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[LF.Anastasia]

CHF: Swiss Franc reluctantly moves away from historic highs

At the Forex currency market Swiss Franc rate moves away slightly from its previous highs on Monday; however volume of sales is not high, taking into account continuing global instability, particularly in the matter of Libya.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down slowly, maintaining a pair sell signal. Stochastic Oscillator tends to come out of the oversold zone and to confirm a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.9060 the pair will go to 0.9090 and 0.9120. However it should be kept in mind that if external background deteriorates, aggressive traders will come back.

Data on the trade balance in Switzerland for February will become known on Tuesday, in general, macro-economic background will remain quiet for the country this week.

Statistics demonstrated earlier that 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 has been increasing 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.

In addition, 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.

Swiss National Bank adopted measures of verbal intervention against the Franc last week: representatives of the SNB said following the meeting that strong currency is a hard burden for the economy and its inflated price will trigger a slowdown of economic growth – largely, due to the decrease of the export volumes.

The level of three-month LIBOR rate was left unchanged, at the 0.25%, as expected.

 

[LF.Anastasia]

JPY: Japanese Yen remains under pressure

The Japanese Yen remains under pressure at the Forex currency market on Monday. It is a day off in Japan today and markets are closed due to the celebration of the vernal equinox.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and goes down, giving a pair sell signal. Stochastic oscillator goes up in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 80.90 the pair will go to 80.20 and 81.50.
Japanese markets are closed today.

The Yen was shaken up last week: countries of the “ Big Seven” agreed to start currency intervention together in order to ease pressure of the expensive Yen on the weak economy of Japan. Therefore, on 18 March authorities of the USA, Great Britain, Canada and ECB have joined the Bank of Japan- the intervention started at 9 am Tokyo time. Half an hour later the JPY collapsed by 3.1% in pairing the USD and continued to fall further.

As noted by the representative of the Bank of Japan Noda, countries of B7 can conduct intervention, using the pair Euro/Yan. Currency intervention is not aimed at certain levels.

The situation remains tense in Japan: it became known earlier that radiation background near the atomic power station in Fukishima is at extremely high level due to the accident at the power generating unit caused by the earthquake and tsunami.

Central Bank of Japan has repurchased debt securities from the market in the amount of 2 trillion yen on 17-18 March. Closure of financial market due to stock market panic is not planned. In addition, starting from 22 March the Bank of Japan intends to offer bonds to the market in the amount of 300 billion yen – received funds will be spent for reconstruction. In addition, Central Bank has already poured $87.5 billion to reassure stock markets where the panic started last week. Private Banks can count on this fund to issue short term loans. The regulator will also allocate $220 billion to rebuild national economy, which has not been strong before, and recent developments will become extremely hard burden for it.

Worth noting that the Bank of Japan decided earlier to pour Y3.5 trillion to the market to maintain liquidity level of one-day operations.

 

[LF.Anastasia]

AUD: Australian Dollar continues to rise steadily

At the Forex currency market the Australian Dollar rate continues to rise on Monday, following the fall in the middle of the last week.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD and continues to go down. Stochastic Oscillator is giving a pair buy signal today, going upward in the neutral zone.

Forex recommendations: if current investors sentiment is maintained and in case of breakdown at the level of 1.0050 the pair will go to 1.0070 and 1.0090.

It became known last week that the Reserve Bank of Australia sold А$414 billion in the market in February – the action was aimed at weakening the position of the AUD, says the RBA monthly bulletin. In addition the RBA bought А$464 billion from foreign banks in February.
The data released earlier showed that leading indicators Westpac decreased by 0.1% m/m in January; while the forecast was +0.8% m/m. It is a moderately negative signal for the Australian economy.

Representatives of the Bank of Australia noted earlier that economy of the country has been growing almost at the level of trend, and current moderately restrictive fiscal policy fits the external situation.

In addition, according to the RBA, shortage of cash in Australia now amounts to А$1.437 billion.

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.

No important Australian macro-economic statistics is going to be published this week; therefore movement direction will be determined by external background and domestic news for the pair AUD/USD.

 

[LF.Anastasia]

NZD: New Zealand Dollar regains confidently lost positions

The New Zealand rate has been traded upward at the Forex currency market on Monday for the third consecutive session, regaining partly lost positions.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and continues to decline, giving a pair sell signal. Stochastic Oscillator is rising today, being in the neutral zone and confirming a previous buy signal for the pair.

Forex recommendations: if current favourable market sentiments are maintained and in case of breakdown at the level of 0.7350, buyers’ targets will be the levels of 0.7370 and 0.7390/0.7400.

