LiteForex's analytics

[LF.Anastasia]

AUD: Australian Dollar remains under pressure

At the Forex currency market the Australian Dollar rate continues to decline on Tuesday, to a large extent due to the pressure caused by release of the last meeting minutes of the Reserve Bank of Australia.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is moving along the signal line, not giving any signals. Stochastic Oscillator is moving is the similar way.

Forex recommendations: in case of breakdown at the level of 1.0550, the pair will go to 1.0530 and 1.0490. If downward breakdown does not take place, the pair will consolidate at the current levels.

Minutes of the last meeting of the Reserve Bank of Australia, released on Tuesday morning, stressed that inflation prospects in the country suggest further tightening; however recent macro-data does not encourage the rise in the rates. “Current inflation rate is partly due to the deflationary effects of the rise in interest rate and slowdown in the increase of expenditure for labour force,” stressed the document.

The AUD fell amid such background, since investors did not like uncertainty in the RBA’s views.

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. It runs counter to the tone of the meeting minutes.

The head of RBA Mr. Stevens said earlier, that updated statistics will be available at the end of July; policy evaluation will be based on it. According to him, eventually, at some point, the rise in the interest rate will become a necessity 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 interval 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.

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 estimates of TD Securities. It is the index of average weighted inflation which is a guideline in decision making for the Bank of Australia. The index is slowing down its growth rate at the moment (in April: +0.3% m/m), indicating, that prospects for the interest rate rise in the coming months are slipping away. It became known earlier that inflation expectations in Australia remained at the level of May at the level of 3.3% in June.

 

[LF.Anastasia]

EURO/USD: EURO grows amid quiet external background

The pair EUR/USD is traded upward at the Forex currency market on Tuesday because the head of the European Group, Junker noted yesterday that the decision on the financial aid to Greece shall be made before the meeting of EU on 3 July.

By 12.20 Moscow time the Euro is at 1.4355 against yesterday’s closing level of 1.4303.

The U.S. Federal Reserve meeting, scheduled for 21-22 June, the outcome of which will be announced tonight, bear risk for the major pair.

Most likely the pair EUR/USD will not go beyond the range of 1.4290-1.4390 at the trading session today.

 

[LF.Anastasia]

EUR/USD: EURO is being corrected after steady growth

The pair EUR/USD is traded downward at the Forex currency market on Wednesday morning awaiting outcomes of the U.S. Federal Reserve meeting.

By 9.05 Moscow time the Euro is at 1.4381 against yesterday’s closing level of 1.4411.Steady growth of the Euro in the last few days is explained by the relative stabilization in the Greek issue. It became known yesterday that Greek government passed a vote of confidence in the Prime-Minister, Mr. Papandreou, who intends to bring forward a draft of more significant reduction in government spending.

Two- day meeting of the U.S. Federal Reserve will be finished today and regulator’s decisions on interest rate, as well as the data on the economic forecast will be made public tonight. In general, if the Euro will be able consolidate its grip above the level of 1.4450 it will be prerequisite for climbing in the area of 1.47.Most likely the pair EUR/USD will not go beyond the range of 1.4350-1.4480at the trading session on Wednesday.

 

[LF.Anastasia]

GBP: British Pound declines again in the middle of the week

At the Forex currency market the British Pound Sterling rate demonstrates decline on Wednesday morning as part of the correction after three days of growth.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom, it started to give a sell signal. Stochastic Oscillator is increasing in the neutral zone and is shaping a buy signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 1.6200, the target for purchase will be the levels of 1.6180 and 1.6150. If downward breakdown does not take place, the pair will consolidate close to the current levels.

British Prime Minister Cameron stressed yesterday that situation in the Eurozone impacts negatively on the country, and the UK should not be involved in helping Greece, as Eurozone is strong enough to prevent its own collapse.In addition, according to the study of industrial trends in June by CBI, total orders increased by 1% against the fall of 2% in May.

The volume of orders CBI in June rose by 13% against +20% in May.Representative of the Bank of England Mr. Fisher said that at the moment British economic forecast is vague, since risks are incorporated both in inflation expectations and in weak growth as well. According to him, it will be more difficult for the Central Bank to cope with deflation than inflation; however despite temporary inflation rise, MPC intends to achieve its medium term objectives. As for the interest rate, Fisher noted that the rise will be required, if wages begin to grow, however, it is not necessary to change monetary police now.The politician also touched upon the issue of the Pound value. He believes that government should not influence on the rate of the Pound and that the currency looks fairly stable since 2009.

