Pressure upon dollar will proceed and in May
The last month was marked by serious falling of dollar. Its quotations to the main European currencies only in April have decreased more than on 2 %. Stimulus to easing dollar and growth of Europeans were both the American news, and messages from the Europe.
To one of the first pushes became the offer of the Ministry of Finance of the Great Britain on granting tax privileges for transnational corporations, transit capitals back to the Great Britain. The similar practice was used by the United States in the past and has led to growth of dollar. It is no wonder, that investors have reacted purchases of pound to the similar initiative of the British officials.
News about that inflation industrial and consumer prices in the Great Britain in March was considerably above, than that was expected by analysts, only has strengthened demand for pound. The positive news background was present and at the Eurozone. Indexes of German institute Zew have appeared above forecasts. Moreover, experts of institute expect the further acceleration of economic growth in Germany during the following of 6 months. All this promoted that pair GBP/USD could overcome important psychological a mark in 2 dollars for pound and be fixed above it. The euro could grow above a level 1.3600.
The American currency had no place to get support: the important data on economy of the USA appeared not so favorable. Rates of growth of consumer prices in Staffs have completely coincided with expectations of economists and have made +0.6 % of m/m and +2.8 %, that has disappointed investors, and the volume of purchases of the American securities foreign investors in February has made only 58 billion dollars though value 81.5 billion was expected
Rates of a rise in prices define a monetary and credit policy of the central banks. Preservation of inflation at a present level can have, finally, adverse consequences for economy. Not without reason, officials of the Federal Reserve at the session in the beginning of month have agreed that the basic subject for anxiety there is a risk of high inflation. The committee believes, that the further toughening of a monetary and credit policy can appear necessary for achievement of lower rate of inflation. Therefore the Federal Reserve has especially noted, that the further change of a monetary and credit policy will depend on change of prospects of growth of inflation.
Interest rates in the Eurozone have remained also at a former level. Jean-Claude Trishe, contrary to expectations, has refrained from use of the formulation « special vigilance » with reference to inflation. As experts believe, was refrained from the use of the mentioned formulation to avoid even more rapid growth of uniform currency which and without that was at multimonthly heights.
The bank of Japan also did not begin to change the monetary and credit policy and has left interest rates at a former level. Performance Fukui has surprised with nothing the market, it has confirmed, that in the country the moderate economic growth proceeds. Fukui again has concentrated attention that cannot give the forecast on the future of interest rates as the decision concerning a credit policy in advance is not accepted.
Thus, from a position of questions under interest rates, the situation in the currency market continued to consider percentage differential. I.e. currencies of those countries where increase of rates is expected, were in demand, while expected downturn of rates stimulated sales of dollar in the USA.
The forecast for May
After enough rough events in the currency market the last month last spring month can become less interesting. It will be more exact less interesting, most likely, for those investors who prefer quiet investment on a trend. In May of movement of rates, most likely, there are more diverse. Certainly, prospects of change of interest rates remain former: they support idea of sale of dollars for the European currencies. However high levels on euro and the pound, reached these April days, will stimulate partial fixation of profit and sale of the European currencies. Therefore first half of May, most likely, will be noted by decrease in quotations of euro/dollar and pound/dollar. Such succession of events is especially probable, if the American economic parameters in the beginning of May will appear above forecasts.
The European official believes that the Bank of Japan does a mistake, not raising the rates. However Japanese, on the contrary, do not wish to hasten with similar increase since inflation in the country is still very small while low rates of economic growth cause fears in the government of Japan. Whether the position of Bank of Japan will change or not – cost of yen will depend on it also. If officials will give a signal about fast increase of rates it will lead to growth of yen. Otherwise, speculators will continue to use the Japanese currency for financing purchases of currencies of other countries.As a whole in May of analytics expect, that the euro/dollar will change within the limits of 1.3430-1.3720, pound/dollar – 1.9770-2.0300, and dollar/yen – 122.50-118.50.
To one of the first pushes became the offer of the Ministry of Finance of the Great Britain on granting tax privileges for transnational corporations, transit capitals back to the Great Britain. The similar practice was used by the United States in the past and has led to growth of dollar. It is no wonder, that investors have reacted purchases of pound to the similar initiative of the British officials.
News about that inflation industrial and consumer prices in the Great Britain in March was considerably above, than that was expected by analysts, only has strengthened demand for pound. The positive news background was present and at the Eurozone. Indexes of German institute Zew have appeared above forecasts. Moreover, experts of institute expect the further acceleration of economic growth in Germany during the following of 6 months. All this promoted that pair GBP/USD could overcome important psychological a mark in 2 dollars for pound and be fixed above it. The euro could grow above a level 1.3600.
The American currency had no place to get support: the important data on economy of the USA appeared not so favorable. Rates of growth of consumer prices in Staffs have completely coincided with expectations of economists and have made +0.6 % of m/m and +2.8 %, that has disappointed investors, and the volume of purchases of the American securities foreign investors in February has made only 58 billion dollars though value 81.5 billion was expected
Rates of a rise in prices define a monetary and credit policy of the central banks. Preservation of inflation at a present level can have, finally, adverse consequences for economy. Not without reason, officials of the Federal Reserve at the session in the beginning of month have agreed that the basic subject for anxiety there is a risk of high inflation. The committee believes, that the further toughening of a monetary and credit policy can appear necessary for achievement of lower rate of inflation. Therefore the Federal Reserve has especially noted, that the further change of a monetary and credit policy will depend on change of prospects of growth of inflation.
Interest rates in the Eurozone have remained also at a former level. Jean-Claude Trishe, contrary to expectations, has refrained from use of the formulation « special vigilance » with reference to inflation. As experts believe, was refrained from the use of the mentioned formulation to avoid even more rapid growth of uniform currency which and without that was at multimonthly heights.
The bank of Japan also did not begin to change the monetary and credit policy and has left interest rates at a former level. Performance Fukui has surprised with nothing the market, it has confirmed, that in the country the moderate economic growth proceeds. Fukui again has concentrated attention that cannot give the forecast on the future of interest rates as the decision concerning a credit policy in advance is not accepted.
Thus, from a position of questions under interest rates, the situation in the currency market continued to consider percentage differential. I.e. currencies of those countries where increase of rates is expected, were in demand, while expected downturn of rates stimulated sales of dollar in the USA.
The forecast for May
After enough rough events in the currency market the last month last spring month can become less interesting. It will be more exact less interesting, most likely, for those investors who prefer quiet investment on a trend. In May of movement of rates, most likely, there are more diverse. Certainly, prospects of change of interest rates remain former: they support idea of sale of dollars for the European currencies. However high levels on euro and the pound, reached these April days, will stimulate partial fixation of profit and sale of the European currencies. Therefore first half of May, most likely, will be noted by decrease in quotations of euro/dollar and pound/dollar. Such succession of events is especially probable, if the American economic parameters in the beginning of May will appear above forecasts.
The European official believes that the Bank of Japan does a mistake, not raising the rates. However Japanese, on the contrary, do not wish to hasten with similar increase since inflation in the country is still very small while low rates of economic growth cause fears in the government of Japan. Whether the position of Bank of Japan will change or not – cost of yen will depend on it also. If officials will give a signal about fast increase of rates it will lead to growth of yen. Otherwise, speculators will continue to use the Japanese currency for financing purchases of currencies of other countries.As a whole in May of analytics expect, that the euro/dollar will change within the limits of 1.3430-1.3720, pound/dollar – 1.9770-2.0300, and dollar/yen – 122.50-118.50.
posted by alexsakne at 12:49 PM
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