FX Outlook

May 28, 2015 by

The Fx market volatility continues as USD strength get stronger by the day and EURO continues to depreciate. Over the previous trading days, the market sees USD bought across board and pushing down all other pairs against it. This strength can be attributed to the comment of the FED Chairman on her position to raise rate as soon as economic data meets the banks expectation. This comment has seen investors investing more in the USD in the hope of a rate hike sometimes this year. Assets like Gold has been hit by the strength of USD.US companies are also not benefitting from the strong dollar, this affects their export market.

Elsewhere, the Euro continues to sell off on fears of a possible “Grexit” on the grounds of excess debt and possibility of a default ahead of the payment deadline. Euro has being selling off massively against all pairs, especially the USD. The Strength of USD has also helped in the downward trend of the EURO.

The GBP has also seen some volatile on the backs of a “Brexit” from the EU. This was coupled with a leaked email from the bank of England about how to tactical plan for the exit. The GBP is not really weak if paired with other currencies except the USD. It will be a better option to buy sterling against other currencies such as yen.

Aussies has been on a downward trend over the past couple of trading days. This is attributed to the falling commodity prices which the economy so much rely upon. It will also be recalled that the RBA governor wants a weaker AUD so as to boost economic growth, especially international trade. If the currency should fail to fall as expected, there might be more Rates cut.

The Japanese Yen has seen the most weakness among the currencies. The currency is at the weakest level against the dollar in over a decade. This is the major goal of the BOJ so as to boost international trade. We expect to see a further weakness on the yen.

However, some economic reports will be out today and tomorrow. These are important data that will possible dictate the direction of the market. The quarterly GDP data for UK and US are expected. A strong GDP figure will continue to strengthen the USD, while a poor data might see a bit of sell offs.