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[LF.Anastasia]

JPY: Japanese Yen weakens in pairing with USD

At the Forex currency market the Japanese Yen rate continues to decline on Wednesday amid stable external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, however reversal is taking shape, starting a pair buy signal. Stochastic Oscillator continues to go up in the neutral zone today, confirming a previous buy signal for the pair.

Forex recommendations: in case of breakdown at the level of 83.00 the pair will go to 83.50 and 84.00.

According to the head of the Bank of Japan Mr. Shirakawa, excessive load on the short term inflation can harm price stability in the country: price stability itself is not the foundation of the economic stability; therefore Japan still requires accommodative monetary policy. Shirakawa also thinks that inflation of new bubbles shall be avoided.

The data released yesterday showed decline in bank lending in February (- 2.0% y/y against -1.9% y/y in January; and the fall in current account balance in January: (-47.6% y/y (Y461.9 billion) against +30.5% in December).

Interest rate of the Bank of Japan is at its lowest level of 0.1% per annum. The next meeting of the Bank of Japan is scheduled for 16 March. (Other meetings of the regulator will be held on 16 March, 8 April, 23 May, 15 June, 16 July, 15 September, 14 October, 14 November, 13 December).

According to the Japanese observers the worsening political situation is a long term negative factor for the Japanese Yen; it especially concerns Prime-Minister of Japan, Naoto Khan. Khan’s positions had shattered after the resignation of the Minister of Foreign Affairs, Maekhara. First of all, in case of Khan’s resignation there will be difficulties in adopting the law of repayment of the considerable public debts of the Country of the Rising Sun. Khan brings forward a draft bill on the issue of government bonds.

Chairman of the Bank of Japan Mr. Yagamuchi said earlier that country’ economy shows signs of recovery: amid the growth of the developing markets, Japan also receives a catalyst to get out of hibernation.

 

[LF.Anastasia]

CHF: Swiss Franc continues to move away from highs

At the Forex currency market Swiss Franc rate continues to move away from historical highs on Wednesday.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF; however it started upward reversal, forming a pair buy signal. Stochastic Oscillator continues to go up today, coming into the overbought zone and giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.9375 buyers’ targets will become the levels of 0.9430 and 0.9475/80.
Market will await publications on Swiss consumer price index for the last month today.

According to the data released on Tuesday, unemployment rate in Switzerland reduced to 3.6% m/m in February against the previous rate of 3.8% m/m.

In general it is a positive indicator for Swiss economy, which indicates that economic system of the country is being recovering steadily, despite high rate of the national currency.

Level of retail sales in Switzerland declined by 2.6% y/y in January against the fall by 0.8% in December; however external background still remains the main driver of the Franc’s movement, as well as possible withdrawal of the players from risks. It is the factor of trade balance (index rose to the level of 1.96 billion euro in January against the growth to 1.26 billion euro earlier) that helps the CHF to be considered a stable currency, since the country does not require external borrowings.

Statistics released earlier showed that showed that employment rate in Switzerland declined to the level of 4.085 billion in QIV against expectations of growth to 4.086 billion; however Franc ignored this information. The data released earlier showed that indicator of consumption UBS in Switzerland fell to the level of 1.676 points (-0.15 points) in January amid decreasing sales in retail sector due to the low demand for new cars. However the indicator still remains above the key level of 1.5, which ensures favorable prospects.

Last week statistics showed that the level of retail sales in Switzerland declined by 2.6% y/y in January against the fall by 0.8% in December. Probably, cold winter had its impact on the indicator. If the reason for the decline n sales is seasonality, then we will be able to witness recovery in the indicator in spring.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to decline

At the Forex currency market the British Pound Sterling rate continues to decline for the fifth consecutive day.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it is going down, confirming a previous sell signal for the pair. Stochastic oscillator is coming out of the oversold zone today, continuing to give a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.6120 traders’ targets will be the levels of 1.6075 and 1.6030.

On Thursday, 10 March next meeting of the Bank of England will be held, where interest rate decision will be made - investors will be interested in the follow-up comments of the regulator. Meanwhile interest rate is kept at the level of 0.5% per annum.