The main macro- statistics on New Zealand is scheduled for publication on 24 March: country’s GDP for QIV will become known- this data can significantly affect forces balance in the pair NZD/USD.

We would remind that previous sales of the NZD were caused by the view of the country’s Prime Minister John Key, who said in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate from the current 3%; %. Investors interpreted his opinion as a call to action and pressed the pair down to the local lows. The politician does not rule out that effect of the earthquake in the South of New Zealand in February can cause the rollback of the national economy into the state of recession.
Indeed, at the last meeting the Reserve Bank of New Zealand decided to decrease interest rate by 50 basis points, to the level of 2.50% per annum. Investors, who had predicted possible reduction of the indicator, ignored its decrease by 25 basis points.

Note that basically the NZD is still quite weak, although technical chart shows that all conditions have been created for the rebound from the lows.

 

[LF.Anastasia]

Euro/USD: Euro continues to grow, unlocking its potential

The pair EUR/USD continues to grow at the Forex currency market on Tuesday – ECB once again gave indicated rapid increase in the interest rate which brought a rally in the markets.

By 9.15 Moscow time the Euro is at 1.4223 against closing session level of 1.4219 yesterday.

Yesterday, executive board member of the ECB, Gertrude Tumpel-Gugerel noted that the regulator shall maintain high level of vigilance to continue effectively restrain inflationary pressure in the region- investors interpreted her signal in favour of possible increase in the interest rate in April.

However, an obstacle for the Euro’s rally is the news background in Libya where tension still remains.
There will not be a lot of macro-statistics published today; therefore, external background will remain the main driver for the movement direction in the pair.

Most likely the pair EUR/USD will not go beyond the range of 1.4130-1.4250 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound Sterling intends to test local highs

At the Forex currency market the British Pound Sterling rate continues to grow today- for the fourth consecutive session, tending to retest highs of March, which had triggered a wave of sales last time.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and started upward reversal, forming a pair buy signal. Stochastic Oscillator has come into the oversold zone today and maintains a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.6325 buyers’ targets will be the level of 1.6345, a maximum since 2 March
However, it should be remembered that in case of deterioration of the external background, technical correction of the Pound Sterling will not take long to appear.

It became known yesterday that house prices in Great Britain increased by 0.8% m/m (+0.9% y/y) in March. Observation shows that different agencies have different methods of price estimating, which results in the essentially different data.

The data released last week showed that unemployment rate ILO in the UK increased to 8.0% in November- January, while the forecast was 7.9%. At the same time level of unemployed ILO rose by 27 thousand on quarterly basis.
Following the meeting of the Bank of England it became known that interest rate was kept at the previous level of 0.50% per annum, volume of debt securities was also left unchanged – 200 billion pound sterling.

Levels of inflation in the UK 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. 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.

Statistics released last Friday showed that level of consumer confidence in Great Britain declined to 38 points in February against the forecast of 47. Thus, the indicator has dropped to the record-breaking lows- for the British economy and for the Pound in particular, it is a not a good sign.

 

[LF.Anastasia]

JPY: Japanese Yen has shaped course for the rise

At the Forex currency market the Japanese Yen rate began to rise today in pairing with the USD after the drastic fall caused by the intervention last week. Apparently the regulator of Japan will have to pour additional funds to the market to maintain the effect of expansion.

Forex forecast: MACD indicator is in the negative area for the pair and is going down, maintaining a pair sell signal. Stochastic Oscillator is coming into the overbought zone today, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.00 the pair will go to 81.20 and 81.50. If the pair breaks down the level of 80.80 under the pressure from the technical correction, traders’ targets will become the levels of 80.60 and 80.45/40.

According to the estimates of the World Bank, disasters in Japan- earthquake and tsunami in March will reduce GDP of the country in the middle of this year by 0.25%-0.5% ; however it is possible that rapid economic growth will follow after that.

World Bank has come to a conclusion that within the next 5 years economic growth pace in the Country of the Rising Sun will accelerate due to the significant efforts of Japan to restore from devastation. In general the cost of damage is estimated at $122-235 billion, or 2.5-4% of the country’s GDP.

We would remind that the Yen was shaken up last week: countries of the “ Big Seven” agreed to start currency intervention together in order to ease pressure of the expensive Yen on the weak economy of Japan. Therefore, on 18 March authorities of the USA, Great Britain, Canada and ECB have joined the Bank of Japan- the intervention started at 9 am Tokyo time. Half an hour later the JPY collapsed by 3.1% in pairing the USD and continued to fall further.

