Forex Market News
The US continues to grow and at or above expectations, with GDP at 4.6%. Therefore we can expect the US dollar to continue to outperform over the Europeans, Japanese, Australians and New Zealanders. This will run right up until the US start to raise rates. At that point (expected June 2015) things will turn for the US.
The Canadians, having close to 80% of their export industry reliant on the USA, will be dragged along with it. So, I am still bullish the Loonie and looking for buying opportunities at every turn, just not against the greenback. The Europeans and Japanese are still looking to add stimulus thanks to weak growth and super low inflation. So, still bearish them and look to sell on any opportunity. The antipodes are on struggle street. Nothing too dramatic but the Aussies are at the bottom of the cycle, the next move in rates will be up but I do not expect that to happen until mid to late next year. Therefore the Aussie I am a bear for some months to come. Look for it to trade to 80 cents, perhaps even 75 but that is open to negotiation later. From there, once we start to raise rates expect the dollar to head back into the 90’s. The Kiwi’s, well, I expect it to spend most of its time between 65 and 75 for the next 6 to 9 months.
Now to the cable. Late last week, Carney was recorded as saying: “With many of the conditions for the economy to normalize now met, the point at which interest rates also begin to normalize is getting closer. While there is always uncertainty about the future, you can expect interest rates to begin to increase.” Fair call. So, still bullish the pound. Again maybe not against the greenback, but certainly against diverging economies (euro/yen/aussie etc). http://www.bloomberg.com/news/2014-09-27/pound-climbs-to-two-year-high-versus-euro-after-carney-comments.html