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Foreign Currency Rate Predictions - EUR, GBP, USD, AUD, JPY, ZAR

February 15, 2011 - Written by John Cameron


The Euro has suffered a turbulent day, finishing the European session over 0.5% down against the Pound. Weaker than expected growth figures from Germany, France and the whole of the Eurozone caused fears of a downturn in the real economy. NEAR-TERM OUTLOOK – NEGATIVE.


The Pound made gains across the board in Tuesday trading after the annualised CPI figure for January showed that UK inflation is running at double the government‘s 2% target. Futures markets are pricing in a UK rate rise in the next six months. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


Today saw a soft trading performance for the Dollar. Retail sales numbers for January came in worse than expected. Worries persist over the Federal reserve’s reticence to raise rates, but the Dollar is likely to continue to be propped up by its role as a the world’s favourite safe-haven currency, particularly if Eurozone sovereign debt fears flare up again. NEAR-TERM OUTLOOK – NEUTRAL.


Minutes released overnight for the most recent Australian Central Bank meeting delivered mixed messages, predicting lower inflation in Australia towards the end of the year and airing fears over weak consumer spending figures. On a more positive note, the RBA was positive on the worldwide economic recovery. The Aussie weakened in late trading as the FTSE 100 and Dow Jones suffered losses, evidencing a return of risk aversion. NEAR-TERM OUTLOOK – NEUTRAL.


Chinese inflation numbers released overnight came out lower than anticipated at an annualised 4.9% versus analysts’ expectations of 5.4%. This caused a sell-off of the safe-haven Japanese Yen, causing it to trade down to a 9 month low against the high-yielding Australian Dollar. NEAR-TERM OUTLOOK – NEUTRAL TO NEAGTIVE.


The South African currency suffered broad weakness in the markets during today’s session as the SARB continued to take active steps to weaken it. The domestic equities market also saw losses as speculators took profits following the recent rally. This weighed down the risk-sensitive Rand. NEAR-TERM OUTLOOK – NEGATIVE.

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