive data was the rise in activity in the production sector – in the manufacturing sector the number of jobs increased by 65.7 thousand which has become the highs since 1976.

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: Euro continues to remain under pressure

The pair EUR/USD is traded without clearly defined direction at the Forex currency market on Tuesday morning
By 10.05 Moscow time the Euro is at 1.2945 against closing session level of 1.2951 yesterday.

During the first week of new year the Euro has lost 3.6% in pairing with the USD, the fall started at the level of 1.3384. The main reason of the Unified European currency sales was the decision of the Swiss National Bank to stop accepting Irish government bonds and then Portuguese government bonds as collateral for repo transactions. Investors regarded such action as a gesture of distrust to European economy which triggered massive sales of the EUR.

The latest released U.S. statistics was quite positive which supported the USD.

Macro-economic calendar is eventful only in the afternoon today: at 16.30 Moscow time data on new construction started in December in Canada will be made public, at 18:00 Moscow time data the U.S. wholesale inventories for November will be released.

Most likely the pair EUR/USD will not go beyond the range of 1.2900-1.2990 at the trading session on Tuesday.