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[LF.Anastasia]

GBP: British Pound Sterling is on sale again, signals, however, are multidirectional

At the Forex currency market the British Pound Sterling rate is again in the center of traders’ attention on Tuesday despite some recovery yesterday. In general the situation for the pair GBP/USD still remains vague.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and continues to go up, giving a pair buy signal. Stochastic oscillator is giving a pair sell signal today.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5600 the pair will go to 1.5620 and 1.5640. If the level of 1.5540 is exceeded, traders’ targets will be the levels of 1.5510 and 1.5460.

It became known today that level of retail sales in the UK reduced by 0.3% y/y in December at the similar trading floors, as per BRC estimates while the forecast of growth had been by 0.7% y/y. At the same time sales rose by 0.4% y/y in October-December, while total sales: by 2.2% y/y.
According to the representatives of the British Chamber of Commerce sharp increase in demand for exports in the country would not be a sufficient factor to stop slowing down of British economy according to the results of QIV 2010 and QI of 1011. Thus, experts of the Chamber believe that although the rate of production is high, low productivity in the service sector still remains a weak spot of the UK economy.

In general this opinion agrees with the earlier forecast made by various agencies. It is possible that such trend will be continued in QII this year.
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.

 

[LF.Anastasia]

CHF: Swiss Franc is under pressure again

Swiss Franc rate is under pressure again today at the Forex currency market.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is still growing, confirming a previous buy signal for the pair. Stochastic Oscillator remains in the overbought zone today, giving a similar signal.

Forex recommendations: if bullish sentiment will be maintained for the pair, buyers’ targets will become the levels of 0.9550 and 0.9520.

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 earlier 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. 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.

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%.

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 retreats on Tuesday; pairs’ outlooks are obscure

At the Forex currency market the Japanese Yen rate declines under the pressure of the USD on Tuesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is going up, giving a pair buy signal. Stochastic Oscillator is giving a pair sell signal, coming out of the overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.50 the pair will go to 84.00 and 84.30. If the level of 82.50 is exceeded, traders’ targets will be the levels of 82.20 and 81.70.

The following Japanese data was released today:
– Currency reserves reduced to $1.096 trillion in December against $1.101 trillion in November. The record highs of October 2010 registered was at $1.118 trillion;
–Leading indicator index in November: 101.0 against the forecast of 100.9;
– Index of coincident indicators is 102.1 against the forecast of 102.2.

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.


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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to be in sale

The Australian Dollar rate continues to decline at the Forex currency market on Tuesday after slight upward rebound as a part of technical correction yesterday.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, nevertheless it continues to fall, confirming a pair sell signal. Stochastic oscillator remains in the oversold zone today and is not giving a clear signal.

Forex recommendations: if bearish sentiment for the pair intensifies traders’ targets will be the local low of 0.9770.

The main negative factor for the AUD is expansion of the flooding all over Australia. It started in the North East part of Australia and in Queensland and which threatens to be the largest in the last 50 years. It is obvious now that the flooding is spreading to the South, to the area of Breesban, the third largest city 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.

In addition, investors’ concern about slowdown in exports rate in China are also strong, which has a negative impact on the Australian domestic currency.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar tends downward

At the Forex currency market the New Zealand Dollar rate reverted to the downward movement on Tuesday. Investors’ doubts that China will start to reduce levels of import including those from New Zealand, has put pressure on the NZD, amplifying negative effect of the flooding in Australia.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is going up, giving a pair buy signal. Stochastic Oscillator is giving a similar signal today.

Forex recommendations: Considering pressure of the external background, off the market.

Feasible event scenario at Forex: if bearish sentiment intensifies for the pair, traders’ targets will be the levels of 0.7510 and 0.7450. Otherwise the pair will continue to consolidate close to the current levels.
The following data on New Zealand economy was released today:
– Construction permits in November: +8.8% against previous forecast of -2.0%;
– Level of business sentiment in new Zealand in QIV rose to 8 points, as per NZIER, against the previous level of 6 points.

Interest rate of the Reserve Bank of New Zealand is now at the level of 3.0% per annum. Commenting the last RBNZ meeting the regulator noted that the rate of the monetary policy tightening is expected to be moderate in the next two years, since the earthquake which happened in the country recently (and which was the strongest over the last 80 years) had a significant impact on the state of the national economy.

Regulator’s meetings in 2011 are scheduled for 26 January, 9 March, 27 April, 8 June, 27 July, 14 September, 26 October and 7 November.
Earlier Ministry of Finance brought down economic growth forecast for the current and the next fiscal years. In particular, estimate of GDP growth for the next fiscal year which starts on 1 June was brought down to 2.2% against the previous target level of 3.2%. In 2012 monetary politicians expect economic growth to 3.4%; however later, in 1015, economic growth in New Zealand will slow down again to - 2.7%.

In addition, it is assumed that there is a budget deficit in the country, which is expected to increase from the current 14.1% of GDP to 28.5% of GDP by June 2015.

 

[LF.Anastasia]

EUR/USD: Euro is growing up slowly, awaiting Portuguese auction

The pair EUR/USD continues to grow slowly at the Forex currency market on Wednesday morning, being corrected after significant fall earlier.
By 10.35 Moscow time the Euro is at 1.2992 against closing session level of 1.2974 yesterday.

Market is still focused on the problems of Eurozone - auction on allocation of Portuguese government bonds is expected to take place today; the results of which will show whether the country is able to service its debts on its own. If the result is poor, continuation of sales threatens the Euro
Meanwhile Japan and China have already expressed their intention to buy bonds of Eurozone to support region in dealing with debt problems.

