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[LF.Anastasia]

NZD: External background drove New Zealand Dollar to correction

The New Zealand Dollar continues corrective rollback from the highs under the pressure of the external background and investors’ aversion from risks.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and continues to give a pair buy signal. Stochastic Oscillator tends to go out of the oversold zone, starting to give a weak sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7790 the pair will go to 0.7770 and 0.7750. If a breakdown will not take place the pair will consolidate close to the current levels.

According to the representative of the Finance Ministry of New Zealand the country will not need to reduce interest rate once again as the situation in the economy has relatively stabilized and this factor supports the NZD.

Earlier the country reported about the positive trade surplus for the first time in the last 8 months. High raw material prices which have been maintained in the world market have become a catalyst for this, as well as the growth of export levels of timber and dry milk. Exports increased by 17% y/y in February; imports – by 23% y/y, to the level of 3.86 billion of NSD. Exports in New Zealand amounts to about 30% of the total GDP level and the increase in this article will have a positive impact on the national economy.

It became known yesterday that level of business confidence in New Zealand declined by 27% in QI, as per NIESR estimates against the level of +8 points in QIV.

Publications of the first data of the QI 2011 started last week, which had been mostly weak. The NZD is ignoring this statistics so far. The data of March has not been very impressive either: business confidence index NBNZ fell to -8.7 in New Zealand against 34.5 in the previous period. It is difficult to judge which factor caused such rollback and it is worth waiting for the new data to be able to speak about one or another trend.

Balance of current account in New Zealand fell to -NZ$3.5 billion in QIV against the data of QIII in the amount of -NZ$1.77billion. Most likely the balance has narrowed due to the temporary factors and it is quite possible that traders will see the changes in the situation.

 

[LF.Anastasia]

Euro/USD: Euro is stable in the middle of the week

The pair EUR/USD remains stable in pairing with the UDS at the Forex currency market on Wednesday amid generally quiet external environment.
By 9.10 Moscow time the Euro is at 1.4481 against closing session level of 1.4477 yesterday.

Statistics released yesterday showed that the U.S budget deficit rose to $188.2 billion y/y in March, which was however better than economists’ forecast of $189 of deficit.

A year earlier, in March 2010 the index was at the level of $65.4 billion.

The day is going to be quiet in general today.

Most likely the pair EUR/USD will not go beyond the range of 1.4400-1.4520 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound regains after sales

At the Forex currency market the British Pound Sterling regains after two days of sales on Wednesday morning.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6300 buyers’ targets will be the level of 1.6340. If the level of 1.6265 is exceeded, the pair will go to 1.6250 and 1.6235.

The data released yesterday showed that CPI in Great Britain increased by 0.3% m/m (+4.0% y/y). Sterling sluggishly responded to this statistics – inflation in the UK has been considerably higher than the significant level of 2%, to which the Bank of England adheres.

The UK important data will be published on 27 April – it will be GDP in QI and monetary authorities hope to see the growth by 0.7%. If economic growth will be confirmed the rate can be increased to 0.75% per annum in the medium term. The meeting of the Bank of England did not give any surprises: interest rate was left at the level of 0.50% per annum, assets redemption program was also maintained in the previous volume.

According to the minutes of the last meeting of the Bank of England, 6 members of MPC voted for keeping interest rate at the previous level. In addition 8 people voted for the maintenance of the current assets redemption program unchanged. Posen voted for the rise in the QE to 50 billion pounds.

It became known yesterday that index of retail prices BRC in Great Britain increased by 2.4% y/y in March against the growth by 2.7% y/y in February. In the service sector sales are expected to be at the level of +6 points in QI against +5 in the last quarter and orders can increased to +5 from -7.

 

[LF.Anastasia]

CHF: Growth of Swiss Franc suspended

At the Forex currency market growth of Swiss Franc, which has been very intensive yesterday has suspended on Wednesday morning. Franc was close to reaching its historical highs.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, it is moving along the signal line not giving a clear signal. Stochastic Oscillator remains in the oversold zone and maintains a pair sell signal.

