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[LF.Anastasia]

GBP: British Pound slightly goes down on Monday

At the Forex currency market the British Pound Sterling rate goes down slightly at the beginning of the week, because most investors are away from the trading floors, due to the Easter Holiday. Markets in the UK are closed.

Forex forecast: MACD indicator is in the positive area for the pair and is growing, giving a pair buy signal. Stochastic Oscillator is giving a similar signal today, coming into overbought zone.

Forex recommendations: in case of breakdown at the level of 1.6530 the pair will go to 1.6550. if upward breakdown does not take place, the pair will consolidate close to the current levels.

The data released last week 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. 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.

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.

Minutes of the last meeting of the Bank of England released earlier showed that balance of power in the Monetary Committee remained unchanged: 6:3 and the regulator still has no intention to start monetary tightening policy.


It is unlikely that the rate will be raised before July-August this year.
The data released earlier showed that net volume of UK public sector borrowing in March reduced (to 18.632 billion pounds) due to the reduction in emissions of the government bonds by the end of the fiscal year. Net demand of the British government in cash amounted to 139.6 billion pounds for 2010/2011 against expected OBR of 141.1 billion pounds.

Current budget of the UK, excluding intervention in the financial sector, showed deficit in the amount of 10.442 billion pounds in March against 11.468 billion pounds a year earlier.

 

[LF.Anastasia]

CHF: Swiss Franc still stands close to historic highs

At the Forex currency market Swiss Franc imperceptibly goes upward on Monday although movement is negligible in the market because most investors are absent. Franc is close to historic highs (0.8779) and it still has strong position.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down, giving a pair sell signal. Stochastic Oscillator is close to the oversold zone today, maintaining a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8840 the pair will go to 0.8830 and 0.8810. If downward breakdown does not take place the pair will consolidate in the existing range.

Note that sharp movements are not expected in the market today.
The situation in Swiss economy remains unchanged.

Representative of Swiss National Bank Mr. Dantin stressed earlier that the Bank is quite capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention to 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 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%.

It became known last week that economic sentiment index - 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 economic recovery even regardless of strong Franc. The data of last week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agrees 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.

 

[LF.Anastasia]

JPY: Japanese Yen becomes weaker at the beginning of the week

The Japanese Yen rate moves away from local highs at the Forex currency market on Monday due to the domestic economic news in the Country of the Rising Sun.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and goes down, however trading volume is not high which shows that sell signal is fading. Stochastic Oscillator remains in the oversold zone, maintaining a pair sell signal.

Forex recommendations: if the level of 82.40 is exceeded the pair will go to 82.55 and 82.70. If upward breakdown does not take place the pair will consolidate close to the existing levels.

As it became known this morning, the head of the Bank of Japan Mr. Shirakawa said that following quarters I and II it can be expected that level of GDP will reduce, due to the serious aftermath of the earthquake in March. He thinks that the main problem is the shutdown of the production facilities, which in any way or other is connected with the power failure.

Shirakawa believes that as soon as the power supply will reach the level of 11 March, production capacity will be restored.

At the same time Central Bank is still ready to take measures to support economy, if required.

It became known earlier that Japanese government decided not to issue new government bonds aimed at financing supplementary budget which is designated for recovery process after the earthquake and tsunami in March. In addition, last Friday, government of the Country of the Rising Sun approved the budget in the amount of 4.015 trillion yen designated for the North-East regions of the country which suffered the most losses during the earthquake.

It is also worth noting that Japan considers the possibility of raising taxes to 15% of the sales tax from the current 10%.

It became known earlier that surplus of trade balance amounted to Y196.5 billion in March against the level of Y931.94 billion a year earlier and tertiary index rose by 0.8% m/m in February against the fall by 0.1% in January - Japanese economy had really expanded but it was before the earthquake in March.

Meanwhile, the level of export decreased by 2.2% y/y in March, while level of import increased by 11.9% y/y which is logical.

 

[LF.Anastasia]

AUD: Australian Dollar holds positions near many-year highs

At the Forex currency market the Australian Dollar rate stands near many-year highs on Monday amid stable external background and absence of most investors, due to the Easter holidays.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to grow, confirming a previous buy signal for the pair. Stochastic Oscillator is in the overbought zone today and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.0740 the pair will go to 1.0755 and the highs of 1.0783.