Increase of VAT in the UK at the beginning of this year contributed to the growth of prices in British shops – the index rose to 24 month highs on annual basis in February. According to the estimates of BRC retailers’ prices rose by 2.7% y/y last month against the rise by 2.5% in January.

Thus, taking into account this factor as well, sooner or later the Bank of England will have to adopt measures aimed at reducing inflationary credibility.

It became known yesterday that according to the data from Royal Institute of Chartered Surveyors, house prices in the UK are becoming stable; prices balance increased to -26% in February against the previous value of -31%. At the same time prices balance still remains in the negative area, while house prices are at the highs of the summer last year.

The UK data released yesterday showed that balance of production volume in the manufacturing sector declined to 25 points in QI, as per EEF estimates, against the level of 33 points in QIV.

At the same time, balance of new orders in the manufacturing sector of the UK decreased to 20 points in QI against the previous level of 32 points.

The data released on Friday showed that house prices in the UK fell lower that lower than it had been expected in February: -0.9%, according to Halifax, against the growth by 0.8% in January. The prospect for the real estate market remains not the most positive: low employment along with the expectations of the interest rate increase does not contribute to consumer interest.

 

[LF.Anastasia]

EUR/USD: Euro continues to lose positions

The pair EUR/USD continues the descend at the Forex currency market on Wednesday, which started yesterday.
By 8.10 Moscow time the Euro is at 1.3888 against closing session level of 1.3904.

Investors withdraw positions in the Euro since the talk about debt problems of Greece has resumed in the market- despite the fact that the auction of government bonds which was carried out yesterday, was quite successful and the bid book was oversubscribed more than 3.5 times.

Against this background players also ignore the statements of the representative of ECB, ex-chairman of Bundesbank, Axel Werber that the European Central Bank could raise the rate several times this year. However against the background of the previous comment of the head of the Bank Mr. Trichet, that the interest can be increased in April as part of the fight against inflation, this comment did not make any effect on the market.

Therefore, fears regarding possible debt problems of the peripheral countries of the Eurozone are at the forefront again.
Most likely the pair EUR/USD will not go beyond the range of 1.3800-1.3950 at the trading session today.

 

[LF.Anastasia]

JPY: Japanese Yen continues to decline in price

The Japanese Yen rate continues to give way to the USD at the Forex currency market on Thursday amid GDP data of the Country of the Rising Sun which turned out to be worse than expected.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is moving along the signal line, not giving a clear signal. Stochastic oscillator continues to grow in the neutral zone, trying to come into the overbought zone, thus confirming a pair buy signal.

Forex recommendations: if bullish sentiments for the pair are maintained and in case of breakdown at the level of 83.00, buyers’ targets will be the levels of 83.20 and 83.60.

The following Japanese data was released today:

– Real revised level of GDP in Japan declined by 0.3% on quarterly basis (-1.3% y/y) in February against preliminary level of -0.3% q/q (-1.1% y/y);
– Index of prices for corporate products rose by 0.2% m/m (+1.7% y/y) in February against the forecast of growth by 0.4% m/m.
Therefore, Japanese economy has reduced more than expected, which calls into question excessively optimistic statement of the authorities of the country about future outlooks. Chairman of the Bank of Japan Mr. Yagamuchi said earlier that country’ economy shows signs of recovery: amid the growth of the developing markets, Japan also receives a catalyst to get out of hibernation.

According to the head of the Bank of Japan Mr. Shirakawa, excessive load on the short term inflation can harm price stability in the country: price stability itself is not the foundation of the economic stability; therefore Japan still requires accommodative monetary policy. Shirakawa also thinks that inflation of new bubbles shall be avoided. The data released yesterday showed decline in bank lending in February (- 2.0% y/y against -1.9% y/y in January; and the fall in current account balance in January: (-47.6% y/y (Y461.9 billion) against +30.5% in December).
According to Japanese observers worsening of political situation is a long term negative factor for the Japanese Yen; it especially concerns Prime-Minister of Japan, Naoto Khan. Khan’s positions had shattered after the resignation of the Minister of Foreign Affairs, Maekhara. First of all, in case of Khan’s resignation there will be difficulties in adopting the law of repayment of the considerable public debts of the Country of the Rising Sun. Khan brings forward a draft bill on the issue of government bonds.

