LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar continues to be corrected

The Australian Dollar rate continues to go down at the Forex currency market on Tuesday; sales started to rise following the decision made by the Reserve Bank of Australia to keep interest rate unchanged.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.1000 the pair will retest new highs at 1.1020. If the level of 1.0900 is exceeded, the level of 1.0850 will become the target of decline.

Therefore, the Reserve Bank of Australia decided to leave interest rate at the previous level of 4.75% per annum. At the same time the RBA was not eloquent in the comments – and this gave the go for investors to start sales.

It became known on Wednesday that CPI in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI. Therefore, inflation in the Green Continent has reached five-year highs; natural disasters have triggered the rise in costs for food and other consumption goods for people. In addition, commodity prices at the global markets remain high, because tension in the Middle East does not abate.

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

As it was made public earlier, index of import prices 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.

According to the data released today house prices in Australia reduced by 1.7% on quarterly basis in QI. Unemployment rate fell to 4.9% in March against preliminary level of 5.0% and employment rate increased to 37.8 thousand last month against the forecast of growth by 24 thousand. Therefore, strong performance in the employment sector helped the AUD to go up, convincing investors that monetary tightening process can resume earlier. In addition deficit of trade balance has been 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 has resumed its decline

At the Forex currency market the New Zealand Dollar rate continues to decline on Tuesday – on the one hand, investors have not decided on the sentiment of the week yet, on the other hand interest in the high yielding currencies has been decreasing after the rally in April.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is moving along the signal line due to high trading levels and is not giving a clear signal yet. Stochastic Oscillator started to go down in the neutral zone today forming a pair sell signal.

Forex recommendations: if bearish sentiments intensify at the market and in case of breakdown at the level of 0.8040, the pair will go to 0.8020 and 0.8000.

It became known today that Monetary Authorities of New Zealand decided to expand program to purchase assets up to NZD20 billion. The data released at the end of last week showed that trade surplus in New Zealand rose to NZD464 billion in March against the level of NZD194 billion in February. The level of trade surplus was substantially above the forecast of 200 billion, which is a positive indication for the economy. Export amounted to NZD4.53 billion last month against the forecast of 4.20 billion and imports totaled 4.07 billion versus to the expected 3.90 billion.

In addition it also became known 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.

According to the decision of the Reserve Bank of Zealand, made at the meeting last Thursday, interest rate was left unchanged, at the level of 2.5% per annum. The head of the RBNZ also stressed that interest rate is not supposed to be changed so far. Regulator pointed in the follow-up comments that high rate of the New Zealand Dollar is undesirable, since it has a negative impact on the economy. Statistics released earlier showed that inflation in New Zealand rose by 0.8% on quarterly basis (+4.5% y/y) in QI against the forecast of growth by 1.0% on quarterly basis. Therefore, CPI in the country turned out to be weaker than expected, which indicates that pace of economic recovery is slow.

 

[LF.Anastasia]

Euro/USD: Euro remains in the range

At the Forex currency market the pair EUR/USD continues to move slightly downward on Wednesday morning, remaining in the previous range.
By 9.00 Moscow time the Euro is at 1.4802 against closing session level of 1.4824 yesterday.

Investors are still interested in the safe currencies, moving away from risk amid ambiguous sentiments of investors in the global capital markets.
Authorities of Portugal said late last night that IMF and ECB agreed on the aid package to the country in the amount of E78 billion. The program is designed for three years; this year budget deficit should amount to 5.9% of GDP, in 2012- 4.5% of GDP.

At the same time the country does not have to introduce new measures of financial discipline.

In the afternoon, market’s attention will be focused on the index of business activity in the service sector of some countries of the Eurozone in April.
Most probably the pair EUR/USD will not go beyond the range of 1.4750-1.4850 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound is still under selling pressure

At the Forex currency market the rate of the British Pound Sterling still remains under pressure from traders today and goes down.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however slowed down, trying to identify a signal. Stochastic Oscillator goes down in the neutral zone, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.6460 the pair will go to 1.6440 and 1.6420.

