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World Foreign Currency Predictions - USD, EUR, GBP, AED, TRY, INR, HKD

February 11, 2011 - Written by John Cameron


Risk sentiment in the markets has dropped off significantly in the latter part of the week, following down movements in world stock markets. Equities have suffered another negative day today with the Dow Jones currently trading down by a third of a per cent. However, caution is advisable as the Dollar has made significant gains in a short period of time, so some speculative profit-taking can not be ruled out. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE


Yesterday saw Portuguese borrowing costs rise to over 7.0%, causing the ECB to step in and buy Portuguese bonds. This is the latest in a series of European debt scares and caused significant downside for the Euro against the majors. Fears over Eurozone sovereign debt are unlikely to be resolved in the near-term and so caution is advisable. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


The Pound continues to garner support in spite of the Bank of England’s decision to hold base rate at a record low of 0.5% yesterday. Several MPC members have made comments that UK Interest Rates need to be hiked and futures markets suggest that rates will be hiked sooner rather than later. NEAR-TERM OUTLOOK – NUTRAL TO POSITIVE.


Pegged to the US Dollar, so mirrors price action for the Dollar. With equity markets on the slide and political uncertainty in Egypt as well as concerns over Eurozone sovereign debts, the outlook is cautiously positive for the Dirham. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


Turkish Central Bank MPC due to meet on Tuesday, the Lira remains susceptible to the downside with a cut the most likely outcome. It has made significant gains on the day today, however as speculators continue to use the Lira as a proxy for Egyptian Pounds. This move could simply serve to set the Lira up for further falls next week. NEAR-TERM OUTLOOK – NEGATIVE.


The Rupee staged a mini-revival today having lost significant ground against the majors over the previous 48 hours. These losses were fuelled by a poor performance in the benchmark Sensex Equities Index during the middle part of the week. The Rupee is currently trading close to a 12-month low against the Pound but seems unlikely to drop down through this level. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


The Hong Kong Dollar continues to struggle in the currency markets. Ultra low interest rates are holding it back against the majors and it is trading very close to its 12-month low against the US Dollar. It looks likely to break to a new low. NEAR-TERM OUTLOOK – NEGATIVE.

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