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GBP: British Pound continues to grow steadily

At the Forex currency market the British Pound Sterling continues to grow steadily amid external positive factor on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to grow, confirming a previous buy signal for the pair. Stochastic Oscillator has entered overbought zone, indicating the prospect of the rising trend completion and the chances of immediate reversal.

Forex recommendations: if current sentiment will be maintained in the and in case of breakdown at the level of 1.6180 the pair will go to 1.6210 and 1.6260.

Representative of the Bank of England Mr. Sentence noted once again this morning that interest rates in Great Britain shall be increased now, as it will enable to restrain inflationary values. It is also required to increase of the interest rate consistently to avoid sharp rise in the future.

Note that the situation in British economy still remains ambiguous. Statistics released yesterday showed that a number of approved mortgage requests amounted to 42 563 against 47 287 last month. Experts’ forecast was 47 000 requests.

According to the analyses, made by National Institute of economic and social researches “NIESR”, the UK government shall postpone for some time a program of budget expenses reduction, since the strategy can bring huge losses in economy, rather than benefit. The statement made by the UK Prime-Minister Cameron earlier 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 into 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.

 

[LF.Anastasia]

CHF: Swiss Franc started to consolidate after sharp rise

At the Forex currency market Swiss Franc rate started to consolidate on Wednesday after the sharp rise yesterday, awaiting new signals to determine movement direction.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to go down, which confirms a previous sell signal for the pair. Stochastic Oscillator has come into oversold zone today and is giving a similar signal, at the same time, indicating the completion of the rising trend for the Franc soon.

Forex recommendations: to make sure that descending trend will be continued for the pair USD/CHF today, we shall see a breakdown at the level of 0.9320, after which the levels of 0.9260 and 0.9200 will become targets of traders.

Swiss economy continues to demonstrate slowdown in the recovery pace. Swiss data released yesterday was negative: (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).

In addition, indicators of last week showed ongoing pressure on Swiss economy: 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).

Therefore, pace of economic recovery in the country has obviously slowed down and the guilt for it is laid on Swiss Franc too.

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.

Note that state of affairs in Swiss economy is quite grave, despite optimistic forecasts of the authorities.

 

[LF.Anastasia]

JPY: Correction started for Japanese Yen after the rise on Tuesday

The Japanese Yen rate demonstrates technical pullback at the Forex currency market on Wednesday following sharp rise yesterday when investors’ optimism about world economic recovery encouraged purchases of all currencies.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to go down, which indicates that sales will go on. Stochastic Oscillator went down to the oversold zone today which gives ground for a pair buy signal.

Forex recommendations: taking into account external background, corrective ascending channel can find a confirmation today, and in this case buyers’ targets will be the levels of 81.75 and 81.90.

Representative of the Bank of Japan Mr. Kamezaki noted this morning that economy in the Country of the Rising Sun will overcome the phase of deceleration by the spring; nevertheless careful monitoring of the developments is still required at Forex, where sharp fluctuation of currencies remains unwanted.

Monetary politician observes high risks of downward pressure from the USA and Europe. In Japan downside and upside risks appear balanced. In addition Kamezaki stressed that Japan should resolve its debt problems quickly, before the country loses credibility.

We would remind that a two-day meeting of the Bank of Japan was held last week; where the decision was made 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.

Statistics released earlier was mixed: unemployment and number of new jobs has become a positive factor for the Japanese economy; at the same time 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%).

 

[LF.Anastasia]

NZD: New Zealand Dollar is at the local highs

At the Forex currency market the New Zealand rate continues to be traded upward on Wednesday on the tide of investors’ overall positive sentiment at the global capital markets.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and continues to go up, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone today, confirming a pair buy signal and creating conditions for the upcoming correction.

Forex recommendations: if current bullish sentiment will be maintained at the market and in case of breakdown at the level of 0.7825, which is a local high buyers’ targets will be the levels of 0.7850 and 0.7870.

In general the situation in the economy of New Zealand remains almost unchanged

We would remind that the meeting of the Reserve Bank of New Zealand was held at the end of January which made an expected decision to keep interest rate at the previous level of 3.0% per annum. In the follow-up comments, the head of the RBNZ, Bollard stressed that the rates will be sequentially raised over the next two years.

