Exchange Rate Outlook Forecast For Major Currencies ? GBP, USD, EUR, AUD, NZD, CAD

March 18, 2011 - Written by John Cameron

STORY LINK Exchange Rate Outlook Forecast For Major Currencies ? GBP, USD, EUR, AUD, NZD, CAD

POUND STERLING

The Nationwide Consumer Confidence survey for February, which was released overnight in the UK, came in far worse than expected, with negative respondents heavily outweighing positives. This caused the Pound to traded slightly weaker against most majors ahead of next week’s key Bank of England minutes. Comments by BoE Deputy Governor, Charles Bean, suggesting that interest rate hikes should be delayed, further hurting Sterling. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6234

The Dollar has lost ground against the majors today, as EUR/USD breaking up to its highest level since 5th November last year. Stock markets have gained on the day, whilst the rally in oil continued – both factors have weighed heavily on the Greenback. It appears that market intervention by the G7 group of nations is also causing the Dollar to weaken as it is the world’s reserve currency of choice. NEAR-TERM OUTLOOK – NEGATIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1455

The Euro has traded strongly on the day, breaking through to new near-term highs against Sterling and the Greenback. The massive Japanese earthquake will reduce global economic activity, which may reduce worldwide price pressures. This may delay the ECB’s decision to raise interest rates. If European policy makers do not hike rates next month, the Euro may be in for a fall. NEAR-TERM OUTLOOK – NEUTRAL.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.6319

The Aussie finished down on the day against virtually all of the majors, but improved significantly during the European session. Fear in the market over the Japanese nuclear crisis and the Libyan conflict caused the initial Australian Dollar weakness. The subsequent firming up of the Aussie came as stock markets responded positively to the market intervention by the G7 nations and news of a ceasefire in Libya. The Aussie remains highly susceptible to any further risk aversion. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 2.2225

In the absence of any tier one economic data releases, relative Kiwi strength was determined by risk sentiment and technical levels in the market. The New Zealand Dollar was also affected by the G7 intervention. The net effect of these factors was positive for the Kiwi, as it improved to trade almost 4c higher against Sterling than its opening level at one point. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


CANADIAN DOLLAR – The Pound Canadian Dollar exchange rate (GBP/CAD) is 1.5974

In spite of an increase in oil prices during today’s session, the CAD has weakened. Canadian inflation data came in below expectations this afternoon, reducing the likelihood of an interest rate hike by the Canadian central bank in the near future. Some analysts have also suggested that the Canadian Dollar lost ground today due to a pick up in risk sentiment causing institutional investors to liquidate positions of safety which they have taken in Canadian Dollar denominated assets. NEAR-TERM OUTLOOK – NEUTRAL.

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