Forex Forecast – Voltrex Fx
Euro falls against majors on gloomy global sentiment in Europe
Dollar picks up on sterling and euro on fall in risk sentiment
Sterling makes gains on euro overnight
Beijing prepares to receive US President next week
China may pave way for Yuan rise on dollar as its value comes into focus
Forex Forecast – US Dollar: The dollar roared back against the euro and sterling yesterday, on the back of a fall in risk sentiment as equities fell after their impressive rally over the last few days. We did hear yet again, the US state they want a strong currency, as Treasury Secretary Timothy Geithner commented about the importance of a strong dollar, but as before it seems to have fallen on deaf ears. The greenback took over one and a half cents off sterling to push GBP/USD down close to the $1.65 levels. The greenback also saw a similar gain over the euro as EUR/USD fell to $1.4820. The dollar has weakened off slightly in Asia this morning as Asian market participants sold the US unit to lock into profits following its recent rise. But dealers said the greenback could bounce back later in the day as US hedge funds may buy dollars to prepare for investors dollar-redemption requests that are expected to increase due to the terms of their business contracts. In addition to expected buying by hedge-fund players later in the day, dealers said short term focused investors may also buy back the US unit if a US consumer confidence survey shows an improvement. If the Reuters/University of Michigan consumer sentiment index due at 15.00 beats expectations for a rise to 72, that could cause US equities to rally, putting upward pressure on US interest rates to the benefit of the dollar. Data 13.30: Trade Balance -$31.6B from -$30.7B. 15.00: U.of Michigan Confidence expected 71.0 from 70.6.
Forex Forecast – Sterling: The UK currency came under pressure yesterday against both the euro and dollar as risk sentiment disappeared, hurting the higher yielding currencies as global equities fell and dragged down the sterling. Cable gave up a whopping one and a half cents to push GBP/USD down to close to $1.65 and sterling also fell to its knee’s against the single currency, with GBP/EUR capitulating with a fall to the 1.1031 levels. There has however been a strong sell off in the single currency camp in the early morning hours as Asian players have jumped on the and wagon to sell the euro after gloomy sentiment spread across Europe. The sterling has taken full advantage and roared back against its euro cousin, pushing GBP/EUR back up to hit the 1.12 level this morning. In the UK Friday, major data agenda is empty, but investors are looking to next week’s reverse auction, where the BoE said it will buy £1.7Bn of UK government bonds next week via its Asset Purchase Facility. No data.
Forex Forecast – Euro: The euro had a mixed day yesterday as it too succumb to investors running sacred of risk appetite, pushing the higher yielding currencies lower against the safe haven dollar and yen as global equities fell. The euro gave up over one and a half cents on the dollar as players sold the single currency. We also saw gloomy sentiment creep across Europe, as the view of tighter ECB policy having an impact on risk sentiment took its toll on the euro, as it would probably lead to a weaker single currency. In Asian trade, the euro was heavily sold off, continuing the theme from earlier in the day. This has now seen the euro fall against sterling as EUR/GBP has now slide down to 0.8930. E/Zone GDP data for Q3 is in focus today. Economists expect data due at 10.00 to show E/Zone GDP grew 0.6% on a quarterly basis and contracted 3.9% on an annual basis in the third quarter. Any negative surprises from the eurozone thirQ3 GDP could drag on the single currency to the dollar and sterling’s benefit.
Data 10.00: E/Zone GDP 3Q 0.6% from –0.2%, YoY –3.9% from –4.8%
General:
China could well pave the way for more yen gains versus the dollar. As Beijing prepares for a visit by US President Barack Obama next week, the People’s Bank of China has made a broad hint that it could allow the yuan to rise against the dollar.
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