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[LF.Anastasia]

CHF: Swiss Franc tends to consolidate

At the Forex currency market on Thursday morning Swiss Franc rate continues to demonstrate efforts to consolidate.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is growing, giving a pair buy signal; while volumes are below average. Stochastic Oscillator has reached oversold zone, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of0.8770, the pair USD/CHF will go to 0.8750andи 0.8735. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Important statistics on Swiss economy will be made public today: index of investors’ economic expectations ZEW in May.
Inflation has slowed down in Switzerland which became another negative factor for the Franc, 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.

It was made public Earlier 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.

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.

The fall in the CHF rate has reduced the hawkish spirits of the SNB to zero.

 

[LF.Anastasia]

JPY: Japanese Yen stands still pending, and preserves downward trend

At the Forex currency market the Japanese Yen rate keeps a downward trend on Thursday morning, after the publication of the Japanese pessimistically tinged statistics.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, and started to grow, giving a pair buy signal. Stochastic Oscillator is growing in the neutral zone, giving a moderate buy signal.

Forex recommendations: in case of breakdown at the level of 81.70 the pair will go to 82.00 and 82.25. If upward breakdown does not take place, the pair will consolidate in the current range.

It became known today that preliminary GDP in Japan fell by 0.9% q/q (-3.7% y/y) in QI. In addition, revised volume of industrial production fell by 15.5% in March against preliminary -15.3%.

It is obvious that the earthquake in March had a negative impact on the industrial production.
It was not the last negative news- ex-deputy head of the Bank of Japan Mr. Muto said this morning that national economy is weak and will reach the bottom in QIII this year. Future economic prospects are vague.

Japanese Economy Minister is confident that the economy of the Country of the Rising Sun is very easy to adapt to various changes and prior to the earthquake the state of economy had improved. “We are making progress in the fight against limited supply and by the end of this fiscal year GDP will increase by 1%” –he said. The Minister is also assured that economy can avoid recession.

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.

Note also that tertiary index of business activity in Japan fell by 6.0% m/m (-2.9% y/y) in March. The fall was more significant than expected and became the fifth fact of decline on monthly basis over the last 12 months.

Representatives of the Central Bank of Japan stated this week 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.

 

[LF.Anastasia]

AUD: Australian Dollar tends to move upward

At the Forex currency market the Australian Dollar rate continues to grow moderately 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 below average. Stochastic Oscillator is growing in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0640 the pair will go to 1.0655 and 1.0670. If upward breakdown does not take place, the pair will consolidate at the current levels as yesterday.

The Australian economy has not changed dramatically this morning.
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.

Note also that the level of CPI in Australia rose by 1.6% on quarterly basis (+3.3% y/y) in QI.
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.

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, the data may well affect the decision of the RBA in June, forcing the regulator to extend the pause in the interest rate increase.

 

[LF.Anastasia]

NZD: New Zealand Dollar continues to grow steadily

At the Forex currency market the New Zealand Dollar rate continues to grow today, amid stable external background.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, 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 0.7920, the pair will go to0.7935 and 0.7950.

Agency Fitch stated that New Zealand economy has demonstrated stabilization of the budget however it is not sufficient yet to revise the rating outlook of the country from the current “negative”. Moody’s noted that authorities of New Zealand are doing a good job and are taking every step to revert the economy to its normal state.

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.

Indicators released this week showed that producer price at entrance increased by 2.2% q/q in QI; while the forecast of growth had been by 0.6% q/q; producer price at exit rose by 1.7% q/q in QI; while the growth by 0.5% q/q had been expected.

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.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.

 

[LF.Anastasia]

Euro/USD: Euro remains on the plus side

The pair EUR/USD is traded slightly upward at the Forex currency market on Friday, making attempts to stand firm above the level of 1.43.

By 9.00 Moscow time the Euro is at 1.4315 against yesterday’s closing level of 1.4310.

External background is calm this morning; ex-director of the IMF, Dominique Strauss Kahn will be released from custody on bail of $1 million on Friday. Market continues to make guesses who will take his seat in the International Monetary Fund.

If the trend of the Euro strengthening will continue, the Unifies European currency will have a chance to finish this week on the plus side.

Most likely the pair EUR/USD will not go beyond the range of 1.4280-1.4390 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is determining movement direction

At the Forex currency market the British Pound Sterling rate stands still on Friday morning, trying to determine movement direction.

Forex forecast: MACD indicator for the pair GBP/USD is crossing signal line from top to bottom and is going down, volumes also fell which give a weak 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 1.6240, the levels of 1.6255 and 1.6270 will become the target for the purchase. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Representative of the Bank of England Mr. Bean noted yesterday that unemployment will partly contain inflation; however inflationary pressure can intensify in the second half of 2011. In this case, while consumer spending remains restrained, and net exports are disappointing, we cannot expect that tax payers will support the banks.

It was also known on Thursday that retail sales in the UK increased by 1.1% m/m (+2.8% y/y) in April. 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.

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 and volume of assets purchase was kept unchanged - at the level of GBP200 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 them to leave rates at the current level at least until the end of this year and throughout 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 by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest 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 be slightly above 1.9% in two years time.

