Analytic reviews

On Thursday on a trading session US dollar is traded in a narrow range against other main currencies, because investors expect publication of data on the employment market in US on Friday. This data can make the beginning of the reduction of the purchase of government bonds closer that is done by the Federal Reserve System. Investorshave so far refrained from large positions, and will scrutinize the revised data on U.S. GDP in the 3rd quarter and weekly data on applications for unemployment benefits, which will be published later on Thursday. Investors will also pay attention to the evaluation of the European economies, which Central banks of the Eurozone and the UK will provide.

Analyst Andrew Batenski

US dollar has a good potential for growth

Yesterday’s data on employment from ADP that comes out before the data on employment in a non-agricultural sector of the US economy came out much better than it was predicted 215 000 against 173 000. This is a good signal that the main data that comes out on Friday will be good as well due to the expectation that economic stimuli will be reduced. It will definitely give a good support to a US dollar.

Attention of the market will be concentrated on the results of the Bank of England and European Central Bank meetings today as well. Market participants do not expect anything new from them. It looks like there will be another statement of intent to keep the same course of the monetary policy.

Today market participants will be looking at the data on US GDP, and also on application of unemployment benefits. The forecast on GDP is quite optimistic 3% against the previous 2.8%. If the data will be such as predicted this will be another reason for the Fed to announce the beginning of the stimulus reduction already on the next meeting of the Fed on December 18^th.

In this case, of course, we expect the shift of interest on the market to the purchase of the US dollar.

SemoynKamenski

In expectation of US unemployment data

Forex is being consolidated after the strong statistical data from USA which was published yesterday. Index of business conditions NAPM New York came out on the level 608.5 points against previous value of 598.7 points. This data produced a negative influence on the Stock markets not only in the US but in other countries as well, because such statistics supported expectations of the announcement of stimulus reduction decision on the December’s meeting of FRSM that is going to be on the 12^th of December. US dollar holds its position due to such expectations and will definitely receive support on the markets.

Australian dollar that is negatively influenced by the RBA policy is still under the strong pressure. It’s possible that New Zealand dollar that is around its historical maximum values will decline in a long run.
 

Semyon Kamenski​

Swiss National Bank will keep its current monetary policy on a meeting planned for December 12, due to continuing economic, tax, budget and monetary uncertainty in Eurosone. Swiss National Bank keeps the lowest rate for EUR/CHF at the level 1.20 and the range for 3 month Labor rate at 0.0% - 0.25%. Moreover, “inflation gradually approaches 0, and is much lower than the level which is considered by the Central Bank to be desirable for the price stability, and Swiss Franc stays overestimated”, says economist Reto Hunervadel. The meeting of the Swiss National Bank is going to be on the 12^th of December, and the decision will be published at 12:30 pm Moscow time.

Analyst Andrew Batenski
 

Pair USD/JPY is being traded with the decrease in European session, reaching the new maximum in six month on the 103.38 mark on Tuesday during the Asian trading session. On the market it’s being said about big short orders, related to options, on the levels of 103.5, 103.75 and 104.00. It’s being said as well about stop-orders placed higher than 103.74 mark, 2013’s maximum. Now USD/JPY is being traded at 102.80, and long orders from the importers’ side are, supposedly, a little bit lower than 103.00 level.

Trading recommendation: buy the pair when the price breaks through and firmly establishes higher than the strong intermediate level of resistance 104.00 by small volumes. Gradually increase positions in case of strengthening the pair above the 104.40 mark with the first aim of 105.00, and the further aim 108.00.
 

Analyst Andrew Berdanski​

New Zealand dollar keeps holding against US dollar

Yesterday’s data on US came out quite well. That caused negative influence on the US stock market, as well as it supported US dollar against main currencies besides New Zealand dollar. It’s been around its historical peak for quite a while already. Yesterday’s data from China wasn’t bad as well. It supported New Zealand dollar, but Australian dollar continued its fall despite the fact that RBA made a decision to keep interest rate at 2.5% without changes, due to another negative comment about RBA’s desire to leave monetary policy without changes for a considerable period of time. It’s possible that New Zealand dollar doesn’t drop because of the expectation to raise interest rate already in 2014.

The situation on the market in general is marked by the expectation to reduce stimulus from the Fed, especially if fresh data supports such market expectations.

Today we should pay attention to the indicator of economic expectations in USA. Positive data will support US dollar locally.

Coming week is expected to be full of economic events

Coming week will be reach in important economic data. There will be events related to meetings of the Central Banks of the UK and Eurozone on interest rates. We cannot expect from those meetings that interest rates will change, but certainly market participants will be looking forward to the release of data on U.S. employment. Before this year’s last meeting of the Fed this data will be the key to understanding of when reduction in government bond purchases will take place. In spite of the predicted increase in new jobs at a non-agricultural sector to 185 000 from the previous amount of 204 000, financial markets expect signals from the Fed about the period when stimulus reduction will start. It’s highly possible that on the December’s meeting this decision will not be made, but there may be comments about purchase reduction that may start already by spring 2014.

While expecting the release of the US data and the Fed’s meeting there may not be much activity in the Forex market. 

Today Australian and New Zealand dollars received a significant local support due to the good Chinese data. Business activity index in an industrial sector of China from HSBC came out better than was expected – 50.8 points against 50.5 points. At the same time industrial indices PMI from Germany and Eurozone came out better than was thought too. However, this data couldn’t support Euro because market participants continue to wait for the statements from the head of ECB about the extension of the soft monetary policy.

Today we should pay attention to data from the U.S. If it’s not worse than expected, it can support the U.S. dollar.
 

Semen Kamenski​

Markets today are going to be quiet

Today there is practically the second unofficial holiday in USA – “black Friday”, a day when Christmas sales begin and Americans hurry to buy presents for their relatives.  This day is an important indicator of American consumer confidence for experts and analytics. In the last year the profit in retail stores during Holidays was about $579,5 billion, and this year it is being predicted that the volume of sales will decrease. This is a good indicator characterizing the desire of US citizens to spend their savings and it shows their consumer confidence level.

As for the situation on financial markets then there is hardly any activity until Monday, because in fact Holidays will last from Thursday till Sunday.

Next week there is a big block of data from USA coming out, and in the first place traders will analyze employment data that will definitely influence the market. Dynamics on the currency market is going to be formed on the basis of this data.

Semen Kamenski​

The Japanese yen continues to decline against major currencies on Tuesday, because the recovery of the stock market and tolerable auction results on placement of government bonds in Japan helped ease risk aversion by investors.

Trade Recommendation: Buy the pair at a penetration of 128.00-128.50 resistance area (in this case can be used as a pending order buy-stop, and "manual" input) with the immediate goal of 129.70 and a distant prospect - the level of 131.00

Analyst Andrew Batensky

Grand Capital

The U.S. dollar continues to rise against the yen, but the key level of 100.00 is still elusive in the European session. But taking into account the commitment of the new leadership of the Bank of Japan achieving the inflation target 2% in the next two years, a break of this key level of the U.S. dollar is only a matter of time.

Trade Recommendation: Buy the pair of breaking through the key level of 100.00 (in this case is better to use a buy-stop) with the first target 101.60.

Analyst Andrew Batensky
Grand Capital