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[LF.Anastasia]

CHF: Swiss Franc falls back after yesterday’s growth

At the Forex currency market Swiss Franc rate goes down on Thursday after the growth yesterday when the currency came close to the previous historic highs.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, however continues to go upward, giving a pair buy signal. Volumes remain average. Stochastic Oscillator is still 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.

As it became known yesterday, index of economic expectations ZEW in Switzerland declined to -24.3 points in June against preliminary value of -11.5 points.

However the growth of the Franc was attributed to a sharp rise in demand for the currency “safe habour”.

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%.

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%.

 

[LF.Anastasia]

JPY: Japanese Yen continues to give way to the USD

The Japanese Yen rate continues to decline at the Forex currency market on Thursday morning.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and is going up slightly, 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 80.50, the pair will go to 80.60 and 80.75. If upward breakdown does not take place, the pair will move towards 80.00.

Meanwhile, economic situation in Japan has not changed much today.

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.

Representatives of Japanese government said earlier that Japan is ready to cooperate with its European counterparts 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.

 

[LF.Anastasia]

AUD: Australian Dollar decreases due to Chinese statistics

At the Forex currency market the Australian Dollar rate goes down on Thursday morning, due to the weak statistics of China.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, after broking through the signal line from top to bottom and goes down gradually, giving a sell signal. Stochastic Oscillator is moving along the signal line in the neutral zone, not giving a any signals.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0530, the pair will go to 1.0510 и 1.0490. If downward breakdown does not take place, the pair will go to 1.0590.

The data released today showed that preliminary PMI HSBC in China fell to 50.1 points in June against the level of 51.6 points in May. Australian Dollar reacted negatively to the statistics of its nearest commercial partner.

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 the day before 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; 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.

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.

 

[LF.Anastasia]

NZD: New Zealand Dollar is strengthening gradually

At the Forex currency market the New Zealand Dollar rate is traded upward on Thursday morning, continuing the trend of this week.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, goes down, giving a sell signal, however volume are decreasing. Stochastic Oscillator goes up in the neutral zone, giving a buy signal and approaching overbought zone.

Forex recommendations: in case of breakdown at the level of 0.8175, the pair will go to 0.8190 and 0.8230.

This week data showed that 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 addition, it also became known that 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. 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.

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.

 

[LF.Anastasia]

EURO/USD: EURO tries to regain from yesterday’s losses

The pair EUR/USD is traded slightly upward at the Forex currency market on Friday morning after yesterday’s sales.

By 9.15 Moscow time the Euro is at 1.4266 against yesterday’s closing level of 1.4255.Two-day EU summit, where Greek issue is being discussed, will finish today.

According to the new comments on the situation, which became known yesterday, Eurozone is prepared to provide funds to Athens only in exchange for new cost-saving measures.

The data on Germany, which is going to be released today, is expected to be weak. If forecast on index Ifo will come true, it will become the negative signal for the Euro.In addition, revised U.S. GDP in Q1 will be known today, which is also a risk factor for the major pair.Most likely the pair EUR/USD will not go beyond the range of 1.4180-1.4320 at the trading session on Friday.

 

[LF.Anastasia]

CHF: Swiss Franc stands almost motionless

At the Forex currency market Swiss Franc rate stands almost motionless on Friday morning, tending to keep on moving towards historic highs.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, continues to go upward, giving a pair buy signal. Volumes remain average. Stochastic Oscillator reversed in the neutral zone, and started to give a buy signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 0.8390, the pair USD/CHF will go to 0.8410 and 0.8460.

If upward breakdown does not take place, the pair will consolidate close to the current levels.It became known yesterday that trade balance in Switzerland rose by 3.31 billion francs in May against the value of +1.44 billion in April. In addition, level of exports fell by 1.5% m/m in May against the growth of 3.1% in April.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 %.

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 last week Swiss National Bank left three- month Libor rate 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%).

 

[LF.Anastasia]

GBP: British Pound is slowly moving away from local lows

At the Forex currency market the British Pound Sterling rate goes upward on Friday morning after yesterday’s fall to the lows of this March.

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.According to statistics released yesterday, approved applications for mortgage, BBA, increased to 30.509 in May against the forecast of 30 thousand and the previous value of 29 747.

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. 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.The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who replaced ” a 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.

 

[LF.Anastasia]

JPY: Japanese Yen determines movement direction at the end of the week

At the Forex currency market the Japanese Yen rate stands almost motionless on Friday morning, trying to determine further movement direction.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, is going up slightly, 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 80.50, the pair will go to 80.60 and 80.75. If upward breakdown does not take place, the pair will move towards 80.00.

Decline in the price index for service continues in Japanese economy: Indicator CSPO fell by 0.3% m/m (-0.9% y/y) in May, which became the 31st fact of decline on annual basis. In particular prices are falling in the sector of aviation and transportation; rental price for houses also declined. 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.

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.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.

 

[LF.Anastasia]

AUD: Australian Dollar regains from previous sales

The Australian Dollar rate increases at the Forex currency market on Friday, regaining from sales, which took place this week, in particular, on Thursday.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD, after breaking through the signal line from top to bottom earlier, it goes down gradually, giving a sell signal. Stochastic Oscillator is going down in the neutral zone, giving a weak sell signal.

Forex recommendations: in case of breakdown at the level of 1.0550, the pair will go to 1.0570.

If upward breakdown during the rebound does not take place, the pair will go to target of 1.0490.Recovery of the AUD was supported today by the vice president of the Reserve Bank of Australia Mr. Low, who stressed that special efforts shall be given to maintain low level of inflation. According to him previous growth of CPI was attributed mostly to the external factors and influence of the currencies’ exchange rates was insignificant.He also noted that very little unused spare capacity is left in the economy, and the upward pressure on inflation was caused by such facts as labour costs and growing price for utilities.

Yesterday the Australian Dollar reacted negatively to the statistics of its nearest commercial partnerInterest rate of the Reserve Bank of Australia is at the level of 4.75% per annum now; 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. It became known in the middle of the week that leading indicator index WestpacMelbourne increased to 0.6 points, up 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.

Minutes of the last meeting of the Reserve Bank of Australia was released earlier; 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.

 

[LF.Anastasia]

NZD: After all, New Zealand Dollar found itself under pressure

At the Forex currency market the New Zealand Dollar rate moderately goes down on Friday morning; the currency had been resisting general negative sentiments at the market for nearly the whole week, however at the end of the week it failed.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD goes down, giving a sell signal, however volumes are below average. Stochastic Oscillator started to reverse in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8115, the pair will go to 0.8100 and 0.8080.

Macro-economic situation in New Zealand does not have fundamental changes at the end of the week.

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.

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.

Index of trading conditions in Q1 increased to a 37 - year highs in Q1, demonstrating the growth of 0.9% on quarterly basis (+6.8% y/y), which could be one of the signs of economic recovery in New Zealand, 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. Note that this indicator is strongly correlates with the indicator of the living standards of the country –and it is a positive sign.

This week data showed that 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.