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[FXCM-PR Rep]

G-20 Meeting Stresses Fiscal Consolidation

Over the weekend, G20 Finance Ministers and Central Bank Governors clashed over various solutions regarding the global economic recovery. Countries like China and Germany who have high levels of savings expressed the desire for greater austerity measures from nations who have obtained an absurd amount of debt. On the other hand, indebted nations recommended that savings-rich countries be more profligate.

At the meeting, finance ministers were unable to agree on new rules related to the financial markets, however, they still aimed for additional capital requirements for banks by the end of 2012. Going forward, it will be interesting to see what measures these ministers will take as banks such as UBS AG have warned that the capital proposed by central bank governors may further impinge on credit growth. However, the main focus of this weekend’s meeting was fiscal consolidation. The U.S. expressed fears that rigid austerity measures will undermine the global recovery. Meanwhile, German Chancellor, Angela Merkel stated that “we cannot achieve growth at the expense of high deficits; we must develop our growth paths on a sustainable path.”

Moreover, U.S. Treasury Secretary, Timothy Geithner warned that the fall in U.S. consumer demand and the American economy cannot continue to absorb world exports and that “without further progress on rebalancing global demand, global growth rates will fall short of potential. In this context we are concerned by the projected weakness in domestic demand in Europe and Japan.”

Interestingly, most ministers/governors are aiming to export their way out of trouble. Japan’s former finance minister, now the prime minister of the world’s third largest country announced that he is in favor of a weaker yen, whereas, the prime minster of France stated that the drop below $1.20 is “good news” for the euro after a gain that was “penalizing our exports.” Additionally, U.K.’s Chancellor of the Exchequer George Osborne last week publicized that he is “keen” to make the U.K. more trade driven. With these countries looking out rather than in, who will import their goods?

Looking ahead, we are unlikely to see G-20 members come to an agreeable term in the short term as across emerging Asia, countries are on the path to scale back stimulus measures, while political concerns in Germany and Japan (Risks for Intervention Could Resurface as Kan Takes Office) are constraining further stimulus measures. All in all, deleveraging in highly indebted nations will be increasingly painful in the near term if savings-rich nations do not stimulate domestic demand. This is a major concern looking at Germany which has a trade surplus. Nonetheless, G-20 members ended off their meeting agreeing to meet again on October 22-23, 2010 in Gyeongju, Republic of Korea in advance of the November 2010 Seoul Summit.

 

[FXCM-PR Rep]

Australian Dollar to Fall as Fundamental Outlook Turns Negative

Australian Dollar to Fall as Fundamental Outlook Turns Negative

The Australian Dollar is poised to move lower a the interest rate tightening cycle stalls, while a host of longer-term fundamental factors conspire to undermine the currency in the coming months.

The Australian dollar has been among the top performing currencies over the past year. While majors such as the Euro and British Pound have been trending lower for several months amid sovereign debt concerns, commodity currencies, including the Aussie, have been largely insulated, supported by robust global growth on the back of emerging markets such as China. This past month, however, the foundation of the global growth thesis has been shaken, and in turn, commodity currencies have had their most significant fall since the depths of the credit crisis a year and a half ago. Still, we continue to see AUDUSD as overvalued and expect the exchange rate will trend lower in the months ahead.

Over the past month, volatility has picked up considerably in AUDUSD, just as it has in most currency pairs and most financial instruments in general.

The pair has lost 14 percent peak-to-trough over about the same period, having put in a top just below the 0.94 figure. Though the recent move is significant, it is relatively mild compared to the 2008 plunge and subsequent 2009 rebound.

The selloff has been fueled by a broad move out of risk assets and into safe havens such as the U.S. Dollar and gold. Indeed, AUDUSD is perceived to be one of the pairs most closely tied to global growth. Recent movements have tracked the MSCI World Index extremely closely.

There is no reason to think that AUDUSD will not continue to track movements in broad risk sentiment in the near term. Over a longer time horizon, however, AUDUSD should find an equilibrium level that is independent of capital movements. In our view, AUDUSD is fundamentally overvalued and a move toward a sustainable equilibrium exchange rate implies losses, with significant rallies to be considered as opportunities to sell.

From the perspective of external trade, the Australian Current Account deficit narrowed in 2008 and 2009 and is expected to continue shrinking to approximately 3.5 percent of Gross Domestic Product in 2010 on the back of strong commodity pricing, according to the International Monetary Fund (IMF). The trend is expected to reverse over the longer term, however, with the deficit set to increase to over 5 percent of GDP by 2013.

