BSEIndia: All Stock Market News: DG

Monday, January 28, 2008

DG - Forex Update

USD : It is set to be another volatile week with a series of market moving data due for release. In the US the Fed holds its policy meeting and is expected to cut rates by 25 to 50 basis points despite its 75 basis point cut to 3.5% at an emergency meeting last week. On the data calendar this week there is a raft of very important reports including; New Home Sales, Durable goods orders, Consumer Confidence Index, the FOMC meeting, Personal Income, Chicago PMI, the non-farm payrolls and Unemployment rate reports for January. Also on the data calendar ISM Manufacturing Index, Construction Spending and UoM Consumer report.

AUD : With continuing volatility, fragile risk appetites and the likelihood of interest rate cuts from the FOMC, it is set to be another roller-coaster week for carry-trades and hence the Aussie dollar. Strong commodity prices will continue to underpin, cushioning sharp down-side risk. On the data calendar this week; NAB business survey, Dec credit and Jan RBA commodity price index.

NZD : As for its Aussie counterpart, it is expected to be a volatile week for the kiwi, with equity markets and developments in the US driving direction for the kiwi. On the data calendar this week; Dec building consents and Dec merchandise trade feature.

GBP : On the data calendar this week, the UK will be releasing a number of housing market related data in addition to manufacturing PMI, none of which are expected to lend support to the sterling.

EUR : It is a relatively quiet week on the economic data calendar with movements in the Euro likely to be driven by US economic data and events. On the data calendar this week; Eurozone retail PMI, German unemployment, German retail sales and manufacturing PMI.

JPY : Risk sentiment trading is likely to continue to be the driving force for the yen this week. On the data calendar this week there is a lot of Japanese economic data concerning the labour market, consumer spending and manufacturing activity. None of these are expected to be particularly market moving for the Yen given the barrage of US data, but are expected to reflect the overall vulnerability of the Japanese economy.

CAD : The Canadian dollar remains supported to by newly positive Canada-U.S. interest rate differentials, and also by a sense that the Bank of Canada will likely stick to more measured rate cuts in the weeks ahead than the Fed, which has to deal with a more pronounced economic slowdown and troubled credit markets in the U.S. On the data calendar Nov GDP and Dec industrial product prices feature.