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[LF.Anastasia]

Euro/USD: Euro grows up after considerable sales

The pair EUR/USD is traded upward at the Forex currency market on Monday after two days of considerable sale last week.
By 8.50 Moscow time the Euro is at 1.4397 against closing level of 1.4317 on Friday.

Sales of the Euro on Friday were caused by the negative sentiment at the global capital market triggered by the fears of slowing down of the world economic recovery in general and that of American one in particular.

The Euro started to strengthen today as it has reached the levels attractive for the purchase. In addition, investors overestimate the prospects of the interest rate increase by the ECB in July, noting that it is a good option too, and just a cycle of increases will shift one month forward.

The day will be uneventful in terms of macro-statistics today; therefore external background will remain the driver of the movement.

Most likely the pair EUR/USD will not go beyond the range of 1.4320-1.4450 at the trading session on Monday.

 

[LF.Anastasia]

GBP: British Pound tries to be corrected after sales

At the Forex currency market the British Pound Sterling rate tries to rehabilitate after sales for five consecutive sessions last week.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD however it is going down, trading volumes are also decreasing, which indicates that a sell signal is being formed for a pair. Stochastic Oscillator remains in the oversold zone, maintaining a pair sell signal, although the signal is abating.

Forex recommendations: upward correction can lead the pair to 1.6400. However if “bears” are back in the pair, then the target of the sales will become the levels of 1.6345 и 1.6320.

General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending considerably. “ We continue to expect that recovery will proceed this year as well as next year, however its pace will be slow.- thinks CBI.

CBI expects that the growth in the British economy will be by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% on average.

At the meeting earlier the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept unchanged- at the level of stg200 billion. Comments of the regulator did not contain any new development, and this seems natural; the situation in the British economy is far from being stable.

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.

According to the rating agency S&P the rise in the interest rate can be expected in the next three months. “It can happen due to the fact that inflation level will 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.

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.

 

[LF.Anastasia]

CHF: Swiss Franc tends to grow

At the Forex currency market Swiss Franc rate begun to rise on Monday after two days of rollback earlier.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going down, maintaining a pair sell signal and tending to continue movement along the signal line. Stochastic Oscillator has reached overbought 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 0.8760 the pair USD/CHF will go to 0.8775 and 0.8795. f the level of 0.8730 is exceeded, traders’ target will be the level of 0.8700.

The situation in Swiss economy has not changed fundamentally; external background puts the main pressure on the pair.

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.

The head of the National Bank of Switzerland, Mr. Hildebrand noted that strong and expensive Franc undermines exports and disrupts 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.

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.

It became known earlier 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 maintains position close to local highs

At the Forex currency market the Japanese Yen rate is traded upward in pairing with the USD on Monday, staying close to the local highs.

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 goes up in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.60 the pair will go to 80.75 and 80.90. If the level of 80.30 is exceeded, traders’ target will be the level of 80.10.

The minutes of the Bank of Japan meeting of 6-7 April was released today; it says that some members of the CB believe that the policy of quantitative easing in March had a positive impact on the state of the financial market and business confidence; however it is still required to monitor carefully the effect of the high prices of commodity.

In addition the Bank of Japan are concerned about the effects of the interest rates rise by the European Central Bank.

In regards to the YPY rate, the document indicates that weak Yen positively affects the state of the capital expenditures. It should be taken into consideration that the meeting took place at the beginning of April when the YPY was really weak.

The head of the Bank of Japan Mr. Shirakawa said earlier 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.

Note that the Bank of Japan believes that real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

 

[LF.Anastasia]

AUD: Australian Dollar grows, actively restoring

At the Forex currency market the Australian Dollar rate continues attempts to restore at the beginning of the week.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; however it is moving along the signal line, not giving any sell signals. Stochastic Oscillator is growing in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0780, target for purchase will be the levels of 1.0820 and 1.0840. If a more significant upward breakdown does not take place the pair will consolidate close to the current levels.

Last week, the Reserve Bank of Australia outlined its vision of the prospects for the national economy. Thus, next week the RBA will announce measures to reduce government costs in order to restore budget surplus. If the program is implemented it will help Australia to maintain GDP growth, which has been observed over the past 20 years, and will also help curb inflation.

On 10 May Finance Minister Swan will announce details of the program. The situation is still complicated with respect to the interest rate: most probable that Prime Minister Julia Gillard will oppose the tightening of monetary policy, since the rise in the rates will create additional obstacles for the RBA. However the RAB is also set to increase interest rate because the boom in the mining sector triggers the growth of inflation, although at the same time contributes to maintaining stability in the employment sector.

According to the data released last week 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. RBA expects that net CPI will reach 3% against predicted 2.75% by the end of this year.

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 has been keeping interest rate unchanged for a long time.

Economists were shocked by the data on the retail sales (-0.5% m/m against the growth by 0.8% in February): the indicator went down because sales in the department stores and super markets had been reduced. Interestingly, that it happens during the period of long term discounts in many stores.

