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AUD: Australian Dollar declines despite strong statistics

At the Forex currency market the Australian Dollar rate declines on Tuesday, because investors’ interest in risk is very low at the moment. Meanwhile strong statistics released this morning helps the AUD avoid significant sales.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and started to decline, forming a pair sell signal; while trading volume is slightly higher than average. Stochastic Oscillator is 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 1.0780, the levels of 1.0805 и 1.0830 will be the target for the purchase. If upward breakdown does not take place the pair will consolidate close to the current levels.

The following Australian data was released today:

– Trade balance rose to A$1.74 billion in March against the level of -A$0.08 billion in February.

Therefore, surplus versus deficit was observed in February – which is a positive factor for the Australian economy which was caused by the growth of exports in iron ore and coal and also reduction of gasoline imports.

At the same time, index of export prices increased by 9% to A$25 billion in March; import rose by 1%. It became known earlier that 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.

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.

Today, on 10 May, Finance Minister Swan shall 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.

As it was made public 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar is being sold on Tuesday

At the Forex currency market the New Zealand Dollar subsides on Tuesday amid weak statistics and continuing risk aversion.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and is going down, giving a pair sell signal. Stochastic Oscillator rises 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 0.7950/60 the pair will go to 0.7990. if the level of 0.7920 is exceeded, the level of 0.7880 will become the target of decline.

The following New Zealand data was released today:

– House prices fell by 1.9% m/m in April against the decline by 2.0% in March;

– Credit cards expenses rose by 1.7% м/м in April against the increase by 0.5% in March.

In addition, budget deficit in New Zealand amounted to NZ$10.17 billion for the 9 months by 31 March which was in average 15% higher than expected by economists. This fact provoked sales of the NZD.

According to the 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.

We would remind that the Reserve Bank of Zealand left interest rate 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.

 

[LF.Anastasia]

Euro/USD: There is no reason to buy Euro yet

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning, as investors are waiting for the U.S. strong statistics on Thursday and Friday.

By 9.15 Moscow time the Euro is at 1.4386 against closing level of 1.4409 on Tuesday.

The market expects that indicators which are scheduled for the release tomorrow will show reduction in the number of initial applications for unemployment benefits and the growth of the retail prices in the U.S. Thus, investors gained confidence that the world economic recovery continues at a good pace.

The day is not going to be very eventful in terms of important macro-statistics; therefore external background will continue to guide direction of the trading movement at the session today.

Most likely the pair EUR/USD will not go beyond the range of 1.4300-1.4470 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound sluggishly declines

At the Forex currency market the British Pound Sterling rate still remains under the pressure on Wednesday; however sales are rather nominal at the moment.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it goes down, trading volumes are falling as well, which gives a sell signal. Stochastic Oscillator has come out of the oversold zone, going up in the neutral area 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 1.6370 the pair will go to 1.6395 and 1.6420. If the level of 1.6340 is exceeded, the level of 1.6300 will become the target for the sales.

The market will await the data on the UK trade balance indicator for March today. The indicator showed decrease in deficit from December 2010 until February this year, therefore if this trend continues, the Pound will gain strong support.

As statistics released yesterday 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% in average

We would remind that at the regular meeting the Bank of England left 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 it 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 determines movement direction

At the Forex currency market Swiss Franc rate is immobile in the middle of the week, trying to determine direction for the further movement.

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 0.8800 the pair USD/CHF will go to 0.8815 and 0.8830. If the level of 0.8750 is exceeded, traders’ target will become the level of 0.8700.

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.

It became known yesterday that consumer confidence index in Switzerland amounted to 1 point in QI, as per SECO estimates, against the growth by 10 points in QIV. Franc has ignored this statistics.

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 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. In addition statistics released earlier showed 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.

 

[LF.Anastasia]

JPY: Japanese Yen is at a standstill in the middle of the week

At the Forex currency market the Japanese Yen rate is at a standstill, as investors continue to assess external background.

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 is going 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 80.95 the pair will go to 81.10 and 81.30. If the level of 80.30 is exceeded, traders’ target will be the level of 80.10.