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well.

Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

The head of the Bank of England Mervyn King believes that the rise in the interest rate can exacerbate problems of national debts. Such statement can be well regarded as support to “dovish” sentiments in the Monetary Committee.

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.
Statistics released last week showed that GDP in the UK rose by 0.5% on quarterly basis (+1.8% y/y) in QI, which agreed with the forecast and was taken favourably by investors at Forex.

A meeting of the Bank of England will be held tomorrow.

 

[LF.Anastasia]

CHF: Swiss Franc has reached new highs

At the Forex currency market Swiss Franc rate has reached historic highs at the level of 0.8594 yesterday, and is being slightly corrected today, still maintaining strong positions.

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

Forex recommendations: in case of breakdown at the level of 0.8610 the pair will retest lows at 0.8594 and will move to 0.8585.

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.

The head of the National Bank of Switzerland, Mr. Hildebrand noted that strong and expensive Franc undermines exports and harms tourism industry; therefore negative impact of the CHF can be stronger than predicted. “We intend to take any measures to achieve price stability” stressed monetary politician.

According to him, downside risks to recovery are still preserved, although economy demonstrates more steady growth rate than previously expected.
Statement made by Hildebrand that long term expansionary monetary policy constitutes a menace to some industrial sectors is worthy of being noted.
The data released earlier showed that real retail sales in Switzerland decreased by 0.2% in March against the growth by 1.8% in February. In addition index SVME – PMI in Switzerland fell to 58.4 points in April against the previous level of 59.3 points.

It also became known that consumption indicator UBS in Switzerland rose to 1.660 points in March against the revised level of 1.453 points in February; while volume of export in Switzerland fell by 4.8% m/m in March against the level of +3.6% m/m in February. Franc has ignored this statistics.

 

[LF.Anastasia]

JPY: Japanese Yen is still of interest as “safe harbor”

The Japanese Yen rate continues to grow at the Forex currency market on Wednesday morning: the Yen is of interest to investors as safe currency amid instability at the world financial trading floors.

Forex forecast: MACD indicator for the pair USD/JPY has crossed the signal line from top to bottom, giving a pair sell signal. Stochastic Oscillator has come back into oversold zone, giving a similar signal.

Forex recommendations: is case of breakdown at the level of 80.80 the pair will go to 80.60 and 80.40.

Markets in Japan will be closed today, due to the “Gold week” and will open again only on Friday.

Current growth of the JPY was caused by purely external factors and has nothing to do with the internal situation in the country. Earlier the Bank of Japan declared that real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

As it became known earlier, the Bank of Japan has not changed interest rate, leaving it at the level of 0.1% per annum. Japanese data released after that was also mixed: unemployment rate remained at the previous level of 4.6% in March; preliminary data on industrial output fell by 15.3% m/m in March against the growth by 1.8% m/m in February; net CPI decreased by 0.1% y/y in march which became the 25th fact of reduction in a row; household spending decreased by 8.5% y/y in march against the previous decline by 0.2%.

Last week it was made public that the head of the Bank of Japan Mr. Shirakawa said that following the results of 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 considers the possibility of raising taxes up 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, at least 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 continues to decline

At the Forex currency market the Australian Dollar rate continues to remain under selling pressure on Wednesday because interest in risk is minimal in the market at the moment.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and is moving along the signal line, although trading volumes remain high. Stochastic Oscillator has come out of the overbought zone and goes down in the neutral zone, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.0810 the levels of 1.0800 и 1.0770 will become targets for decline.

The data released today showed that sale of new houses in Australia increased by 4.3% m/m in April, as per HIA estimates versus preliminary expectations of growth by 0.6% m/m. In addition, index of business activity in the service sector of Australia rose to 51.5 points in April, as per estimates of AIG/Commonwealth Bank, against the previous level of 46.5 points. However, the AUD disregarded this statistics.

The Reserve Bank of Australia decided to leave interest rate at the previous level of 4.75% per annum. At the same time the RBA was not eloquent in the follow up comments – and this was the indication for investors to start sales.

