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[LF.Anastasia]

Euro/USD: Euro weakens amid expectations of the U.S. economy recovery

The pair EUR/USD is traded downward on Wednesday morning: the USD gets support from the expectations of strong labour market statistics on Friday and forecasts of the key rate increase.

By 9.10 Moscow time the Euro is at 1.4075 against Tuesday closing session level of 1.4112.

Investors keep vigilant watch on Fed to signal its readiness to decrease stimulus programs that may indicate the recovery of the U.S. economy and time to raise the key rate.

Besides Federal Funds Futures contracts showed a 53% chance of an increase in the key rate, compared with 43% odds a week ago.
Today investors will take interest in the data from Eurozone and Switzerland, in the USA no important statistics that may influence pair movements will be released.

Most likely the pair EUR/USD will not go beyond the range of 1.4000-1.4140 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound experienced a sharp selloff again

At the Forex currency market the British Pound Sterling is trading downward again. For the last three days GBP stays within the trading range 1.5935-1.6043, a breakthrough which will indicate further dynamics for the pair.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to decline, giving a pair sell signal. Stochastic Oscillator is in the oversold zone, giving a pair the similar signal.

Forex recommendations: in case of bullish sentiment strengthening buyers’ targets for today will be the levels of 1.5990 and 1.5960.

Chancellor of the Exchequer George Osborne sees two main risks for the British economy: inflation and eurozone economic crisis. According to his speech, one of the factors of faster inflation is weak Pound. However currency weakness is supportive for the economic balance – so the descending rate of GBP is rather advantageous for the British economy.

Both fundamentals and the general external background continue to put pressure on the British Pound. The day before Spencer Dale of Bank of England said he would be ready to reverse his decision on the key interest rate in case the inflationary pressure in the country continued to ease. He voted to raise the key rate this month guided by the inflation indicators.

According to the Minutes of meeting of the Bank of England 6 members of MPC voted for keeping interest rate at the previous level. In addition, 8 people were for preserving current volume of the assets redemption program. Posen voted for the growth of QE by 50 billion pounds. Therefore, balance of forces in the Monetary Committee has remained unchanged, which frustrated bulls who expected indications of imbalance. 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.

Still medium trend for GBP/USD is bearish with the possibility of technical correction.
Note that in spite of strong 4q GDP data released the day before there is still no fundamental support for the pair.

 

[LF.Anastasia]

CHF: Swiss Franc resumed moving away from historical highs

At the Forex currency market Swiss Franc rate resumed falling pairing with the USD amid no traders’ interest in the currency as a safe heaven.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, but is rising, giving a pair buy signal. Stochastic Oscillator still stays the overbought zone today, giving a pair the same signal.

Forex recommendations: if current sentiment for the pair AUD/USD remains intact and in case of 0.9235 breakup bulls’ target levels will be 0.9235 and 0.9265 for today.

Representative of Swiss National Bank Mr. Jordan said the day before that strong national currency is one of the main reasons for economic growth weakening and puts downward pressure on inflation. According to his speech current monetary conditions look favorable, but different market segments respond to them differently.

Expensive CHF is negative for exporters, prevents rates from stabilization and influences monetary policy tightening.

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.

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

Note that verbal interventions are ordinary for SNB. Previously Swiss National Bank started to indicate that intervention of possible: representative of the regulator Mr. Dantin said that the Bank is able to ensure price stability even amid excess liquidity. In addition the politician noted that the cost of the intervention at the currency market will be determined by the information pressure.

Important data on the Leading indicators KOF for March will become known on Wednesday, Retail sales and PMI are to come out on Friday. These indicators will present fresh information about the state of national economy.

 

[LF.Anastasia]

JPY: Japanese Yen weakens with every passing day

The Japanese Yen rate is weakening at the Forex currency market for the fifth consecutive session – market ignores strong statistics according to which Japanese economy showed signs of recovery before the earthquake on March, 11, that ruined the game.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, going upward, giving a pair buy signal. Stochastic Oscillator is in the overbought zone today, also giving a pair buy signal.

Forex recommendations: buyers’ targets for today will be the levels of 83.00 and 83.40.