It is a day off in Australia as in most large countries of the world- Easter holiday continues. Markets of the country will be closed tomorrow as well.
On Wednesday investors will await data on CPI in QI (quarterly growth by 1.2% is expected). Level of lending in the private sector (rise by 0.4% in March) will be made public on Friday as well as the data on the volume of total lending.

The situation in the Australian economy has remained unchanged due to the long holiday. It became known in the middle of last week that index of prices for import increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia keeps interest rate unchanged for a long time. Leading indicators index demonstrates good growth in the Australian economy: figures show that growth is unlikely to be too high next year; however there will be some growth.
Kevin Rood, Minister of Foreign Affairs of Australia said yesterday that RBA has no plans to carry out currency intervention, although national currency is significantly overvalued.

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.

 

[LF.Anastasia]

CAD: Canadian Dollar almost stands still for already the second day

At the Forex currency market the Canadian Dollar rate continues to almost stand still awaiting new signals even though oil prices continue to rise.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD; however it is moving along the signal line not giving a clear signal. Stochastic Oscillator has come out of the oversold zone today 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 0.9550 the pair will go to 0.9565 and 0.9575. if upward breakdown does not take place the pair will continue to consolidate close to the existing levels.

The situation in Canada remains unchanged.

Earlier, Imperial Bank of Commerce reported on the revision of its GDP forecast for QIV 2010 to 2.6% versus the previous level of 2.3% and the Bank expects that this year economic growth will be by 2.6% (2.4 % earlier).

The Bank of Canada stated earlier that CPI in the country will begin to rise, as soon as it exceeds expected level. At the same time value of key index of net CPI is also growing, remaining close to the target level of 2%.

The regulator expects that average growth of GDP will be at the level of 2.9% per annum this year.

According to the experts from International Monetary Fund, Canadian economy will grow by 2.3% y/y this year, which is less than the forecast of +2.7% y/y in October.

It became known earlier that retail sales in Canada increased by 0.4% in February against the fall by 0.4% in January. In addition, index of leading indicators in Canada increased by 0.8% in March against 0.8% m/m earlier and wholesales sale fell by 0.6% in February against 1.5% m/m in January.

In regards to the Canadian Dollar rate, IMF believes that if average oil price will remain at about $90 barrels (in October- $79 barrels) CAD will increase, with the help of support from the commodity sector of the country’s economy.

 

[LF.Anastasia]

Euro/USD: Euro is being corrected due to the Middle East news

At the Forex currency market the pair EUR/USD goes down on Tuesday for the first time in four sessions amid another aggravation of the situation in the Middle East.

By 9.20 Moscow time the Euro is at 1.4529 against closing level of 1.4580 yesterday.

Unrest has swept Syria – there are new sources of anti-government demonstrations, riots spread to large Syrian cities: Derya and Damascus.
Investors’ concern about the further escalation of the conflict in the Middle East has forced players to shift to safer currencies.

Two- day meeting of the U.S. Federal Reserve will start today and most probably investors will prefer wait and see strategy.

Most likely the pair EUR/USD will not go beyond the range of 1.4490-1.4580 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound continues to decline

At the Forex currency market the British Pound Sterling carries on the decline on Tuesday which started yesterday because investors have been moving away to safe harbours amid decreased interest in risk.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is growing, however volumes are dropping which indicates that a buy signal is fading. Stochastic Oscillator is going down in the neutral zone today, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.6440 the pair will go to 1.6410 and 1.6380.
Important UK news are not going to be published today, therefore, external background will remain the main movement driver. Data on GDP in the UK will be presented tomorrow which will enhance volatility in the Pound.

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.

Minutes of the last meeting of the Bank of England released earlier showed that balance of power in the Monetary Committee remained unchanged: 6:3 and the regulator still has no intention to start monetary tightening policy.

It is unlikely that the rate will be raised before July-August this year.
Current budget of the UK, excluding intervention in the financial sector, showed deficit in the amount of 10.442 billion pounds in March against 11.468 billion pounds a year earlier.

