05 Nov 2008 -
Some issues will be discussed here, is reduced to 1.60 euros? and perhaps the GBP in the levels from 1.97 to 1.98 and higher?
The weak U.S. dollar
The U.S. dollar was significantly weaker than last week, the price of oil has shown the weaknesses of the economy of the United States. Companies are starting to fight and was forced to deal with more creative ways to address the energy crisis. With prices of crude oil hit $ 135 a barrel and gasoline in many countries at the top of $ 4 a gallon, are American companies, which cuts across the board. Ford Motor Co., for instance, plans to reduce production costs, while American Airlines is lowering capacity by 15 percent and the addition of pocket expenses. After the futures market, some traders expect the same gas prices hit $ 7-8 per gallon. But the U.S. is not the only one with the oil crisis, one of the main reasons why the dollar has weakened a lot. In recent weeks the market had been slow to amount to a breach of the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to lower interest rates. Rising oil prices and comments from the hawks in the ECB, the Bank of England and the Reserve Bank of Australia has radically changed the outlook of these central banks. With strict inflation targeting, traders realized that the interest rate for these three countries remain unchanged for the foreseeable future and therefore the exchange rate adjusted for these expectations. Next week, the vulnerability of the U.S. economy has become even clearer. U.S. markets are closed for Memorial Day Monday, but we still have a busy week with consumer confidence, new home sales, durable goods in the first quarter GDP, personal income, spending personal and Chicago PMI for approval. We anticipate that most of these numbers on a dollar bearish as U.S. consumers continue to be under the weight of the deterioration of the struggle of personal finance.
EUR: Going back to 1.60 and a little more?
The staging a dramatic recovery euro against the dollar last week as hawkish comments from European Central Bank fueled speculation that rising rates may be just around the corner. Although we believe that higher rates would be a drastic measure, the stability of the euro area, recent economic data was encouraging, as the market focus going concern for growth, inflation. Earlier this week, German business confidence in May showed a surprising improvement. Today, PMI explain why German companies are not worried. Service and manufacturing PMI numbers have deteriorated compared to the previous month, but remain on the territory expansion. Next week, it may be, rather than data U. S. Euro zone economy, the euro / dollar pair to help Customs to 1.60. The only significant reports of the euro area, German employment, Retail PMI and German retail sales. We expect the labor market in Germany to improve further because the employment component of manufacturing PMI report actually accelerated this month. Meanwhile, there is also a busy week for Switzerland, the output will be their job, UBS and consumption KOF leading indicator reports. The currency has a very good performance against the Japanese yen last week, and it remains to be seen whether this strength can continue.
Then the pound sterling to hold their gains?
It has been a great week for the pound, more than 300 pips against the U.S. dollar exchanged. pleasant surprises in economic data and hawks confirmed the minutes of its last monetary policy meeting, that there be months before we see another rate cut by the Bank of England. In fact, for all practical purposes, perhaps the next stage of the BoE to raise interest rates. Unlike the U.S., the Bank of England a strict inflation target and if inflation over 3 percent, the Governor of the Central Bank is obliged to declare a letter to the Chancellor why inflation has risen and the time framework for the layout of the inflation target. Earlier this month, consumer prices rose to 3 percent per year, and now, the BoE everything they can to inflation under control. The stability of recent economic data has helped their cause as long as the economy does not fall into a downward spiral. No major economic data due for release next week is the British pound, a chance to share its profits, until it has surprisingly strong U.S. data.
Week in Australia, New Zealand and Canadian dollars
Rising commodity prices, the story of the week, helping to take Australia, New Zealand and Canadian dollars higher. The Australian has risen to 24 a year sitting on the scope of an arm to hit parity against the dollar. Rising inflationary pressures and the strengthening of economic data suggests the RBA is much closer to an increase in the rate of all other major central banks. We do not believe they are ready to raise interest rates, but monetary policy tightening could be a last option. The absence of significant economic data next week is the action of CAD and NZD. Canada will release its current account and GDP, while New Zealand will report its trade balance.
