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[LF.Anastasia]

CAD: Canadian Dollar remains in the range

At the Forex currency market the Canadian Dollar rate is going down slightly on Tuesday, however still remaining in the four days range of 0.9907-0.9990.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however is going up, giving a pair buy signal. 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 0.9965 the pair will go to 0.9980 and 1.0010. If the level of 0.9930 is exceeded, traders’ targets will be the levels of 0.9890 and 0.9850.

According to the experts from the International Monetary Fund, Canadian economy will be growing by 2.3% y/y in the current year, which became a downgrade compared with the forecast of October (+2.7% y/y).

At the same time IMF expects that in 2012 Canadian economy will increase by 2.7%. The exact figures of the GDP growth in the country will be published on 28 February but meanwhile IMF supposes that the indicator will be at the level of 2.9% (earlier – 3%).

As for the exchange rate of the Canadian Dollar in the current year, IMF believes that in case if average prices for the oil will be maintained at about 90 dollars for the barrel (in October- $79 per barrel), the CAD will consolidate supported with the help of fundamental support provided by the commodity economy of the country.

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.

 

[LF.Anastasia]

EUR/USD: Market is waiting for the Federal Reserve decisions

The pair EUR/USD is traded slightly downward at the Forex currency market on Wednesday morning.

By 10.20 Moscow time the Euro is at 1.3665 against closing session level of 1.3681 yesterday.

Today in the Asian session, players were supported again by the expectation of the decisions made in the FR meeting which will end tonight. Traders do not expect changes in the tone of the regulator.

The Dollar, meanwhile, is still under pressure, caused by the speech of the USA leader Barack Obama, who believes that main items of public expenditure in the United States should be frozen for 5 years. Apparently, macro-economic statistics published in the States is only one side of the coin. Obama’s opinion indicates pessimistic frame of mind of the authorities regarding recovery of the domestic economy.

A lot of news will be released tonight therefore volatility in the major pair can increase.

Most likely the pair EUR/USD will not go beyond the range of 1.3580-1.3710 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound continues to decline

At the Forex currency market the British Pound Sterling rate continues to decline following the release of weak data on the country’s GDP for QIV 2010.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and still continues to go up, giving a pair buy signal. Stochastic oscillator is giving 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 1.5830 the pair will go to 1.5880 and 1.5930. If the level of 1.5760 is exceeded, traders’ targets will become the levels of .5710 and 1.5660.

As it became known earlier, GDP in Great Britain fell by 0.5% on quarterly basis in QIV against expectations of growth by 0.5% q/q. According to the official information, bad weather this winter has affected customer’s demand.

Meanwhile, public sector is still in a difficult situation in spite the fact that the reduction program has not entered yet its active phase. As the data released earlier shows, needs of the government in funds increased to the level of 27.85 billion GBP in December, while revenue in the budget from tax for the specified period amounted only to 27.34 billion pounds.

Last Friday, representative of the Monetary Committee of the Bank of England Posen noted once again that the position of the regulator towards inflation has remained unchanged: The bank expects that inflationary pressure will reduce to the level of 2% soon and below, as fundamental factors, which take into account, for example, zero growth in base salary, give indications of this. We would remind that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%. According to traders, it became evidence in favor of interest rate increase by the Bank of England. Market believes it is a settled matter because inflation has remained above target level of the regulator for 11 months. It is interesting to know how authorities are going to achieve this.

We would remind that that Begbies Traynor published a report, according to which British companies again experience difficulties in doing business due to the reduction of government spending in the country. Thus, about 140 thousand companies in the UK are now in difficulties, and crisis in the companies started long before active phase of reduction of government spending. According to Begbies Traynor experts, this fact increases fears of the second wave of recession in the country. In addition, experts see signs of stagnation in British economy which is yet another alarm bell.

 

[LF.Anastasia]

CHF: Swiss Franc gave Dollar a chance to regain

At the Forex currency market Swiss Franc rate is retreating slightly on Wednesday after three days of rapid growth. Trades yesterday were vague in the first half of the day; however by the evening the situation turned in favour of the CHF.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and resumed decline, giving 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 and in case of breakdown at the level of 0.9400 traders’ targets will be the levels of 0.9385 and 0.9350.

In general, the situation in Swiss economy where all attention is now focused on the rate of the CHF, still remains almost unchanged.

So, attention to the Swiss Franc has remained steadfast from both regulator and local authorities: expensive 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. Swiss authorities also stressed that 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, although probability of currency intervention is estimated as low so far. The head of Swiss National Bank Mr. Hildebrand said earlier, that in his opinion, stability of Eurozone is the key factor of economic growth in Switzerland. He also expressed confidence that the region will revert to quiet times.

Swiss authorities stated this week that country’s economy has faced a complicated situation; however it is not a crisis. Expensive Franc became a catalyst for the complications in the economic conditions. At the same time authorities declared that SNB does not influence in any way on the CHF rate, although it bears full responsibility for the monetary policy and its contents.

