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[LF.Anastasia]

EURO/USD: EURO RECEIVED SIGNIFICANT SUPPORT

The pair EUR/USD is traded upward at the Forex currency market on Tuesday; markets expect new positive solutions of Greek issues.
By 8.30 Moscow time the Euro is at 1.4381 against yesterday’s closing level of 1.4281.
Prime Minister of Luxembourg, Jean-Claude Junker said yesterday that European leaders would consider the issue of providing additional funds to Greece before the end of June. In addition, The Wall Street Journal said that Germany might soften its position towards Greece. It became a good support for the Euro.
Eurozone statistics will become known today. It will be the data on preliminary value of consumer price index in May and unemployment rate in April
A lot of American statistics will be released this afternoon.
Most likely the pair EUR/USD will not go beyond the range of1.4250-1.4430 at the trading session on Tuesday.

 

[LF.Anastasia]

GBP: BRITISH POUND REVERTED TO GROWTH

At the Forex currency market the British Pound Sterling rate continues to grow on Tuesday after the fall at the beginning of the week, while external background remains stable.
Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from top to bottom and started to increase, giving a pair buy signal. Stochastic Oscillator remains in the overbought zone and is giving a similar signal.
Forex recommendations: in case of breakdown at the level of 1.6550, the target for sale will be the levels of 1.6570 и 1.6590. If upward breakdown does not take place, the pair can consolidate close to the current levels.
Trading floors were close in Great Britain yesterday due to the Banking Day.
According to the data released at the end of the week, the level of consumer confidence has increased in May by 10 points, to the level of -21 points against the level of -31 points in April. The report of GfK NOP said that the index fell short of forecast. However, it is worth noting that consumer confidence in the UK economic situation increased to -44 points over the last 12 months versus the previous level of -57 points.
The research company stresses that it is too early to expect effect from the budget, which was issued only last week, adding that despite the results of today’s reports, confidence remains low.
The Bank of England thinks 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.
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.
As per Nationwide estimates, British economy managed to renew its growth in QI, although it is very insignificant and therefore, prevents recovery of the housing market. House prices in the country rose by 0.3% m/m in May. Observers assess it as a sluggish increase: prices are still lower by 1.2% on annual basis than the level a year earlier.

 

[LF.Anastasia]

CHF: SWISS FRANC TENDS TO RE-TEST HIGHS

At the Forex currency market Swiss Franc rate is traded upward on Tuesday amid stable external environment. The CHF re-tested historic highs again at the Asian trading session.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down, forming a pair sell signal; while volumes remain average. Stochastic Oscillator remains in the oversold zone, giving a pair sell signal
Forex recommendations: in case of breakdown at the level of 0.8500, the pair USD/CHF will go to 0.8480 and to new lows of 0.8465. If downward breakdown does not take place, the pair will consolidate close to the current levels.
Important Swiss data will be released this afternoon. It will be assessment of the country’s GDP in QI. If the indicator will be above the previous level of 0.9%, the Franc will receive support.
In general Swiss economic situation remains almost unchanged.
Index of leading indicators KOF in Switzerland rose to 2.30 points in May against the forecast of growth by 2.22 points.
Julius Baer Group believes that it is not clear yet whether Swiss economy requires the increase in the interest rate or not: “any rise will have an impact on the economy as a whole for a year”. However it is quite possible that local economy and its recovery process are strong enough to cope with the interest rate rise to 1%-1.5%.
Note that real effective exchange rate of the Franc grew by 10% last year.
As it was made public earlier the level of trade balance in Switzerland rose by 1.52 billion in April against the rise of 1.0 billion in March. In addition, exports in Switzerland increased by 7.9% in April against the fall by 3.1% in March.
It became known earlier 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.
However, 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%).
Swiss National Bank is going to discuss monetary policy issues on 16 June.
The data on the retail sales and PMI in Switzerland will be released on Wednesday.

 

[LF.Anastasia]

JPY: JAPANESE YEN WEAKENS BECAUSE OF THE STAND OF MOODY’S

The Japanese Yen rate weakens at the Forex currency market on Tuesday because agency Moody's has shifted Japanese rating with a negative forecast.
Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, increasing moderately, and giving a pair buy signal. Stochastic Oscillator reversed in the neutral zone and is increasing, which indicates purchase of a pair.
Forex recommendations: in case of breakdown at the level of 81.40 the pair will go to 81.80 and 82.00. If upward breakdown does not take place, the pair will consolidate in the current range.
Rating agency Moody's Investors Service announced intention to review Aa2 rating of the Japanese government and local bonds to give negative forecast –the JPY declined in respond.
The news released on Tuesday showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics.
According to the data released last week, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; In addition, net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.
The data released last week showed that volume of imports increased by 8.9% y/y in April against the forecast of growth by 12.8% and the previous rise by 11.9%; volume of exports fell by 12.5% in April against the forecast of reduction by 12.7% and previous decline of 2.2%.
In addition, minutes of the meeting of the Bank of Japan of 28 April which were made public earlier, stated that members of the Bank were requested to expand program of the quantitative easing due to the deterioration in the economic sentiments. The Bank also agree that it is required to focus on the downside economic risks and take further steps to support the process reconstruction after the earthquake.
It became known earlier that index of prices for corporate services in Japan fell by 0.8% y/y in April against the level of -1.2% in March. The data is positive as it reflects ability of the local economy to recover and regenerate.

