Exchange Rate Forecasts

The dollar was firmer on Friday, albeit in thin and inactive markets. All eyes will be upon the FOMC meeting on Tuesday. It is a 99% certainty that rates will go up 0.25%. The European Central Bank meet on Thursday, and with more hawkish comments from board members over the weekend, the market is now [...]

The dollar has been creeping back up against Euro and Sterling, with last week’s momentum seemingly dissipated. Bush’s nomination of Ben Bernanke as next Federal Reserve president turned the dollar weaker for a few hours as analysts pointed out that Bernanke was likely to be less aggressive in raining interest rates than Alan Greenspan. Business [...]

Cable and Eurodollar continued to rally yesterday, with sterling strength being the main theme in the markets. The dollar failed to rally on the Philadelphia Fed’ figures, which were hugely above analysts expectations (17.3 vs expected 10!!!). This was a sure indication that the appetite for dollars has diminished greatly over the past few days, [...]

The Dollar made a new high against the Euro in early trade yesterday, but a sharp reversal ensued from there, and both Euro, Dollar and Cable ended the session looking fairly bullish. There is so much fundamental news already “built in” to the Dollar rally, so it’s not surprising to see it running out of [...]

We have seen serious Euro weakness overnight, which is why GBP EUR is higher, EUR USD is much lower, but Cable is relatively static. Dollar strength is also evident as President of the San Francisco Fed’ Bank suggested rates may need to go as high as 5.5% next year to contain inflation. (In my opinion [...]

UK CPI rose at its fastest rate since records began in September(1997) according to the Office for National Statistics. A rise of 2.4% for the third quarter was above the Bank of England’s 2.2% target. However, the figure was still lower than many analysts expectations, which is why we are seeing sterling weakness in the [...]

The dollar drifted higher yesterday amidst a lack of any real data to give the market impetus. Despite Friday’s double blow of rising inflation and falling industrial production, it is believed that the dollar is being supported by massive investment flows into US stocks from foreign investors. Sterling was considerably weaker, closing below the important [...]

Friday’s inflation data from the US was the main news of the day, with energy prices in the wake of hurricane Katriana contributing to the 1.2% CPI figure. This was the largest gain in 25 years! There is a two-fold impact from this news. Firstly, it absolutely cements the view that the Federal Reserve will [...]

The European Commission is “optimistic” about the state of the Euro economy according to comments from Jean-Claude Trichet yesterday. He also stated that European interest rates are at the “right level”, but expressed some concern about inflation. Higher energy costs are driving inflation, and this increases the possibility that the ECB will raise rates to [...]

Greenspan’s comments failed to have much effect on the dollar yesterday, with only a mild dollar sell off during the day, quickly erased overnight. Against the Yen the dollar has remained consistently firm, despite soaring Japanese stock markets and a generally better economic outlook. GBP/EUR remains unchanged, trading within a tight range again yesterday after [...]