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AUD: Australian Dollar is in sale again

The Australian Dollar rate resumed its decline at the Forex currency market on Thursday.

Forex forecast: MACD indicator for the pair AUD/USD continues to be upon the signal line, not giving a clear signal. Stochastic oscillator is giving a pair sell signal, being in the neutral zone.

Forex recommendations: if bearish sentiment for the pair will be maintained and in case of breakdown at the level of 0.9900 the pair will go to 0.9850 and 0.9800.

The news about downgrading of Japan to the level of –AA has become a negative factor for the Australian currency. Drastic sale, caused by unfavourable news, have indicated once again general instability in the pair AUD/USD. . We would remind that the following data was released earlier: 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.

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.

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.

In general, medium term trend for the AUD is downward.

 

[LF.Anastasia]

NZD: New Zealand Dollar marks time

At the Forex currency market the New Zealand Dollar does not make much progress on Thursday, following four sessions of growth.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD; however it 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 buyers’ interest to the pair will increase and in case of breakdown at the level of 0.7730 the pair will go to 0.7750 and 0.7790. If the breakdown upward will not take place, the pair will continue to consolidate close to the current levels.

On Wednesday night the meeting of the Reserve Bank of New Zealand finished; an expected decision to keep interest rate at the previous level of 3.0% per annum was made at the meeting. In the follow-up comments the head of the RBNZ, Bollard stressed that the rates will be raised sequentially over the next two years.

However, the regulator will keep the rate at the low levels as long as the situation in the economy regains confidence and the recovery process will become stable. As for the internal economy of New Zealand, economic activity in the second half of 2010 turned out weaker than the forecast and the reduction of spending in the retail sector in QIV is not ruled out.

In other respects, the regulator adhered to his previous statements and the outlook for the New Zealand economy has also remained unchanged.

Ministry of Finance takes a dark view of the economic outlooks of the country; therefore, earlier they downgraded the forecast of economic growth 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%. Note also, that budget deficit is assumed in the country, which is expected to increase from the current 14.1% of GDP to 28.5% of GDP by June 2015.

According to the earlier data the level of business sentiment in New Zealand in QIV rose to 8 points, as per NZIER estimates, against the previous level of 6 points. In general, it is a positive indicator for the NZD and the economy.

 

[LF.Anastasia]

EUR/USD: Dollar makes attempts to regain

The pair EUR/USD is traded with minor fluctuations at the Forex currency market on Friday morning, because morning selling in the Asian session of the stock market did not encourage positive factor in the currency sector.

By 9.25 Moscow time the Euro is at 1.3715 against closing session level of 1.3733 yesterday.

In addition to the morning’s Asian factor, expectations of the strong statistics on U.S. GDP for QIV can contribute to consolidation of the USD positions; it is assumed that the data will show growth by 3.5% against the rise by 2.6% in QIII.

In general, the Unified European currency consolidated its positions by 1.7% in January against dual currency basket; the USD became “lighter” by 2.5%, Japanese Yen fell by 1.5%.

Most likely, volatility on the trading floors can increase in advance of the U.S. statistics release tonight.

Presumably, the pair EUR/USD will go beyond the range of 1.3620-1.3790 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound aroused interest of traders again

At the Forex currency market the British Pound Sterling is traded downward on Friday, continuing the movement which had started earlier.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD; however it started to move along the signal line and is not giving a clear signal. Stochastic oscillator is giving a pair sell signal.

Forex recommendations: if current bearish sentiment will be maintained for the pair and in case of breakdown at the level of 1.5890 the pair will go to 1.5830 and 1.5780.

It became known today that as per GFK/NOP, consumer confidence in Great Britain fell to -29, against the previous level of -21. Thus, the index is at the lowest level since 1994, which indicates consumers’ skepticism to the near -term economic outlook in the country.

The publication of the last meeting of the Bank of England prevented The pound from collapse on Thursday; 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, which was 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 Pound Sterling has already incorporated expectations of the monetary policy tightening.

Nevertheless, to date the Pound demonstrates weakness, responding not as much to macro-statistics but mostly to the correlation of EUR/USD where the Dollar is regaining its positions today.

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.

A week ago, 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.

 

[LF.Anastasia]

CHF: signals are still ambiguous for Swiss Franc

At the Forex currency market Swiss Franc rate is going down slightly on Friday, following the trend which had started yesterday.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF; however it is going down, giving a pair sell signal. Stochastic Oscillator is giving a pair buy signal today, still staying on the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case if breakdown at the level of 0.9470 the pair will go to 0.9500 and 0.9550. If the level of 0.9400 is exceeded, traders’ targets will be the levels of 0.9350 and 0.9320.

The situation in Swiss economy has remained almost unchanged at the end of the week.

Swiss authorities stressed 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 that possibility of the regulator’s unilateral intervention in the market can become a reality, although chances of currency intervention are estimated as low so far.