 

[LF.Anastasia]

AUD: AUSTRALIAN DOLLAR TENDS TO STRENGTHEN

At the Forex currency market the Australian Dollar rate is growing on Tuesday, supported by quiet external background
Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, however at the moment it is moving along the signal line and is not giving a clear signal. Stochastic Oscillator has come into 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 1.0720 the pair will go to 1.0730 and 1.0750. If upward breakdown does not take place, the pair will consolidate at the current levels. There is high possibility that aggressive sellers will be back for the pair.
The following Australian data was released today:
– Construction permits decreased to -1.3% m/m in April;
– Balance of current account in Australia amounted to -A$10.447 billion in QI.
The minutes of the Reserve Bank of Australia meeting of 3 May which were made public earlier 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 an obvious necessity.
Representative of the Reserve Bank of Australia Mr. Batellino noted yesterday that growth of the Australian Dollar is a direct reflection of the situation in the global economy. “It is difficult to change this situation, so some sectors of the economy will suffer from high exchange rate of the currency” –he stressed. However, he clarified that growth in inflationary pressure is natural amid recovery of the global economy.
It became known earlier that leading indicators index in Australia increased by 1.5% m/m in March, to the level of 284.5 points, while annual gain is assessed at 5.3%. Index of coincident indicators rose by 0.7% (+2.0% y/y) in March.
Westpac believes that growth rate of the leading indicators, which helps to assess economic prospects for the next 3-6 months, has stabilized, and shows moderate rate of recovery in the Australian economy. “The results of the first half of the year might be not the best, due to slowdown in the pace of development in QI, which was caused by weakness in external sector and wholesale inventories”, pointed Westpac.

 

[LF.Anastasia]

CAD: STATISTICS GAVE SUPPORT TO CANADIAN DOLLAR

At the Forex currency market the Canadian Dollar rate is growing on Tuesday with the help of support from external background and macro-statistics released yesterday.
Forex forecast: MACD indicator for the pair USD/CAD has broken through the signal line from bottom to top, and is increasing, 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 0.9710, traders’ target will be the levels of 0.9680 and 0.9650. If downward breakdown does not take place, the pair will consolidate close to the current levels.
It became known yesterday that balance of current account in Canada was at the level of –CAD $8.92 billion in QI against the level of CAD$10.28 billion in QIV last year. In addition, real GDP of basic prices increased by 0.3% (+2.8% y/y) in QI against revised level of -0.1 % m/m in February.
Накануне стало известно, что баланс текущих операций в Канаде по итогам первого квартала оказался на уровне -CAD$8,92 млрд против данных IV квартала прошлого года на уровне -CAD$10,28 млрд. Кроме того, реальный ВВП в марте по базовым ценам вырос на 0,3% м/м (+2,8% г/г) против пересмотренного значения февраля на отметке -0,1% м/м.
Note: GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.
Inflation in Canada increased by 3.3% y/y, 0.3% m/m in April against the forecast of 3.4% y/y and 0.5% m/m; while energy costs rose by 17.1% y/y, as per the estimates of the Canadian Statistics Service.
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.
It became known earlier that retail sales in Canada rose by 0.4% in February against the fall by 0.4% in January. In addition, the index of leading indicators in Canada increased by 0.8% in March versus 0.8% m/m earlier and wholesale sales declined by 0.6% in February against 1.5% m/m in January.
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).
According to the head of the Bank of Canada Mr. Carney inflation shall exceed the level of 3% in the current Quarter due to which the issue of raising rates will be “get a lot of scrutiny”. He 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 a 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]

GBP: BRITISH POUND GOES DOWN AT THE END OF THE WEEK

At the Forex currency market the British Pound Sterling rate goes down on Friday morning.
Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from top to bottom and started to increase, however it is moving along the signal line and is not giving any signal. Stochastic Oscillator began to decline in the neutral zone, giving a sell signal.
Forex recommendations: in case of breakdown at the level of 1.6320, the target for purchase will be the levels of 1.6300 and 1.6280. If downward breakdown does not take place, the pair can consolidate close to the current levels.
Earlier, representative of the Bank of England Mr. Fisher noted that bad state of economy could prompt Central Bank to further policy easing. In addition, in case of unexpected economic downturn there is a chance that economic stimulation with the help of repurchasing of the securities from the market will continue.
In addition he noted that he would think about second round of QE.
The issue of the interest rate is still open; regulator and market have opposite views on the subject. The Bank of England thinks 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.
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.
Representative of the MPC of the Bank of England Mr. Sentence who is going to retire next week noted this week that he has always stood for gradual rise in the interest rate and the level of confidence in the Bank of England can suffer, due to the current financial situation. He also stressed that existing situation does not require urgent special changes in the monetary policy, however sharp increase in rates is possible in the future.
According to him high level of inflation retards economic growth and CPI is unlikely to revert to the level of 2% before 2012.
The meeting of the Bank of England will be held on 9 June.

