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[LF.Anastasia]

GBP: Long-awaited correction has started British Pound Sterling

At the Forex currency market the British Pound Sterling rate in traded downward on Thursday as the correction started after the 9 days of continuous growth.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is going up, confirming a pair buy signal. Stochastic Oscillator has come out of the overbought zone and is giving a weak buy signal for a pair.

Forex recommendations: in order to make sure that corrective downward movement for the pair intensifies we should see a breakdown at the level of 1.5890, after that, traders’ targets today will be the levels of 1.5850 and 1.5800.

According to the representative of the Bank of England Mr Posen, regulator, who is taking all necessary measures, has performed great services for achieving current stable situation in British economy.

In his view efforts of the Bank of England shall be focused on providing price stability which also includes anti-inflationary steps. We would remind that it became known yesterday that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%.This is another evidence proving that the Bank of England will raise interest rate soon, market believes that this is a resolved issue already, as inflation has remained above target level of the regulator for 11 months. Earlier the Pound was supported by statistics on the level of consumer confidence Nationwide which increased to the level of 53 points in December against the previous value of 45 points. A driver for the growth was the rise in income of population at the end of the year.

Meanwhile the market believes that the issue of raising interest rate by the bank of England is only a matter of time. Meetings of the regulator are scheduled for: 10 February, 10 March, 7 April, 5 May, 9 June, 7 July, 4 August, 8 September, 6 October, 10 November, 8 December.

Note, that International rating agency Moody's stated this week that financial situation in Great Britain as well as in Germany, France and the USA remains stable and is virtually unchanged. This fact confirms the ranking of the countries at the level of AAA. It is worth noting that at the meeting of the bank of England yesterday interest rate was maintained at the previous level of 0.5% per annum.

 

[LF.Anastasia]

CHF: Swiss Franc determines movement direction on Thursday

At the Forex currency market Swiss Franc rate almost makes no movement on Thursday; while investors assess external background and technical signals.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it has been moving along the signal line for the second day and is not giving a clear signal. Stochastic Oscillator remains in the oversold zone today and has not forms a signal either.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9600 the pair will go to0.9650 and 0.9700. If the level of 0.9520 is exceeded, traders’ targets will be the levels of 0.9460 and 0.9380.

Thus, Franc managed to attract attention of Swiss authorities and regulator as well, at the briefing yesterday, representatives of the Swiss National Bank raised the issue of CHF. Finance Minister of the country stated that there are no signs of speculation in the market which can shift the Franc; while economy in the country grows and there are no signs of crisis.

It was also stressed that an issue of expensive Franc will become a subject of discussion in the next couple of weeks.
In this context it can assumed that the rate of the pair USD/CHF can remain in the narrow range or take aim at the rise under the pressure of such verbal intervention.

We would remind that a week earlier Swiss government announced that the SNB should influence on the rate of the Franc, working with it directly. This increases the possibility of the regulator’s unilateral intervention in the market. Note that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery. This has been confirmed by Swiss authorities who reminded that strong Franc complicates correction of the national economy.

However, recent actions of regulator indicate that Swiss authorities are not ready for the currency intervention, although the market expects unilateral intervention by Swiss National bank. Despite concerns about the rise of CHF and CNB losses (in 2010 the regulator lost 21 billion francs or 4% of GDP due to the currency rise), the probability of intervention is estimated as low so far.

 

[LF.Anastasia]

JPY: Japanese Yen made upward correction possible for USD

The Japanese Yen rate goes down at the Forex currency market on Thursday after six sessions of steady growth.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is moving along signal line not forming a clear signal. Stochastic Oscillator continues to give 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 82.30 the pair will go to 82.50 and 82.90. If the level of 81.70 is broken down,traders’ targets will be the levels of 81.30 and 80.95.

The following Japanese data was released today:
– Index of leading indicators in November: +2.9 points;
– Index of coincident indicators in November: +1.7 points.

In general the situation in Japanese economy remains unchanged, except for the frequent talk in the market that Japan can cede to China its status of the world’s second largest economy; according to preliminary estimates, China overtook Japan in the levels of nominal GDP in 2010.

Japanese statistics was favourable so far. Thus, revised volume of industrial output in Japan increased by 1% m/m in November, which became the first factor of growth over half a year; at the same time capacity utilization rose by 1.6% m/m in November against the previous fall by 2.3% and the ratio of stocks and supplies was revised to -8.3% m/m in November against the growth by 8.4% m/m in October.

In addition, tertiary index increased by 0.6% m/m in November which agreed with the forecast. It became the sixth consecutive factor of growth, which is a positive indicator.

Minister of Economy Mr. Yosano expressed hope yesterday that the JPY will be traded at the adequate levels. In addition, the head of the Bank of japan Shirakawa and Prime Minister Khan exchanged views on the current situation in the Japanese economy and the world; Shirakawa drew attention again to the priorities of monetary policy in Japan.