Earlier, 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. 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.

 

[LF.Anastasia]

CHF: Swiss Franc still tends to grow

At the Forex currency market Swiss Franc rate is getting slightly weaker on Wednesday, however still tends to grow.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however continues to go upward, giving a pair buy signal. Stochastic Oscillator remains in the neutral zone, and goes down, giving a sell signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 0.8430, the pair USD/CHF will go to 0.8460 and 0.8480.

If upward breakdown does not take place, the pair will consolidate close to the current levels.Index of economic expectations ZEW in Switzerland will become known today. If the index demonstrates significant decline, it will be a negative signal for the Franc. In other respects economic situation in Switzerland remains almost unchanged.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 %.

The data released earlier 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).Statistics released earlier 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 worth noting 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.

At the meeting of the Swiss National Bank last week, three- month Libor rate was left in the previous range of 0-0,75% with a tendency to 0.25%. At the same time the SNB said that GDP growth would 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%)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%.

 

[LF.Anastasia]

JPY: Japanese Yen is in the sideways

The Japanese Yen rate is traded slightly downward at the Forex currency market on Wednesday, remaining in the narrow range of 80.01-80.37 for three days already.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and is going up, giving a weak buy signal. Stochastic Oscillator reversed in the neutral zone, pushing away from the oversold zone and started to increase, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 80.40, the pair will go to 80.60 and 80.75. If upward breakdown does not take place, the pair will move towards 80.00.

Economic situation in Japan has not changed dramatically.Representatives of Japanese government said yesterday that Japan is ready to cooperate with its European counterpart in order to resolve Greek problems more effectively.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.Statistics remain mixed. 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 is worth noting that trade balance deficit amounted to Y853.7 billion (forecast –Y710.1 billion) against the surplus a year earlier. 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.

 

[LF.Anastasia]

AUD: Australian Dollar failed to stay in the black

At the Forex currency market the Australian Dollar rate goes down in the middle of the week, although the currency looks quite attractive for the purchase at its current levels.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, and it broke through the signal line from top to bottom and goes down gradually, giving a sell signal. Stochastic Oscillator is moving sluggishly 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 1.0600, the pair will go to .0620 и 1.0650. If upnward breakdown does not take place, the pair will go to 1.0585 and 1.0570.It became known in the middle of the week that leading indicators index WestpacMelbourne increased to 0.6 points, to the level of 280.6 points, which indicates growth of 2.7% on annual basis and proves stability of economic outlook for the next 3-9 months.

Meanwhile, target value of the coincident indicators index is at the level of +2.9% y/y; while in April the growth was only by 0.3% y/y. At the moment it demonstrates downturn in the Australian economy in Q1. According to the Westpac estimates, scope of impact of the natural disaster on the momentum of economic growth is becoming more obvious. Minutes of the last meeting of the Reserve Bank of Australia was released yesterday; the document stressed that inflationary prospect in the country suggests further tightening; however recent macro-data does not encourage the rise in the rates. “Current inflation rate is partly due to the deflationary effects of the rise in interest rate and slowdown in the increase of expenditure for labour force,” stressed the document.

The AUD fell amid such background, since investors did not like uncertainty in the views of the RBA. Interest rate of the Reserve Bank of Australia is at the level of 4.75% per annum now; the next meeting is scheduled for 5 July and Westpac believes that the rise in the rates at this meeting is hardly probable.According to the data released last 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%. it became known yesterday, that inflation expectations have remained at the level of May at 3.3% q/q in June. The head of RBA Mr. Stevens said earlier, that updated statistics will be available at the end of July; policy evaluation will be based on it.

According to him, eventually, at some point, the rise in the interest rate will become a necessity to control prices, however at the last meeting the level required to raise interest rate has not been reached.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. So far, it runs counter to the macro-economic news.

 

[LF.Anastasia]

NZD: New Zealand Dollar stands still in suspense

At the Forex currency market The New Zealand dollar rate stands still on Wednesday, determining movement direction.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, goes down, giving a sell signal. 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 0.8135, the pair will go to 0.8150 and 0.8170. If upward breakdown does not take place the pair will aim at 0.8080.