The U.S. import prices data for December will be released in the afternoon and level of crude oil reserves as well. In general external background will continue to dictate conditions at the market and players pay little attention to statistics.

Most likely the pair EUR/USD will be in the range of 1.2900-1.3050 at the trading session today.

 

[LF.Anastasia]

GBP: British Pound grows steadily in the middle of the week

The British Pound Sterling rate continues to grow at the Forex currency market on Wednesday – the pair GBP/USD somehow managed to go beyond the days-long range amid restoration of positive sentiments at the capital markets. In addition, the Pound has reached attractive purchase levels after the series of sales.

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

Forex recommendations: if current market sentiments will be maintained buyers’ targets will become the levels of 1.5650 and 1.5685.

It became known today that number of permanent jobs in the UK is growing (54.9 in December against 55.2 in November), however according to KPMG/REC observations, growth rate has reduced. At the same time similar situation is observed in the sector of temporary jobs (52.8 in December against 53.5 in November). According to KPMG/REC findings, the situation in the employment sector in Britain is stable, the growth continues, however the growth rate has slowed down.

BRC data released on Wednesday showed that retail prices in Great Britain increased by 2.1% on annual basis in December which was higher than the growth by 2.0% y/y in November.

However, traders’ attention is not focused on statistics as yet, investors are concentrated on the events in Eurozone and the pair GBP/USD is closely correlated with EUR/USD.

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.

According to the representatives of the British Chamber of Commerce sharp increase in demand for exports in the country would not be a sufficient factor to stop slowing down of British economy according to the results of QIV 2010 and QI of 1011. Thus, experts of the Chamber believe that although the rate of production is high, low productivity in the service sector still remains a weak spot of the UK economy. In general this opinion agrees with the earlier forecast made by various agencies. It is possible that such trend will be continued in QII this year.

 

[LF.Anastasia]

CHF: Swiss Franc remains under pressure from traders

At the Forex currency market Swiss Franc rate continues to be under pressure as investors do not show interest in the protective currencies
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to grow, confirming a previous buy signal for the pair. Stochastic Oscillator is in the overbought zone today and is giving a similar signal.

Forex recommendations: if current market sentiments will be maintained and in case of breakdown at the level of 0.9755, buyers’ targets will be the levels of 0.9800 and 0.9830. If upward breakdown wll not take place, the pair will continue to consolidate close to the current levels.
A report of Credit Suisse AG and Osec which was made public earlier showed that sentiments of Swiss exporters are improving despite the recent highs of the Franc. Companies are confident that demand for the goods of Swiss production will remain high over the next few months, although the threats posed by the expensive CHF are still present.

According to the research, export barometer in QI of this year will amount to 0.6 which is higher than the levels of Q VI 2010. In general the results of the QI of this year are expected to be favourable in the export sector. Companies are taking into account that after the rise of the Franc by 16% last year the demand from the Eurozone will be lower but not critical.

Unemployment rate in Switzerland increased to 3.8% in December against the forecast of 3.7% and the previous value of 3.6%. It is a negative indication for the Franc at the moment; however attention of the traders is focused on the Eurozone.

It became known earlier 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. 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.

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.

 

[LF.Anastasia]

JPY: Japanese Yen consolidates on Wednesday

At the Forex currency market the Japanese Yen rate began to grow in the mid-week. Nevertheless, the pair USD/JPY remains in the range of 82.66-83.68 so far.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is moving along the signal line today preventing from forming a clear signal. Stochastic Oscillator is giving a pair sell signal, coming out of the overbought zone.

Forex recommendations: if current sentiments at the market will be maintained and in case of breakdown at the level of 83.00, traders’ targets will be the levels of 82.70 and 82.50. More distant bearish target is 82.00.

It became known today that the growth of money supply M2 in Japan amounted to 2.3% y/y in December which became the weakest growth rate since March 2009. In addition, indicator M3 increased only by 1.8% y/y which is lower than the level of 2.0% in November.
Worth noting that there is no historical basis for M3 yet- the indicator was introduced by the Bank of Japan recently, therefore the levels of economic activity are assessed by M2.

Furthermore, levels of demand for bank lending in the Land of the Rising Sun remain weak: the indicator fell by 1.9% y/y in 2010 which became the first factor of decrease since 2005. Recall that in 2009, in year of crisis the indicator increased by 2.2%.
Interest rate of the Bank of Japan is at the minimal level of 0.1% per annum. 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. Tomorrow 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.

Today’s demand for the Japanese Yen can be attributed to optimism at the market; the currency does not have other grounds for significant consolidation.

 

[LF.Anastasia]

AUD: Australian Dollar is technically corrected still remaining

At the Forex currency market the Australian Dollar rate remains weak on Wednesday; nevertheless it is being technically corrected after the surge of sales. Today’s positive in general sentiments at the currency market gives the AUD a chance to regain slightly from the previous fall, although fundamental factors for decline are more than enough.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is still going down, confirming a previous sell signal for the pair. Stochastic oscillator has left the oversold zone today and is giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9915 the pair will go to 0.9940 and 0.9970. If the level of 0.9890 is broken down, traders’ targets will become the levels of 0.9875 and 0.9850.

Meanwhile, natural disaster still remains the main negative factor for Australian economy and Australian Dollar rate. Flooding started in the North East part of Australia and in Queensland and is now threatens to be the largest in the last 50 years. It is obvious now that the flooding is spreading to the South, to the area of Breesban, the third largest city 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.

It became known today that number of victims of the flooding in Queensland continues to grow.
This fact can force the Reserve Bank of Australia to postpone interest rate raise as the economy of the country will require real funds to liquidate the aftermath of the natural disaster.

Interest rate in Australia is at the level of 4.75% per annum. 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.