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

 

[LF.Anastasia]

CHF: Swiss Franc is in the range again

Trades have changed slightly for Swiss Franc at the Forex currency market today: the currency stuck in the range again; this time it is the range of 0.8764-0.8880.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is increasing, giving a pair buy signal; while volumes are below average. Stochastic Oscillator is coming out of the oversold zone and is starting upward reversal, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 0.88250, the pair USD/CHF will go to 0.8850 and 0.8880. If upward breakdown does not take place, the pair will consolidate close to the current levels.

It became known yesterday that index of investors’ economic expectations ZEW in May fell by 20.3 points in May, to the level of -11.5 points against the previous level of 8.8 points. Due to such background, a number of those who expected the increase of the interest rate in the next quarter have dropped sharply.

Meanwhile, economists do not assess Swiss economic situation as negative, on the contrary, it is described as “good” (majority -68.6% of respondents think so).

The share of those, who expect the rise in inflation in the near future, has fallen to 51.4% (-25.1%).

Inflation has slowed down in Switzerland which became another negative factor for the Franc, 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 of 0.6% y/y.

It was made public earlier that unemployment rate in Switzerland fell to 3.1% in April against the previous level of 3.3%, which 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 of 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 exports in Switzerland fell by 4.8% m/m in March against the level of +3.6% m/m in February.

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 could be worse than predicted. “We intend to take any measures to achieve price stability” stressed the monetary politician. According to him, downside risks to recovery are still preserved, although economy demonstrates steadier growth rate than previously expected. It was worth noting Hildebrand’s statement that expansionary monetary policy constitutes a menace to a number of industrial sectors in the long term.
Swiss National Bank is going to discuss monetary policy issues on 16 June.

 

[LF.Anastasia]

Australian Dollar stays put due to uncertainty

At the Forex currency market the Australian Dollar rate is traded with the lack of movements after three days of growth.

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 below average. Stochastic Oscillator is growing in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0660 the pair will go to1.0675 and 1.0690. If upward breakdown does not take place, the pair will consolidate at the current levels.

The Australian economy remains almost unchanged this morning.

Note: that the level of CPI in Australia rose by 1.6% on quarterly basis (+3.3% y/y) in QI.

The minutes of the Reserve Bank of Australia meeting of 3 May which were made public yesterday 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 a necessity.

The minutes of the meeting were vague when describing the state of the labor market in the country; it is not clear yet in which way the increasing wages will impact on the tightening of the labor market conditions. At the same time sentiments of households and labour market will be important factors for determining dynamics of inflation in the coming years.

It became known in the middle of the week that index of wage costs in Australia rose by 0.8% on quarterly basis (+3.8% y/y) in QI, while the forecast of growth was 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 lessen.

However, the data may well affect the decision of the RBA in June, forcing the regulator to extend the pause in the interest rate increase.

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.

 

[LF.Anastasia]

CAD: Canadian Dollar steadily gains in weight

At the Forex currency market the Canadian Dollar rate is traded upward on Friday, for the fourth consecutive day.

Forex forecast: MACD indicator for the pair USD/CAD has broken through the signal line from bottom to top, giving a pair buy signal. Stochastic Oscillator goes down in the neutral zone, giving a pair sell signal.Forex recommendations: in case of breakdown at the level of 0.9650, traders’ target will be the levels of 0.9610 и 0.9590. If downward breakdown does not take place, the pair will consolidate close to the current levels.

It became known in the middle of the week that leading indicators index in Canada rose by 0.8% in April, which was above market’s expectations (+0.6%). The favorable data had became the 7th fact, that gave an incentive for the rise in the indicator

High levels of export along with the labor market continue to be the main supportive factor.

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.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%.

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 grow with the help of support from the commodity sector of the country’s economy.

The head of the Bank of Canada noted earlier 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 Europe Carney noted that he is convinced that IMF should continue to implement the tasks aimed at resolving European crisis.

 

[LF.Anastasia]

JPY: Trading is still unstable for Japanese Yen

At the Forex currency market trading is still unstable for the Japanese Yen on Friday, as it lacks general direction.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, and started to increase, giving a pair buy signal. Stochastic Oscillator is growing in the neutral zone, indicating moderate purchases.

Forex recommendations: in case of breakdown at the level of 81.70 the pair will go to 82.00 and 82.25. If upward breakdown does not take place, the pair will consolidate in the current range.

According to the decision of the Bank of Japan the key rate will be left unchanged in the range of 0-0.1%.

It is obvious that recession in the Japanese economy is preserved in full, however regulator still withholds from nullification of the rate.

The data released on Friday showed that activity index in the industrial sectors of Japan fell by 6.3% m/m in March; while the forecast of reduction was 6.1%. It became known this week that preliminary GDP in Japan fell by 0.9% q/q (-3.7% y/y) in QI against the expectations of decline by 0.5% q/q (-1.8% y/y). In addition, the revised volume of industrial production dropped by 15.5% in March against the previous level of -15.3%. It is clear that the earthquake in March had a negative impact on the industrial production.

Japanese Economy Minister is confident that the economy of the Country of the Rising Sun is very easy to adapt to various changes and prior to the earthquake the state of economy had improved. “We are making progress in the fight against limited supply and by the end of this fiscal year GDP will increase by 1%” –he said. The Minister is also assured that economy can avoid recession.

It was made public earlier that 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.

Ex-deputy head of the Bank of Japan Mr. Muto said this morning that national economy is weak and will reach the bottom in QIII this year. Future economic prospects are vague.