Australian economic activity outpaced that of other advanced economies by an incredible 4.5 percent in 2009, as the economy managed to avoid falling into a recession. However, that growth premium is expected to fall back near 1 percent this year, close to what it has been over the last two decades.

Turning to monetary policy, while the relatively high cash interest rate of 4.5 percent offered by the Australian central bank is well above those maintained by its counterparts in other advanced economies, its ability to remain as a supporting factor for the exchange rate seems suspect. Indeed, after adjusting for inflation, Australia’s yield gap substantially narrows. Based upon this year’s first-quarter annualized Consumer Price Index reading of 2.9 percent, the real cash rate in Australia is about 1.6 percent. Furthermore, the interest rate outlook going forward is less flattering. Based upon a Credit Suisse gauge of policy expectations derived from overnight index swaps, markets are pricing in a mere 10 basis points in rate hikes from the Reserve Bank of Australia over the next year, versus over 30 basis points from the U.S. Fed and ECB. Therefore, widening interest rate differentials are unlikely to be a bullish catalyst for AUDUSD going forward.

Though capital movements will continue to have significant, sometimes overwhelming influence in determining interest rate levels and fluctuations, we believe that the fundamental factors outlined above will serve to push the AUDUSD exchange rate lower. Moreover, movements in capital can work against a currency just as vigorously as they work in its favor. Indeed, that is precisely what we saw in 2008 when AUDUSD collapsed 38 percent over a three month period.

Our medium term target for AUDUSD is 0.70, which is consistent with a normalized current account deficit of 5 percent, a growth premium of 1 percent, and real cash interest rates less than 4.5 percent.

Traders with longer term holding periods can begin to build positions at current levels near 0.81. Above that, there are two levels where we would consider selling AUDUSD incrementally. They are 0.8508, the reaction high of the 5/13-5/25 downswing, and 0.8737, the 200-day moving average and bottom of the first leg down of the current correction.

 

[FXCM-PR Rep]

Euro Tips Higher on ECB Trichet Comments, British Pound Halts Four-Day Decline

Comments from European Central Bank President Jean-Claude Trichet helped to push the Euro to a high of 1.1985 during the overnight trade, but the major currencies are likely to face increased volatility during the North American session as Fed Chairman Ben Bernanke is scheduled to testify in front of the House Budget Committee at 14:00 GMT.

Talking Points
• Japanese Yen: Loses Ground on Risk Appetite
• Pound: Trade Deficit Widens as Exports Falter
• Euro: ECB President Trichet Pushes For Increased Integration
• U.S. Dollar: Fed Chairman Bernanke, Beige Book on Tap

ECB President Trichet said that monetary union offers “protection and improves resilience” for the economies operating under the fixed-exchange rate system, and argued that the Europe needs to act collectively and “implement reforms to improve fiscal surveillance” during a speech in Frankfurt.

As the governments in the Euro-Zone struggle to manage their public finances, with the central bank continuing to see a risk for an uneven recovery this year, the Governing Council is widely expected to hold a dovish outlook at its interest rate decision tomorrow as policy makers aim to balance the risks for the region. Nevertheless, there seems to a shift in market sentiment during the European trade, with risk appetite flowing back into the foreign exchange market, and the Euro may continue to push higher throughout the day as investors move into higher-yielding currencies. At the same time, equity futures are pointing to a higher open for the U.S. market and we may see the rebound in investor confidence carry throughout the day as global policy makers aim to support the recovery in the global economy.

The British Pound halted the four-day decline and rallied to a high of 1.4509 overnight following the rebound in risk sentiment, and the exchange rate may continue to hold the narrow range carried over from the previous week throughout the day as the Bank of England is scheduled to release its interest rate decision tomorrow at 11:00 GMT. Meanwhile, the economic docket showed the visible trade deficit for the U.K. unexpectedly widened to GBP -7.297B in April from a revised GBP -7.259B in the previous month as exports weakened for the first time in three-months, and outpaced the 0.4% decline in imports as foreign demands slipped 0.6% from March. A report by KPMG and the Recruitment and Employment Confederation showed a gauge for full-time placements slipped to 61.3 in May from 63.2 in the previous month to mark the slowest pace of growth in four months, and the ongoing weakness in the private-sector will certainly lead the BoE to support the economy going into the second-half of the year as the new coalition in the U.K. turns its focus on managing its public finances.

