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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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Waiting for decision upon rates…Rate dynamics and recommendations on EUR-USD and GBP-USD.
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07:59 03/26/2004
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Waiting for decision upon rates…Rate dynamics and recommendations on EUR-USD and GBP-USD.
Two factors caused strengthening of the dollar – waiting for decisions upon refinancing rate of Central Banks of two largest monetary systems – national currency of the US and common European currency.
The president of Atlanta’s Federal Reserve Bank Jack Guinn stated that low interest rates in the US should rise together with economic growth and business representatives and market participants should get ready to that. “FRS has got reasons to support its mild policy, at least, for now. However, if economic growth proves to be more powerful than forecasted, at some stage, 1% interest per annum of FRS interest rate won’t be a good policy”, - stated J. Guinn. He underlined that low rates strategy might create some risks. Trade participants expect Jean-Cloude Trichet’s address (the head of ECB), which is planned in the US for 24:00 Moscow time. Earlier, the president of European Central Bank stated that there were signs of economic recovery of Eurozone in the second half of 2003. However, he also noted that if consumer spending did not rise, ECB could revise the forecast of European economic development. The given statements brought back expectations that Eurozone’s key interest rate might be reduced.
Negative data on the US labor market put pressure on the dollar. On Thursday, the Labor Department said 339,000 people filed new claims for state unemployment benefits in the week ended March 20 compared with a revised 338,000 the prior week.
Last week’s level was the lowest for new claims since January 13, 2001.
Last year, the average indicator made up 403000 claims. Since the beginning of this year, average indicator makes up 347250 claims. Specialists think that retail sales growth and inventories reduction will contribute to production volume increase in the nearest months, which, according to economists, will result in employing new staff and will somehow dump the negative effect of indicators’ release.
The dollar is also pressed by the yen. Proficit of Japan’s international trade rose 15% in February compared to January. Positive surplus of foreign trade balance rose to 1.25 trillion yen last month ($11.8 billion) compared to forecasted 1.1 trillion yen. The volume of export fell 1.4% to 4.82 trillion yen, the volume of import fell 6% to 3.57 trillion yen. At the same time, Japan’s export rose 10.3% in February compared to the corresponding period of the last year. That was greatly due to increase in supplying digital camera components, cellular phones and video devices. Import fell 1% due to reduction in demand for oil and natural gas. However, the yen approaches key level of support 105, that is why, there are quite serious reasons to expect currency intervention from the given level.
Recommendations: price has reached a serious level of support on EUR 1,2095-1,2045. In case of breaking that zone out, sales are possible, the closest target 1,2 and long-term target 1,1870.
Recommendations: price has reached a serious level of support on EUR 1,2095-1,2045. In case of breaking that zone out, sales are possible, the closest target 1,2 and long-term target 1,1870.
The forecast was created by trans1.
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