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[LF.Anastasia]

CHF: Swiss Franc remains within trading range

Swiss Franc rate is traded within a narrow range of 0.9419-0.9460 at the Forex currency market on Monday, determining movement direction.

The pair USD/CHF is in the positive area, however it is going down, giving a pair sell signal. Stochastic oscillator has come out of the oversold zone and begun to form a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9400 the pair will go to 0.9350 and 0.9310. If the downward breakdown does not take place, the pair will continue to consolidate within the range.

The data on Swiss economy, released on Friday, in particular leading indicator, according to the Research Institute KOF, turned out negative: the index fell to the level of 2.10 against the level of 2.11 in December, which became the fifth consecutive fact of reduction of the indicator. However, the data was still above than the forecast of economists (2.05).

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. 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.

Meanwhile, 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.

In general, taking into account the latest statistics it can be assumed that the Bank of Switzerland will not raise interest rate, at least until the middle of this year.

 

[LF.Anastasia]

JPY: Japanese Yen is growing amid external background at the beginning of the week

The Japanese Yen rate is growing slightly at the Forex currency market on Monday, supported by the developments in Egypt and gaining strength as a protective asset.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it resumed decline again giving a pair sell signal. Stochastic Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: if bearish sentiment will be maintained and in case of breakdown at the level of 82.00 the pair will go to 81.75 and 81.30.
Japanese authorities continue to face the future with optimism, now raising assessment of the industrial output as well on the basis of the growth rate of exports.

Thus, industrial output increased by 3.1% m/m in December against the growth by 1.0% m/m in November and the forecast of 2.9% m/m. Authorities of the Country of the Rising Sun expect that the index will rise by 5.7% in January, and will reduce by 1.7% in February. We would remind that export rate increased by 13.0% y/y last month.

It is not excluded that demand abroad, in the USA and China, will push levels of exports in Japan to continue its growth and then production will get a support. At the moment it is obvious that Japan has come out of the state of stupor in regard to production, however it is still unclear if it will continue this momentum.

Japanese data released last Friday was mostly favourable: unemployment and number of new jobs became a positive factor for the Japanese economy, however consumption sector is still in crisis (unemployment rate in December: 4.9% against 5.1% in November; net CPI in December:-0.4% y/y against -0.5% earlier; consumer expenditure in December: 3.3% against the forecast of -0.6%).

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 continues to tend upward

At the Forex currency market the Australian Dollar rate continues the growth which started earlier, ignoring external background so far as well as possible aggravation in the Far East and in Egypt.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD; however it is moving along the signal line and does not form a clear signal. Stochastic Oscillator has reversed today, giving grounds for a pair sell signal.

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 1.0090/1.01000. If a breakdown of the parity level will not take place, the pair will continue to consolidate close to the current levels.

The meeting of the Reserve Bank of Australia will be held tomorrow, regulator’s comments will be the focus of traders’ attention, as players await RBA’s assessment of the damages in the country caused by the flooding, one the largest over 50 years. At the same time interest rate is most likely to be remain unchanged, at the current level of 4.75% per annum.

Market believes that there are plenty of reasons owing to which it is better to the regulator not to raise interest rate, and inflation is not the most compelling of them. Inflation rates are expected to rise as the flooding has brought losses to the farmers and their farms in the average amount of A$1 billion.

According to preliminary estimates damage from the natural disaster in January amounts to A$20 billion. Market thinks that after a pause the rate will be raised to the level of 5.0% before the end of QII 2011.

In advance of tomorrow’s meeting of the regulator, volatility for the pair AUD/USD can increase.

 

[LF.Anastasia]

CAD: Canadian Dollar is being corrected on Monday

At the Forex currency market on Monday the Canadian Dollar rate tends to correction, although external background can interfere with the alignment of forces for the pair USD/CAD.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD; however it is growing steadily, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if current market signals will be maintained and in case of breakdown at the level of 1.0010 the pair will go to 1.0050 and 1.0075.

Finance Minister of Canada, Mr. Flaherty said last Friday that Canada will continue to leave market to perform the function of building up currency value. He believes that market that knows actual price of the currency better.

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.

Flaherty, however stressed that monetary politicians have a package of measures which will be applied if the situation with CAD at the currency market will go beyond the control or violation of trading will be noticed. 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.

A week earlier meeting of Bank of Canada was held where 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.

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.

 

[LF.Anastasia]

EUR/USD: Euro continues to grow amid general optimism

On Tuesday morning the pair EUR/USD is traded continuing the rise which started at the Forex currency market yesterday

By 10.00 Moscow time the Euro is at 1.3734 against closing session level of 1.3693 yesterday.

The growth in Asia and general optimism of investors has overshadowed attractiveness of “safe harbor” currencies. Against such background appetite to risks comes again.

Weak statistics on China released this morning did not disappoint investors too much: the market has long been waiting for a gradual cooling down of the economy in Celestial Empire.

The data on a number of unemployed in Germany will attract traders today; reduction by 10 thousand is projected in January after the rise by 3 thousand in December.

In addition statistics on business activity in the U.S. production sector ISM Manufacturing will be released in the afternoon which will likely show decline to the level of 58 points in January against the previous value of 58.5 points.

Most likely the pair EUR/USD will not go beyond the range of 1.3650-1.3790 on Tuesday trading session.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to grow

At the Forex currency market the British Pound continues to ascend on Tuesday amid external positive factor.

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

Forex recommendations: if current sentiments of the market will be maintained and in case of breakdown at the level of 1.6060 the pair will go to 1.6100 and 1.6165.