 

[LF.Anastasia]

NZD: New Zealand Dollar are tending upwards

At the Forex currency market on Monday the New Zealand Dollar rate continues to strengthen, regaining from the previous decline.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD; however it goes down, giving a pair sell signal. Stochastic Oscillator pushed away from the oversold zone and resumed growth, forming a buy signal.

Forex recommendations: Correction can help the pair reach 0.7950/60, however when “bears are back at the market the target of the sale will be the level of 0.7895.

According to official data, the outflow of population was the biggest in March over the past 10 years– migration figures will cause slow down in the NZD recovery process.

At the same time unemployment rate New Zealand fell to 6.6% in QI against the level of 6.8% in QIV, 2010. The forecast had been 6.7%. In addition the proportion of labor force increased to 68.7% against the previous level of 67.9%. Although indicators are favourable, ASB still believe that report is ambiguous: it is possible that the earthquake of February will have more serious impact on the economy than expected and it will have additional pressure on the labor market of New Zealand and will have an adverse affect on the prospects for the sector as a whole.

According to the decision of the Reserve Bank of Zealand, made at the last meeting, 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 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.

Macro-statistics released this week showed that construction permits in New Zealand rose by 2.2% m/m in March against preliminary forecast of decline by 9.7% m/m.

It became known last week 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.

 

[LF.Anastasia]

Euro/USD: Euro remains under pressure due to Greece

The pair EUR/USD is traded downward at the Forex currency market on Monday morning because news from Eurozone does not favour optimism in the market.

By 8.50 Moscow time the Euro is at 1.4325 against closing session level of 1.4365 yesterday.

It became known yesterday that rating agency S&P downgraded long term rating of Greece to BB from B, by two grades at once, which became the fourth fact of Greek rate reduction over this year.

Today, investors will wait for the allocation of the treasury bills by Greece at the volume of 1.25 billion euro for 12 months; market is apprehensive about the possibility of restructuring of the debt of the country.

Therefore, market carefully avoids all the issues related to the risk until situation with weak European countries will not clear up.

Most likely the pair EUR/USD will not go beyond the range of 1.4290-1.4390 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: British Pound is on sale again after slight rebound

At the Forex currency market the British Pound Sterling rate is on sale again on Tuesday due to the negative background and investors’ aversion to risk.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD; however it goes down, and trading volumes are reducing as well, which indicates a sell signal for the pair. Stochastic Oscillator remains in the oversold zone, maintaining a pair sell signal; although it tends to leave the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6380 the pair will go to 1.6395 and 1.6420. If the level of 1.6340 is exceeded, the target of sales will become the level of 1.6300.

As statistics released today showed, retail sales in the UK rose to the five-year highs in April, favoured by the warm weather last month and a royal wedding.

According to the BRC estimates, the volume of comparable sales rose by 5.2% y/y after the decline by 3.5% y/y in March.

General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending considerably. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI.

At the same time CBI expects that the growth in the British economy will be by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% on average. At the meeting earlier the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept unchanged- at the level of stg200 billion. Comments of the regulator did not contain any new development, and this seems natural; the situation in the British economy is far from being stable

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.

 

[LF.Anastasia]

CHF: Swiss Franc came to a stop in the range

At the Forex currency market Swiss Franc rate is traded downward on Tuesday, remaining in a three- day range of 0.8675-0.8798.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is moving along the signal line, not giving a clear signal. Stochastic Oscillator has reached overbought 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 0.8770 the pair USD/CHF will go to 0.8795 and 0.8810. If the level of 0.8730 is exceeded, traders’ target will be the level of 0.8700.

Today, market expects publication of the data on consumer confidence index and dynamics of consumer prices in Switzerland.

It was made public last week that unemployment rate in Switzerland declined to 3.1% in April against the previous level of 3.3%. It is a positive indication for the economy. 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.

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.

It became known earlier 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.

The head of the National Bank of Switzerland, Mr. Hildebrand noted that strong and expensive Franc undermines exports and disrupts 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.

 

[LF.Anastasia]

JPY: Japanese Yen remains close to local highs

At the Forex currency market the Japanese Yen rate remains in the range of 80.10-80.94 for the fourth consecutive day on Tuesday, staying close to the local highs as a safe currency amid investors’ aversion to risk.

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 goes up in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.60 the pair will go to 80.75 and 80.90. If the level of 80.30 is exceeded, traders’ target will be the level of 80.10.

The situation remains almost unchanged in the Japanese economy this morning.

The minutes of the Bank of Japan meeting of 6-7 April was released yesterday; it says that some members of the CB believe that the policy of quantitative easing in March had a positive impact on the state of the financial market and business confidence; however it is still required to monitor carefully the effect of the high prices of commodity.

In addition, the Bank of Japan is concerned about the effects of the interest rates rise by the European Central Bank.

In regards to the YPY rate, the document indicates that weak Yen positively affects the state of the capital expenditures. It should be taken into consideration that the meeting took place at the beginning of April when the YPY was really weak.

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.

Note that the Bank of Japan believes that real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

The head of the Bank of Japan Mr. Shirakawa said earlier 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.