Foreign Exchange Rates : Currency Predictions - GBP, EUR, USD, HKD, CAD, INR

Published: Thursday, 24 February 2011 15:34 BST - Written by John Cameron

STORY LINK Foreign Exchange Rates : Currency Predictions - GBP, EUR, USD, HKD, CAD, INR

POUND STERLING

The Pound has suffered a poor day on the Foreign Currency markets as analysts digested the minutes of this month’s Bank of England Policy meeting, released yesterday. Three of the nine-man committee voted for a rate hike, meaning that two other members will have to join them next month to precipitate a rise. The minutes pointed to tomorrow’s revised Q4 UK GDP figure as being of particular significance for future monetary policy decisions. This morning’s CBI Reported Sales figure for February was dramatically worse than expected. NEAR-TERM OUTLOOK – NEUTARL TO NEGATIVE.


EURO

Eurozone policy-makers continue to make hawkish statements regarding interest rates and futures markets predict that the ECB will raise by more basis points than the Bank of England or The Fed over the next 12 months. This, along with comments from Germany officials stating that they may consider supporting proposals to increase the scope of the European Financial Stability Fund, has caused the Euro to strengthen throughout today. NEAR-TERM OUTLOOK – NEUTRAL.


US DOLLAR

Brent Crude Oil traded at close to $120 per barrel in early trading today as the Arab uprising continued, which has caused continued losses in world stock markets throughout today. Ordinarily, this drop in global appetite for risk would see significant support for the US Dollar, however the Dollar has lost ground against many of the majors, whilst the Yen and Franc have benefitted. This has raised questions about its continuing role as world markets’ reserve currency of choice. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


HONG KONG DOLLAR


The Hong Kong Dollar has suffered losses this week with the Hang Seng coming under heavy selling pressure as investors react to events in the Arab world by shifting their assets into safe haven currencies. According to this week’s annual budget address, the Hong Kong central bank’s plans for tackling inflation do not appear to include raising interest rates, which has caused further pressure on the HKD. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


CANADIAN DOLLAR

The Canadian Dollar has strengthened to currently trade very close to its 3 year high against the Greenback. This move has been primarily caused by spiralling oil prices as fears over supplies grow due to the Arab uprising. Some analysts have suggested that because of the structural strength of its real economy, thanks to its oil reserves, the CAD is also picking up some safe-haven support as investors start to doubt the debt-addled US economy. NEAR-TERM OUTLOOK – POSITIVE.


INDIAN RUPEE

India’s benchmark equities index, the SENSEX, lost 3% of its value during the overnight Asian session, bringing its total losses on the week to almost 1000 points. The Rupee has been hit hard by this week’s massive increase in crude oil prices as India is a large-scale net importer of oil. Figures released today show that food and fuel prices are rising at around 12%, causing speculation that the Indian central bank may act to hike rates in the near future. NEAR-TERM OUTLOOK – NEGATIVE.

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