Currency Report
Here is the news for the currency market for the upcoming week.
The US Dollar is slated to be weak this week for fundamental reasons. Globally, inflation is low, the producer price report that was released last week. This news has given rise to the expectation that the Consumer Price Index will also show weakness. The Federal Reserve has taken a wait and see attitude while the European Central Bank has clear plans to hike interest rates, including the other factors, it has no doubt spurred the Euro upwards.
As for the Euro, it has been and continues to be a great time for the currency. It had broken past its 1.3050 resistance from last week and has stayed around 1.31 versus the Dollar. The European economy is operating quite strongly and has more releases coming up than the US Dollar. French and German GDP is expected to show great results and will serve as impetus to raise interest rates within the Eurozone. The most important release to look out for this week is the German IFO report, which has been sustained by consumer consumption ahead of the new Value Added Tax. This may serve to slow down the business sector slightly. Overall, unless there is a severe drop in the consumer sentiment, the outlook looks positive for the Euro.
The Pound is seen as overvalued and expected to move lower to close the current account deficit. Inflationary pressures have become relatively stable and have been signified by a .8% drop in consumer prices in January. The question on traders' minds is whether the Bank of England will hike rates by 25 basis points to 5.50%. If at least 2 people vote in favor of the hike, then it is likely that it will happen. However if the sentiment to hold rates is unanimous then the probability of a rate increase is low.
In Japan, a rate increase may be in the works, as the odds were updated to 65%. While growth is improving in Japan and fourth quarter results show improvement, there is no significant change that will warrant a rate hike. However, it should be duly noted, that after the G7 meeting last week, rumors of an under the table deal between Japanese and European financial ministers may serve to bolster the rate hike to occur.
Commodity influenced currencies, mainly the Canadian Dollar, had noticed improvements in the Wholesale, Automotive, Housing and Manufacturing sectors. This means a rate hike may occur in the long term and making the currency bullish in the short term. The currency was weak however as the international securities transactions report came in lower than expected. The other currencies, such as the Australian dollar were flat while the New Zealand Dollar increased most likely due to yen selling in the NZD/JPY pair.
The US Dollar is slated to be weak this week for fundamental reasons. Globally, inflation is low, the producer price report that was released last week. This news has given rise to the expectation that the Consumer Price Index will also show weakness. The Federal Reserve has taken a wait and see attitude while the European Central Bank has clear plans to hike interest rates, including the other factors, it has no doubt spurred the Euro upwards.
As for the Euro, it has been and continues to be a great time for the currency. It had broken past its 1.3050 resistance from last week and has stayed around 1.31 versus the Dollar. The European economy is operating quite strongly and has more releases coming up than the US Dollar. French and German GDP is expected to show great results and will serve as impetus to raise interest rates within the Eurozone. The most important release to look out for this week is the German IFO report, which has been sustained by consumer consumption ahead of the new Value Added Tax. This may serve to slow down the business sector slightly. Overall, unless there is a severe drop in the consumer sentiment, the outlook looks positive for the Euro.
The Pound is seen as overvalued and expected to move lower to close the current account deficit. Inflationary pressures have become relatively stable and have been signified by a .8% drop in consumer prices in January. The question on traders' minds is whether the Bank of England will hike rates by 25 basis points to 5.50%. If at least 2 people vote in favor of the hike, then it is likely that it will happen. However if the sentiment to hold rates is unanimous then the probability of a rate increase is low.
In Japan, a rate increase may be in the works, as the odds were updated to 65%. While growth is improving in Japan and fourth quarter results show improvement, there is no significant change that will warrant a rate hike. However, it should be duly noted, that after the G7 meeting last week, rumors of an under the table deal between Japanese and European financial ministers may serve to bolster the rate hike to occur.
Commodity influenced currencies, mainly the Canadian Dollar, had noticed improvements in the Wholesale, Automotive, Housing and Manufacturing sectors. This means a rate hike may occur in the long term and making the currency bullish in the short term. The currency was weak however as the international securities transactions report came in lower than expected. The other currencies, such as the Australian dollar were flat while the New Zealand Dollar increased most likely due to yen selling in the NZD/JPY pair.
posted by Ian Bellamy at
12:11 AM
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