Thus the statistics released this week showed signs of economic recovery in Japan before the earthquake: the level of Industrial output increased by 0.4% m/m (+1.3% y/y) in February that is a positive signal.

Tuesday’s data also turned out to be strong (unemployment rate decreased to the level of 4.5% in February against the level of 4.9% in January; the level of retail sales rose by 0.1% y/y in February against the same increase in January), but these are indicators for February – outdated for now.

Meanwhile data for March is weak as expected: the level of Small Business Confidence decreased to 49.5 points in March against the level of 56.6 points seen in February.

Currently it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan 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.

The day before representative of the Bank of Japan Mr. Miyao said the day before yesterday that the regulator shall carefully trace all risk factors for the process of Japanese economic recovery. In addition, time frame and volumes of reconstruction is not known yet which makes obscure further economic outlooks of the Country of the Rising Sun.

Apparently the Japanese Yen rate heads for weakening – in the medium term the pair USD/JPY has a good chance to overstep the level of 84,0.

 

[LF.Anastasia]

AUD: Australian Dollar reaches for new highs

At the Forex currency market the Australian Dollar rate trades upward on Wednesday – yesterday’s correction failed and aussie tested the new peak – 1.0336.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, having crossed the signal line, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone, giving a pair the same signal.

Forex recommendations: if bullish sentiment for the pair AUD/USD preserves the level of 1.0345 will be the target for buyers today.
Judging by traders’ sentiment it is premature to stake on the pair’s rollback.

The situation in the Australian economy remains unchanged on Wednesday.

We would remind that leading indicator CB increased by 0.1% in January against the growth by 0.7% in December. It is the best indication for the medium term outlook of Australian economy; although it seems that external background overbalances this information. The data released earlier showed that leading indicators Westpac fell by 0.1% m/m in January while the forecast had been +0.8% m/m. It is a moderately negative sign for the Australian economy.

As noted by the representatives of the Bank of Australia 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.

The portion of important statistics will come out this week only on Thursday (Retail Sales in February), so the key driver for the pair will be the general external background.

Note that on the threshold of RBA meeting on Monday, April 4, the pair may lose steam.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues rising steadily

At the Forex currency market the New Zealand Dollar rate continues strengthening.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and continues to rise, giving a pair buy signal. Stochastic Oscillator is in the overbought zone, giving a pair the same signal.

Forex recommendations: in case current market sentiment remains intact and breakup of the level 0.7600 occurs, buyers’ targets will become the levels of 0.7610 and 0.7630.

The situation in the New Zealand economy remains unchanged on Wednesday. As it became known the day before, trade balance in New Zealand increased to NZ$194 mln in February against the level of NZ$11 mln in January and forecast of growth to NZ$272 mln. In addition export levels increased by 17% y/y, import – by 23% y/y.

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.

It became the reason of the dramatic fall of the NZD, and what is more, Prime Minister John Key said earlier in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate.

Statistics released showed that GDP in New Zealand rose by 0.2% m/m (+0.8% y/y) in QIV against the forecast of growth by 0.1% m/m, which support positive dynamics in NZD.

Statistics of the last week showed that balance of current account in New Zealand decreased to -NZ$3.5 billion against the value of -NZ$1.77 billion in QIII. The balance is most likely decreased due to the seasonal factors and we surely can see improvement in the situation.

 

[LF.Anastasia]

Euro/USD: the external background is neutral for the pair

The pair EUR/USD is traded slightly upward on Thursday morning: for the whole week the main pair is trying to decide on the direction of movement amid neutral external background. Still moderate optimism is prevailing.

By 9.00 Moscow time the Euro is at 1.4137 against Wednesday closing session level of 1.4126.

Today will be informative in terms of macro-statistics: data from Germany and Eurozone will be released midday, Jobless claims and ISM-New York index will come out as from 16.30 Moscow time. Later Factory orders will be released.

In whole the sentiment is neutral – many traders are awaiting tomorrow’s publication of U.S. labour market statistics.

Most likely the pair EUR/USD will not go beyond the range of 1.4080-1.4140 at the trading session on Thursday.

