Exchange Rate Forecasts

Yesterday’s Durable Goods orders from the US were in line with forecasts, and sales of new homes jumped 13% to a new record for October. Consumer confidence was also firm, giving investors a good indication that Xmas sales will be strong. The dollar reacted predictably to these reports, undoing a large part of Monday’s rally [...]

Weak sales of existing homes (down 2.7% for October) drove the dollar lower yesterday, despite an otherwise robust housing sector, with prices up 16% on the year. The dollar fell to 1.7340 overnight. Most analysts are nevertheless brushing off yesterday’s rally, saying that the market will bring interest rates back into focus, and that the [...]

After a quiet one last week I am expecting more movement for the week ahead, and we have plenty of data to drive the markets from Wednesday onward. The ECB meet on Thursday (1st December), and the market is pricing in a strong probablity of a 0.25% interest rate hike, bringing Euro rates to 2.25%. [...]

A boring day as expected yesterday, and most Americans will be sleeping it off today so I expect a relatively inactive dollar. Sterling may see some movement on the release of revised Q3 GDP, with some analysts expecting a slight upward revision. Here’s a snippet from yesterday’s testimony by BOE govenor Mervyn King, given to [...]

*****It’s Thanksgiving today in the US, so we may have a relatively inactive day on the markets.***** A quiet day yesterday, with not much in the way of data. All nine MPC members voted to keep interest rates steady at 4.5% in the November meeting, a clear indication that we shouldn’t be expecting any change [...]

Cable briefly made new lows yesterday but there didn’t seem to be any appetite for further downside and the market swiftly rebounded above 17100. The minutes the last Federal Reserve meeting caused a serious stir last night as it was revealed that Fed givernors had debated a slight change in the language used to accompany [...]

The ECB is going to run into credibility problems if they keep giving the markets such a unclear steer on interest rates. It seems that while the bank is prepared to raise rates in the near term, they are trying to give the impression that “monetary policy accomodation” (economic speak for low rates!) will not [...]

The ECB president is getting into the habit of surprising the markets. Only two weeks ago he made unexpectedly dovish comments at the ECB press conference, describing the current interest rates at 2.0% as “appropriate”. Then on Friday he said almost the exact opposite, indicating that the ECB is ready to raise rates at the [...]

We were hoping that yesterday’s Bank of England report would give sterling some direction, well it certainly did that! The bank lowered its inflation expectations over the next two years, resulting in the conclusion that there is no chance of an interest rate rise in the New Year as the market was coming to expect [...]

A rather mixed bag yesterday, with sterling trading weaker after lower than expected inflation figures. Today’s Bank of England Inflation Report sound gives an idea of their revised targets and view on interest rates, and will hopefully give sterling some direction. The US PPI was also uninspiring, and the dollar reacted with the usual bout [...]