The data released last week 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. 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 is being corrected after reaching highs

At the Forex currency market Swiss Franc is being corrected on Tuesday, after reaching historic highs yesterday, amid the surge of risk aversion, caused by escalation of the conflict in the Middle East.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, maintaining a pair sell signal. Stochastic oscillator is still in the oversold zone today, moving along the signal line and not forming a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8850 the pair will go to 0.8870. If correction is depleted, a maximum level will again become a target for traders.

Today investors will wait for the publication of the trade balance in Switzerland (it is expected that the index will reduce to 2.1 billion francs against the previous level of 2.486 billion francs.

In other respects, the situation in Swiss economy remains unchanged today.
Three- month Libor rate remains unchanged, at the level of 0.25%.
It became known last week that economic sentiment index - 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 economic recovery even regardless of strong Franc. The data of last week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agrees 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 Swiss National Bank Mr. Dantin stressed earlier that the Bank is quite capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention to 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 overprice will trigger slowdown in economic growth – largely due to the deceleration in export volumes.

 

[LF.Anastasia]

JPY: Japanese Yen tries to grow again

At the Forex currency market the Japanese Yen rate tries to grow again on Tuesday amid escalation of the conflict in the Middle East investors have shifted to the safer currencies, including YPY. However, it has nothing to do with recognition of the stability in Japan.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and goes down; volume of trading also declines, draining away a sell signal. Stochastic Oscillator remains in the oversold zone today and maintains a similar signal.

Forex recommendations: in case of breakdown at the level of 81.50 the pair will go to 81.40 and 81.25. If downward breakdown does not take place the pair will consolidate close to the current levels.

It became known today, that confidence in small business in Japan fell by 13.4 points in April, to the level of 36.1 points which became the lowest level since May, 2009, which is logically explained by the aftermath of the earthquake and tsunami in March.

It became known at the beginning of the week, that the head of the Bank of Japan Mr. Shirakawa said that following the results in quarters I and II, it can be expected that level of GDP will decline, due to the serious aftermath of the earthquake in March. He thinks that the main problem is the shutdown of the production facilities, which in any way or other is connected with the power failure. Shirakawa believes that as soon as the power supply will reach the level of 11 March, production capacity will be restored. At the same time Central Bank is still ready to take measures to support economy, if required.

Japan also considers the possibility of raising taxes to 15% of the sales tax from the current 10%. It became known earlier that surplus of trade balance amounted to Y196.5 billion in March against the level of Y931.94 billion a year earlier; tertiary index rose by 0.8% m/m in February against the fall by 0.1% in January - Japanese economy had really expanded but it was before the earthquake in March.

Meanwhile, the level of export decreased by 2.2% y/y in March, while level of import increased by 11.9% y/y which is logical.
It became known earlier that Japanese government decided not to issue new government bonds aimed at financing supplementary budget which is designated for recovery process after the earthquake and tsunami in March. In addition, last Friday, government of the Country of the Rising Sun approved the budget in the amount of 4.015 trillion yen designated for the North-East regions of the country which suffered the most losses during the earthquake.

 

[LF.Anastasia]

AUD: Slight correction continues for Australian Dollar

At the Forex currency market the Australian Dollar rate continues to be slightly corrected from many-year high level amid investors’ risk aversion.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and goes up, maintaining a pair buy signal. Stochastic Oscillator tends to come out of the overbought zone today, starting a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.0670 the pair will go to 1.0650 and 1.0630.
As the data released this morning showed, leading indicators index in Australia increased by 0.6% in February against the rise by 0.1% in January. It is a good sign for the local economy.

The situation in the Australian economy has remained unchanged due to the long holiday. It became known in the middle of last week that index of prices for import increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia keeps interest rate unchanged for a long time. Leading indicators index demonstrates good growth in the Australian economy: indicators show that growth is unlikely to be too high next year; however there will be some growth.

Kevin Rood, Minister of Foreign Affairs of Australia said yesterday that RBA has no plans to carry out currency intervention, although national currency is significantly overvalued.

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.

Tomorrow, on Wednesday investors will await data on CPI in QI (it is expected that quarterly growth will be by 1.2%). Level of lending in the private sector (rise by 0.4% in March) will be made public on Friday, as well as the data on the volumes of total lending.