 

[LF.Anastasia]

CHF: Swiss Franc remains flat

At the Forex currency market Swiss Franc rate remains flat, trading slightly upward.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is rising, maintaining a former buy signal. Stochastic Oscillator left the overbought zone today and is decreading, giving a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9180 the pair will go to 0.9200 and 0.9220. If the level of 0.9160 is exceeded, traders’ targets will be 0.9150 and 0.9135.

As it became known today, KOF Indicator in Switzerland rose to 2.24 points in March against the forecast of 2.18 points. It is a positive signal for the national economy.

Representative of Swiss National Bank Mr. Jordan said the day before that strong national currency is one of the main reasons for economic growth weakening and puts downward pressure on inflation. According to his speech current monetary conditions look favorable, but different market segments respond to them differently.

Expensive CHF is negative for exporters, prevents rates from stabilization and influences monetary policy tightening.
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.

Level of three-month LIBOR rate was left unchanged, at the 0.25%, as expected.
Note that verbal interventions are ordinary for SNB. Previously Swiss National Bank started to indicate that intervention of possible: representative of the regulator Mr. Dantin said that the Bank is able to ensure price stability even amid excess liquidity. In addition the politician noted that the cost of the intervention at the currency market will be determined by the information pressure.

Markets will be awaiting the data on Retail sales in February and PMI Index tomorrow.

 

[LF.Anastasia]

GBP: British Pound continues to recover

At the Forex currency market the British Pound Sterling rate continues to rise on Thursday recovering from a selloff seen last and this week.


Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to decline, maintaining a sell signal. Stochastic Oscillator is rising in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of current sentiment preserving buyers’ targets for today will be the levels of 1.6130 and 1.6150.
A portion of important macro-statistics from Great Britain was published today:
– the level of GfK Consumer confidence remained at -28 points in March against the forecast of reduction to -29 points;
– Nationwide house prices published by Hometrack decreased by 0.1% m/m (-3.2% y/y) in March against the reduction by 0.2% m/m in February.

Thus consumer confidence still doesn’t improve: the main restrictive factor in country’s budget. Apparently, market needs a positive driver.
According to the Minutes of meeting of the Bank of England 6 members of MPC voted for keeping interest rate at the previous level. In addition, 8 people were for preserving current volume of the assets redemption program. Posen voted for the growth of QE by 50 billion pounds. Therefore, balance of forces in the Monetary Committee has remained unchanged, which frustrated bulls who expected indications of imbalance. 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.

As it became known this week, the level of 4q GDP in Great Britain was revised to -0.5% q/q (+1.5% y/y) against the forecast of revision to -0.6% q/q. The released data was strong, but the pair GBP/USD remained under pressure and didn’t respond to it.

Chancellor of the Exchequer George Osborne sees two main risks for the British economy: inflation and eurozone economic crisis. According to his speech, one of the factors of faster inflation is weak Pound. However currency weakness is supportive for the economic balance – so the descending rate of GBP is rather advantageous for the British economy.

 

[LF.Anastasia]

JPY: Japanese Yen stays near lows

The Japanese Yen rate remains weak at the Forex currency market.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, but going upward, confirming a former buy signal. Stochastic Oscillator is in the overbought zone today, maintaining a similar signal.

Forex recommendations: in case buyers’ sentiments preserve, the pair will move to 82.90 and 83.10. If the breakup doesn’t occur, the pair will start consolidation near the current levels.

As it became known on Thursday, Manufacturing PMI in Japan according to Nomura decreased to the level of 46.4 points in March against the level of 52.9 points seen in February. The data is of no surprise taking into consideration the ravages after earthquake in March and the following tsunami.

Statistics for March came out weak as expected: the level of Small Business Confidence decreased to 49.5 points in March against the level of 56.6 points seen in February.

Meanwhile Tuesday’s data turned out to be strong (unemployment rate decreased to the level of 4.5% in February against the level of 4.9% in January; the level of retail sales rose by 0.1% y/y in February against the same increase in January), but these are indicators for February – outdated for now.

The day before representative of the Bank of Japan Mr. Miyao said the day before yesterday that the regulator shall carefully trace all risk factors for the process of Japanese economic recovery. In addition, time frame and volumes of reconstruction is not known yet which makes obscure further economic outlooks of the Country of the Rising Sun.

It is likely that in the medium term the pair USD/JPY has a good chance to overstep the level of 84,0.

Currently it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan 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.