Foreign Currency Rate Predictions - USD, EUR, GBP, HKD, NOK, SGD

February 17, 2011 - Written by John Cameron

STORY LINK Foreign Currency Rate Predictions - USD, EUR, GBP, HKD, NOK, SGD

US DOLLAR

The Federal Reserve’s dovish stance on inflation continues to suppress the Dollar. Today’s CPI inflation figure came out in line with expectations, whilst the Philadelphia Fed Sentiment Survey was significantly better than anticipated. Improved sentiment tends to weaken the Dollar, ceteris paribus. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO

The Euro made up some ground on the Dollar in today’s session, as the wires went quiet on sovereign debt problems. Tuesday’s anaemic growth figures continue to provide cause for concern, this afternoon’s Eurozone Consumer confidence figure for February came out better than anticipated. Next month’s ECB summit on Eurozone debt continues to loom. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


POUND STERLING

The Pound suffered during yesterday’s session following the surprisingly dovish tone of the Bank of England’s Quarterly Inflation Report. Yesterday’s employment figures, showing that more than one in five of 16-24 year olds in the UK is unemployed, also hurt Sterling. Today’s session saw a technical bounce for the Pound, further direction for interest expectations will be dictated by next Wednesday’s BoE minutes. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


HONG KONG DOLLAR

China lowered their US Dollar/Yuan parity rate to a record low of 6.5800 overnight, causing some support for the HK Dollar due to its status as a proxy for the untradeable Yuan. Chinese inflation figures earlier in the week also hinted that their current rate-hiking cycle may be halted soon. The HK Dollar is trading towards the bottom end of its 7.7500-7.8500 pegged range against the US Dollar, leaving some room for upside movement. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NORWEGIAN KRONE

Following hints last week, the Norwegian Finance Minister, Sigbjorn Johnsen confirmed that formalised rules would be enforced to limit government spending and reduce the Norwegian budget deficit to 4% of oil revenues in 2012. He expressed hopes that this would ease pressures on the Norwegian Central Bank to raise interest rates. NEAR-TERM OUTLOOK – NEGATIVE.


SINGAPORE DOLLAR

The Singapore government today raised its inflation projections for the remainder of 2011, stating that inflation could reach 5-6% in the first half of the year – a significant acceleration from the 2.8% figure of last year. The market now expects the Monetary Authority of Singapore to hike interest rates at their April meeting. However, upwardly revised interest rate expectations have been offset by speculation that Singapore’s government will the city state’s macroeconomic policy to dampen price rises. However, spending cuts and increases in taxation would have a lengthy lead-in. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.

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