However, the regulator will keep the rate at the low levels until the situation in the economy regains confidence and the recovery process becomes 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 outlook for the New Zealand economy has also remained unchanged.

Forecast of economic growth in New Zealand which was made public earlier, is not too optimistic. Estimates 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, it is assumed also that country will have budget deficit, which is expected to rise from the current 14.1% of GDP to 28.5% of GDP by June 2015. According to the data released earlier, level of business sentiment in New Zealand rose to 8 points in QIV, as per NZIER estimates, against the previous level of 6 points.

 

[LF.Anastasia]

AUD: Australian Dollar continues to go up

At the Forex currency market the Australian Dollar rate is being corrected today after the rise yesterday, due to the all-round consolidation of the USD positions.

Forex forecast: FORCE indicator is in the positive area for the pair AUD/USD; at the same time narrowing of the spread away from the signal line is being observed, which helps to form divergence of the purchase. Stochastic Oscillator has reached overbought zone today, giving signal of a possible profit fixation in the speculators’ portfolios, those who took part in Long for the pair AUD/USD.

On the daily chart Ichimoku indicator indicates a correction of medium term downward trend. After the period of consolidation in the broad horizontal channel with the upper border of 1.0000 and bottom border of 0.9850, quotes went up yesterday, which means the retest of the upper border of 1.0000 and further growth of the pair to the next high of 1.0225.

Forex recommendations: wait for the correction of the level 1.0100. Comfortable level to resume purchase is 1.0000.

Feasible event scenario at Forex: in case of reverse from the level 1.0100, the pair will start testing the level of 1.0000.

The meeting of the Reserve Bank of Australia yesterday was dedicated to the devastating effect of the largest flooding in the history of the country and possible reasons which can slow down recovery process, in particular, inflationary risk to the recovering economy was mentioned. Note also that 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]

EUR/USD: Euro is being corrected slightly, relying on external background

The pair EUR/USD is traded slightly downward at the Forex currency market on Thursday morning, continuing rollback which started yesterday.

By 9.50 Moscow time the Euro is at 1.3798 against closing session level of 1.3809 yesterday.

The Euro subsides slightly amid aggravation of the situation in Egypt where shooting started on Wednesday and in advance of the today’s meeting of the European Central Bank and publication of the data on the U.S. labor market tonight.

Nevertheless it is worth noting that sales volumes are not big which indicates strength of the European currency.

The meeting of the ECB today should not bring any surprises, the rate will remain at the level of 1% and Trichet will make a statement about inflationary levels.

In general the day is going to be interesting, level of volatility, however, can be above average.

Most likely the pair EUR/USD will be in the range of 1.3720-1.3840 on Thursday trading session.

 

[LF.Anastasia]

GBP: British Pound continues to grow; however correction is on the doorstep

At the Forex currency market the British Pound Sterling continues to grow on Thursday, however all conditions for correction have been created for the pair GBP/USD which is also confirmed by the external background.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is moving along the signal line, not forming a clear signal. Stochastic oscillator is in the overbought zone, giving a buy signal and at the same time creating ground for the movement reversal.

Forex recommendations: if bearish sentiment intensifies at the market, the pair will go to 1.6080 and 1.6030. If downward breakdown will not take place, bulls’ targets will remain the level of 1.6230.

According to the study of the National Institute of Economic and Social Researches “NIESR”, the Bank of England can raise interest rate three times this year, with the main target to control the growth of consumer prices.

Так, ожидается, что до конца 2011 года ставка вырастет до уровня 1,75% с текущих значений. При этом прогноз по инфляции NIESR также повысил – до 3,8% на 2011 год с прежних 2,8%. Ожидается, что уровни безработицы в текущем году вырастут до 8,7% с текущих 7,8%.

NIESR has already made not too rosy forecasts. Thus, the Institute recommended the UK government to postpone for some time a program of budget expenses reduction, since the strategy can bring huge losses in economy, rather than benefit. The statement made by the UK Prime-Minister Cameron earlier 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.

Yesterday representative of the Bank of England Mr. Sentence noted once again that interest rates in Great Britain shall be increased now, as it will enable to restrain inflationary values. It is also required to increase of the interest rate consistently to avoid sharp rise in the future.