U.S. dollar price action was mixed overnight, with the USD/JPY falling back from the high (91.60) to reach a low of 91.24 during the European trade, and the greenback is expected to face increased volatility later today as Fed Chairman Bernanke meets with Congress, while the central bank is scheduled to release the Beige Book economic report at 18:00 GMT. We are likely to see the central bank maintain a cautious outlook for the world’s largest economy as households continue to face tightening credit conditions paired with the deterioration in the labor market, but a shift in the Fed’s economic assessment could lead to some dollar strength as market participants speculate the Fed to start raising the interest rate in the latter half of the year. However, if the central bank head maintains his pledge to keep borrowing costs close to zero for an “extended period” of time, dovish comments from Chairman Bernanke could drag on the exchange rate as investors weigh the outlook for future policy.

 

[FXCM-PR Rep]

Euro Forecast to Recover Against Dollar on Shift in Forex Sentiment

EURUSD – Euro Forecast to Recover Against US Dollar
GBPUSD – British Pound Outlook Bullish on Sentiment
USDJPY – Japanese Yen Expected to Decline against USD
USDCHF – Swiss Franc May Strengthen against Dollar
USDCAD – Canadian Dollar Forecast Calls for Gains
GBPJPY – British Pound Forecast Remains Bullish Against Yen

Forex trading crowds have suddenly shifted towards buying the US Dollar against the Euro, British Pound, Swiss Franc, and Canadian Dollar—giving contrarian signal to go short the previously high-flying US currency. The shift has been especially pronounced in the EURUSD; the number of traders short jumped by an impressive 39% since just a week ago. Given that crowds had been steadily net-long the Euro against the US Dollar amidst sharp declines, the sudden shift suggests we could see a noteworthy short-term bounce. The noteworthy exception to calls for US Dollar weakness is on the USDJPY pair, where a dramatic shift towards selling gives contrarian signal to buy the USD against the Japanese Yen. Watch for noteworthy corrections across the board as sentiment shifts rapidly across forex trading markets.

 

[FXCM-PR Rep]

Euro Maintains Rally as Policy Makers Raise Economic Outlook

The Euro maintained the short-term rally from earlier this week and pushed to a high of 1.2140 during the overnight trade, and the exchange rate may continue to trend higher going into the U.S. trade as European policy makers hold an improved outlook for the region.

Talking Points
• Japanese Yen: Loses Ground Against Most of the Majors
• Pound: Industrial Outputs, Manufacturing Unexpectedly Falters
• Euro: German Wholesale Prices Top Forecast
• U.S. Dollar: Retail Sales, U. of Michigan Confidence on Tap

Germany’s central bank raised its economic assessment for Europe’s largest economy and projects GDP to expand 1.9% this year versus an initial forecast for 1.6% rise in the growth rate as the recovery gathers pace, but went onto say that inflation is expected to stay moderate over the medium-term despite the recent depreciation in the euro.

At the same time, European Central Bank board member Juergen Stark said that the Governing Board’s asset purchase plan Is “temporary in nature” during a speech in Frankfurt, and noted the financial markets are “overshooting and overemphasizing” the fiscal turmoil within the region. In addition, ECB council member Nout Wellink voiced his support for the government bond purchase scheme and said that the extraordinary measure is “a good idea,” and went onto say that the decision was “necessary” during a conference in Vienna. Meanwhile, the economic docket showed wholesale price in Germany increased 0.3% in May to top forecasts for a 0.2% rise, while the annualized rate advanced 6.2% from the previous year, which marked the fastest pace of growth since August 2008.

The British Pound halted the two-day rally and slipped to a low of 1.4626 during the European trade as the economic docket reinforced a weakened outlook for the region, and the Bank of England may look to support the economy throughout the second half of the year as policy makers continue to see a risk for a protracted recovery. Producer prices in the U.K. increased 0.3% in May, which failed to meet forecasts for a 0.5% rise, while the annualized rate slipped to 5.7% from a revised 5.9% in April. In addition, industrial outputs unexpectedly weakened 0.4% in April versus projections for a 0.4% advance, while manufacturing slumped 0.4% during the same period to mark the first decline in three-months. As the economic outlook for the U.K, remains clouded by the uncertainties surrounding the prospects for future policy, the GBP/USD may trade within its recent range going into the following week as market participants speculate the BoE to support the economy throughout the second-half of the year.

