Foreign Currency Rate Predictions - USD, EUR, GBP, TRY, ZAR, JPY

16 Feb 2011 at 4 PM - Written by John Cameron

STORY LINK Foreign Currency Rate Predictions - USD, EUR, GBP, TRY, ZAR, JPY

US DOLLAR

The tone of the latest FOMC Minutes, due for release at 1900hrs GMT today, is unlikely to deviate from the dovish line that the Fed has peddled in recent times. Producer price index figures were significantly higher than expectations, however this has failed to cause the Dollar to strengthen as market participants’ US interest rate expectations appear entrenched. Tomorrow’s inflation figure is equally unlikely to shift the Dollar unless it is massively below or above the anticipated level. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO

ECB President Jean-Claude Trichet made further hawkish comments in a German newspaper interview published today. He talked about the risk of ‘secondary effects’ of rising prices, alluding to the risk of a wage-price spiral in the Eurozone. The outlook for Eurozone interest rates has been adjusted accordingly, causing the Euro to strengthen during the second half of the European session. Concerns over European sovereign debts persist. NEAR-TERM OUTLOOK – NEUTRAL.


POUND STERLING

The Pound has suffered a torrid day on the markets following the release of January’s unemployment figures. These showed that UK unemployment has risen to almost 2.5m. The Bank of England’s Quarterly Inflation Report also downwardly revised growth forecasts and stated that it was possible that when it recedes, UK inflation could undershoot the Bank’s 2% target. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


NEW TURKISH LIRA

The Lira broke a three day losing run during today’s trading session following yesterday’s decision by the Turkish Central Bank to maintain interest rates at their current level of 6.25%. In its accompanying statement, the central bank referred to inflationary risks, sparking speculation that Turkey’s rate-cutting cycle is at an end. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


SOUTH AFRICAN RAND

The Rand gained 1% against the US Dollar during Wednesday’s trading session following the release of inflation figures which suggested that a rate-hike may be necessary later in the year. However, caution is advisable when trading the Rand, as the South African Central Bank is expected to take measures to actively weaken the Rand in order to improve terms of trade. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


JAPANESE YEN

The Yen has struggled to find any clear direction in the markets over the last twenty four hours. Yesterday’s Chinese CPI inflation figure for January, which came in lower than expected, failed to have a significant effect on the Yen. The drop in Chinese inflation was largely discounted by analysts who pointed out that the China’s National Bureau of Statistics have altered the way the CPI figure is calculated since the December figure was released. With little data of note due for release for the rest of the week, the Yen is susceptible to swings in risk sentiment. NEAR-TERM OUTLOOK – NEUTRAL.

TAGS: American Dollar Forecasts Currency Predictions Euro Forecasts Japanese Yen Forecasts Pound Dollar Forecasts Pound Euro Forecasts Pound Lira Forecasts Pound Rand Forecasts Pound Sterling Forecasts Pound Yen Forecasts South African Rand Forecasts Turkish Lira Forecasts