LiteForex's analytics

[LF.Anastasia]

Euro/USD: Euro is under pressure at the beginning of the week

The pair EUR/USD is traded downward at the Forex currency market on Monday morning, investors try to escape from risk, due to the fears that debt crisis in Eurozone will resume.

By 9.15 Moscow time the Euro is at 1.4374 against closing session level of1.4429 on Friday.

Market believes that Greece will declare default sooner or later, as it is unable to cope with its internal problems even on conditions that it receives help from other countries.

Furthermore, the rate of the Euro is under pressure exerted by the elections in Finland where National Coalition Party won the elections formally, however the true winner is the Party “The True Finns” which took the third place in accordance with the number of votes. Observers believe that if a Nationalist Party assumes the power it can seriously shake positions of the Euro in the country.

The day is going to be uneventful in terms of macro-statistics, therefore the market will be guided by the external background.
Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4430 at the trading session on Monday.

 

[LF.Anastasia]

CHF: Swiss Franc remains near historic highs

At the Forex currency market Swiss Franc rate is traded slightly downward in pairing with the USD on Monday morning, remaining nevertheless, near historic highs.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8950 the pair will go to 0.8960 and 0.8975. If the level of 0.8945 is exceeded, the target for the decline will be the level of 0.8910.

The situation in Switzerland has not changed fundamentally by this morning. Actual level of retail sales in Switzerland rose 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.

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.

SNB has already highlighted the problems more than once: following the last meeting, the regulator said that strong currency is a burden for the economy and its overprice will trigger slowdown in economic growth – largely due to the deceleration in export volumes.
Three- month Libor rate remains unchanged, at the level of 0.25%.

In addition, it became known last week that index of investors’ economic expectations ZEW increased to 8.8 points in April against the fall by 13.5 points in February. It was a positive sign for Switzerland which confirmed the continuation of the national economy recovery even despite strong Franc. The data of this week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agreed with the forecasts.

 

[LF.Anastasia]

JPY: Japanese Yen continues to rise in price as “protective currency”

At the Forex currency market the Japanese Yen rate is traded upward on Monday morning, investors escape from risk due to the fears that debt crisis can continue in the countries of Eurozone.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it is moving along the signal line, not giving a clear signal. Stochastic Oscillator remains in the oversold zone today, giving a sell signal for the pair USD/JPY.

Forex recommendations: in case of breakdown at the level of 82.80 bears’ positions will intensify in the pair and traders’ targets will be the levels of 82.65 и 82.50.

Difficult situation in the NPP “Fukusima-1” is still putting pressure on the Yen; nevertheless today’s investors’ withdrawal from risk and shifting to safe assets today, including JPY, helps to strengthen the position of the Yen.

Starting from today Japanese Ministry of Finance will begin to repurchase government bonds from the market in the amount of Y160 billion. Japanese Finance Minister Mr. Yosano noted yesterday 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. According to Yosano the main factor of uncertainty is instability of power supply and its possible shortage.

Statistics showed previously that the revised volume of industrial output in Japan rose by 1.8% m/m in February against the preliminary level of +0.9%. This is a mediate indicator for the Yen because it shows the situation prior to the earthquake in March. Statistics released this week 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 determines movement direction at the beginning of the week

At the Forex currency market the Australian Dollar rate remains close to the opening levels on Monday, determining movement direction. On the one hand the pair AUD/USD is under pressure caused by escape of the players from risky positions which has been observed today; on the other hand the Australian currency has not exhausted its potential for growth yet.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and goes up, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone today, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0570 the pair will go to 1.0585 and 1.0600.

Situation in Australia has not changed dramatically by this morning. Unemployment rate reduced to 4.9% in March versus the preliminary 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.

The data released last week showed that the level of consumer lending Westpac in Australia increased by 1.2%, to the level of 105.3 points in April against preliminary level of -2.4%. Such positive data has reflected 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 has been for the fourth time already that the RBA does not dare to continue monetary policy tightening.

Earlier 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar started correction after reaching new highs

The New Zealand Dollar is traded downward at the Forex currency market on Monday after the leap to new local highs.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is growing, which, taking into account high volumes, maintains a pair buy signal. Stochastic Oscillator remains in the overbought zone today, tending to move to the neutral zone.

Forex recommendations: in case of breakdown at the level of 0.7920 the pair will go to 0.7900 and 0.7880. If the downward breakdown does not take place the NZD/USD will consolidate close to the current levels.

The following data on New Zealand was published today:

– CPI in New Zealand rose by 0.8% on Quarterly basis (+4.5% y/y) in Quarter I against the forecast of growth by 1.0% on quarterly basis;

– Activity index in the service sector of New Zealand remained at the February level of 50.8 points in March.

Therefore, inflation in the county was below the forecast which demonstrated slow pace of the national economic recovery. Indices in March has not been 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.

Statistics released earlier 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 -10.5%. In addition prices for food increased by 0.3% in March against the 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.

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

 

[LF.Anastasia]

Euro/USD: Euro is still under strong pressure

The pair EUR/USD is traded downward at the Forex currency market on Tuesday after the release of the negative forecast from S&P.
By 8.50 Moscow time the Euro is at 1.4225 against closing session level of 1.4233 yesterday.

