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Forex Trading Weekly Forecast - 10.12.2012
Dollar Requires Stronger Risk Aversion to Kindle Lasting Trend
- Even the most optimistic investor has to be nervous about the state of risk appetite. This past week, the benchmark US equity indexes broke critical levels of support and plunged to three-month lows. A turn here speaks to the kind of concern that not even a central bank guarantee can prevent. Under this kind of pressure, we would expect the Forex market’s preferred safe haven currency (the US dollar) to surge. So why hasn’t it taken off yet?
Euro Vulnerable Amid Weak Economics, Greek and Spanish Concerns
- With another weak performance over the past five days behind the Euro, it’s important to reflect on the path traveled. In terms of data, Italian and French manufacturing data turned lower over the past months, and the German growth forecast for the coming year was revised lower as well – both clear signs the crisis is having real impacts on the relative core.
British Pound Forecast Remains Bearish Ahead of Key Week
- Recent disappointments in UK economic fundamentals set the stage for similarly lackluster UK labor reports and Retail Sales data in the days ahead, but a Bank of England Inflation Report may have the most significant implications for the British Pound. The British central bank left monetary policy unchanged through its recent meeting but did not produce a statement following their decision.
Japanese Yen Unfazed By BoJ Policy, 3Q GDP In Focus
- Indeed, the dovish remarks by the Bank of Japan (BoJ) failed to weaken the local currency even as Governor Masaaki Shirakawa pledged to tackle the ongoing threat for deflation, and the central bank is likely to come under increased pressure to shore up the ailing economy as the GDP report is expected to show the growth rate contracting 0.9% in the third-quarter.
Australian Dollar at Risk on Greece Woes, Fiscal Cliff
- The Australian Dollar is rebuilding its correlation with broad-based risk sentiment trends after diverging to focus on domestic policy issues over the past six weeks. The breakdown in the relationship came as the Reserve Bank of Australia (RBA) hinted at forthcoming interest rate cuts in minutes from September’s policy meeting and delivered a 25bps reduction at October’s sit-down.
Gold Reverses Course Amid Sharp Risk Sell-Off, Is the Rally Real?
- Recently, stronger-than-expected US metrics have weighed on gold prices on expectations the Federal Reserve may begin to normalize monetary policy, thereby alleviating concerns over rising inflation. So what explains the sharp rally seen in gold this week?
Canadian Dollar Has Solid Fundamentals Yet Faces Pressure
- In terms of the coming five days, there’s only one data point in focus: the Existing Home Sales report for October on Thursday. While there’s no forecast provided, the line in the sand comes in at +2.5% month-over-month, considering that was September’s reading. Needless to say, given the concerns around the housing market recently, this is a print worth paying attention to.
New Zealand Dollar To Maintain Range-Bound Price On RBNZ Policy
- As the 10, 20, 50 and 100 Day moving averages on the NZDUSD start to converge with one another, the indicators instill a neutral outlook for the pair, and the kiwi-dollar may continue to track sideways ahead of the December meeting as it trades above the 0.7900 figure.
Even the most optimistic investor has to be nervous about the state of risk appetite. This past week, the benchmark US equity indexes broke critical levels of support and plunged to three-month lows. A turn here speaks to the kind of concern that not even a central bank guarantee can prevent. Under this kind of pressure, we would expect the Forex market’s preferred safe haven currency (the US dollar) to surge. So why hasn’t it taken off yet?
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