Apparently, purchase of the GBP will be continued due to the rumors about possible increase in the interest rate in the coming quarters.

Note, that according to the analyses, made by National Institute of economic and social researches “NIESR” and released today, The UK government shall postpone for some time a program of budget expenses reduction, since the strategy can lead to huge losses in economy, rather than to benefit. The statement made by The UK prime-Minister Cameron yesterday partly proves that 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 -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.
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.

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 continued 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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to rise

At the Forex currency market the Australian Dollar rate continues the growth which started yesterday while maintaining immunity to the negative external background from Egypt.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, however there is a tendency where a spread can merge with the signal line thereby, forming a signal to stop active buying in the pair. Stochastic Oscillator continues to move towards overbought zone, indication that long position for the pair AUD/USD will be retained in speculators’ portfolios.

Forex recommendations: purchase up to 1.0100 dollars for the AUD.

On the weekly chart the model of the market movement “head and shoulders” is coming into sight: 1.0225 – a top level, and level 1.0150 – is a line of the left shoulder. Consequently, the reduction of the growing inertia is caused by the approach of the currency pair to a significant resistance level at 1.0150, after which a reversal downward is more probable.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0000 the pair will go to test the levels of 1.0050 and 1.0090/1.01000.

Today’s meeting of the Reserve Bank of Australia has brought the following comments: recovery of economy and infrastructure after the flooding will affect inflation forecast:
-Inflation in the coming year will be in the range of target levels of 2-3%;
- Raw materials prices will remain too high in the short term;
-Final assessment of the flooding impact is premature;
-Recovery from the flooding has not yet affected inflationary forecasts.

The fact that at the last meeting, the Reserve Bank of Australia decided to keep current interest rate unchanged at the level of 4.75% is an important point. At the same time according to the survey of independent experts the rise of the interest rate to the level of 5.0% is projected until the end of QII, 2011.

 

[LF.Anastasia]

CHF: Swiss Franc remains in range

At the Forex currency market Swiss Franc rate continues to be traded in the range of 0.9419-0.9482, however it is growing on Tuesday.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF, however it is going down, giving grounds for a pair sell signal. Stochastic Oscillator is coming out of the oversold zone, starting to form a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9475 the pair will go to 0.9500 and 0.9550. If the level of 0.9400 is exceeded, traders’ target will become the levels of 0.9350 and 0.9320.

The following Swiss data was released today:
– Retail sales in December: -0.4% y/y against +1.8% for the previous period;
– PMI in the manufacturing sector in January: 60.5 against 61.2 for the previous period.

Therefore, Swiss economy continues to demonstrate slowdown in the recovery pace. We would remind that Swiss data on Friday was also negative: leading indicator according to the Research Institute KOF fell to the level of 2.10 against the level of 2.11 in December, which became the fifth consecutive fact of reduction of the indicator. However, the data was still above than the forecast of economists (2.05)

Meanwhile, 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.

In general, taking into account the latest statistics it can be assumed that the Bank of Switzerland will not raise interest rate, at least until the middle of this year.

 

[LF.Anastasia]

JPY: Japanese Yen consolidates at the trading volume above average

The Japanese Yen rate consolidates significantly at the Forex currency market, acting as a currency -“refuge” due to the developments in Egypt.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go down, giving a pair sell signal, which is supported by considerable volumes. The level of such volumes has not been observed since the end of last year. Stochastic Oscillator has entered into the oversold zone which indicates the development of the descending trend with its subsequent weakening and changing.

Forex recommendations: if bearish sentiment will be maintained the pair will go to 81.25 and 80.90.

Downward trend was also confirmed on the weekly chart where according to the indicator Ichimoku the pair has been in the power of bears since 20 June last year. Potential of the descending movement is at the lows of the last year, at 80.25.

Japanese authorities continue to face the future with optimism, raising assessment of the industrial output as well on the basis of the growth rate of exports.

Thus, industrial output increased by 3.1% m/m in December against the growth by 1.0% m/m in November and the forecast of 2.9% m/m. Authorities of the Country of the Rising Sun expect that the index will rise by 5.7% in January, and will reduce by 1.7% in February. We would remind that export rate increased by 13.0% y/y last month.

It is not excluded that the demand abroad, in the USA and China, will encourage levels of exports in Japan to continue its growth and then production will get a support. At the moment it is obvious that Japan has come out of the state of stupor in regard to production, however it is still unclear if it will continue this momentum.

The existing situation in Egypt has urged many speculators avoid risks and the purchase of the Japanese national currency looks like the most informed decision. Technical analyses supports fundamental factors, showing that the largest sales in the pair took place simultaneously with the riots in Egypt and their volumes (sale volumes) continues to increase today.

 

[LF.Anastasia]

EUR/USD: Euro continues to grow, positive factor governs the market

The pair EUR/USD is traded upward for the third consecutive day at the Forex currency market on Wednesday morning because investors’ interest to risk is still preserved.

By 9.00 Moscow time the Euro is at 1.3839 against closing session level of 1.3828 yesterday.

The main positive factor comes from the Asian markets where, according to investors, significant growth will be observed based on the growing levels of exports. In addition, it is expected that both today’s statistics on Europe and the U.S. statistics tonight will be favourable.

Thus, it is predicted that index of producer prices in Eurozone will rise to 5.2% in December which will become the highs since 2008.

Note that that the meeting of the European central Bank will be held tomorrow and in advance of it the Euro can be corrected.

Most likely the pair EUR/USD will not go beyond the range of 1.3750-1.3890 at the trading session today.