Wednesday, March 23, 2011

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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Euro Continues To Surge and Hits 4-Month High vs. Dollar

Posted: 22 Mar 2011 12:23 AM PDT

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The two main topics in the market are still the ongoing Japanese nuclear crisis and the conflict in Libya. Over the past few days it has been said that officials have made progress in cooling nuclear reactors at a crippled nuclear plant. This has increased risk-appetite in the market, and as a result the euro rallied against most of the major currencies.

The euro's rally also took place due to expectations that the European Central Bank (ECB) will hike rates in April. ECB officials have already hinted in several occasions that the ECB will not tolerate the surging inflation, which is caused mainly by the rise in energy prices, and will act to reduce it. This simply means that the ECB will probably hike rates soon from a record low of 1.00% by half a percent or maybe even a whole percent, to 2.00%.

The conflict in Libya and the protests in Yemen continue to effect energy prices. By now crude has reached over $104 a barrel. It seems that if NATO forces will continue to bomb Libya, crude prices will continue to rise, and the price of $106 a barrel seems like a reasonable price this week.

Here are today's leading news events:

• 09:30 GMT, British Consumer Price Index (CPI) – The CPI is considered to be the most reliable inflation gauge, and thus its release tends to have a significant impact on the market. If the end result will beat expectations for a 4.2% increase, the GBP may continue to strengthen against its major rivals.

• 12:30 GMT, Canadian Core Retail Sales – The core report measures the change in the total value of sales at the retail level, excluding automobiles which tend to be very volatile. If the end result will beat projection for 0.8%, the CAD will probably be supported.
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