As noted by the representative of the Bank of Japan Noda, countries of B7 can conduct intervention, using the pair Euro/Yan. Currency intervention is not aimed at certain levels.

The situation remains tense in Japan: it became known earlier that radiation background near the atomic power station in Fukishima is at extremely high level due to the accident at the power generating unit caused by the earthquake and tsunami; smoke can be seen over the third reactor.

Central Bank of Japan has repurchased debt securities from the market in the amount of 2 trillion yen on 17-18 March. Closure of financial market due to stock market panic is not planned. In addition, starting from 22 March the Bank of Japan intends to offer bonds to the market in the amount of 300 billion yen – received funds will be spent for reconstruction. In addition, Central Bank has already poured $87.5 billion to reassure stock markets where the panic started last week. Private Banks can count on this fund to issue short term loans. The regulator will also allocate $220 billion to rebuild national economy, which has not been strong before, and recent developments will become extremely hard burden for it.

 

[LF.Anastasia]

CHF: Swiss Franc grows slightly on Tuesday

At the Forex currency market Swiss Franc rate grows after three days of minor correction. In general, the Franc looks stable.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to go down, giving a pair sell signal. Stochastic Oscillator ascends in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9050 the pair will go to 0.9060 and 0.9090. If the level of 0.9020 is broken down, traders’ targets will become the levels of 0.9010 and 0.8980.

Data on the trade balance in Switzerland for February will become known on Tuesday, in general, macro-economic background will remain quiet for the country this week.

Statistics released earlier showed that volume of industrial output in Switzerland increased by 6.1% y/y in QIV. Before that it became known that index of economic expectations ZEW in Switzerland increased to -13.5 points in March against the previous level of -17.2 points. It is a favourable indication for the local economy.

Swiss National Bank adopted measures of verbal intervention against the Franc last week: representatives of the SNB said following the meeting that strong currency is a hard burden for the economy and its inflated price will trigger a slowdown of economic growth – largely, due to the decrease of the export volumes.

The level of three-month LIBOR rate was left unchanged, at the 0.25%, as expected.

Statistics previously demonstrated that 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 has been increasing 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.

In addition, 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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to grow

At the Forex currency market the Australian Dollar rate continues to grow amid favourable market environment.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD; however reduction in volume indicates possibility of reversal. Stochastic Oscillator has come into overbought zone today and maintains a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0090 buyers’ targets will be the levels of 1.0110 and 1.0150.

The situation in the Australian economy remains almost unchanged. No important Australian macro-economic statistics is going to be published this week; therefore movement direction will be determined by external background and domestic news for the pair AUD/USD

It became known last week that the Reserve Bank of Australia sold А$414 billion in the market in February – the action was aimed at weakening the position of the AUD, says the RBA monthly bulletin. In addition the RBA bought А$464 billion from foreign banks in February.

The data released earlier showed that leading indicators Westpac decreased by 0.1% m/m in January; while the forecast was +0.8% m/m. It is a moderately negative signal for the Australian economy.

Representatives of the Bank of Australia noted earlier that economy of the country has been growing almost at the level of trend, and current moderately restrictive fiscal policy fits the external situation.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to recover steadily

The New Zealand Dollar continues to grow steadily at the Forex currency market on Tuesday, regaining from the losses of positions earlier.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD, however it started to rise, giving a chance for the pair buy signal. Stochastic Oscillator is coming into the overbought zone today, maintaining a pair buy signal.

Forex recommendations: if positive sentiments are maintained in the market, buyers’ targets will become the levels of 0.7250 and 0.7290/7300.

The situation in the economy of New Zealand has not changed dramatically today. We would remind that previous sales of the NZD were caused by the view of the country’s Prime Minister John Key, who said in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate from the current 3%; %. Investors interpreted his opinion as a call to action and pressed the pair down to the local lows. The politician does not rule out that effect of the earthquake in the South of New Zealand in February can cause the rollback of the national economy into the state of recession.

It is logical that at the last meeting the Reserve Bank of New Zealand decided to decrease interest rate by 50 basis points, to the level of 2.50% per annum. Investors, who had predicted possible reduction of the indicator, ignored its decrease by 25 basis points.

Note that basically the NZD is still quite weak, although technical chart shows that all conditions have been created for the rebound from the lows.

The main macro- statistics on New Zealand is scheduled for publication on 24 March: country’s GDP for QIV will become known- this data can significantly affect forces balance in the pair NZD/USD.