So what’s going on with the Forex market this upcoming week? The USD had a rough time last week. Let’s see where it is headed this week and how it will effect us.
According to Adrian Jones of Tradeology.com it looks like a tough one.
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Earlier today, the Greenback remained under pressure after disappointing first quarter U.S. economic growth. This left Sterling, the Yen and the Aussie at multi-week highs.
The Dollar touched levels not seen since late February. It fell as low as 80.25 Yen, while Sterling stood at $1.6276, following an 8 month peak of $1.6280 hit on Friday.
With Japan closed for a public holiday today and most of Asia shut on Tuesday for the May Day holiday, trading in Asia is expected to be subdued.
On Friday, data had shown that U.S. economic growth slowed in the first quarter. This was partly as a result of businesses cutting back on investment and this has strengthened the Federal Reserve’s case that interest rates should be kept near zero, at least through late 2014.
Market expectations now persist that this indeed will be the case, notwithstanding that more bond buying or quantitative easing (QE) is not on the cards just yet. The result is that the Dollar will likely be driven lower and risky assets higher.
Despite Britain’s double-dip recession, this gives a partial explanation of why Sterling has outperformed the Greenback. Many analysts are now of the view that Sterling’s fortunes appear to have turned a corner and as a result, currency speculators seem now to expect further gains.
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Another view of the Forex market this week comes from Forexpros.com. Here’s part of it now.
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The yen firmed up against the dollar and the euro after new easing measures announced by the Bank of Japan fell short of some market expectations. The BoJ said it will increase the size of its asset purchase fund by JPY5 trillion, while a program to provide loans to banks was cut back by JPY5 trillion.
Elsewhere, the pound rallied to an almost eight-month high against the greenback on Friday, despite data earlier in the week showing that the U.K. economy entered a recession in the first quarter.
Data on Wednesday showed that U.K. GDP contracted by 0.2% after contracting by 0.3% in the fourth quarter, confounding expectations for 0.1% growth.
The pound has remained supported in recent weeks, with investors viewing the currency as an alternative to the euro, but the weak growth data has sparked fresh concerns over the possibility of more easing by the Bank of England.
Elsewhere Friday, Swiss National Bank president Thomas Jordan said the central bank was prepared to take further measures to weaken the franc if necessary, as the strength of the currency still poses “considerable challenges” to the economy.
In the week ahead, Friday’s data on U.S. non-farm payrolls will be eagerly anticipated amid concerns that the economic recovery in the U.S. is losing momentum.
In the euro zone, investors will be looking ahead to Wednesday’s data on manufacturing activity, as well as the outcome of the European Central Bank’s policy meeting on Thursday. In addition, both Spain and France are to hold auctions of government debt.
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There you have it. If you have any comments leave them down below.
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