We would remind that the situation in British economy still remains ambiguous. Statistics released earlier showed that a number of approved mortgage requests amounted to 42 563 against 47 287 last month. Experts’ forecast was 47 000 requests.

 

[LF.Anastasia]

CHF: Swiss Franc continues to lose positions

Swiss Franc rate continues to descend from the local highs at the Forex currency market on Thursday morning due to the statements of the monetary authorities and under the pressure from external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to decline, giving a pair sell signal. Stochastic oscillator began to go up today, 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 0.9440 the pair will go to 0.9475 and 0.9500. If upward breakdown will not take place the pair will continue to consolidate close to the current levels.

Thus, external background is exacerbated by the aggravation in the situation in Egypt where political instability cannot be settled amicably and which affects risk appetite at Forex.

In addition, yesterday Swiss monetary authorities gave to understand that expensive Franc bears danger. Thus, chief economist of the government Aimo Brunetti noted on Wednesday that ongoing growth of CHF will have a negative impact on Swiss economy, affecting adversely the growth of economic system.

At the same time, according to him there is no actual evidence of slowdown in Swiss economy so far.

Note that SECO, the Department of Economic Policy in Switzerland believes that this year GDP growth will drop to 1.5% while in 2010 it amounted to 2.7%. The department will release a new forecast on 17 March.

Meanwhile, situation in Swiss economy is far from being optimistic. Swiss data released earlier was negative: (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).

In addition, indicators of last week showed ongoing pressure on Swiss economy: 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)

Therefore, pace of economic recovery in the country has obviously slowed down and the guilt for it is laid on Swiss Franc too.

 

[LF.Anastasia]

JPY: Japanese Yen is being corrected from the level of 81.30

The Japanese Yen rate is being corrected against the Dollar at the Forex currency market on Thursday after it has reached a significant level of support at 81.30.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and continues to decline, indicating divergence in the chart of prices and volumes. Stochastic Oscillator turned into the oversold zone which gives a signal about corrective trend in the pair.

Forex recommendations: if corrective trend for the pair will be maintained, the pair will go to the level of 82.50. It is recommended to draw “Stop on Long” at 81.20- above the key level of support of 81.30.

Downward trend is also confirmed on the daily chart where according to indicator Ichimoku the pair has been on the grip of bears since 20 June of last year. The potential of the downward movement is at the lows of last year at 80.25.

Yesterday representative of the Bank of Japan Mr. Kamezaki noted that economy in the Country of the Rising Sun will overcome the phase of deceleration by the spring; nevertheless careful monitoring of the developments is still required at Forex, where sharp fluctuation of currencies remains unwanted. Experts believe that it was this statement that made the pair USDJPY reverse close to the low values of the current year. The task of the Bank of Japan is to facilitate the economy of the country in achieving price stability.

 

[LF.Anastasia]

AUD: Australian Dollar is testing the peak of 1.0150

At the Forex currency market the Australian Dollar rate continues to consolidate today after the one day correction yesterday.

Forex forecast: indicator FORCE is in the positive area for the pair AUD/USD, while narrowing of the spread with the signal line is being observed, giving ground to form divergence for the purchase. Stochastic Oscillator has come into overbought zone, indicating that there is a possibility of fixing profitable positions by those traders who are focused on short term movements in the pair AUD/USD

On the daily chart indicator Ichimoku indicates correction of the medium term downward trend. The retest of the upper border of 1.0000 is being postponed and our guideline is the previous high at 1.0225. Level of support with losses for the key slow of the indicator is at 1.0000.

Forex recommendations: hold on the level of 1.0150 is exceeded – there is risk of formation of a “double top”. Breakdown of the indicated level will open the way to the level of 1.0225.

Feasible event scenario at Forex: in case of downward reverse from the level of 1.0150 the pair will start to test the level of 1.0000. If the level of 1.0150 exceeded the target of the movement will become the highs of the end of December, at 1.0225.

Statistics released today has added new impetus to the AUD, as a number of construction permits in Australia increased by 8.7% in December. Positive factor was the growth of trade surplus in the country to the level of $1.981 in December.

The latest economic data gives hope that economy in Australia will be able to recover fast from devastating flooding which became the largest over the last 50 years.