It became known yesterday that according to UBS estimates, consumer confidence index in Switzerland increased to the level of 1.842 in December against 1.624 in November. This is a positive indicator for the local economy. Therefore, the situation in Swiss economy remains ambiguous.

 

[LF.Anastasia]

JPY: Japanese Yen is growing while USD is weak

At the Forex currency market the Japanese Yen rate continues to consolidate on Wednesday, taking advantage the weakness of the USD which is under the pressure from external factors.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and started to descend, giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if current bearish sentiment will be maintained and in case of breakdown at the level of 82.00, traders’ targets will be the levels of 81.75 and 81.30.

On Wednesday morning the Bank of Japan reported a revision of its economic forecast, emphasizing that the pause in the economic recovery, observed in QIV last year was a temporality, and the economy will be back on the path of recovery in the nearest months. The regulator believes that one of the main factor of support is an industrial production sector –its growth estimate was revised upward by the Bank of Japan in December and the regulator takes into account accumulation of capital by the companies, due to which investments flow into the sector will be stably moderate as yet.

A two-day meeting of the Bank of Japan finished yesterday; at the meeting it was decided to keep interest rate in the previous target range of 0-0.1% per annum. The head of the Bank of Japan Mr. Shirakawa noted in the follow- up comments that the country continues to move towards achieving price stability and at the moment both upside and downside risks to the economy are stabilized.

Monetary politician also stressed that Japan will resume recovery sooner or later; while the growth in QI 2011 still remains disputable. Shirakawa expressed confidence that export levels will also begin to increase.

We would remind that there are still deflation problems in the Country of the Rising Sun and the longer they last the harder will be the rehabilitation. The Yen, meanwhile, is traded in its own way, not paying much attention to the reaction of the Bank of Japan.

The Yen, which is still rising in price, remains a serious risk factor for the Japanese economy, making a situation in the exports sector more complicated.

 

[LF.Anastasia]

AUD: Australian Dollar tries to grow, signals are contradictory, however

The Australian Dollar rate is traded upward at the Forex currency market on Wednesday; however, keeping in mind weakness of the currency in the moments when external background deteriorates, it is necessary to be carefull, especially knowing that signals are contradictory.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD after crossing with the signal line, it is moving down, giving a pair sell signal. Stochastic Oscillator is giving a pair buy signal today, being n the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0000 the pair will go to 1.0050 and 1.0095. If a breakdown will not take place, the pair will continue to consolidate close to the current levels.

Statistics on the Australian economy was not published this morning, so currency pair is guided by external background; which remains ambiguous in advance of the U.S. Federal reserve meeting.

Collapse of the AUD yesterday proved our theory about generall weakness of the AUD once again. After the release of the data on the consumer prices index in QIV (+0.4% q/q (+2.7% y/y) against the forecast of +0.7% q/q), traders felt disappointed and the AUD went down.

As it became known on Monday morning, PPI index in Australia increased by 0.1% on quarterly basis (+2.7% y/y) in QIV. Earlier statistics was multifarious. Thus, import and export prices in Australia fell by 8.1% and 3.8% respectively. However, level of consumer confidence in Australia is estimated not so unequivocally; 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, index of consumer sentiment 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.

Note, that despite complicated situation in the Australian economy due to the flooding authorities of the country face the future with optimism: according to Minister of Finance of the country Mr. Swan, CPI will show increase in QI of this year due to the growing dynamics of prices for food. Observers believe that economic consequences of the flooding in the Green Continent have already been noticeable in the results of the current quarter.

 

[LF.Anastasia]

EUR/USD: Euro remains at the two –month highs

The pair EUR/USD is close to the opening levels at the Forex currency market on Thursday morning, remaining at the two-month highs.

By 9.45 Moscow time the Euro is at 1.3705 against closing session level of 1.3712 yesterday.

On Wednesday night a two-day meeting of the U.S. Federal Reserve was over; the meeting decided to keep current level of the interest rate in the target range of 0-0.25% per annum. The regulator once again confirmed his intention to keep the rate at the low levels “for a long time”; the program of government bond redemption -E2 in the amount of $600 and the term of validity until end of June, 2011 was also left unchanged.

Traders’ attention today will be focused on the Eurozone; at 13.00 Moscow time today, consolidated indexes of consumer and business confidence to Eurozone in January will be released.

In general, the Euro maintains a solid position.

Most likely the pair EUR/USD will be in the range of 1.3600-1.3730 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound determines movement direction

At the Forex currency market the British Pound Sterling started to decline again on Thursday, however signals for the pair GBP/USD remain multidirectional, which indicates the trend forming process.

Forex forecast: MACD indicator is n the positive area for the pair GBP/USD; however it started to move along the signal line and has not formed a clear signal today. Stochastic Oscillator is not giving a clear signal either today.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5940 the pair will go to 1.6000 and 1.6050. If the upward breakdown will not take place the pair will continue to consolidate in the range.

By the way, yesterday’s fall of the Pound was regained in the afternoon when the minutes of the last meeting of the Bank of England were made public.