Forex recommendations: in case of breakdown at the level of 0.8960 the pair will go to 0.8945 and 0.8925. If breakdown does not take place the pair will consolidate close to the current levels.

The demand for the CHF was caused by the investors’ risk aversion due to the situation in Japan, where tremors do not stop, and also due to the general lack of interest of investors to the purchase.

The data on Swiss producer price index in March will be made public on Wednesday (previous value is +0.2% m/m); index of investors’ economic expectations ZEW in April will be released on Thursday.

In general the situation in Swiss economy has not changed this morning. It became known earlier that actual level of retail sales in Switzerland increased by 1.5% m/m in February against the fall by 2.4% m/m in January. However index of SVME-PMI fell to 59.3 points in March against the previous value of 63.5. According to the data released yesterday level of CPI in Switzerland rose by 0.6% m/m (+1,0% y/y) in March against the forecast of growth by 0.2% m/m. It is a ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

Three- month Libor rate remains unchanged, at the level of 0.25%.

Swiss National Bank has been taking active measures of verbal intervention against the Franc: following the last meeting representatives of the SNB said that strong currency is a burden for the economy and its overprice will trigger slowdown of the economy – largely due to the deceleration in exports volumes. A couple of weeks ago Swiss National Bank began to give indications of the possible intervention: the representative of the regulator Mr. Dantin stressed that the Bank is capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention in the currency market will be determined by the informational pressure.

 

[LF.Anastasia]

JPY: Japanese Yen reverted to decline after correction

At the Forex currency market the Japanese Yen rate reverted to decline after three days of correction.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is going up, giving a pair buy signal. Stochastic Oscillator goes down today in the neutral area and started to approach oversold zone, continuing to give a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 84.25 the pair will go to 84.50 and 84.75. If upward breakdown does not take place the pair will consolidate at the current levels.

Japanese Finance Minister Mr. Yosano noted today that economic recession after the earthquake is temporary and by the end of the year the situation can improve in the Country of the Rising Sun. The main factor of uncertainty, according to Yosano, is instability of power supply and its possible shortage.

It also became known on Wednesday that starting from 18 April Ministry of Finance will begin to repurchase government bonds from the market in the amount of Y160 billion.

As noted in the minutes of the meeting of the Bank of Japan of 14 March released yesterday, the earthquake of 11 March and subsequent devastating tsunami had a significant impact on the Japanese economy. Members of the Monetary Committee have agreed to continue soft policy and mitigate it further as soon as possible. The Bank of Japan expects deterioration in sentiments both within large companies, production and households.
In addition the head of the regulator Mr. Shirakawa noted on Tuesday that Japanese economy had declined in exactly the same way as after the collapse of Lehman Brothers.

Statistics released on Monday showed that volume of orders for the basic production equipment in Japan reduced by 2.3% m/m in February for the first time in the last three months while a month earlier the index had increased by 4.2%. The indicator gives an idea about the amount of capital investments in production sector for the next 3-6 months. Thus, continuation of companies’ cost reduction threatens to the Japanese economy in addition to the fact that the situation in the business sector has already been very hard after the series of earthquakes and tsunamis.

Statistics released earlier was positive (unemployment rate amounted to 4.6% in February, unrevised; balance of current account increased by 3.0% y/y in February against the fall by 47.6% in January; level of import increased by 3.3% y/y, export rose by 4.1% y/y).

 

[LF.Anastasia]

AUD: Australian Dollar begun to grow after two-day rollback

The Australian Dollar is back to the rise at the Forex currency market on Wednesday after two days of technical correction triggered by the previous rapid growth and overheating.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and goes up, volumes are large for the indicator which helps to maintain a pair buy signal. Stochastic Oscillator continues to goes down in the neutral zone today, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.0485 the pair will go to 1.0500 and 1.0520. If upward breakdown does not take place the pair will consolidate close to the current levels.