At the moment, 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 involves 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. Therefore verbal intervention is still effective for Swiss Franc.

 

[LF.Anastasia]

JPY: Positive indicators in economy promote growth Japanese Yen

The Japanese Yen rate regains after yesterday’s fall at the Forex currency market on Friday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and tends to continue the fall, giving a pair sell signal. Stochastic Oscillator revolves a signal today, being in the neutral zone.

Forex recommendations: if bearish sentiment for the pair intensifies, traders’ targets today will be the levels of 82.50 and 82.10.

Therefore, two factors are in benefit for the Yen today: investors’ interest in secure assets due to the increased uncertainty in the market and Japanese statistics which, in general, turned out to be favourable.

The following Japanese data was released today;

– Net CPI in December: -0.4% y/y against: -0.5% earlier;

– Unemployment rate in December: 4.9% against 5.1% in November;

– Preliminary retail sales in December: -2.0% y/y against +1.5% in November;

– Consumer expenditures in December: -3.3% against the forecast of -0.6%.

The data on unemployment and on the number of new jobs was a positive factor for the Japanese economy; however consumer sector is still in crisis.

It is interesting, that Japanese data released yesterday 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.

However, we should keep in mind that yesterday, 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.

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.

 

[LF.Anastasia]

AUD: Australian Dollar is not going to discard its intentions to regain

At the Forex currency market the Australian Dollar rate demonstrates intention to regain from the sales on Thursday, however it is more likely that weakness of the currency will prevent from full -scale technical pullback.

Forex forecast: MACD indicator is below the signal line today for the pair AUD/USD and continues to go down, giving a pair sell signal. Stochastic Oscillator is also going down today, giving a sell signal and being in the neutral zone.

Forex recommendations: if bearish sentiment intensifies for the pair, traders’ targets will become the levels of 0.9860 and 0.9820/10.

The situation in Australian economy has remained unchanged today, no important macro-economic news was published today.

As it became known this week, PPI index in Australia increased by 0.1% on quarterly basis (+2.7% y/y) in QIV. Statistics released before that 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.

Medium term trend for the AUD is downward, although in the future constructive fundamental factors will be in favor of the AUD.

 

[LF.Anastasia]

CAD: Canadian Dollar remains in the range, giving way to USD

At the Forex currency market the Canadian Dollar rate is traded downward on Friday, as investors have withdrawn from the risky positions at the end of the week and under the pressure of the external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD however it is going 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 1.0000 the pair will go to 1.0030 and 1.0050. If upward breakdown will not take place the pair will continue to consolidate close to the current levels.

Earlier, the head of the Bank of Canada Mr. Carney noted that some Central Banks stay below inflation curve, although in Canada, inflation levels are moderate. At the same time Carney emphasized that economy and trade deteriorate in the country due to the rise in the rate of the CAD.

According to the experts from the International Monetary Fund, Canadian economy will grow by 2.3% y/y in the current year; this was 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 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 with the help of fundamental support provided by the raw material 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.

 

[LF.Anastasia]

EUR/USD: Euro is traded upward despite external background

The pair EUR/USD is traded upward at the Forex currency market on Monday morning, regaining from losses of Friday, after the release of the U.S. statistics.

By 10.05 Moscow time the Euro is at 1.3618 against closing session level of 1.3610 on Friday.

Meanwhile investors’ sentiment today will hardly be favourable to risk- due to the growing unrest in Egypt and related concerns about economic stability and oil factor, the USD and Yen will once again become “protective” harbors.

In general, as long as situation in Egypt will remain tense, risk aversion will be observed in the market.

Investors’ attention today will be attracted to the statistics on Eurozone’s countries, in the afternoon statistics on the U.S. economy will be published.
Most likely the pair EUR/USD will not go beyond the range of 1.3580-1.3720 at the trading session today.

 

[LF.Anastasia]

GBP: British Pound determines further movement direction

At the Forex currency market the British Pound Sterling rate is traded close to the starting session levels on Monday, determining direction after the fall on Friday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, continuing to go up, which confirms a previous buy 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 1.5880 the pair will go to 1.5920 and 1.5980. If the level of 1.5830 is broken down, traders’ targets will become the levels of 1.5780 and 1.5740.

According to British Prime Minister Cameron, this year will be extremely difficult for the country’s economy. We would remind that as it became known on Friday consumer confidence in the UK fell to to -29 in January, as per GFK/NOP, against the previous level of -21. Thus, the index is at its lowest level since 1994, which indicates consumers’ skepticism regarding prospects of the economy in the nearest future.

In general economy in the UK remained almost unchanged.

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. A week ago, 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%.

Recall that the minutes of the last meeting of the Bank of England was made public last week; 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, which was 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 Pound Sterling has already incorporated expectations of the monetary policy tightening.