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AUD: Australian Dollar began to grow

At the Forex currency market the Australian Dollar rate has shifted to growth today, amid stable external environment, after the lingering sales

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, giving a pair sell signal, while volumes are slightly above average. Stochastic Oscillator has reached oversold zone, and is ready for a reversal.

Forex recommendations: in case of breakdown at the level of 1.0620 the pair will go to1.0635 and 1.0650. If an upward breakdown does not take place the pair will consolidate at the current levels.

The minutes of the Reserve Bank of Australia meeting of 3 May which was made public today stated that growing Australian Dollar has assisted to curb inflation; while interest rate remains at the previous level of 4.75% per annum.

The RBA admits that if economic situation will develop according to expectations, interest rate increase will become flagrant necessity.

The minutes of the meeting was vague while describing employment market in the country; it is not clear yet what will be the impact of the growing wages on the tightening of the labor market conditions. At the same time sentiments of the households and labour market will be important factors for determining dynamics of inflation for the coming years.

It became known at the beginning of the week that finance of the housing construction in Australian fell by 1.5% m/m in March. However it is just a minor factor for the exchange rate formation of the AUD.

At the end of last week, ABS, Australian Bureau of Statistics did not receive authorization for additional funding to assess inflation indicators in the country on a monthly basis instead of existing quarterly basis. Therefore, from all OECD countries only Australia and New Zealand do not release inflationary data on monthly basis. It became known earlier that unemployment rate remained unchanged, at the level of 4.9% in April, and the change in the employment rate in April amounted to -22.1 thousand compared to +37.8 thousand in March. Market did not expect such an unpleasant surprise from the employment sector which, along with investors’ risk aversion in the market, has encouraged ongoing sales of the AUD.

Statistics which was made public 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. Moody's Investors Service agency gave 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, which is at Aaa.

Note that the rise in the indicator was caused by the growth of exports of iron ore and coal and also by the reduction of gasoline imports. Also take not that CPI level in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI.

 

[LF.Anastasia]

CAD: Canadian Dollar took a break

At the Forex currency market the Canadian Dollar rate continued to decline until today, when USD/CAD “bulls” have taken a time out.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD and goes upward, maintaining a pair buy signal. Stochastic Oscillator is growing in the overbought zone, giving a similar signal.

Forex recommendations: when “bulls” will be back at the market, the target for the growth will be the level of 0.9750, and further 0.9770. If upward breakdown does not take place, the pair will consolidate close to the current levels.

The head of the Bank of Canada noted yesterday that most countries of the Eurozone comply with the requirements prescribed by the G20; only the USA ignores them in large extent. At the same time, the size of the American deficit continues to be the matter of concern.

With respect to the Euro, Carney said that he is convinced that IMF should continue to implement the tasks aimed at resolving European crisis.

It became known earlier that trade balance surplus in Canada rose to $627 billion in March against the level of $356 billion in February. In addition, exports increased by 3.5% in March; imports by 2.8%. Canadian economy declined unexpectedly in February: GDP fell by 0.2% in February against the growth by 0.5% in January. It was largely caused by the reduction in the industrial output.

As it became public earlier 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.

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

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%.

 

[LF.Anastasia]

Euro/USD: Euro continues to recover

The pair EUR/USD continues to be traded upward at the Forex currency market on Wednesday morning since investors have become more brisk and are interested in risk.

By 6.30 Moscow time the Euro is at 1.4270 against yesterday’s closing level of 1.4236.

The U.S. statistics released yesterday was poor and the data on began construction and construction permits in April fell short of expectations, thus accelerating withdrawal of players from dollar positions.

Eurozone and the USA will not pamper investors with statistics today: no important news from Eurozone is scheduled for the release today, and interesting data from the USA- “ minutes” of the U.S. TCF will be published only late tonight, at 22.00 Moscow time.

Most likely the pair EUR/USD will not go beyond the range of 1.4230-1.4350 at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound determines movement direction

At the Forex currency market the British Pound rate is on the standstill on Wednesday morning – the currency is determining movement direction after yesterday’s growth.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it is going down, volumes have also dropped, which indicates a weak sell signal. Stochastic Oscillator has come out of the oversold zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.6260; target for the purchase will be the levels of 1.6280 and 1.6300. If upward breakdown does not take place, the pair will consolidate close to the current levels.

