Foreign Exchange Rates : Currency Predictions - GBP, EUR, USD, TRY, ZAR, AUD

Published: Monday, 28 February 2011 16:10 BST - Written by John Cameron

STORY LINK Foreign Exchange Rates : Currency Predictions - GBP, EUR, USD, TRY, ZAR, AUD

POUND STERLING

The Pound has enjoyed a positive day, possibly due to a technical bounce following Friday’s negative performance. Sterling lost ground after the downward revision to the quarter 4 UK GDP figure on Friday as analysts revised their UK interest rate expectations downwards. Bank of England Governor Mervyn King speaks tomorrow, which provides significant event risk if his comments are interpreted as dovish in tone. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO

The Euro has made gains against the Dollar on the day as fears over the Eurozone sovereign debt ease in anticipation of next month’s ECB debt summit. In the near term, the market is focussing on Thursday’s ECB interest rate decision. Consistently hawkish rhetoric from ECB President Jean-Claude Trichet and other Eurozone policy-makers has led the market to price in a rate hike sooner rather than later. If the ECB chooses to maintain rates at 1%, some downside for the Euro is to be expected. NEAR-TERM OUTLOOK – NEUTRAL.

US DOLLAR

The Dollar has lost ground against the other majors during today’s session. Global stock markets have made gains during the first session of the week, as institutional investors to shift their funds out of the safe haven of the US T-bill and into riskier assets. Spiralling wholesale oil prices continue to place downward pressure on the Dollar. NEAR-TERM OUTLOOK – NEGATIVE.


TURKISH LIRA


The Lira continues to lose ground against the majors as concerns grow over the government’s ability to service its debt. The cost of insuring Turkish sovereign debt against default has risen to its highest level since last autumn in the last few days. Concerns continue about Turkey’s proximity to the Middle East and the effect that unrest in the region may have on the Turkish economy. NEAR-TERM OUTLOOK – NEGATIVE.


SOUTH AFRICAN RAND

Johannesburg’s All Share index gained almost one per cent on the day, helping to support the Rand. The South African Revenue Service published disappointing trade figures for January earlier today which showed that SA exports are slowing and that the South African economy suffered its first trade deficit for three months. The Rand traded in positive territory against the majors today but may not fare as well later in the week as the market digests today’s figures. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR

The Australian Central Bank announces its interest rate decision for March during tonight’s Asian session. The last Australian rate change came in November, 2011, when the RBA increased rates to 4.75% and they are expected to be maintained at this level for the foreseeable future. The Aussie has weakened off during today’s European session after China announced over the weekend that it is down-grading its domestic growth forecast for 2011-2014 to 7%. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.

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