Forex Forecast – Voltrex Fx

Global markets are settling into narrow trading ranges

Sterling plunges on Fitch’s warning over AAA credit rating status

October retail data raises hopes retailers will lead Britain out of recession

Wall Street surges to new 13-month high

Gold down slightly at $1,103.85/ troy ounce

Forex Forexcast – US Dollar:

The U.S. dollar is likely to remain under pressure due to interest rate differentials, momentum, and lack of official concern about dollar weakness from the G-20 meeting over the weekend. The dollar was hit over the weekend after leaders at the G20 meeting in Scotland failed to say anything about the relative weakness of the currency. The dollar has also been targeted as a currency ripe for “carry trade”, under which investors sell the dollar to invest in other currencies, resulting in its value being depressed on forex exchanges. The tactic is appealing because US interest rates are so low compared with those in other countries, which means that investors can achieve a better interest rate by selling dollars and buying higher-yielding currencies elsewhere. In a report published on Saturday, the International Monetary Fund said: “There are indications that the dollar is now serving as the funding currency for carry trades. These trades may be contributing to upward pressure on the euro and some emerging- economy currencies.” DATA : No major data

Forex Forexcast – Sterling:

Sterling had a mixed day yesterday as all was looking rosy for the sterling against a basket of currencies. The UK currency hit a three-month high against the dollar as the greenback dipped amid expectations that US interest rates will remain at historic lows for the foreseeable future. The sterling rose to more than $1.6844, its highest level since early August, before falling back slightly to $1.6747. Sterling also hit a near eight-week high against a basket of leading currencies, rising to 81.6 on the index in trading, before closing at to 81.1. The sterling was boosted last week after the Bank of England’s rate-setting committee voted to raise the Bank’s scheme of quantitative easing by £25 billion — less than the £50 billion extension some investors had been expecting. The sterlings big sell off came in the afternoon on a warning by the credit rating agency ‘ Fitch’ as it reported the UK is most at risk among major economies of losing its AAA status. This saw a dramatic sell-off for sterling which witnessed a cent and a half wiped off cable, pushing GBP/USD down to $1.6646. The move also saw GBP/EUR lose its edge as a cent was given up to push the sterling down to 1.11 against its European counterpart. DATA : Visible trade Balance and DCLG UK House Prices

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Forex Forexcast – Euro:

The euro hovered around $1.50 for most of yesterday’s trade, but failed to sustain a break above the key level as strong demand for a three-year U.S. Treasury auction undergirded the otherwise feeble dollar. With little global economic data on the calendar for the rest of the week, the euro and other higher-yielding currencies should continue to track stocks, likely leading to an increased pace of dollar losses, analysts said. The euro should remain on an upward trajectory toward $1.5064; if that level is breached, it may push the common currency to test $1.5285, said Tom Fitzpatrick, chief technical analyst at Citigroup in New York. DATA : German Zew Survey and Euro-Zone Zew Survey

General:

Gold declined for the first time in three days in Asian trading as the dollar rebounded and some investors sold the metal to lock in gains after its rally to a record high

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