Forex Crunch Fed Mini-Hike – Which Currencies Are More Vulnerable |
| Fed Mini-Hike – Which Currencies Are More Vulnerable Posted: 19 Feb 2010 01:53 AM PST
Ben Bernanke surprised everybody with a hike of the Fed’s discount rate. The response was immediate and shook all the markets. Some currencies weathered the storm, while others are at critical spots. Here’s a quick damage control. The Federal Reserve only raised the special discount rates for banks, and said that businesses and households won’t feel it. Apart from the discount rate, they also made further retreats from special measures. In various speeches, Fed officials downplayed the move and said that it won’t affect the Federal Funds Rate. If this move was so minor, why was it released after the US stock markets were closed? Well, they knew that this would have a strong impact. With this surprising news events, we get to see the nature of the forex markets – constantly moving, 24 hours a day. OK, let’s review the impact:
American consumer prices will be released soon, and this might hint about the real rate: Federal Funds Rate. If inflation picks up, Bernanke has a good reason to raise the rates. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| Forex Daily Outlook – February 19th 2010 Posted: 18 Feb 2010 02:00 PM PST
The week ends with more important releases: British and Canadian retail sales and American inflation numbers among other releases. Let’s review the events: Commodity currencies enjoyed a good week, riding on less fear in the markets. Will they manage to close the week higher? In recent weeks, Fridays were quite crazy. Following the rate decision yesterday, the BOJ releases its monthly report. This might move the yen after the rate decision didn’t have too much impact. In Europe, purchasing managers’ indices will pour in during the morning. France starts with its Flash Manufacturing PMI and Flash Services PMI. This will be followed by the same data from Germany and then for the whole continent. All the scores are above 50 points, meaning expectations for economic expansion. All the numbers are predicted to edge up. For more details and also technical levels for the Euro, read the EUR/USD forecast. And there’s more in Europe: German PPI is expected to show a rise of 0.4% in prices, after a drop of 0.1% last month. The European Current Account is expected to turn negative, showing a deficit of 0.6 billion. In Britain, an eventful week ends with the release of retail sales. British sales are predicted to drop by 0.5%, after rising last months. This might be the direct result of the rise in unemployment reported earlier this week. Moving across the Atlantic, Canadian retail sales are predicted to jump by 1.1% after dropping last month. Also Core retail sales are expected to rise, but at a more moderate pace – 0.4%. Also note the Canadian Leading Index which is predicted to continue the positive trend and rise by 0.6%. For more on the loonie, read the Canadian dollar forecast. In the US, we have a major release to close the week: US Consumer Price Index is predicted to rise by 0.3%, more that last month’s 0.1% rise. Core CPI is expected to rise by 0.2%. Members of the Federal Reserve began talking about exit strategies from the crisis. These focused on the selling mortgage bonds that the central bank holds. They didn’t talk about a rate hike, which can only come after a significant rise in prices. It probably won’t be seen today. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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