 

[LF.Anastasia]

AUD: Australian Dollar descends again

At the Forex currency market on Thursday the Australian Dollar rate resumed its descend after three days of corrective pullback.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving along the signal line, not forming a trading signal. Stochastic Oscillator has come out of the overbought zone and is giving a pair sell signal.

Forex recommendations: if bearish sentiment intensifies and in case of breakdown at the level of 0.9900 the pair will go to 0.9850 and 0.9810.

It became known today that according to ANZ consumer confidence in Australia amounted to 117 points in January against the level of 112.2 n December. It is interesting that, as per official data, released yesterday consumer confidence index in Australia fell by 5.7% in January against the growth by 0.2% in December, mostly due to the flooding in the country. Flooding in Australia in early January is still number one news: natural disaster in Queensland and the two neighboring states threatens to become the most severe over the past 50 years.

Obviously, different approaches are used for assessment of the consumer confidence index which leads to an increase in biased estimates.
Although the AUD exceeded the parity level yesterday, today’s decline proves once again our prior view that currency is weak at the moment mainly due to the flooding in Queensland which happened in January.

The meeting of the Reserve Bank of Australia is scheduled for 31 January and market will carefully wait for the comments of the RBA head, as the AUD future will depend on them in the short term. 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.

 

[LF.Anastasia]

EUR/USD: Ascending trend for Euro still remains in force

The EUR/USD is traded, continuing to go up at the Forex currency market on Friday morning.

By 10.15 Moscow time the Euro is at 1.3525 against closing session level of 1.3472 yesterday.

Thus, the week was quite favourable for the Euro and today’s enthusiasm of the buyers is explained by the market’s belief that at the meeting of 25026 January Federal Reserve system will keep interest rate unchanged and provide a neutral commentary on the current economic situation.

The day will be eventful in terms of macro-statistics on Eurozone countries and Great Britain; however the calendar of statistics for the evening is empty.

Most likely the pair EUR/USD will finish trading session on Thursday, being in the range of 1.3460-1.3570.

 

[LF.Anastasia]

GBP: Pound began to grow after technical correction

At the Forex currency market the British Pound Sterling resumed its growth at the Forex currency market on Friday after yesterday’s technical pullback.


Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is going up, confirming a previous buy signal for the pair. Stochastic Oscillator s giving a pair sell signal today.

Forex recommendations: off the market.
Feasible event scenario at Forex: to insure that bearish sentiment is intensive, it is required to see a breakdown at the level of 1.5840, after that, buyers’ targets will be the levels of 1.5780 and 1.5750. If a breakdown will not take place the pair will continue to consolidate close to the current levels.


The levels of retail sales in the UK will become known today, which can impact on the alignment of forces in the pair GBP/USD.
In general, the situation in the British economy has remained almost unchanged.

We would remind that market believes that the issue of raising interest rate by the bank of England is only a matter of time. Meetings of the regulator are scheduled for: 10 February, 10 March, 7 April, 5 May, 9 June, 7 July, 4 August, 8 September, 6 October, 10 November, 8 December.

In addition, International rating agency Moody's stated this week that financial situation in Great Britain as well as in Germany, France and the USA remains stable and is virtually unchanged. This fact confirms the ranking of the countries at the level of AAA. It is worth noting that at the meeting of the bank of England yesterday interest rate was maintained at the previous level of 0.5% per annum. Statistcs released earlier showed that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%.This is the other evidence, proving that the Bank of England will raise interest rate soon, market believes that this is a resolved issue already, as inflation has remained above target level of the regulator for 11 months. Earlier the Pound was supported by statistics on the level of consumer confidence Nationwide which increased to the level of 53 points in December against the previous value of 45 points. A driver for the growth was the rise in income of population at the end of the year.

 

[LF.Anastasia]

CHF: Swiss Franc grows, trying to go out of the range

At the Forex currency market Swiss Franc rate has resumed ascending movement again on Friday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, it approached the signal line very closely, and is moving along it, not giving a clear signal. 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 0.9700 the pair USD/CHF will go to 0.9760, which will become the local highs. If upward breakdown will not take place, the pair will continue to consolidate close to the current levels, remaining in the range of 0.9525-0.9685.

The head of Swiss National Bank Mr. Hildebrand said yesterday, that in his opinion, stability of Eurozone is the key factor of economic growth in Switzerland. He also expressed confidence in reverting of the region to quiet times.

In addition, the regulator stressed once again that strong Franc is a hard burden for the local economy which is especially evident in some sectors. However, in general, the macro-economic background demonstrates a good atmosphere in the country.

This week the CHF issue was brought up more than once: earlier representatives of the Swiss National Bank had raised the issue of CHF. Finance Minister of the country stated that there are no signs of speculation in the market which can shift the Franc; while economy in the country grows and there are no signs of crisis. It was also stressed that an issue of expensive Franc will become a subject of discussion in the next couple of weeks.