The greenback strengthened against most of its major counterparts, with the USD/JPY extending the previous day’s advance to reach a high of 91.77, and the reserve currency may continue to gain ground during the North American trade as the economic docket is expected to reinforce an improved outlook for future growth. Household spending in the world’s largest economy is expected to rise 0.2% in May after expanding 0.4% in the previous month, while the U. of Michigan consumer confidence survey is forecasted to rise to 74.5 in June from 73.6 in the previous month, which would be the highest reading since January 2008. Moreover, business inventories are projected to expand for the third consecutive month in April, with market participants forecasting a 0.5% rise, and the data could spur expectations for a Fed rate hike later this year as the outlook for future growth improves.

 

[FXCM-PR Rep]

Forex Weekly Trading Forecast - 06.14.10

Forex Weekly Trading Forecast - 06.14.10

- Dollar on the Cusp of a Major Reversal Awaits a Clear Sentiment Signal
- Euro Resilience Suggests Currency May Recover Further Against Dollar
- Japanese Yen May Neglect Risk Trends as BoJ Sets Monetary Policy
- British Pound to Decline on Soft Data Ahead of Emergency Budget
- Canadian Dollar Trend Favors Further Depreciation
- Australian Dollar Momentum Points to Further Gains
- New Zealand Dollar Remains Locked to Risk Appetite
- Gold Could Hold onto Gains Despite a Rebound in Risk Appetite

 

[haffez AM]

mak aihhh.. panjangnya.. pening aku membaca nih..erm nmpaknya wdraw ada sedikit masalah, so xda pape ke, kalo saya nak trade mcm nih.. risau jugak.

 

[FXCM-PR Rep]

Euro Ignores Warning Shots From Fitch Rating, British Pound Maintains Narrow Range

The U.S. dollar continued to weaken against most of its major counterparts, with the Euro extending the previous day’s advance to a reach a high of 1.2265 during the overnight trade, and the rise in risk sentiment is likely to dictate price action going into the North American session as investors turn a blind eye to the fundamental developments for the global economy.

Talking Points
• Japanese Yen: Bounces Back Against Most Counterparts
• Pound: Inflation Rises Less-Than-Expected
• Euro: Fitch Ratings Sees Risk For Double Dip Recession
• U.S. Dollar: Import Prices, Net Long-Term TIC Flows on Tap

Meanwhile, European Central Bank board member Lorenzo Bini Smaghi warned that the central bank “cannot be asked to rescue insolvent issuers; whether private or public,” and argued that the Governing Council’s asset purchase scheme was meant to support the financial system rather than to “finance public debt” during a speech in New York.

At the same time, ECB council member Juergen Stark talked down the risks for a double-dip recession after Fitch Ratings saw a risk for a possible downturn in economic activity and said that “there are no signs of a second downturn” during an interview with the British Broadcasting Corporation, and noted that the “markets are very nervous” as the governments operating under the fixed exchange rate system struggle to manage their public finances. Nevertheless, investor confidence in the Germany weakened the most since October 2008 as the ZEW survey slipped to 28.7 in June from 42.0 in the previous month, while the gauge for the Euro-Zone pulled back to a one-year low of 18.8 from 37.6 in May. In addition, a separate report showed employment in the region held flat in the first quarter after contracting 0.2% during the last three-months of 2009, while the trade surplus narrowed to EUR 18B in April from a revised EUR 4.5B following a 1.4% drop in exports.

The British Pound pulled back from the high (1.4770) during the European trade, with price action continuing to hold below the 50-Day SMA at 1.4894, and the GBP/USD may continue to trend sideways in the days ahead as investors wait for the Public Budget statement and the Bank of England policy meeting minutes due out next week. Meanwhile, the BoE warned of a possible collapse in the British equity market and said investors are increasing bets for a 20% drop in the FTSE 100 according to an article in the U.K. telegraph, and stated that demands for the options pointing to this development has jumped to roughly 13%in the previous month from 5%. Meanwhile, consumer prices in the U.K. increased 3.4% in May after expanding 3.7% in the previous month, which was just shy of expectations for a 3.5%, while the core rate of inflation pulled back to 2.9% from 3.1% April. As price pressures diminish, with policy makers continuing to see a risk for a protracted recovery in Britain, the BoE is likely to support the economy over the coming months and may maintain the option to expand its asset purchases further throughout the second-half of the year in order to balance the risks for growth and inflation.

