Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and it is going up, confirming a previous buy signal for the pair. Stochastic oscillator is approaching oversold zone, not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9890 the pair will go to 0.9910 and 0.9930. If the level of 0.9832 is exceeded, traders’ target will be the levels of 0.9800 and 0.9780.

Thus, the Australian Dollar has failed to form a definite trend for the third session, being under the pressure from different factors.
Investors continue to express concern about continuation of Korean crisis: it became known on Monday that South Korea began shooting near the island of Yeonpyeong. According to the press, guns volleys have been heard there. We would remind that DPRK has repeatedly stressed that if South Korea would conduct military exercise on Yeonpyeong, the country would open fire on the island in “self-defence”.
In general, it is negative news for the AUD – negative factor prevails at the market now.

Domestic Australian news is far from being positive either. We would remind that according to the statistics released earlier, GDP in Australia increased by 0.2% on quarterly basis in QIII; while analytics had expected the rise by 0.5%; the growth over last quarter positioned as the lowest over the last two years, therefore GDP dynamics seems to be descending. It became known earlier that retail sales in October amounted to-1.1% m/m against +0.1% in September and trade balance surplus in October was $2.625 billion. It also became known earlier that current account balance amounted to -А$7.83 billion in QIII against the forecast of -А$6.60 billion.

Thus, trading session for the USD started at the level of 30.82 roubles, which is 15 kopeks more than the level on Friday; the EUR started at the level of 40.55 roubles (-12 kopeks).

Dual currency basket value has changed insignificantly on Monday and amounted to 35.2 roubles.

Note that currency market makes no way at the beginning of the week, watching the developments on the Korean peninsula.

Presumably the pair Rouble/Dollar will not go beyond the range of 30.75-30.95 roubles for the USD at the trading session on Monday

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it continues to move along the signal line preventing from forming a clear signal. Stochastic Oscillator is giving a pair sell signal, being in the neutral zone.

Forex recommendation: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.80 the pair will go to 83.50 and 83.10. If the level of 83.95 is exceeded buyers’ targets will be the levels of 84.10 and 84.40.

The following Japanese news was published today:
– Index of leading indicators (unrevised) reduced by 1.4 points m/m in October which was the fourth reduction in a row.
– Index of coincident indicators (unrevised) declined by 1.3 points m/m in October, which was the second reduction in a row.
The data has demonstrated once again that the economic growth in the Country of the rising Sun has slowed down.

Two- day meeting of the Bank of Japan started today; interest rate decision, and assessment of the current situation in the country’s economy will be adopted there. It is predicted that soft monetary policy of the regulator will remain unchanged, since there is no other option in the current situation. Yesterday’s comments of the head of the Bank Mr. Shirakawa will be of interest; he is expected to touch upon the subject of rapid increase in bond yield at the domestic market which has been observed recently.

Interest rate is likely to be preserved in the target range of 0-0.1% and the regulator will not make new decisions of easing.
Tankan report released last week also deserves consideration: it showed decline for the first time in 7 quarters – up to the level of 5 against the previous level of 8 and the forecast of 3. Quarterly report of the Bank of Japan which shows sentiments in the business circles of the country once again confirmed the fact that Japanese indicators of QIV will be weak, which will indicate downturn in economy. Market believes that Tankan indicator will go down to -2 by March 2011 which will mean that pessimists dominate over optimists in the business-class of Japan.

Forex forecast: MACD indicator is in the negative area for the pair AUD/USD however it started to go up, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: considering that bullish sentiments for the pair will probably intensify, and in case of breakdown at the level of 0.9830, buyers’ targets today will be the levels of 0.9860 and 0.9900.

The following Australian data was released today:
– Volume of complete construction in QIII declined by 2.1% against the growth forecast by 2.0%;
– Leading indicators index CB decreased by 0.1% in September against +0.2% in August.

In general, statistics today did not give rise to optimism. Current growth was caused entirely by the markets participants’ belief that the last events in Ireland and South Korea do not annul global economy recovery.

Chief newsmaker for Australia is China – the country has increased the level of reserve requirements for the banks for the fifth time this year, which suggests that the Celestial Empire intends to raise the level of the interest rate in the future. This is a negative signal for Australia and AUD.
According to the average forecast of economists and analytics the RBA is unlikely to raise interest rate before QIV of 2011. Current level of the interest rate is 4.75% per annum. The Australian Minister of Finance updated its budget forecast this week. Thus, GDP in 2011 is expected to be at the level of 3.5% (growth), in 2012 – 3.75% (unchanged). Net debt will amount to 6.4% by 2012. As for the employment sector- unemployment rate is expected to be at the level of 4.75% in 2011 and at the level of 4.5% in 2012.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it goes down which gives a pair sell signal. Stochastic Oscillator is giving a pair buy signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.30 the pair will go to 83.50 and 83.95. If the level of 82.80 is exceeded, traders’ targets will be the levels of 82.50 and 82.10.

Markets in Japan were closed yesterday due to the holiday in the country.

The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan  announced the purchase of the mortgage investment trusts with the rating not lower than AA. As was noted earlier in accordance with the Bank of Japan expectations, domestic economy will revert to the moderate growth path in 2011; while average forecast of basic inflation amounts to 0.4% so far. Average forecast of the real level of GDP for the next fiscal year is at the level of +2.1% against the forecast of 2.6% in June. The head of the Bank Mr. Chirakawa noted that they will carry out monetary policy easing more actively than it was before, as the economy follows the way of development.

Japanese Finance Minister Mr. Noda stressed earlier that authorities intend to take decisive measures when required and if the Yen starts to grow rapidly. He also noted that the Bank of Japan shall provide full support to the country’s economy.

Noda also expressed hope that consumer prices in Japan will begin to grow in the new fiscal year which starts in April 2012. In general, the situation in Japanese economy remains unchanged, since attention of the monetary authorities is focused on the anti-deflation move and on the support to economy.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down, giving a pair sell signal. Stochastic Oscillaotr is giving a pair buy signal, being in the oversold zone.

Forex recommendations: off the market.

Feasible event scenarios at Forex: in case of breakdown at the level of 1.5850 the pair will go to 1.5900 and 1.5950. If the level of   1.5770 is exceeded, traders’ targets will be the levels of 1.5700 and 1.5660.

It became known yesterday that a number of approved mortgage requests in the UK declined to 30.8000 in October against the previous figure of 31.100. It has become one more indication that real estate market in the country is running down. A lot of statistics will be released today. The data on the revised UK GDP in QIII will become known, and also preliminary data on the business investments in QIII and service sector index in September. In addition a member of the Monetary Policy Committee of the Bank of England, Andrew Sentence will make a speech this afternoon. 

Great Britain actively participated in the talks regarding Irish debts and problems in the banking sector of the country; British Finance Minister Osborn stressed earlier that Irish government had to make difficult decisions and that the country did not have flexible currency rate. However, the politician emphasized that the UK will not take part in the developing of a constant anti-crisis mechanism, as they have domestic problems to settle.  And the UK has them plenty.

Representative of the Bank of England Mr. Posen noted earlier that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption. According to him, instruments, which are available to the regulator cannot always be fully effective in combating the bubbles –Posen is convinced that inflation of the stock market bubbles would be very difficult to track.