Exchange Rate Update 2012 April 10th
The pound moved up to the highest level in over a year against the major currency counterparts as it held near what is now a 3 month high point against the common currency – the euro (EURGBP). This is seen as concerns about the eurozone debt situation once more pushed global speculative investors to buy into the UK GBP currency.
Holiday makers looking to visit the UK who will be using the pound will be paying more over the summer if this continues so what exchange rate are they to expect? This could be dependant on the eurozone crisis and how it unfolds. There has been relative silence recently but bond yields are now higher. The EURUSD forecast is one that is hard to pin down on a week to week basis but large specs on the COT are still heavily short. Holiday exchange rates will likely be volatile while this lasts.
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Japanese Yen Intervention Could Be Ahead
The Bank of Japan intervention could Be Ahead. For a few weeks the intervention talk subsided. The yen declined v the majors, to the relief of the BOJ authorities as the Yen currency lost some of the safe haven attraction.
However, everything has swung back again in the yen’s favor in the last few days.
It all kicked off when the U.S. Federal Reserve gave its dovish assessment for the U.S. rate outlook, suggesting that monetary tightening would be delayed until late 2014. The market had been looking for rates to start rising again in 2013. Speculation that the Fed might still resort to further monetary easing has only increased since last Friday’s news that annualized gross domestic product growth in the fourth quarter of last year amounted to only 2.8% rather than the 3.0% that had been expected. The EURUSD currency pair is moving higher on the back of this news.
Fears are that growth in the first quarter of this year will now be even slower if companies start to run down the inventories they built at the end of last year. That contributed as much as 1.9% of the growth figure.
Apart from the relative rate outlook, there is also another decline in global market sentiment as Greek debt negotiations are proving even more difficult than expected. The continued, and some may say increased, risk of a Greek default means that the yen’s safe haven role will return, making the currency more attractive to foreign investors than it has been over the last few weeks.
This deteriorating outlook for U.S. interest rates, with 10-year Treasury yields falling to 1.87% from 2.06% a week ago, coincided with a softer monetary outlook in many other countries in the Group of 10 industrial nations, meaning that Japanese investors will show even less interest in putting their money abroad.
NFP Report 6/1/2012
The NFP data today showed the U.S is potentially making progress and comes after similar positive data from the states recently. Non-farm payroll employment has actually increased by 200,000; this is higher than the previously forecast 155,000 figure. The FTSE 100 rallied on the news and the EUR/USD dropped inline with the weekly trend.
EUR/USD Has Been Resilient After Strong Drop Early In The Week
Forex News – EUR/USD Has Been Resilient After Strong Drop Early In The Week.
The Euro dropped sharply v the US Dollar as troubles in Greece escalated earlier during the week. The Greek PM scared the markets earlier this week as he proposed bringing the newest austerity measures to the domestic referendum. Papandreou brought about a major decision early this week and suggested a national referendum regarding whether Greece would take the bailout package and associated austerity plan. The PM has subsequently offered to cease going forward with this referendum plan and the EUR/USD daily price benefitted accordingly after a strong drop early in the week.
FTSE Market Analysis Overview 2/10/11
The index of the top 100 blue chip companies represented in the UK FTSE 100 closed last week slightly over the major psychological level 5000 area. There will possibly be a lot of interest in this area with speculators placing bets on the FTSE either way. Time will tell if the euro debt situation can be resolved or not.
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