18.02.10
The Euro index experienced a January jump to 15.4 from the December lull of 4.3. A rejuvenated Euro was fuelled by the German ZEW survey results and positive political words. With German economic sentiment, supporting rather than condoning the Euro, the idea of present positive ideology seemed to momentarily override the Euro debt crisis ghost. EU ministers attempted to seal off the forces of doubt with Olli Rehn insisting that ‘market forces cannot have even the slightest doubt about our capacity to act even in the most stressed scenarios.’ Nevertheless the forex market is not a philosophizing place, sentiment and soothing political words alone have a finite impact on trading movements. The desire for cold hard facts played an additional devaluing role, as European ministers failed to endorse their words with an adequate time frame.
Market confidence persisted in Europe, Sterling rose against the dollar to reach its highest point across an eight week period. A report from the financial organization, Nationwide revealed consumer confidence had risen. Consumer optimism mixed with consumer prices as the Office for National Statistics produced a report indicating that the consumer price index was at an eight month high of 3.7%. With growing demand and inflation looming the justification behind a Bank of England interest rate hike may move closer to reality. Sterling is proving a seductive prospect for Forex traders. The Bank of England juxtaposes this market focus by arguing that prices are rising as a result of temporary UK price adjustments such as a rise in VAT however the year on year increase in CPI inflation may suggest otherwise.
The Australian dollar was bolstered by the latest China Securities Journal, predicting GDP growth in 2010 as 10.1%. When compared with the third quarter growth reading of 9.2% this growth looks encouraging. The fate of the Australian dollar remains heavily interwoven with China due to strong connections between Australian exports and China. However increased Chinese confidence also opens up the possibility of inflationary concerns, inflationary worries may force the Chinese Central Bank to impose growth tightening measures.
The Yen continues to rise against the US dollar, as it surfs a consistent wave of growth. The ministry of Economy, Trade and Industry’s index rose to 1.6 from -2.3 and industrial production continues to rise consistently year on year. At 10pm (London time) this evening the ABC consumer confidence index is released, if findings are in line with market expectation then traders can expect the Dollar to regain some of its value against the Yen.