Thus, 7 out of 9 members of MPC voted for the regulator’s decision to keep the rate at the level of 0.5% per annum, so the camp Sentence, which supports monetary policy tightening, was increased by one more vote, given by Vail. In addition Posen continues to vote for the volume increase of the assets redemption program.

In general the document stated that majority of the Bank members believe in the balanced risks; however, it is also not excluded that inflation will be higher than the forecast in the short term.

Changes in the balance of power in the MPC in regard to the rate, completely fits our view, that current price of the Sterling has already incorporated expectations of the monetary policy tightening.

As it became known earlier, GDP in Great Britain fell by 0.5% on quarterly basis in QIV against expectations of growth by 0.5% q/q. According to the official information, bad weather this winter has affected customer’s demand.

Meanwhile, public sector is still in a difficult situation in spite the fact that the reduction program has not entered yet its active phase. As the data released earlier shows, needs of the government in funds increased to the level of 27.85 billion GBP in December, while revenue in the budget from tax for the specified period amounted only to 27.34 billion pounds.

Last Friday, representative of the Monetary Committee of the Bank of England Posen noted once again that the position of the regulator towards inflation has remained unchanged: The bank expects that inflationary pressure will reduce to the level of 2% soon and below, as fundamental factors, which take into account, for example, zero growth in base salary, give indications of this. We would remind that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%. According to traders, it became evidence in favor of interest rate increase by the Bank of England. Market believes it is a settled matter because inflation has remained above target level of the regulator for 11 months. It is interesting to know how authorities are going to achieve this.

 

[LF.Anastasia]

CHF: Swiss Franc is losing positions under pressure from regulator

At the Forex currency market Swiss Franc rate is traded downward on Thursday; redouble attention of Swiss authorities to the Franc is interpreted by the investors as a kind of verbal intervention.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF, however it is moving along the signal line, not giving a clear signal. Stochastic oscillator has come out of the oversold zone today and is giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.9450 the pair will go to 0.9500 and 0.9550.

Now, Swiss Franc still remains in the focus of regulator’s attention. The head of the Swiss National Bank Mr. Hildebrand noted today that rise of the Franc is a serious risk for some sectors of economy, however, he emphasized that macro-economic indices demonstrate steady growth of the domestic economy at the moment. The head of Swiss National Bank Mr. Hildebrand said earlier, that in his opinion, stability of Eurozone is the key factor of economic growth in Switzerland. He also expressed confidence that the region will revert to quiet times.

Swiss authorities stated this week that country’s economy has faced a complicated situation; however it is not a crisis. Expensive Franc became a catalyst for the complications in the economic conditions. At the same time authorities declared that SNB does not influence in any way on the CHF rate, although it bears full responsibility for the monetary policy and its contents. It became known earlier that according to UBS estimates, consumer confidence index in Switzerland increased to the level of 1.842 in December against 1.624 in November. This is a positive indicator for the local economy. Therefore, the situation in Swiss economy remains ambiguous.

Note, the possibility of the regulator’s unilateral intervention in the market can become the reality, although probability of currency intervention is estimated as low so far.

 

[LF.Anastasia]

JPY: Japanese Yen became weaker after the decision on the country’s ranking

The Japanese Yen rate is traded with significant decrease at the Forex currency market on Thursday, as soon as the information that Japan was downgraded to the level of AA- by the rating agency S$P became public, the currency weakened sharply.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to move along the signal line, not giving a signal. Stochastic oscillator is giving a pair buy signal, being in the neutral zone.

Forex recommendations: if current bullish sentiment will be maintained and in case of breakdown at the level of 82.70, the pair will go to 82.90 and 83.50.

Thus, rating agency S&P reported downgrade of Japan to the level of AA- which led to the massive sales of the JPY. Later, representatives of the agency Fitch stressed that Japan needs more stable financial policy than it is now.

It is interesting, that Japanese data released this morning was quite good: trade balance of the country increased to the level of Y727.7 billion (earlier +Y161.1 billion), exports rose by 13.0% y/y in December, while imports grew by 10.6% y/y.

In addition, country’ export to the U.S. increased by 16.5% y/y in December.

On Wednesday morning the Bank of Japan reported a revision of its economic forecast, emphasizing that the pause in the economic recovery, observed in QIV last year was a temporality, and the economy will be back on the path of recovery in the nearest months. The regulator believes that one of the main factor of support is an industrial production sector –its growth estimate was revised upward by the Bank of Japan in December and the regulator takes into account accumulation of capital by the companies, due to which investments flow into the sector will be stably moderate as yet.

Most likely the revision was premature; we should not forget about deflation and expensive Yen

A two-day meeting of the Bank of Japan finished the day before yesterday; at the meeting it was decided to keep interest rate in the previous target range of 0-0.1% per annum. The head of the Bank of Japan Mr. Shirakawa noted in the follow- up comments that the country continues to move towards achieving price stability and at the moment both upside and downside risks to the economy are stabilized. Monetary politician also stressed that Japan will resume recovery sooner or later; while the growth in QI 2011 still remains disputable. Shirakawa also expressed confidence that export levels will also begin to increase.