The following Japanese data was released today:

– Index of leading indicators: -4.5%;

– Index of coincident indicators: -3.2%;

– Official reserves in April: $1136 billion against $1116.0 billion earlier.

In addition, it also became known that Japanese gold and foreign currency reserves has reached a new peak level

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 for 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 according to the Bank of Japan real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.

 

[LF.Anastasia]

AUD: Australian Dollar goes up steadily

At the Forex currency market the Australian Dollar rate continues to grow steadily on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to decline, giving a pair sell signal; while volumes are slightly above the average. Stochastic Oscillator is going up in the neutral zone and has already reached overbought zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0870 the pair will go to 1.0890 and 1.0910. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Statistics released earlier showed that trade balance in Australia rose to A$1.74 billion in March against the level of -A$0.08 billion in February. At the same time agency Moody's Investors Service gave a positive assessment to the data; according to observers of the agency, resolution of the authorities to revert the balance of the state budget to the zone of surplus is well-founded and such attitude supports credit rating of the country at Aaa.

Note that the rise in the indicator was caused by the growth of exports in iron ore and coal and also reduction of gasoline imports.

As it was made public 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.

Exports increased by 9% to A$25 billion in March; import rose by 1%. It became known earlier that 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. 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.

 

[LF.Anastasia]

NZD: New Zealand Dollar is in the narrow range

At the Forex currency market the New Zealand Dollar rate is almost motionless in the middle of the week squeezed within the narrow range.

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 rises 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 0.7950/60 the pair will go to 0.7990. if the level of 0.7920 is exceeded, the target for decline will become the level of 0.7880.

It became known today that the house price index in New Zealand increased by 1.1% m/m in April, as per REINZ estimates against the forecast of growth by 0.5% m/m. In addition the agency reported that the level of house sales last month was -4.2% y/y against the level of -5.1% y/y in March.

Yesterday’s macro- data showed that house prices fell by 1.9% m/m in April against the decline by 2.0% in March and credit cards expenses rose by 1.7% м/м in April against the increase by 0.5% in March.

Therefore, real estate sector of New Zealand started to recover and it is a strong supportive factor for the economy.

We would remind that the Reserve Bank of Zealand left interest rate 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.

According to the 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.

It is also worth noting that budget deficit in New Zealand amounted to NZ$10.17 billion for the 9 months by 31 March which was in average 15% higher than expected by economists. This fact provoked previous sales of the NZD.

 

[LF.Anastasia]

Euro/USD: Investors began to buy back Euro

The pair EUR/USD is traded upward at the Forex currency on Thursday morning amid expectations of the data on the GDP in Eurozone in QI scheduled for the release today, and due to significant oversold of the major pair.

By 9.30 Moscow time the Euro is at 1.4223 against closing level of 1.4190 yesterday.

The data on GDP in Eurozone for QI will become known today, and investors expect the rise by 2.2% y/y against the level of 2.0% y/y in QIV, 2010.

If the presented data will be strong, the Euro will receive good support.

Most likely the pair EUR/USD will not go beyond the range of 1.4150-1.4310 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound fails to determine movement direction

At the Forex currency market the British Pound Sterling rate remains in the channel of 1.6269-1.6517 on Thursday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it goes down, trading volumes are also reducing, which indicates a pair sell signal. Stochastic Oscillator has come out of the oversold zone, rising in the neutral area and is giving a part buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6370 the pair will go to 1.6395 and 1.6420. If the level of 1.6335 is exceeded, the level of 1.6300 will become the target of the sales.

It is worth paying attention that the level of volatility is extremely high.

Purchase of the Pound was caused by a new forecast of the Bank of England: regulator believes that by the end of this year the interest rate will reach the level of 0.75%, while in QIV, 2012 it will be 1.75%, i.e. the Bank has made provisions for one fact of the rise in the indicator in 2011 and four in 2012.

At the same time inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will grow slightly above 1.9% in two years time.

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% in average

We would remind that at the regular meeting the Bank of England left 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 it 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.

As statistics released yesterday 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.