Forex Forecast – Voltrex Fx
Sterling expected to see another challenging year in 2010
Dollar set to continue gains against majors
Euro starts year under pressure from rallying dollar
This week see’s UK interest rate decision and US non-farm payrolls data
Oil up to $79.79 per barrel as Russia cuts supply to Belarus
Forex Forecast – US Dollar: The dollar rose to a two-week high against the euro in Asia Monday as investors expect Friday’s US unemployment data to point toward a continuing recovery in the world’s largest economy. The greenback is likely to keep strengthening this week thanks to higher yields on US Treasury’s, which may rise further if the US non-farm payrolls data for December come in higher than expected. Bernanke’s interest rate comments look likely to fuel expectations that higher long-term US interest rates would encourage investors to purchase dollar denominated assets. The dollar rally which has taken place in December is significant in that it has brought an end to the powerful downtrend which has been in place since March following the Fed’s decision to begin quantitative easing.
Data 15.00: ISM Manufacturing DEC 54.0 from 53.6, Construction Spending MoM –0.5% from 0.0%.
Speakers 15.15: Fed’s Lockhart.
Forex Forecast – Sterling:
Sterling looks set for a challenging start to the year, with many economic news reports starting off the first weekend of 2010 with concerns about the state of the UK economy and how the debt issues are set to be managed. A Financial Times survey of economists have warned the major risk is the loss of confidence in the governments ability to get the public finances back under control. Sir John Gieve, former deputy governor of the central bank, said that inadequate plans for addressing the fiscal deficit could result in sharp rate rises and a fall in the sterling. The FT also carried more stories predicting that the sterling could hit parity with the euro, a story which we may see more of over the next few months. UK Business Secretary ‘Peter Mandelson’ also stated over the weekend that weakness in the UK currency has provided additional support to demand. Looking ahead to today, the UK manufacturing PMI is expected to have slipped back a little, in line with the recent Confederation of British Industry’s industrial trends survey, but the index should remain firmly above the key 50 level. The Bank of England is excepted to make no changes to either its key interest rate or its bond-buying program at its meeting Thursday, with any more likely to come at its February meeting. Data 09.30: PMI Manufacturing 52.0 from 51.8, Mortgage Approvals 58.0k from 57.3k & Net Consumer Credit –0.5B from –0.6B.
Forex Forecast – Euro: The euro looks set to start the year under pressure from the dollar, and also a little pressure is seen against sterling as the debt issue surrounding certain southern European countries hangs around the neck of the single currency. Today, the Greek government is to submit to the European Commission its draft stability programme, which is seen as a passport to secure €54B in borrowed funds for 2010. These recent credit conditions in Europe are making dealers unwilling to buy the single currency. Looking at where the euro has been trading, earlier in the morning session the euro fell to $1.4257 from $1.4324 in New York Thursday, its lowest level since December 23rd. Dealers said it may fall further to $1.42 this week. Against the sterling, there has been some euro weakness as the 0.90 level was broken at the end of 2009, pushing through that barrier to now trade lower at 0.8871.Data 09.30: E/Zone Sentix Investor Confidence.
General:
Oil prices raced toward $80 a barrel on the first trading day of the year after Russia cut crude supplies to Belarus. New York’s main futures contract rose 61 cents to $79.97 a barrel.
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