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Foreign Currency Rate Predictions - USD, EUR, GBP, NZD, CAD, CHF

February 14, 2011 - Written by John Cameron

US DOLLAR

The Dollar made significant gains against the Euro in today’s trading session, gaining over half a percent on the day. Policy-makers in the US have remained dovish on a near-term rate hike, tomorrow’s retail sales figure and Wednesday’s inflation figure could alter this. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


EURO

Concerns over European sovereign debts are likely to remain until the ECB Summit next month. This policy vacuum is likely to hurt the Euro, particularly if the ECB is forced to actively buy-up any other individual nations’ treasury bills, as they did with Portuguese debt last week. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


POUND STERLING

Business Secretary Vince Cable commented this afternoon that it would be ‘potentially very difficult’ for Bank of England MPC members to hike interest rates in the short-term, causing selling pressure on the Pound. Tomorrow’s UK Inflation figure for January could be more supportive for the Pound – anything above 4% would spark a rally. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NEW ZEALAND DOLLAR

Poor economic data releases continue to weigh down the Kiwi. Earlier today saw the release of weak retail sales numbers for December. A depressed labour market and poor housing market data have compounded the selling pressure in recent weeks. NZ policy-makers are likely to tailor monetary policy accordingly. NEAR-TERM OUTLOOK – NEGATIVE.


CANADIAN DOLLAR

Figures showing the largest monthly increase in exports since 1982 have led to significant CAD strength. Oil prices moved downwards late on Friday due to the resolution of the Egyptian political impasse. However, crude is likely to resume its rally as the week progresses. The CAD has also picked up some support as an alternative to the US Dollar as a North American safe-haven. NEAR-TERM OUTLOOK – POSITIVE.


SWISS FRANC

The Swiss Franc gained ground in early trading on Monday following an upward revision to its 2011 Swiss growth forecast by Credit Suisse from 1.2% to 1.9%. With the Franc continuing to benefit from Eurozone sovereign debt fears, there is significant potential for upside. NEAR-TERM OUTLOOK – POSITIVE.

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