Thus, rating agency S&P announced the revision of the U.S. credit rating to “negative” from “stable” indicating that it will take long years for the country to stabilize its debt burden. American politicians immediately made a denial saying that the agency underestimates authorities’ activity, but it is a fact that the major pair collapsed almost for 2 figures at the beginning of the week.

Today market will continues to regain from this negative factor. In addition statistics on business activity in industrial and service sector of the Eurozone as a whole and in Germany in particular is scheduled for release.

Most likely the pair EUR/USD will not go beyond the range of 1.4150-1.4290 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is still weak

At the Forex currency market the British Pound Sterling continues to be weak on Tuesday amid negative external environment.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however the growth has slowed down which indicates weakness of the buy signal. Stochastic Oscillator started to decline in the neutral zone, creating prerequisites for pair’s sale.

Forex recommendations: in case of breakdown at the level of 1.6240, level of 1.6180 will become the target for decline today; further- is yesterday’s lows of 1.6164.

According to the representative of the Bank of England Mr. Sentence, inflation in Great Britain can exceed the level of 5% soon. He believes that inflation will go up during the summer. “If we wait until all signals of inflation will turn from flashing yellow to red, it will be too late to raise interest rates from the accommodative level” he stressed in his interview to the foreign news agency.

Note that Sentence is one of the few British monetary politicians whose tough position on the interest rate remains invariable for a long time.
Statistics released earlier 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. Interest rate was kept at the level of 0.50% per annum, program of securities repurchase also remained in the previous volume.

It became known yesterday that index of house prices in Great Britain increased by 1.7% m/m (+0.1% y/y) in April, as per Rightmove estimates. This has not affected the trades yet.

Earlier it became known that consumer confidence in Great Britain increased to 44 points in March, as per Nationwide study, against the level of 39 points in February. At the same time index of expenditure rose to 66 points versus the previous level of 53; 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.

 

[LF.Anastasia]

CHF: Swiss Franc tends to strengthen again

At the Forex currency market Swiss Franc rate tends to rise on Tuesday due to downgrade of the U.S. credit rating by the rating agency S&P to “negative”.

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 has come out of the oversold zone and is giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8970 the pair will go to 0.8990 and 0.9010. If the level of 0.8950 is exceeded, the target will be the level of 0.8920.

Situation in Switzerland remains almost unchanged this morning.

It became known last week that index of investors’ economic expectations ZEW increased to 8.8 points in April against the fall by 13.5 points in February. It was a positive sign for Switzerland which confirmed the continuation of the national economy recovery even despite strong Franc. The data of this week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agreed with the forecasts.

Real level of retail sales in Switzerland increased by 1.5% m/m in February against the decline by 2.4% m/m in January; 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 an ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

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.

SNB has already highlighted the problems more than once: following the last meeting, the regulator said that strong currency is a burden for the economy and its overprice will trigger slowdown in economic growth – largely due to the deceleration in export volumes.

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

 

[LF.Anastasia]

JPY: Japanese Yen continues to grow on Tuesday

The Japanese Yen rate continues to grow at the Forex currency market on Tuesday the Yen still maintains its status of the protective currency amid investors risk aversion.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY; however it started decline, caused by the falling volumes, which creates prerequisites for a pair sell signal. Stochastic Oscillator remains in the oversold zone today and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 82.30 the pair will go to 82.15 and 82.00.

The growth of JPY lately is explained by the investors’ risk aversion which is associated with external background: at first, talk about debt intensified, then the U.S. credit rating was downgraded. Meanwhile JPY preserves its “protective” properties. Statistics showed previously that the revised volume of industrial output in Japan rose by 1.8% m/m in February against the preliminary level of +0.9%. This is a mediate indicator for the Yen because it shows the situation prior to the earthquake in March. Statistics released this week 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).

Yesterday Japanese Ministry of Finance began to repurchase government bonds from the market in the amount of Y160 billion. Japanese Finance Minister Mr. Yosano noted yesterday 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. According to Yosano the main factor of uncertainty is instability of power supply and its possible shortage. Therefore internal situation in the country is still difficult, however demand in the Yen overbalances due to the negative external background.

 

[LF.Anastasia]

AUD: Australian Dollar is still interested in correction

At the Forex currency market the Australian Dollar rate continues to be corrected on Tuesday – mainly due to the external background, as investors continues to move away from risky positions.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0470 the pair will go to 1.0490 and 1.0510. If the level of 1.0450 is exceeded, the level of 1.0400 will become the target for decline.

As noted in the meeting of the meeting of 5 April, released by the Reserve Bank of Australia, current monetary politics is quite acceptable, however, at the same time, the regulator expects growth of inflation rate. GDP is expected to be strong in QI. The document clarifies that “main index of CPI can demonstrate growth in March, while GDP will decline more significantly in QI than previously expected. The Committee will carefully consider all these factors”.

Following the meeting of the Reserve Bank of Australia last week the decision was made to keep current level of the interest rate unchanged at the level of 4.75% per annum – it has been for the fourth time already that the RBA does not dare to continue monetary policy tightening. Judging by recent comments, we should not expect the rise in the interest rate at the next meeting either.

Unemployment rate reduced to 4.9% in March versus the preliminary 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.

Indicators of last week showed that the level of consumer lending Westpac in Australia increased by 1.2%, to the level of 105.3 points in April against preliminary level of -2.4%.