Interest rate of the Bank of Japan is at its lowest level of 0.1% per annum. The next meeting of the Bank of Japan is scheduled for 16 March. (Other meetings of the regulator will be held on 16 March, 8 April, 23 May, 15 June, 16 July, 15 September, 14 October, 14 November, 13 December).

 

[LF.Anastasia]

CHF: Swiss Franc maintains its positions in the range

At the Forex currency market Swiss Franc rate declines on Thursday, while remaining in the range of 0.9259-0.9370.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, giving a pair sell signal. Stochastic Oscillator has come close to the overbought zone, confirming a pair buy signal.

Forex recommendations: if bullish sentiments are maintained and in case of breakdown at the level of 0.9330, buyers’ targets will be the levels of 0.9375 and 0.9430. If an upward breakdown does not take place, the pair will continue to consolidate in the specified channel.

Ax the data released yesterday showed level of CPI in Switzerland increased by 0.4% m/m (+0.5% y/y) in February against the forecast of growth by 0.3% m/m.

Thus, inflation in Switzerland increases slightly so far, which on one hand, indicates economic recovery in the country, and on the other hand, does not give rise to discussions of the interest rate revision.

According to the data released on Tuesday, unemployment rate in Switzerland reduced to 3.6% m/m in February against the previous rate of 3.8% m/m.

In general it is a positive indicator for Swiss economy, which indicates that economic system of the country is being recovering steadily, despite high rate of the national currency.

Statistics released earlier showed that showed that employment rate in Switzerland declined to the level of 4.085 billion in QIV against expectations of growth to 4.086 billion; however Franc ignored this information. The data released earlier showed that indicator of consumption UBS in Switzerland fell to the level of 1.676 points (-0.15 points) in January amid decreasing sales in retail sector due to the low demand for new cars. However the indicator still remains above the key level of 1.5, which ensures favorable prospects.

Level of retail sales in Switzerland declined by 2.6% y/y in January against the fall by 0.8% in December; however external background still remains the main driver of the Franc’s movement, as well as possible withdrawal of the players from risks. It is the factor of trade balance (index rose to the level of 1.96 billion euro in January against the growth to 1.26 billion euro earlier) that helps the CHF to be considered a stable currency, since the country does not require external borrowings.

 

[LF.Anastasia]

Euro/USD: Euro is under pressure from external background again

The pair EUR/USD goes down at the Forex currency on Thursday morning – players await important publications on the U.S. employment sector tonight, which provides support the USD.

By 9.35 Moscow time the Euro is at 1.3873 against closing session level of 1.3908 on Wednesday.

There are two factors which are against the Euro today: on one hand, index of the U.S. labor market is scheduled for the release on Thursday night (16:30 Moscow time – number of requests for unemployment benefits last week, forecast +8 thousand), which will confirm the fact of sustainable recovery of the American economy and will support the USD.

On the other hand, aggravation of the conflict in Libya where firing still continues in large cities, arose investors’ interest in safe assets which also maintains the USD.

Therefore, market will take advantage of informational background today.

Most likely the pair EUR/USD will not go beyond the range of 1.3800-1.3950 at the trading session on Thursday.

 

[LF.Anastasia]

AUD: Australian Dollar continues to decline

The Australian Dollar continued to decline at the Forex currency market on Thursday after slight rebound yesterday – the data on the employment rate in the country amid weak statistics on China have become a catalyst for further sales of the AUD.

Forex forecast: MACD indicator is in the positive area for the pair and is moving along the signal line, preventing a clear signal. Stochastic oscillator goes down today, confirming a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.0050 traders’ targets will be the levels of 1.0010 and 0.9980.
The following Australian news was released today:
– Employment rate in Australia fell by 10.1 thousand in February against the forecast of growth by 20 thousand;
– Unemployment rate in Australia remained at the previous level of 5.0% in February.

However even this data did not upset traders: later China reported the fall of the trade balance in February by $7.30 billion in February against the forecast of growth by $4.90 billion and preliminary level of +$6.46 billion. Exports in China increased by 2.4% y/y last month against the previous level of 37.7% y/y, imports rose by 19.4% y/y against the forecast of +32.6%.