 

[LF.Anastasia]

EURO/USD: EURO IS BEING SLIGHTLY CORRECTED AFTER RAPID GROWTH

The pair EUR/USD is traded slightly downward at the Forex currency market on Friday, which is part of profit taking after the rise yesterday.
By 9.30 Moscow time the Euro is at 1.4484 against yesterday’s closing level of 1.4490.
On Thursday, rating agency Moody’s Investors Service announced its intention to put the U.S. rating to review with downgrade prospect if the Congress does not take decision on the rise of limits of the public debts.
Meanwhile consensus between Republicans and Democrats has not been reached.
The release of important statistics is scheduled for this afternoon: the U.S. unemployment rate in April; which can change balance of power in the major pair.
Most likely the pair EUR/USD will not go beyond the range of 1.4400-1.4520 at the trading session on Friday.

 

[LF.Anastasia]

CHF: SWISS FRANC CONTINUES TO MOVE AWAY LEISURELY FROM HISTORIC HIGHS

At the Forex currency market Swiss Franc rate continues to weaken slightly on Friday, still being very close to historic highs, which has been reached again this week.
Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and goes down, forming a pair sell signal; while volumes are increasing. Stochastic Oscillator was going to come out of the oversold zone, and is staying in such position for two days already, giving a pair buy signal.
Forex recommendations: in case of breakdown at the level of 0.8420, the pair USD/CHF will go to 0.8390 and to new lows of 0.8360. If downward breakdown does not take place, the pair will consolidate close to the current levels.
The economic situation in Switzerland remains almost unchanged; the market was closed yesterday, as it was the day off.
Earlier, Mr. Danten, a board member of the Swiss national Bank, said commenting statistics that economy of Switzerland is developing well, which is demonstrated by strong Swiss Franc.
It became known earlier that the level of trade balance in Switzerland rose by 1.52 billion in April against the rise of 1.0 billion in March. In addition, exports in Switzerland increased by 7.9% in April against the fall by 3.1% in March.
Index of leading indicators KOF in Switzerland rose to 2.30 points in May against the forecast of growth by 2.22 points.
Julius Baer Group believes that it is not clear yet whether Swiss economy requires the increase in the interest rate or not: “any rise will have an impact on the economy as a whole for a year”. However it is quite possible that local economy and its recovery process are strong enough to cope with the interest rate rise to 1%-1.5%.
It became known the day before yesterday that index of PMI SVME in Switzerland increased to 59.2 points against the forecast of 57.5 points. It proves once again that national economy has learnt to be effective even in circumstances where national currency is expensive.
GDP in Switzerland slowed down growth rate in QI this year, increasing by 0.3% on quarterly basis (+2.4% y/y) against the rise of 0.8% last quarter and the forecast of growth of 0.6 %.
According to estimates of the SNB, the main activator for economic growth in Switzerland is still national consumer demand, triggered by the rise in the demand for houses and health care expenditure, as well as high level of export.

 

[LF.Anastasia]

JPY: JAPANESE YEN HAS SHIFTED TO GROWTH AGAIN

At the Forex currency market the Japanese Yen rate resumed its growth on Friday morning again due to the pessimistic forecast of the rating agencies regarding the U.S. economy.
Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, increasing moderately, however at the moment it is moving along the signal line and is not giving any signal. Stochastic Oscillator reversed in the neutral zone and is going down, which gives a pair sell signal.
Forex recommendations: in case of breakdown at the level of 81.50 the pair will go to 80.20 and 80.00. If downward breakdown does not take place, the pair will consolidate in the current range.
Important Japanese statistics was not released today, so the Yen responds to the external background where Moody's has warned the USA about possibility of revision the ratings to downward prospects if parties in Congress fail to agree on the public debts levels. The issue of increasing the upper limit is urgent for the USA and there is no much time to resolve the matter.
As it was made public earlier, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; In addition, net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.
This week, rating agency Moody's Investors Service announced intention to review Aa2 rating of the Japanese government and local bonds to give a negative forecast –the JPY declined in respond.
The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risks.
Prime Minister of Japan Naoto Khan is going to resign as soon as reconstruction of the country after the earthquake will gain stability. Some markets have been discussing such possibility for some time already, while political forces demand Khan’s resignation.
Japanese statistics released on Tuesday showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics.