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[LF.Anastasia]

GBP: Sales for British Pound still continues

At the Forex currency market the British Pound Sterling remains in the focus of the sellers on Thursday as external background is still negative.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to go down, giving a pair sell any signal. Stochastic Oscillator remains in the neutral zone and is shaping a sell signal, approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.6130, the target for purchase will be the levels of 1.6100 and 1.6080. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Today, Finance Minister of Great Britain Mr. Osborne said that the country is on the track to recovery although monetary and credit side of the economy remains weak. According to him the British economy continues to struggle with difficulties, which will eventually lead to way out of the problems.
On Thursday investors’ attention will be focused on the data on the retail sales in the UK in May- if the upward trend of the indicator continues, it will help restrain the Pound from the further fall.

As reported in the edition of “Independence”, the Bank of England must be prepared to save national economy from the threat of double dip recession, and according to the comments of BDO representative the regulator has to leave interest rate at the current level of 0.50% per annum and stop using it as a shield against inflation.

Representative of MRS, Mr. Wheal, one of the remaining “hawks” in the Bank of England, stressed that the soonest rise in the interest rate will reduce the need for its further raise, and it is necessary to increase the rate despite the fact that the level of inflation turned out to be below the forecast. According to him all conditions, required for the preventive measures of the Bank of England have been created, and the sooner the BoE launches tightening policy, the greater flexibility it will give to the regulator in the future.

The Bank of England believes 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, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the 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.

As it became known in the middle of the week, consumer confidence index Nationwide in Great Britain rose to 55 points in May against the forecast of 45 points, a maximum growth on monthly basis in 2005. Thus, royal wedding had a stimulating effect.
The data released earlier showed that CPI in Great Britain increased by 0.2% m/m (+4.5% y/y) in May, which agreed with the forecast. Inflation is still high, remaining at two-year highs, and continues to grow.

 

[LF.Anastasia]

CHF: Swiss Franc still weakens

At the Forex currency market Swiss Franc rate continues to move away from the previous historic highs on Thursday, under the pressure from the USD.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and started to reverse upward, giving a pair buy signal, while volumes are decreasing. Stochastic Oscillator goes up in the neutral zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8540, the pair USD/CHF will go to 0.8560 and 0.8590. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Meeting of the Swiss national Bank will be held today; the issue of the three month rate Libor is going to be resolved there and the rate is expected to remain at the current level of 0.25%.

The data on the industrial orders in Q1 will be also presented.

It became known earlier that unemployment rate in Switzerland fell to 2.9% in May against the level of 3.1% in April and the forecast of 3.0%. It is positive data for Swiss economy because strong Franc does not prevent cohesive economic growth. As it became known earlier level of trade balance in Switzerland rose by 1.52 billion in April against the growth of 1.0 billion 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.

GDP in Switzerland has 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 %.

In addition, 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. The data released last week showed that CPI in Switzerland remained unchanged on monthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m (+0.3% y/y).

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%.

Statistics released this week showed that producer prices and prices for imports decreased by 0.2% (-0.4% y/y) in May against the forecast of growth by 0.1% m/m.

 

[LF.Anastasia]

JPY: Japanese Yen started to regain from losses

The Japanese Yen rate begun to strengthen at the Forex currency market on Thursday, because JPY is of investors’ interest, as part of the risk aversion and shift to “safe harbors”.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and is moving along the signal line, not giving any signals. Stochastic Oscillator goes up in the neutral zone, giving a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.90 the pair will go to 81.10 and 81.30. If upward breakdown does not take place, the pair will go to 80.30/20. In general, economic situation in Japan remains almost unchanged this morning.

At the meeting of the Bank of Japan earlier, the regulator decided to leave interest rate unchanged, in the target range of 0-0.1% per annum. In addition, the regulator announced the launch of a new lending program at a rate of 0.1%; the amount of available funds will be Y500 billion. This measure is aimed at supporting economic recovery and can maintain the process of recovery that is hardly noticeable at the moment.

This week, Finance Minister of Japan Mr. Noda, who has not been in public for quite a long time, said that authorities continue to closely monitor currency market; and they remain confident that currency rates should reflect macro-economic foundation. In the event that motion will be chaotic in nature, Finance Ministry intends to take drastic measures. 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 risksIt became known earlier that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%. This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic.

According to the data released earlier trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.

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.

 

[LF.Anastasia]

AUD: Australian Dollar continues to decline

At the Forex currency market the Australian Dollar rate continues to decline today, since the market does not show any interest in risky positions.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, is going down and is ready to cross the signal line from top to bottom, giving a sell signal. Stochastic Oscillator has reversed in the neutral zone, giving a sell signal

Forex recommendations: in case of breakdown at the level of 1.0500, the pair will go to 1.0470 and 1.0450. If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that inflation expectations in Australia in June remained at the May level at 3.3%.

According to the data released this week, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points. In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%.

As it was announced earlier inflation in Australia increased by 0.2% m/m (+3.3% y/y), as per TD Securities estimates. It is the weighted average inflation index which is a guideline in decision making for the Bank of Australia, and it is slowing down its growth rate now (in April: +0.3% m/m), indicating that prospects of the increase in the interest rate in the coming months are slipping away.

The Reserve Bank of Australia left interest rate at the previous level of 4.75% per annum and stressed that current course of policy is quite acceptable, which triggered sales of the AUD because it might mean that monetary policy tightening will continue to be suspended in the next few months.

Yesterday, the head of RBA Mr. Stevens said that a new statistics will be available at the end of July and evaluation of policy will be based on it. According to him, eventually the rise in the interest rate will become a necessity at some point to control prices, however at the last meeting the level required to raise interest rate has not been reached.

Thus, the Reserve Bank of Australia has confirmed its previous hawk opinion, despite the pause in the interest rate rise which has lasted for 6 sessions.

At the same time the RBA does not worry about high rate of the AUD, on the contrary, Stevens noted that expensive AUD promotes economic adjustment.

It is worth noting that the RBA intends to pursue preemptive tactic, therefore, the rates can be raised before autumn.

 

[LF.Anastasia]

CAD: Canadian Dollar still retreats

At the Forex currency market the Canadian Dollar rate weakens on Thursday, while external background remains tense and oil prices are still close to four-month lows.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD; and is moving along the signal line, not giving any signals. Stochastic Oscillator is going up in the neutral zone, shaping a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9810, the pair will go to 0.9830 и 0.9850. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Накануне министр финансов Канады г-н Флаэрти отметил, что рост мировой экономики зависит от финансовых решений США, так как все еще осень неустойчиво, а ситуация в Европе ещё раз подтверждает, что впереди будет еще множество подводных камней в экономике

Yesterday, Canadian Minister of Finance Mr. Flaherty said that global economic growth depends on the U.S. financial decisions, as it is still unstable and the situation in Europe confirms once again that there are still a lot of pitfalls in the economy.

Flaherty also stressed that Canada increased its competitiveness after the recession.

Otherwise the situation in the Canadian economy is stable.

Inflation in Canada increased by 3.3% y/y, and 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 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.

At the beginning of June the Bank of Canada left the interest rate unchanged at the level of 1.00% per annum which agreed with market expectations. The regulator said in the follow-up comments that minimization in incentives shall be thoroughly considered, although eventually all the incentives will be phased out. According to the Bank of Canada, core inflation remains relatively low and economy is active, as expected. At the same time expensive Canadian Dollar may well become a break on national economic growth and provide a restraining effect on inflation.

Note: GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.

 

[LF.Anastasia]

EURO/USD: Euro remains under severe pressure

The pair EUR/USD is traded downward at the Forex currency market on Friday morning because investors are still seriously concerned about Greek problems.

By 9.20 Moscow time the Euro is at 1.4130 against yesterday’s closing level of 1.4204.

Although IMF are ready to offer support to Athens if Greece will fulfill all its obligations, investors are still in suspense.

The second plan of help to Greece has not been endorsed and today representatives of Germany and France will have a meeting dedicated to this issue in Berlin. Finance Ministers of EU will gather for the meeting on 19 June.

The day is going to be quiet in terms of macro-statistics; market will be guided by external background.

Most likely the pair EUR/USD will not go beyond the range of 1.4020-1.4250 at the trading session on Friday.

 

[LF.Anastasia]

GBP: British Pound continues to decline

At the Forex currency market the British Pound Sterling continues to decline on Friday morning, having lost more than two figures this week.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and goes down, giving a pair sell signal. Stochastic Oscillator goes down in the neutral zone and is shaping a sell signal, approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.6100, the target for purchase will be the levels of 1.6080 and 1.6050. If downward breakdown does not take place, the pair will consolidate close to the current levels.

It became known yesterday that volume of retail sales in the UK fell by 1.4% m/m (+0.2% y/y) in May. Sales in Britain demonstrated decline for the first time since January 2010, and it is not a very good sign for the economy.

In other respects, economic situation in the country remains unchanged.

As reported in the edition of “Independence”, the Bank of England must be prepared to save national economy from the threat of double dip recession, and according to the comments of BDO representative, the regulator shall leave interest rate at the current level of 0.50% per annum and do not use it as a shield against inflation. Rating agency Moody's warned Great Britain earlier that the country can lose its AAA rating due to the inefficient fiscal policy.

Representative of MRS, Mr. Wheal, one of the remaining “hawks” in the Bank of England, stressed that the soonest rise in the interest rate will reduce the need for its further raise, and it is necessary to increase the rate despite the fact that the level of inflation turned out to be below the forecast. According to him all conditions, required for the preventive measures of the Bank of England have been created, and the sooner the BoE launches tightening policy, the greater flexibility it will give to the regulator in the future.

Today, Finance Minister of Great Britain Mr. Osborne said that the country is on the track to recovery although monetary and credit side of the economy remains weak. According to him the British economy continues to struggle with difficulties, which will eventually lead to way out of the problems. As it became known in the middle of the week, consumer confidence index Nationwide in Great Britain rose to 55 points in May against the forecast of 45 points, a maximum growth on monthly basis in 2005. Thus, royal wedding had a stimulating effect.

The Bank of England believes 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, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the 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.

 

[LF.Anastasia]

CHF: Swiss Franc goes down again after slight correction

At the Forex currency market Swiss Franc rate reverted to decline at the Forex currency market on Friday morning after slight recovery last night.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and started to reverse upward, giving a pair buy signal, while volumes are decreasing. Stochastic Oscillator remains close to the overboughtl zone, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8500, the pair USD/CHF will go to 0.8540 and 0.8560. If upward breakdown does not take place, the pair will consolidate close to the current levels.

At the meeting of the Swiss National Bank yesterday the three month rate Libor was left in the previous range of 0-0,75% with a tendency to 0.25%.

At the same time the SNB has noted that GDP growth will amount to 2% this year, inflation in 2011 is predicted at around +0.9% (previously +0.8%), in 2012: +1.0% (previously 1.15), in 1013: +1.7% (previously +2.0%).

Statistics released this week showed that producer prices and prices for imports decreased by 0.2% (-0.4% y/y) in May against the forecast of growth by 0.1% m/m. It became known earlier that unemployment rate in Switzerland fell to 2.9% in May against the level of 3.1% in April and the forecast of 3.0%. It is positive data for Swiss economy because strong Franc does not prevent cohesive economic growth. As it became known earlier level of trade balance in Switzerland rose by 1.52 billion in April against the growth of 1.0 billion 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.

In addition, 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. The data released last week showed that CPI in Switzerland remained unchanged on monthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m (+0.3% y/y).

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%.

GDP in Switzerland has 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 %.

 

[LF.Anastasia]

JPY: Japanese Yen determines movement direction

The Japanese Yen rate stands still at the Forex currency market on Friday morning after yesterday’s correction.

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 goes down in the neutral zone, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.70 the pair will go to 81.10 and 81.30. If upward breakdown does not take place, the pair will go to 80.30/20.

The Bank of Japan noted that the rise in exports and in consumer sentiment is noticeable; while uncertainty in the economy is fading away and we can expect improvement in the general state of economy in the Country of the Rising Sun.

Банк Японии в пятницу заметил, что отмечен рост экспорта и потребительских настроений, при этом неуверенность в экономике угасает, и стоит ожидать улучшения общего состояния экономики Страны восходящего солнца.

This week, Finance Minister of Japan Mr. Noda, who has not been in public for quite a long time, said that authorities continue to closely monitor currency market; and they remain confident that currency rates should reflect macro-economic foundation. In the event that motion will be chaotic in nature, Finance Ministry intends to take drastic measures. 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

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.


It became known earlier that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%. This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic.

According to the data released earlier trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.

At the meeting of the Bank of Japan this week, the regulator decided to leave interest rate unchanged, in the target range of 0-0.1% per annum. In addition, the regulator announced the launch of a new lending program at a rate of 0.1%; the amount of available funds will be Y500 billion. This measure is aimed at supporting economic recovery and can maintain the process of recovery that is hardly noticeable at the moment.

 

[LF.Anastasia]

AUD: Sales of Australian Dollar do not subside

At the Forex currency market the Australian Dollar rate remains in the focus of meticulous attention of bears.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is ready to cross signal line from top to bottom, giving a sell signal. Stochastic Oscillator goes down in the neutral zone giving a sell signal and approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.0500, the pair will go to 1.0470 and 1.0450. If downward breakdown does not take place, the pair will consolidate at the current levels.

The situation in the Australian economy has not changed much this morning.

According to the data released this week, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points. In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%.

As it was announced earlier inflation in Australia increased by 0.2% m/m (+3.3% y/y), as per TD Securities estimates. It is the weighted average inflation index which is a guideline in decision making for the Bank of Australia, and it is slowing down its growth rate now (in April: +0.3% m/m), indicating that prospects of the increase in the interest rate in the coming months are slipping away.

It became known yesterday that inflation expectations in Australia in June remained at the May level at 3.3%.

Earlier, the head of RBA Mr. Stevens said that a new statistics will be available at the end of July and evaluation of policy will be based on it. According to him, eventually the rise in the interest rate will become a necessity at some point to control prices, however at the last meeting the level required to raise interest rate has not been reached.

Thus, the Reserve Bank of Australia has confirmed its previous hawk opinion, despite the pause in the interest rate rise which has lasted for 6 sessions.

At the same time the RBA does not worry about high rate of the AUD, on the contrary, Stevens noted that expensive AUD promotes economic adjustment.

It is worth noting that the RBA intends to pursue preemptive tactic, therefore, the rates can be raised before autumn. The Reserve Bank of Australia left interest rate at the previous level of 4.75% per annum and stressed that current course of policy is quite acceptable, which triggered sales of the AUD because it might mean that monetary policy tightening will continue to be suspended in the next few months.