A lot of UK macro-statistics was released yesterday (index of CPI rose by 1.0% m/m (+4.5% y/y) in April against the forecast of growth by 0.7% m/m (+4.1% y/y); index of retail prices RPI increased by 0.8% m/m (+5.2% y/y) in April, which agreed with the forecast.)

Therefore, inflationary pressure in the country continues to grow.

The head of the Bank of England Mr. King noted commenting statistics that high level of inflation was triggered by the growth in VAT, prices for electric power and imports, and inflation would have been much lower if these three parameters were excluded. At the same time King found difficulty in replying when exactly inflation would return to the target level; however he knows exactly that the level of CPI will rise in the next few months. In addition the risk is increasing at the moment that high level of inflation can trigger the rise in inflationary expectations.

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. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI. CBI expects that the British economy will grow 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.
We would remind that at the regular meeting, the Bank of England has 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. The situation in the British economy is still 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.

However, the Bank of England believes that by the end of this year 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. 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.

 

[LF.Anastasia]

CHF: Swiss Franc has chances to continue strengthening

At the Forex currency market Swiss Franc rate is growing slightly on Wednesday, maintaining the trend of the last two days.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going up, giving a pair buy signal, however the volumes are below average. Stochastic Oscillator goes down in the neutral zone, approaching oversold zone and is giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 0.8800, the pair USD/CHF will go to 0.8790 and 0.8770. If downward breakdown does not take place, the pair will consolidate close to the current levels.

The only important data on Swiss economy this week will be made public on Thursday, 19 May; it will be the index of investors’ economic expectations ZEW for May.

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 worse 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 steadier growth rate than previously expected. The statement of Hildebrand that expansionary monetary policy constitute menace to a number of industrial sectors in the long term prospects is worthy of being noted.

At present, the fall in the CHF rate reduces the hawkish spirits of the SNB to zero.

Inflation has slowed down in Switzerland which became another negative factor for the Franc which is pushing the currency downward. It became known last week that the index rose by 0.1% m/m (+0.3% y/y) which is below the forecast by 0.6% y/y.

Swiss National Bank is going to discuss monetary policy issues on 16 June and it is possible that the rates will be increased for the first time in four years.

Earlier it was made public that unemployment rate in Switzerland fell 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 planning reversal

At the Forex currency market in the middle of the week, it looks like Japanese Yen rate is planning to stop decline, and tends to start reversal amid the change in the market sentiments.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, however it is moving along the signal line and is not giving a clear signal. Stochastic Oscillator is growing sluggishly in the neutral zone, giving a moderate buy signal.Forex recommendations: in case of breakdown at the level of 81.20 the pair will go to 81.00 and 80.85. If downward breakdown does not take place, the pair will consolidate in the current range.
It became known this morning that tertiary index of business activity in Japan fell by 6.0% m/m (-2.9% y/y) in March. The fall was above the forecast and has become the fifth fact of decline on monthly basis over the last 12 months.

As it was made public earlier consumer confidence fell to 33.1 points in April against the level of 38.6 points in March, at the same time index of CGPI rose by 0.9% м/м in April against the growth by 0.6% m/m in March. According to the data released earlier, current account balance in Japan fell by 34.3%, to Y1.679 trillion in March against expected -32.0%. The data released earlier showed that leading indicators index decreased by 4.5% and index of coincident indicator subsided by 3.2%. In addition it is also became known that gold and foreign currency reserves of Japan have reached a new peak level.

Representatives of the Central Bank of Japan stated today that the fall in sentiments can “disarm” the Central Bank. In addition the head of the regulator Mr. Shirakawa noted that economy is in the dire state after the earthquake.

It is also worth noting 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.
The minutes of the Bank of Japan meeting of 6-7 April has been released earlier; it states 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.

 

[LF.Anastasia]

AUD: Australian Dollar can grow further

At the Forex currency market the Australian Dollar rate is traded slightly upward on Wednesday amid stability in the market. It is quite possible that ascending trend of the AUD will be continued today.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, giving a pair sell signal, while volumes are slightly below average. Stochastic Oscillator has come out of the oversold zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0640 the pair will go to1.0655 and 1.0670. If an upward breakdown does not take place, the pair will consolidate at the current levels.

It became known in the middle of the week that index of wage cost in Australia rose by 0.8% on quarterly basis (+3.8% y/y) in QI, while the forecast of growth was by 1.1% q/q,. The market had been waiting for the index, as earlier it had almost reached the significant level of 4% y/y. Now the concern of investors about the discrepancy between labor cost and index of inflation will go down.

