Danske Bank about the prospects of Russia

Despite the fact that the Russian economy has begun to bring some signs of stabilization, particularly in the manufacturing sector and the labor market, it is too early to rest on our laurels. There remains a number of financial problems requiring urgent solutions. Thus, public finances deteriorated significantly in the 4 th quarter of 2008. Total expenditure increased by one third, while revenues declined by one fifth, it has resulted in a negative balance the budget. Ministry of Finance of the Russian Federation is now working on the budgets of future years. The planned deficit for the coming years suggests that the Russian government will have to produce new T-bills. Until recently, as the money for a rainy day, use the Reserve Fund, established in February 2008 on the basis of the Stabilization Fund. We believe that in 2010, its resources will be exhausted. To support the budget, the Government will also have to take money from the Fund of National Prosperity. Everything indicates that, among other things, Russia, to finance the deficit, would have to issue debt securities worth about 20 billion dolllarov for the period from 2010 to 2012. In the medium term projections for public finances suggests a possible increase in the state. debt with the impressive 7% of GDP in 2008 to impressive 16-18% of GDP by 2012. In our opinion, the volume of state issues. bonds provoke the growth yield on securities with distant maturities. Ministry of Finance expects that the yield on treasury bills next year will be 13%. Given the forecast for inflation next year in the region of 10-11% this prediction is somewhat optimistic. Last week, rating agency Fitch has confirmed Russia's sovereign rating at BBB with negative outlook. Specialists Fitch mentioned that the key credit risks for Russia in the banking sector, the agency expects to increase the number of overdue debts by the end of 2009 to 25% of the total loan portfolio. In this situation, may need additional capital infusion of $ 24 billion to the banking sector. In Fitch also mentioned the problems associated with the extension of the external debt and large budget deficits that could adversely affect the rating in the short to medium term. The banking system is in serious condition. Provision for credit portfolios "eats" almost all of the net interest income of banks, depriving them of opportunities to generate profit through its core activities. This trend will likely continue in the second half of this year, since the actual level of overdue loans higher than official figures. In general, the data indicate an increase in the risk of volatility in the Russian financial markets this year, with the pressure on the ruble and fixed income securities to fall may increase.

Lars Christensen
Danske Bank

Euro would no longer be able to grow significantly against the dollar

Its strongest in more than 2 months of decline in euro against the dollar might signal that the best this year for the European currency is over. On Friday, August 7 euro fell 1.1%, while the MSCI World Index rose by 0.4%. The second time in months, the European currency has not been able to benefit from growth stocks, as it was earlier in the current year. Goldman Sachs Group Inc believes that the European currency stops growing. "Growth potential is limited because the euro in recent weeks is disappointing, given that there are excellent conditions for the strengthening of the price", - said Ian Stennard, currency strategist from BNP Paribas in London. It is increasingly evident that economic growth in the euro area lags behind the U.S. and global investors turn away from the European currency.

The correlation between growth and growth in the euro price of the shares on the stock markets disappear. In recent weeks, the correlation between the euro and the MSCI World Index is only 0.48, compared with 0.71 for the Canadian dollar, 0.72 to SEK 0.76 for the Australian dollar. Remember, the higher specified rate (the maximum he could be equal to one), the stronger the correlation. On the minima of the year, which was formed on 4 March, the euro against the dollar by 12 per cent. Basically, during the nearly 5-month euro benefited from the partial recovery of interest of investors in the carry trade, where funds are in debt in countries with low interest rate (U.S. and Japan) and investing in regions with higher interest rates (Australia, United Kingdom, The euro, etc.). The refinancing rate is 1% of the ECB, while the federal funds rate for the U.S. Fed is in a minimum range of 0 to 0.25%.

At first-year yield 10-year-old German bundesov by 74 basis points higher than returns on similar U.S. Treasury bonds. Now the 10-year yield of American trezheris by 37 basis points higher than for the Germanic bundesov. The advantage in yield bonds, which earlier supported the euro, is now dissolved in time, and investors have no incentive to buy bonds in the euro area, suggesting that the U.S. economy will recover from the crisis more rapidly than in Europe. Purchasing power parity of currencies, which is a measure of the value of similar goods in different countries, indicates that the euro at 28 per cent overvalued against the dollar.

When the market is back optimism, hope for restoring the viability of economic systems, has started the first phase of the purchase of risky assets. In this phase, the investors were illegible because they bought everything, getting rid of the yen and the dollar, which had been in their pereizbytki as asset security. However, now entering its second phase where investors are already interested in the question: what specific economic system will win in the rate of recovery. In this vein, the investors are beginning to become more selective in their investments. Players for the clarification of the issue are beginning to turn to the macroeconomic statistics. Retail sales in Germany, which is the engine of the eurozone economy, fell unexpectedly in June to 1.8% after falling the previous month. European producer price index fell by 6.6%. This is the maximum value for 28 years. In the U.S., retail sales rose in May to 0.6%, while the index of producer prices rose by 1.8%, double the number forecast. "Euro, ultimately, to weaken, as the region's economy were not strong enough" - said Ken Dixon, currency strategist of Standard Life Investments.

RBCCM expects falling Australian dollar

According to analyst RBC Capital Markets, expects the Australian currency drop against the Japanese yen and U.S. dollar. Last month Australian dollar has strengthened against the background of expectations of a decision on interest rates, higher commodity prices and renewed demand from Japanese retail investors. However, analysts believe the Bank of such currency increase in Australia's excessive. Despite the persistence of bovine forecast for the medium term, currency strategists expect the bank since the fall of a pair AUD / JPY to a level of 73, a pair AUD / USD - below 0.80. At the moment, AUD / JPY was at 81.71, AUD / USD - at 0.8404.

Barclays Capital: that prepares this week for the Australian dollar

According to analysts Barclays Capital, this week, several events could have a significant impact on the Australian dollar. On Friday, the RBA Governor Stevens will speak in the parliament with the semi-annual report. The bank expects that, in general, his speech would not be surprising, except for a possible refutation of the idea of an early rate increase, which could have a negative pressure on the Australian currency. In addition, this week, China publishes a number of reports that can support the Australian dollar. And, of course, much will depend on the reaction of the U.S. dollar at the meeting FOMC. At Barclays Capital noted that the recent Australian dollar was the most benefit (compared with other currencies of the Group of Ten) by weakening the dollar. Now a pair AUD / USD traded at around 0.8403.

Detrended Price Oscillator (DPO) MT4 Indicator

Detrended Price Oscillator allows to more easily identify cycles and, based on that, overbought/oversold levels.

(DPO) indicator is used to isolate short-term cycles, from long-term cycles.
By eliminating long term trends, DPO helps to focus on shorter price moves/cycles, thus again making it easier to spot an overbought/oversold level.

How Detrended Price Oscillator indicator does it?
Detrended Price Oscillator compares closing price to a prior moving average, eliminating all cycles that are longer than the moving average.
Standard DPO indicator setting is 20-period.
The indicator oscillates around zero level, and, if to take 20-day DPO, it'll remove cycles longer than 20 days.

Calculation

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Detrended Price Oscillator (DPO).mq4