The following New Zealand statistics was released today:– Credit card spending increased by 0.6% m/m (+5.1% y/y) in May against the growth of 1.6% m/m in April;– Current account balance amounted to -NZD$0.097 billion in Q1 against the forecast of -NZD$0.900 billion.Note that ratio of the deficit to GDP totaled to -4.3% in Q1 this year against the forecast of -4.4% and the level of -2.3% in Q4 last year.

In other respects economic situation remains unchanged in New Zealand.Earlier, the Reserve Bank of New Zealand decided to keep interest rate unchanged at the minimum of 2.50% per annum, since it is going to continue its work on improvement in economic system. According to the head of the RBNZ, NZD has been overvalued because of high export prices for raw materials, therefore, national currency rate, which has increased over the last two months, has adverse impact on the rebalancing of the economy in New Zealand.

Bollard expressed confidence that decline of the NZD will be gradual because currency intervention will not be able to change the trend. 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 have been doing a good job, and take every step to bring economy to its normal state.Note: that budget deficit in New Zealand amounted to NZ$10.17 billion within 9 months, as of 31 March, which had been 15% higher than expected by economists.

Terms of trade index in New Zealand rose to the 37-year highs in QI, demonstrating growth by 0.9% (+6.8% y/y). It could be one of the indications that New Zealand economy is recovering as it reflects changes in prices for exports and imports. We would like to point that the index is strongly correlated with the index of living standard in the country which is a positive sign. It became known last week, that consumer confidence index Westpac in New Zealand increased to 112.0 points in Q2 against the level of 97.7 points in Q1.

Consumer confidence ANZ increased to 112.5 points in June against the preliminary level of 103.3 points. In addition, volume of retail sales in New Zealand rose for the first time in the last three quarters in Q1, which is a good sign of the economic recovery. Thus, indicator increased by 0.9% q/q which agreed with the forecast, excluding inflation.

 

[LF.Anastasia]

EUR/USD: EURO goes down in advance of the EU summit

The pair EUR/USD is traded downward at the Forex currency market on Thursday morning in advance of the EU summit which starts today.By 9.05 Moscow time the Euro is at 1.4306 against yesterday’s closing level of 1.4355.Two-day meeting of the U.S. Federal Reserve ended last night, on Wednesday; interest rate was kept in the previous range of 0-0.25% per annum with the comment of intention to keep it low level “for a long time”.

Bernanke, Fed Chairman, stressed in his speech that the U.S. economic situation is severe, the growth is hardly noticeable, the situation in the employment sector leaves much to be desired, however in the second half of a year the situation will change for the better. In addition, introduction of the program QE3 is not planned, because deflation is not expected and inflation can be contained by less drastic methods for quite a long time.

Two-day EU summit, which starts today, will discuss issues of Greece and the status of the Euro.Most likely the pair EUR/USD will not go beyond the range of 1.4250-1.4390 at the trading session on Thursday.

 

[LF.Anastasia]

GBP: British Pound is descending again

At the Forex currency market the British Pound Sterling rate continues to descend on Thursday, keeping on yesterday’s trend.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom earlier, it gives a sell signal. Stochastic Oscillator is going down in the neutral zone and is shaping a buy signal, approaching oversold zone.

Forex recommendations: : in case of breakdown at the level of 1.6000, the target for purchase will be the levels of 1.599 and 1.5970. If downward breakdown does not take place, the pair will consolidate close to the current levels.

The minutes of the last meeting of the bank of England was made public yesterday and it is clear now that only two aggressive monetary politicians are left: Wheal and Dale, a new member of the MPC Broadbent who replaced ” hawk” Sentence, joined conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.

Representative of the Bank of England Mr. Fisher said that at the moment British economic forecast is vague, since risks are incorporated both in inflation expectations and in weak growth as well. According to him, it will be more difficult for the Central Bank to cope with deflation than inflation; however despite temporary inflation rise, MPC intends to achieve its medium term objectives. As for the interest rate, Fisher noted that the rise will be required, if wages begin to grow, however, it is not necessary to change monetary police now. The politician also touched upon the issue of the Pound value. He believes that government should not influence on the rate of the Pound and that the currency looks fairly stable since 2009.

Earlier, 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.

British Prime Minister Cameron stressed earlier that situation in the Eurozone impacts negatively on the country, and the UK should not be involved in helping Greece, as Eurozone is strong enough to prevent its own collapse.

In addition, according to the study of industrial trends in June by CBI, total orders increased by 1% against the fall of 2% in May. The volume of orders CBI in June rose by 13% against +20% in May.