However, today’s data may well affect the decision of the RBA in June, forcing the regulator to extend the pause in the interest rate increase.
The minutes of the Reserve Bank of Australia meeting of 3 May which was made public today stated that growing Australian Dollar has assisted to curb inflation; while interest rate remains at the previous level of 4.75% per annum.

The RBA admits that if economic situation will develop according to expectations, interest rate increase will become flagrant necessity.
The minutes of the meeting was vague while describing the state of the labor market in the country; it is not clear yet in which way the growing wages will impact on the tightening of the labor market conditions. At the same time sentiments of the households and labour market will be important factors for determining dynamics of inflation for the coming years.

Statistics which was made public 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. Moody's Investors Service agency gave 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, which is at Aaa.

Note that the rise in the indicator was caused by the growth of exports of iron ore and coal and also by the reduction of gasoline imports. Also take not that CPI level in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI. It also became known at the beginning of the week that finance of the housing construction in Australian fell by 1.5% m/m in March. However it is just a minor factor for the exchange rate formation of the AUD.

 

[LF.Anastasia]

NZD: New Zealand Dollar is moving in the ascending channel

At the Forex currency market the New Zealand Dollar rate is traded substantially upward on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair NZD/US, however it goes down, giving a pair sell signal, while volumes are low. Stochastic Oscillator goes up in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.7900, the pair will go to 0.7920 and 0.7940.
The following New Zealand data was released today:
– Producer prices at entrance in QI rose by 2.2% q/q, while the forecast of growth had been by 0.6% q/q;
– Producer prices at exit in QI increased by in 1.7% q/q, while the forecast of growth had been by 0.5% q/q;
The data was timely for the AUD, and supported the rise of the currency from the local lows.

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 believes 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 became known earlier that house prices 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.

Macro- economic data, released last week 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.

Recall that the Reserve Bank of Zealand has 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 going to be changed yet. The 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.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 was the fact that provoked previous sales of the NZD.

 

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Euro/USD: Euro does not give up hopes to strengthens

The pair EUR/USD is traded upward at the Forex currency market on Thursday morning amid stable external background.
By 9.00 Moscow time the Euro is at 1.4295 against yesterday’s closing level of 1.4249.

Today, the Euro ignores the news about resignation of the head of the International monetary Fund, Dominique Strauss-Kahn. Statistics, scheduled for the release this afternoon is against the USD. It is expected that the data on the secondary housing market will be unfavourable, and will confirm the necessity to preserve economic incentives programs.

It is also worth noting that protocol of the U.S. Federal Reserve issued yesterday stressed that process of monetary policy tightening can start earlier than the market expected, however due to the questionable statistics, the issue is still open.

Most likely the pair EUR/USD will not go beyond the range of 1.4210-1.4350 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound remains under pressure

At the Forex currency market the British Pound Sterling rate remains under the pressure this morning.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it is going down, volumes have dropped as well, which gives a weak sell signal for the pair. Stochastic Oscillator has come out of the oversold zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6180, the levels of 1.6200 and 1.6220 will become the target for the purchase. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known today that consumer confidence Nationwide in the UK fell to 43 points in April against the level of 45 points in March. Thus, decline in confidence among consumers confirmed the fears of the Bank of England about slowdown of the economy.

A lot of UK macro-statistics was released yesterday (index of CPI rose by 1.0% m/m (+4.5% y/y) in April against the forecast of growth by 0.7% m/m (+4.1% y/y); index of retail prices RPI increased by 0.8% m/m (+5.2% y/y) in April, which agreed with the forecast.)

Therefore, inflationary pressure in the country continues to grow.
The head of the Bank of England Mr. King noted commenting statistics that high level of inflation was triggered by the growth in VAT, prices for electric power and imports, and inflation would have been much lower if these three parameters were excluded. At the same time King found difficulty in replying when exactly inflation would return to the target level; however he knows exactly that the level of CPI will rise in the next few months. In addition the risk is increasing at the moment that high level of inflation can trigger the rise in inflationary expectations.

We would remind that at the regular meeting, the Bank of England has 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. The situation in the British economy is still far from being stable.

Deloitte & Touche LLP believe 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.

However, the Bank of England think that interest rate will reach the level of 0.75% by the end of this year; while in QIV, 2012 it will be 1.75%, i.e. the Bank have made provisions for one fact of the rise in the indicator in 2011 and four in 2012. 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.