The decline in the indicators of the nearest trading partner is extremely unfavorable factor for the AUD.
Interest rate is at the level of 4.75% per annum in Australia now. The meetings of RBA in 2011 will be held on 4 April, 2 May, 6 June, 4 July, 1 August, 5 September, 3 October, 31 October, 5 December.
Statistics released on Tuesday morning showed that index of business confidence increased to 14 points in February, as per NAB estimates, against the previous 4 points. Thus, after the flood in the state of Queensland earlier this year the level of business confidence begun to recover.

However, it should be taken into consideration that retail sector, manufacturing industry and construction sector are in the difficult situation, while sectors of recreation and mining industry have been successfully recovering.

Actually, the Australian economy has slowed down – which has been confirmed by statistics and this factor is negative for the AUD. Finance Minister of Australia Mr. Swan described the rate decision as “good news”, clarifying that echoes of disaster can affect the result of QI, while fundamentals in Australia remains steady. In accordance with the RBA, inflation forecast for this year is in the range of 2-3%.

 

[LF.Anastasia]

GBP: It is a decisive day to British Pound Sterling today

At the Forex currency market the British Pound Sterling rate is in the range today, going down in advance of the decision of the Bank of England on the rate and follow-up comments of the regulator regarding anti-inflation strategy.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it is moving along the signal line, not giving a clear signal. Stochastic oscillator remains in the oversold zone today, indicating continuation of sales.

Forex recommendations: in case of breakdown at the level of 1.6150 the pair will go to 1.6110 and 1.6050. Volatility in the pair can increase today, so be careful.

The decision of the Bank of England on the interest rate will be known in the mid-day, as well as comments in regards to the levels of inflation and anti-inflation strategy.


Objectively levels of inflation have been above the levels indicated by the regulator for over a year already, increasing pressure on the recovery of the British economy which is not too steady. Meanwhile interest rate is kept at the level of 0.5% per annum.

The increase of VAT in the UK at the beginning of this year contributed to the growth of prices in British shops – the index rose to 24 month highs on annual basis in February. According to the estimates of BRC retailers’ prices rose by 2.7% y/y last month against the rise by 2.5% in January.

Thus, taking into account this factor as well, sooner or later the Bank of England will have to adopt measures aimed at reducing inflationary credibility.

The UK data released yesterday showed that balance of production volume in the manufacturing sector declined to 25 points in QI, as per EEF estimates, against the level of 33 points in QIV. At the same time, balance of new orders in the manufacturing sector of the UK decreased to 20 points in QI against the previous level of 32 points.

It became known earlier that according to the data from Royal Institute of Chartered Surveyors, house prices in the UK are becoming stable; prices balance increased to -26% in February against the previous value of -31%. At the same time prices balance still remains in the negative area, while house prices are at the highs of the summer last year.

All attention is focused on the Bank of England today.

 

[LF.Anastasia]

Euro/USD: Euro will receive support in a long term outlook

The pair EUR/USD is traded downward at the Forex currency market on Monday morning after positive opening.

By 8.30 Moscow time the Euro is at 1.3929 against closing session of 1.3902 on Friday.

The pair started trading session with an upward gap today amid principally new agreement between the leaders of the leading 17 countries of the Eurozone on overcoming of the global financial crisis.

Final package of measures will be adopted on 24 March, however it is already known now that agreements have been reached on the volume of overall loans (from the current 250 billion euro to 440 billion euro). In addition, mechanism for European financial stability has been developed which will be operational in 1013 and which has capacity of financial funds in the amount of 500 billion euro.

Among important decisions which also have been adopted is approval of the idea of redemption of the shares of those countries which receive financial support by European Crisis Management Fund.

The idea of the Euro stability package has been developed by Germany and France and now it is supported by all 17 countries of Eurozone.

The news is positive for the Euroin a long term outlook.

Macro-economic calendar is almost empty today – publication of data on industrial production in Eurozone in January is expected this afternoon. Therefore, external background will be the main driver for determining directions.

Most likely the pair EUR/USD will not go beyond the range of1.3870-1.4030 at the trading session on Monday.