Swiss authorities also pinpointed the issue of value of the national currency, government of the country announced that the SNB should influence on the rate of the Franc, working with it directly. This increases the possibility of the regulator’s unilateral intervention in the market. Note that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery. This has been confirmed by Swiss authorities who reminded that strong Franc complicates correction of the national economy.

However, probability of currency intervention is estimated as low so far.

 

[LF.Anastasia]

JPY: Japanese Yen tries to regain from yesterday’s fall

The Japanese Yen rate is going up slightly at the Forex currency market on Friday, demonstrating attempts to regain from the fall on Thursday.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.00 the pair will go to 83.40 and 83.90. If the level of 82.60 is exceeded, traders’ targets will be the levels of 82.30 and 81.70.

Japanese authorities noted today, commenting on the state of economy, that Japanese economy is growing, although the pace of growth is slow. In addition, the government increased the overall assessment of the economy for the first time in the last 7 months; outlook of the levels of industrial output have also been upgraded.

Japanese statistics, released this week was favorable. Thus, revised volume of industrial output in Japan increased by 1% m/m in November, which became the first factor of growth over half a year; at the same time capacity utilization rose by 1.6% m/m in November against the previous fall by 2.3% and the ratio of stocks and supplies was revised to -8.3% m/m in November against the growth by 8.4% m/m in October.

In addition, tertiary index, demonstrating the state of affairs in the Japanese service sector and expenditures increased by 0.6% m/m in November, which agreed with the forecast. It has become the sixth consecutive fact of the index growth, which is a positive indicator.

Minister of Economy Mr. Yosano expressed hope yesterday that the JPY will be traded at the adequate levels. In addition, the head of the Bank of japan Shirakawa and Prime Minister Khan exchanged views on the current situation in the Japanese economy and the world; Shirakawa drew attention again to the priorities of monetary policy in Japan.

 

[LF.Anastasia]

AUD: Australian Dollar is weak again

At the Forex currency market the Australian Dollar rate continues descend on Friday that has started earlier.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD however it strived upward, confirming a previous sell signal for the pair. Stochastic oscillator is going down on Friday, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.9810 the pair will go to 0.9770 and 0.9725.

Note that at the moment probability of intensification of the bearish sentiment is not too high, however medium term trend remains downward for the currency.

The following Australian news was released today:

– Import prices in Australia fell by 3.8% on quarterly basis in QIV against the previous growth by 0.7% in QIII;

– Export prices in Australia decreased by 8.1% on quarterly basis in QIV against the growth by 7.8% in QIII.

It became known yesterday, that according to ANZ consumer confidence in Australia amounted to 117 points in January against the level of 112.2 n December. It is interesting that, as per official data, released yesterday consumer confidence index in Australia fell by 5.7% in January against the growth by 0.2% in December, mostly due to the flooding in the country.

The meeting of the Reserve Bank of Australia is scheduled for 31 January and market will carefully wait for the comments of the RBA head, as the AUD future will depend on them in the short term. 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.

Although the AUD exceeded the parity level earlier, today’s decline proves once again our prior view that currency is weak at the moment mainly due to the flooding in Queensland which happened in January. Meanwhile, RBA has not announced yet its assessment of the damage to the economy of the Green Continent.

 

[LF.Anastasia]

CAD: Canadian Dollar has not chosen movement direction at the end of the week

At the Forex currency market the Canadian Dollar rate stands still on Friday, determining movement direction.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD, moving along the signal line, therefore, not giving a clear signal. Stochastic Oscillator is giving a pair buy signal on Friday, approaching overbought zone.

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 1.0000 and 1.0030. If the level of 0.9965 is exceeded, traders’ target will become the levels of 0.9920 and 0.9900.

It became known yesterday that index of leading indicators in Canada fell by 3.3% in December, prompting players to close out positions in CAD.
In addition, it also became known that index of wholesale reserves in Canada increased by 0.4% m/m in November; index of wholesale sales rose by 1.2% m/m.

We would remind that at the meeting of Bank of Canada this week, the regulator decided to keep interest rate unchanged, at the level of 1%. Given the non-uniform statistical data on the nearest neighboring country, the USA, a step is perfectly logical.

The follow-up comments of the regulator have been predictable. The head of the Bank Mr. Carney noted that high rate of the CAD is holding back exports in the country, although the levels of net export will be maintained amid demand for raw materials. In addition, the Bank of Canada said that the fact of tightening of the monetary policy in the developing countries will affect the price movement; and that self-recovery of the world economy progresses slightly faster than than it had been predicted although risks also increase. As for the inflation levels, regulator expects that level of core and general indices of consumer prices will be below 2% level by the end of 1012.

In general, position of the Canadian Dollar at Forex is stable at the moment, taking into account high oil prices and stability of the Canadian economy.