US Dollars with Some Fresh Fundamentals For Next Trading Hours!!!
Last week trades watched that that worlds biggest Economies currency (US Dollar) ruined by the most of its counterpart due to sovereign credit rating fear along with lackluster interest rate prospects, On top of it Fed Chairman Mr Ben Bernanke dovish stance regarding US economy with critical notes over the future monetary were sufficient matters to keep the Dollar down. In deed these risks remain weighed to the downside in the week ahead.
So traders needs to focus over on ongoing debt negotiations and implications for the probability of a deal on the debt ceiling rather than the economic calendar as the top rating agencies Moody’s and Standard & Poor’s closely watching the situation and thinking to downgrade the US sovereign credit rating.
Euro Fundamentals for Next Week Trading Hours
Although the European policy makers are kept busy for the appropriate measure to save them from financial derivatives trading affairs since last year. These measurements really worked for them as we see the Euro zone able to keep their interest rate up. But still the Euro zones crisis are still not over and still contain the crumbling situation.
Few week back, the dominate European issues grow very rapidly, issues like Greek, Portugal, Italy and Ireland despite of the extra efforts the policy makers had made.
Although in the coming week the trouble related to sovereign ratings downgrades will continue to dominate the financial headlines of euro zone but it’s expected that influence will likely taper off. Because these issues already digested by the market.
But maybe we see some adjustments in shape of bailout packages as ECB is also quiet reluctant in its rule and regulation for the sake of effected countries. So my dear forex trader’s focus should make over some bailout discussions for these countries.
The great and most positive thing has happened in the shape of result of EU stress test result. “ This second attempt to review of the 90 important banks from the Europe and plus UK region as well encouraged groans when it was reported that only 8 banks (5 Spanish, 2 Greek and 1 Austrian) for a total need of 2.5 billion Euros. This was the much better result after the first stress test left 7 banks with a failing grade and tab to raise 3.5 billion Euros”.
But over and above the most important consideration for Europe would be the liquidity trouble which directly makes the impact of Euro zones financial health. That’s why for the investor’s huge concern must be fallout for further sovereign downgrades. On other hand if Greek problem would not resolve within time the Euro could be under pressure.
So the wave of uncertainty regarding Euro is still exist, But my dear forex traders however does not guarantee selling pressure because the it’s major counterpart a US dollar also in huge problem as I already discuss the threat of a US sovereign downgrade or acceptance of QE3 catches traction, In this case the euro will suddenly fill the role of liquid alternative.
British Pound for Next Week Trading Hours
The British Pound found strong support as I indicated in my GBP/USD over Fridays analysis. However the Bank of England that it would leaves the rates on hold until unlimited period in order to focus on their economic growth. So by watching the UK inflationary reports and on other hand policy makers not willing to be flexible about the rate hike we may see some immense pressure over the British pound.
Although in the past week the British pound performed better against the US dollar. But it was the Dollars own weakness because the British data was more softer than expected like core producer price index reading down to 3.2 percent from 3.4 percent, while the retail price index fell to 5.0 percent, short of the 5.2 percent expectation, housing sector and labor market also showed signs of fragility, with the DCLG reading of United Kingdom House Prices contracting by 1.6 percent
The British pound direction will be confirmed after the Bank of England minutes from their most recent Monetary Policy Committee are due on Wednesday. The most important will be the commentary in case of dovish stance by policy makers due to inflationary factor the sterling could be in bearish direction.