The weak U.S. dollar
The U.S. dollar was significantly weaker than last week, the price of oil has shown the weaknesses of the economy of the United States. Companies are starting to fight and was forced to deal with more creative ways to address the energy crisis. With prices of crude oil hit $ 135 a barrel and gasoline in many countries at the top of $ 4 a gallon, are American companies, which cuts across the board. Ford Motor Co., for instance, plans to reduce production costs, while American Airlines is lowering capacity by 15 percent and the addition of pocket expenses. After the futures market, some traders expect the same gas prices hit $ 7-8 per gallon. But the U.S. is not the only one with the oil crisis, one of the main reasons why the dollar has weakened a lot. In recent weeks the market had been slow to amount to a breach of the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to lower interest rates. Rising oil prices and comments from the hawks in the ECB, the Bank of England and the Reserve Bank of Australia has radically changed the outlook of these central banks. With strict inflation targeting, traders realized that the interest rate for these three countries remain unchanged for the foreseeable future and therefore the exchange rate adjusted for these expectations. Next week, the vulnerability of the U.S. economy has become even clearer. U.S. markets are closed for Memorial Day Monday, but we still have a busy week with consumer confidence, new home sales, durable goods in the first quarter GDP, personal income, spending personal and Chicago PMI for approval. We anticipate that most of these numbers on a dollar bearish as U.S. consumers continue to be under the weight of the deterioration of the struggle of personal finance.
EUR: Going back to 1.60 and a little more?
The staging a dramatic recovery euro against the dollar last week as hawkish comments from European Central Bank fueled speculation that rising rates may be just around the corner. Although we believe that higher rates would be a drastic measure, the stability of the euro area, recent economic data was encouraging, as the market focus going concern for growth, inflation. Earlier this week, German business confidence in May showed a surprising improvement. Today, PMI explain why German companies are not worried. Service and manufacturing PMI numbers have deteriorated compared to the previous month, but remain on the territory expansion. Next week, it may be, rather than data U. S. Euro zone economy, the euro / dollar pair to help Customs to 1.60. The only significant reports of the euro area, German employment, Retail PMI and German retail sales. We expect the labor market in Germany to improve further because the employment component of manufacturing PMI report actually accelerated this month. Meanwhile, there is also a busy week for Switzerland, the output will be their job, UBS and consumption KOF leading indicator reports. The currency has a very good performance against the Japanese yen last week, and it remains to be seen whether this strength can continue.
Then the pound sterling to hold their gains?
It has been a great week for the pound, more than 300 pips against the U.S. dollar exchanged. pleasant surprises in economic data and hawks confirmed the minutes of its last monetary policy meeting, that there be months before we see another rate cut by the Bank of England. In fact, for all practical purposes, perhaps the next stage of the BoE to raise interest rates. Unlike the U.S., the Bank of England a strict inflation target and if inflation over 3 percent, the Governor of the Central Bank is obliged to declare a letter to the Chancellor why inflation has risen and the time framework for the layout of the inflation target. Earlier this month, consumer prices rose to 3 percent per year, and now, the BoE everything they can to inflation under control. The stability of recent economic data has helped their cause as long as the economy does not fall into a downward spiral. No major economic data due for release next week is the British pound, a chance to share its profits, until it has surprisingly strong U.S. data.
Week in Australia, New Zealand and Canadian dollars
Rising commodity prices, the story of the week, helping to take Australia, New Zealand and Canadian dollars higher. The Australian has risen to 24 a year sitting on the scope of an arm to hit parity against the dollar. Rising inflationary pressures and the strengthening of economic data suggests the RBA is much closer to an increase in the rate of all other major central banks. We do not believe they are ready to raise interest rates, but monetary policy tightening could be a last option. The absence of significant economic data next week is the action of CAD and NZD. Canada will release its current account and GDP, while New Zealand will report its trade balance.