According to the data released today level of consumer lending Westpac in Australia increased by 1.2% in April, to the level of 105.3 points against the previous level of -2.4%.

Such positive data reflects public confidence in the prospects of economy. Following the meeting of the Reserve Bank of Australia last week it was decided to keep current level of the interest rate unchanged at the level of 4.75% per annum – it is the fourth time already when the RBA does not dare to continue monetary policy tightening. The decision had been anticipated and did not provoke any reaction in the market. The meetings of the RBA will be held on 2 May, 6 June, 4 July, 1 August, 5 September, 31 October, 5 December. Therefore while the rate is kept unchanged economy is steady.

Yesterday Finance Minister of Australia Mr Swan said that Australian economy is positive and will only benefit from economic growth of the developing countries. He thinks that although IMF has revised GDP forecast downward for Australia, country’s economy continues to recover. Note that IMF research showed that GDP forecast for Australia had been reduced to 3% in 2011 against the previous level of 3.5%. Floods in January partly impacted the revision of the forecast.

As it became known earlier lending in the housing sector fell by 5.6% m/m in February against the decline by 4.5% in January; according to the observers’ estimates the index collapsed due to the floods in the beginning of the year in Australia.

Macro-economic environment remains mixed in Australia. On the one hand unemployment rate reduced to 4.9% in March versus the prior level of 5.0% and employment rate rose by 37.8 thousand last month against the forecast of increase by 24 thousand. Therefore, strong performance in the employment sector pushed the AUD to go upward, instilling investors with the idea that the RBA can resume monetary tightening policy earlier.

On the other hand deficit of trade balance was recorded in the country for the first time since spring 2010 (February -А$205 billion against +A$1.4 billion in January). In addition activity index in the service sector reduced to 46.5 points in March against the value of 48.7 points in February.

 

[LF.Anastasia]

NZD: New Zealand Dollar reached local highs again

At the Forex currency market the New Zealand rate continues to grow today, reaching the highs of 0.7885 once again.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, it goes up and volumes are large which maintains a pair buy signal. Stochastic Oscillator remains in the overbought zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.7880 the pair will go to 0.7900 and 0.7930.

This morning the New Zealand statistics was mixed: index of houses prices REINZ increased by 0.5% in March against preliminary forecast of growth by 2.3%; while sale of houses reduced by 5.1% last month against preliminary level of -10.5%. In addition prices for food rose by 0.3% in March against preliminary target of 0.1%.

Earlier the country reported that trade surplus was positive for the first time in the last 8 months. High raw material prices which have been maintained in the world market became a catalyst for this, as well as the growth of export levels of timber and dry milk. Exports increased by 17% y/y in February; imports – by 23% y/y, to the level of 3.86 billion of NSD. Exports in New Zealand amounts to about 30% of the total GDP level and the increase in this article will have a positive impact on the national economy.

It became known yesterday that level of business confidence in New Zealand declined by 27% in QI, as per NIESR estimates against the level of +8 points in QIV.

Publications of the initial data for QI, 2011 started last week, which in most cases was weak. The NZD is ignoring this statistics so far. The data of March has not been very impressive either: business confidence index NBNZ fell to -8.7 in New Zealand against 34.5 in the previous period. It is difficult to judge which factor has caused such rollback and it is worth waiting for the new data to be able to speak about one or another trend.
Therefore, the NZD is not particularly responsive to the mixed statistic, basing its growth on the support from high prices for raw products.

 

[LF.Anastasia]

Euro/USD: Major pair tends to form offset

The pair EUR/USD is traded upward at the Forex currency market on Thursday morning after yesterday’s sales.

By 8.50 Moscow time the Euro is at 1.4480 against closing session level of 1.4443 yesterday.