It became known on Wednesday that CPI in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI. Therefore, inflation in the Green Continent has reached five-year highs; natural disasters have triggered the rise in costs for food and other consumption goods for people. In addition, commodity prices at the global markets remain high, because tension in the Middle East does not abate.

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

As it was made public earlier, index of import prices 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar falls lower and lower

At the Forex currency market the New Zealand Dollar is traded downward on Wednesday because investors are actively selling high-yielding currencies amid decreasing interest in risk.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is moving along the signal line, not giving a clear signal, although trading volumes are declining. Stochastic Oscillator goes down in the neutral zone today, giving a pair sell signal.

Forex recommendations: if bearish sentiments intensify in the pair and in case of breakdown at the level of 0.7930, the pair will go to 0.7900 and 0.7880.

According to the data released on Wednesday, construction permits in New Zealand rose by 2.2% m/m in March against preliminary forecast of reduction by 9.7% m/m. The NZD did not respond to the positive statistics because external sales are higher so far.

It became known on Tuesday that Monetary Authorities of New Zealand decided to expand program to purchase assets up to NZD20 billion. The data released at the end of last week showed that trade surplus in New Zealand rose to NZD464 billion in March against the level of NZD194 billion in February. The level of trade surplus was substantially above the forecast of 200 billion, which is a positive indication for the economy. Export amounted to NZD4.53 billion last month against the forecast of 4.20 billion and imports totaled 4.07 billion versus expected 3.90 billion.

In addition, macro-statistics showed 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.

According to the decision of the Reserve Bank of Zealand, made at the meeting last Thursday, interest rate was left unchanged, at the level of 2.5% per annum. The head of the RBNZ Mr. Bollard stressed that interest rate is not supposed to be changed yet. Regulator pointed in the follow-up comments that high rate of the New Zealand Dollar is undesirable, since it has a negative impact on the economy. Statistics released previously was mixed: index of house prices REINZ rose by 0.5% m/m in March against prior forecast of growth by 2.3%; sale of houses last month reduced by 5.1% against preliminary level of -10.5%. In addition, food prices increased in the country by 0.3% in March against preliminary target at 0.1%. Prior to this the country had reported its positive trade surplus –for the first time over the last 8 months, which was caused by high commodity prices in the world and the rise in the levels of exports of timber and dry milk.

 

[LF.Anastasia]

Euro/USD: Euro grows up amid expectations

The pair EUR/USD is traded upward at the Forex currency market on Thursday; players are waiting for the outcome of the European Central Bank meeting which will be held today.

By 9.15 Moscow time the Euro is at 1.4870 against closing level of 1.4826 yesterday.

Preliminary employment data in the U.S. released yesterday provoked withdrawal from dollar positions and today the Euro consolidates amid anticipations that oratory of the head of the ECB, Trichet will remain “hawkish” and he will confirm his intention to raise interest rates in June once again.

The U.S. employment data will be made public tonight, which will give the market guidelines for the short term trend for to form.
Most likely the pair EUR/USD will not go beyond the range of 1.4780-1.4920 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound Sterling is being corrected after sales

At the Forex currency market the British Pound Sterling rate is being corrected on Thursday after sales of the last three days.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it slowed down, trying to determine a signal. Stocastic Oscillator goes down in the neutral zone, giving a pair sell signal.

Forex recommendations: upward correction can lead the pair to 1.6550. However if “bears” are back, the level of 1.6480 will become the target of sales.

A regular meeting of the Bank of England will be held today. During the meeting the issue of the rates will be resolved and outlooks of the British economy will be identified. According to the rating agency S&P the rise in the interest rate can be expected in the next three months. “It is caused by the fact that inflation level will to rise again after the decline in March and it can reach the level of 5% in QIII.” –stated lead economist of the agency J-M Six..

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well.

Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

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.
The head of the Bank of England Mervyn King believes that the rise in the interest rate can exacerbate problems of national debts. Such statement can be well regarded as support to “dovish” sentiments in the Monetary Committee.

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.