U.S. dollar price action was mixed overnight, with the USD/JPY extending the previous day’s decline to reach a low of 91.07, and the rise in risk appetite could drive the greenback lower throughout the North American trade as market sentiment continues to drive price action in the currency market. Nevertheless, the economic docket is expected to show import prices contract 1.2% in May after advancing 0.9% in the previous month, while the Empire Manufacturing index is forecasted to rebound to 20.00 in June from 19.11 in the month prior as the economic recovery gathers pace. Moreover, world demands for U.S. assets are projected to increase $70.0B in April following the $140.5B expansion in the previous month, while the NAHB housing market index is anticipated to fall back to 21 in June from 22 as households continue to face tightening credit conditions paired with the deterioration in the labor market.

 

[FXCM-PR Rep]

Weekly Spotlight: Europe’s Outlook Progressively Worsens

European woes continue to remain in the spotlight, and it is unlikely that the lens will change focus in the near term as ballooning budget deficits in the 16-member euro area continue to rattle the markets. Indeed, Europe’s outlook seems to progressively worsen week by week, and we may see the bloc slip back into recession by the end of this year.

Talking Points
• Euro Defines “the Unholy Trinity”
• Concerns increase of Double-Dip Euro-zone Recession
• Why a Euro Breakup Will Lead to Chaos

Taking a look at recent developments, on Friday, May 28th, Fitch downgraded Spain’s long term foreign and local currency issue default ratings from “AAA” to “AA+,” while Hungary’s Prime Minister on June 8th raised the possibility that the country might default because the previous administration “manipulated” figures. As of late, Moody’s became the third rating agency to downgrade Greece’s government bonds. Greek notes were slashed into junk territory, deepening worries about Europe’s debt crisis. With the credibility of Greece on the line, there are not too many solutions for the ailing economy.

First and foremost, the EU-IMF life line worth nearly $1 trillion will give Greece time to cut its fiscal deficit, one being, scaling back its stimulus measures. If indeed fiscal measures remain controllable amid domestic resistance, the recent jump in bonds may calm fears that the Greek government is not credible. On the other hand, a debt restructuring plan/debt swap could be proposed, similar to the Brady Bond plan. The program was effective in Latin America during the 1980’s where toxic assets were transformed into marketable debt through the use of another financial instrument. In this case, Greece will remain a part of the euro-zone and negotiate with its bondholders. All in all, we can expect the euro bloc to do everything in its power to avoid one or more countries from exiting the euro in order to avoid further negative spillover effects. However, as the bloc remains intact, market participants fear that the Euro-zone will slip back into recession by the end of the year.

Concerns of Double-Dip Euro-zone Recession
As of late, I noted that concerns of a downturn for the 16-member euro area were increasing as it comes to light that governments will have to phase out stimulus measures amid ballooning budget deficits that they are faced with. Adding onto my specualtion, Fitch Ratings recently said that they see “increasing concern that there will be a double-dip recession in the euro-zone”, and went onto say that “it’s becoming an increasingly plausible alternative.” This alternative may become a reality as the lifeline package is surely not enough for the indebted countries.

Why a Euro Breakup will lead to Chaos
If one or more countries leave the euro, the likely result will be an abundance of lawsuits. Preston Keat, research director of consulting firm Eurasia Group notes that local companies with contracts linked to the euro will be thrown in turmoil, and “all contracts- including those governing wages, bank deposits, bonds, mortgages, taxes, and almost everything else” will have to be redenominated in the new currency. “In short, this would violate all kinds of laws and treaties and rules at the national, EU, and internal levels,” he later adds. I concur with Keat, however, it is noteworthy that a default will also destabilize the euro zone and trigger a recession, with the after effects of global contagion. Thus, the talk of Greece or any other country leaving the euro is highly unlikely.

Euro Defines “the Unholy Trinity”
In academia, some economists would say that the single currency is a pure example of the Mundell-Fleming “trilemma,” in which the model is used to argue that an economy cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy. However, the model does not take into consideration default, inflation, or future price levels. Whether this model is right, one thing for sure is that fiscal contraction in the 16-member euro area will cause deflation over time, and an exchange rate is expected to return to some sort of purchasing power parity in the long run. Thus, the expected deprecation means a nominal and real depreciation in the single currency within the short term.

What can we expect going forward?
Looking ahead, the ECB is said to take a 5 percent haircut on all Greek bonds which are posted as collateral with the central bank, leading Greece to post additional bonds in order to cover the spread. At the same time, an EU draft report warned that there is a need for more deficit cuts in both Portugal and Spain by next year. Moreover, the report said the “snowball” effect will impact Spanish and Portuguese debt, and a similar report is likely to be released about Italy as the country is heavily indebted as well. All in all, though there is a much needed correction for the EUR/USD, we may see price action push lower in the medium term.

The yield on Greek 10 year notes are up 96 basis points in the past 5 days, and have rallied 386 basis points to 9.07% in the past year, making Greece’s borrowing costs more expensive. Additionally, Italy’s, Portugal’s and Spain’s 10 year bonds have come under pressure this week, with the countries yield climbing 39, 22, and 14 basis points respectively.

Credit default swaps on 10 year government bonds for “PIGS” have pushed slightly lower from last week. Indeed, insurance against highly indebted countries in Western Europe is gaining momentum as market participants bet that Greece and its neighbors are heading towards default. Furthermore, Italy’s and Greece’s debt to GDP of approximately 115% in 2009 are additional concerns for investors as their bad debt will now have to be restructured. Comparatively to the U.S. where bad debt is in the private sector, for the Europeans, bad debt is in the public sector, and the nearly $1 trillion life line calls for passing on this debt onto the taxpayers of solvent states. One of the main problems with Europe is that peripheral states cannot keep up with the interest on the money that they borrow.

The 21-day correlation between the EURUSD and the MSCI World Stock Index now stands at 0.0.39, down from 0.67 last week. This is a signal that the EU crisis driving risk aversion is tapering off.

The euro looks to continue its southern descent against the U.S. dollar that began earlier this year amid the media frenzy surrounding the brewing sovereign debt crisis in Europe. From a technical standpoint, the pair has broken below an eight year rising trend which I noted earlier this month when the pair was trading at 1.32. As of today, the EUR/USD exchange rate stands at 1.23, and it looks apparent that the pair will rebound on the back of a much needed correction before pushing lower. it is noteworthy that a break below 1.18 exposes support at 1.15. Additionally, the Purchasing Power Parity now stands at 7.97%, down from its extreme level of 24.35% in the November, a signal that the euro may bottom out in the near term versus the U.S. dollar. It is also worth mentioning that the daily studies look to have stabilized from oversold levels.


Weekly Glossary

Credit Default Swap
A credit default swap (CDS) is a type of insurance that allows an investor to buy insurance against a bond issued by a country or a company. In detail, the buyer makes standard premium payments until the end of the contract as long as the borrower does not default. However, if the borrower defaults, the CDS holder is paid by the seller of the protection and the buyer then ceases to pay the payments. Market participants may use Credit Default Swaps for speculative purposes, betting against the solvency of the borrower, and in return receiving capital if it defaults. On the other hand, traders may use CDS contracts to hedge their investments.


MSCI World Stock Index
The MSCI Index is the collective of global companies which includes small, micro, mid, and large size companies.

Purchasing Power Parity (PPP)
One of the oldest and most basic fundamental approaches to determine the “fair” exchange rate of one currency to another relies on the concept of Purchasing Power Parity. This approach says that an identical product should cost the same from one country to another, with the only difference in the price tag accounted for by the exchange rate. We compare values in PP to determine how much each currency is under – or over-valued against the U.S. dollar.

Chicago Board Options Exchange Volatility Index (VIX)
The symbol for the Chicago Board Options Exchange Volatility index, the VIX is one of the most used measures of implied volatility of the S&P 500 index options. The objective of the VIX is to estimate the implied volatility of the S&P 500 over the next 30 days, on an annualized basis. Investors may use the index in tandem with recent fundamental developments in order speculate reverses or continuation of upward/downward trend.

 

[FXCM-PR Rep]

US Dollar Forecast to Lose Further Against Euro on Forex Sentiment

US Dollar Forecast to Lose Further Against Euro on Forex Sentiment


EURUSD – Euro Forecast to Rally Further Against US Dollar
GBPUSD – British Pound Outlook Bullish on Sentiment
USDJPY – Japanese Yen Expected to Recover against USD
USDCHF – Swiss Franc May Strengthen against Dollar
USDCAD – Canadian Dollar Forecast Calls for Gains
GBPJPY – British Pound Forecast Somewhat Bearish Against Yen

A considerable pullback in the US Dollar has been met with aggressive forex trading crowd buying, giving contrarian signal to stay short the US Dollar against the Euro, British Pound, and Canadian Dollar. Last week we wrote that a considerable shift in sentiment called for continued USD pullbacks, and said forecast fit in well with our FX Options and Futures-based calls for Greenback declines. Given recently sharp corrections against the Euro, there is arguably less scope for continued dollar losses. Yet short-term momentum and forex crowd trading sentiment point to further EURUSD and GBPUSD gains.