External background remains stable this morning; however the situation of budget deficit exerts pressure on the USD. Yesterday President of the U.S. Barack Obama confirmed intention to reduce budget deficit by $4 trillion over 12 years, and by 2015 deficit will be reduced to 2.5% of GDP.

The situation for the Euro is also ambiguous at the moment: agency Reuters made public information yesterday that Greece will need 40-50% of debt remission to ensure steady recovery process.

It also became known today that Italy has reduced forecasts for GDP which will limit the growth of the major pair during the day.

Therefore, the pair EUR/USD is most likely to be in the offset of 1.4385-1.4510 at the trading session today.

 

[LF.Anastasia]

GBP: British Pound Sterling continues to grow

At the Forex currency market the British Pound Sterling rate continues to grow on Thursday morning.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it going up giving a pair buy signal. Stochastic Oscillator goes gown in the neutral zone, maintaining a sell signal.

Forex recommendations: in case of breakdown at the level of 1.6325 the pair will go to 1.6340 and 1.6355. If breakdown does not take place the pair will consolidate close to the current levels.

Statistics released today showed that consumer confidence in Great Britain increased to 44 points in March, as per Nationwide study, against the level of 39 points in February. Index of expenditure rose to 66 points versus the previous level of 54; expectation index went up to 66 points against the 51 previously.

Therefore, confidence index in the UK has moved away from the lows, which is a positive factor for the British economy.
The data released today showed that CPI in Great Britain grew by 0.3% m/m (+4.0% y/y) in March. Sterling sluggishly responded to this statistics – for over a year inflation in the UK has been considerably higher than the significant level of 2% to which the Bank of England adheres.

At the meeting of the Bank of England last week the interest rate was kept at the level of 0.50% per annum, program of securities repurchase has remained in the previous volume as well. According to the minutes of the last meeting of the Bank of England, 6 members of MPC voted for keeping interest rate at the previous level. In addition 8 people voted for leaving current program of securities repurchase unchanged. Posen voted for the rise in the QE to 50 billion.

The data released earlier showed that CPI in Great Britain increased by 0.3% m/m (+4.0% y/y). Sterling sluggishly responded to this statistics – inflation in the UK has been considerably higher than the significant level of 2%, to which the Bank of England adheres.

The UK important data will be published on 27 April – it will be GDP in QI and monetary authorities hope to see the growth by 0.7%. If economic growth will be confirmed the rate can be increased to 0.75% per annum in the medium term.

 

[LF.Anastasia]

CHF: Swiss Franc tends to retest historical highs

At the Forex currency market Swiss Franc rate continues to grow on Thursday – the pair USD/CHF tested the latest highs once again yesterday and it is possible that today the pair will reach it again.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and reverses downward, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone today, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8950 the pair will go to 0.8924, to the previous lows, and further to 0.8900.

It became known yesterday that Swiss producer price index and prices for import increased by 0.4% y/y in March which agreed with the forecasts.
Today investors will await the release of the index of investors’ economic expectations ZEW for April.

Three- month Libor rate remains unchanged, at the level of 0.25%.
Earlier Swiss National Bank has been taking active measures of verbal intervention against the Franc: following the last meeting representatives of the SNB said that strong currency is a burden for the economy and its overprice will trigger slowdown of the economy – largely due to the deceleration in exports volumes. A couple of weeks ago Swiss National Bank began to give indications of the possible intervention: the representative of the regulator Mr. Dantin stressed that the Bank is capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention in the currency market will be determined by the informational pressure.

In general the situation in Swiss economy has not changed this morning. It became known earlier that actual level of retail sales in Switzerland increased by 1.5% m/m in February against the fall by 2.4% m/m in January. However index of SVME-PMI fell to 59.3 points in March against the previous value of 63.5. According to the data released yesterday level of CPI in Switzerland rose by 0.6% m/m (+1,0% y/y) in March against the forecast of growth by 0.2% m/m. It is a ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.