FOREXYARD: Forex News Blog

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Euro-Zone Predicted to Strengthen – Week of 9 February 2009 Posted: 08 Feb 2009 03:11 PM PST EUR Recently, the EUR posted gains on the Dollar for the first time in 5 weeks, ending trading at the 1.2935 mark on Friday. The week’s big fundamental event was the decision by the European Central Bank (ECB) to hold its benchmark interest rate steady. Another boost for the EUR was a rally in U.S. equities, sparked by a poor report of U.S. jobs data. Investors are predicting a bigger government stimulus plan for the American economy. This could be a boost for the EUR. Looking towards the week ahead, the market mover may be the German Preliminary GDP report. Germany is the Euro-Zone’s biggest economy and better-than-expected news may help to push the EUR/USD to the 1.3100-1.3200 range. GBP The GBP rallied this week as a shift to riskier currencies helped send the GBP/USD to the 1.4784 level. The currency has gained 7% in the past two weeks after the Pound lost favor in the market on a worsening economic situation in the British economy. The week was highlighted by a 0.50% interest rate cut by the Bank of England (BoE). This was viewed as a positive for the slumping financial situation in Britain. The coming week will see a BoE Inflation Report on Wednesday. This report has the potential to set British interest rate policy for the next two years. It may help to extend the recent appreciation of the Pound to the 1.5000 mark against the U.S. Dollar. CHF The Swiss Franc suffered amid a climate of further risk taking last week as U.S equity markets rallied, giving traders a reason to jump into higher yielding currencies. Selling of the USD/CHF ended the week at 1.1616. This Tuesday, the Swiss CPI report will be released and could have a negative impact on the currency pair. A greater-than-forecasted reading from this indicator has the potential to increase the losses further for the Franc, sending the USD/CHF to the 1.1800 resistance level.

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