Forex Trading News – Currencies Direct

Disappointing data on Friday for Forex Trading, coupled with little headway in the APEC conference has served to undermine the USD as we start the week. EUR/USD is approaching the 1.50 level; GBP/USD made a short breach of 1.67 and USD/JPY remains pegged under 90. On Friday data showed a higher deficit with a surge in imports and the Michigan University consumer sentiment came in weaker than expected. What has weakened the US dollar is continued talk of the negative impact of a weak USD; Liu Mingkang, the Chairman of the Chinese Banking Regulatory Commission said that the combination of a weak US Dollar and ultra low interest rates had encouraged huge volumes of carry trades that were having a “massive impact on global asset prices”. A weaker USD on the one hand will help the US recovery and prolonged low interest rates will have the same effect; the issue here is that the knock on effects of this scenario hit global economies that rely on a stable and strong USD.

The fallout from the latest Quarterly Inflation report was digested in the papers over the weekend; The Banks assessment for growth is now twice the latest consensus of their panel of independent forecasters and their predictions for inflation and interest rate levels over the next couple of years have been revised sharply higher. There is still a cautious tone especially when relating to further stimulus in QE. It will be interesting to see whether Mervyn King and David Miles again voted for a greater increase in the level of QE than their other 7 colleagues when the minutes from the November MPC meeting are released this week. This morning, Japan also reported strong 3rd Quarter GDP data but again, this remarkable recovery can be attributed to short term stimulus measures and is not expected to be sustained going into 2010. The UK Rightmove house price data, released earlier today, came in on the soft side with prices showing a month on month fall of 1.6%

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