Exchange Rate Predictions - GBP, EUR, USD, CAD, NZD, JPY

1 Mar 2011 at 4 PM - Written by John Cameron

STORY LINK Exchange Rate Predictions - GBP, EUR, USD, CAD, NZD, JPY

POUND STERLING

The Pound has traded under the radar against the other majors today as the main price action in the markets affected other currencies. Yesterday’s session was massively positive across the board for the Pound, with commentators speculating that the gains were due to institutional investors adjusting their positions for the month end. Positive house price and mortgage approval data has failed to deliver significant impetus for the Pound. NEAR-TERM OUTLOOK – NEUTRAL.


EURO

The Euro has seen broad support during today’s European session as investors gain comfort from the fact that the ECB Debt Summit is nearing. The ECB upped its growth forecast for 2011 from 1.5% to 1.6%, providing more support for the Euro as investors upwardly adjusted their Eurozone Interest Rate expectations as the euro edges towards the key 1.4000 level against the US Dollar. This morning’s better than expected German Unemployment figure has also lent support to the single currency. NEAR-TERM OULOOK – NEUTRAL TO POSITIVE.


US DOLLAR

The Dollar continues to suffer as equities markets continue to improve, signalling a recovery in risk sentiment. This has sapped the Dollar of strength as have the concerning data releases of yesterday, which saw weak property sector and personal expenditure figures. Oil prices close to the top of the recent range are also serving to subdue the Dollar, which is now trading at. Or close to, significant recent lows against several other majors. NEAR-TERM OUTLOOK – NEUTRAL TO NEAGTIVE.


CANADIAN DOLLAR

The Canadian Dollar pulled back from its near-term high against its US counterpart when the Bank of Canada opted to maintain interest rates at their current 1.0% level this afternoon. The futures market continues to factor in 84 basis points of rate hikes in Canada over the next 12 months, however the Canadian central bank’s statement of this afternoon hinted at a delay in raising rates due to ‘excess supply in the Canadian economy’. Crude oil continues to trade at close to the top of its recent range, providing ongoing support for the CAD. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NEW ZEALAND DOLLAR

The Kiwi Dollar picked up a little support overnight when the Australian central bank voted to maintain interest rates at their current level of 4.75%. However, the European session saw the New Zealand currency relinquish the majority of these gains as fears over the real economy persist. Policy makers have stated that they will be forced to cut government spending in other areas in order to fund the rebuilding of Christchurch following last week’s earthquake. With the domestic budget not forecasted to register a surplus until 2014-15 and the central bank likely to cut interest rates, the prognosis is not good for the Kiwi. NEAR-TERM OUTLOOK – NEGATIVE.


JAPANESE YEN

The Yen has eased off the near-term highs it reached last week as risk sentiment has picked up in global markets. The benchmark S&P 500 made gains of 1% during Friday’s session and over 0.5% yesterday signalling a move by institutional investors into riskier high-yielding assets. The US Dollar has failed to make significant gains during the recent Arab uprising, meaning the Yen picked up more safe haven support than usual. However, this leaves the Yen open to selling pressure as appetite for risk improves. NEAR-TERM OUTLOOK – NEUTRAL TO NEAGTIVE.

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