Hungarian Forint Declines on Interest Rate Speculations

The forint is starting this week under pressure falling from the highest level in almost 10 days before the Hungarian central bank meeting today, which is likely to slash the national benchmark interest rate to a record low for the country since the end of the socialist era.
The Hungarian central bank will publish its decision regarding the current interest rate levels today at noon, GMT time, and according to most economists the Central European nation is likely to cut the rates to a record low of 8 percent from the present 8.5 percent, the highest in the European Union together with its neighboring country, Romania. The speculations regarding the interest rates are forcing the forint down as it can be understood that current government efforts to stimulate the economy are not being sufficient to revive Hungary from its worst recession in 18 years, as unemployment doubled since last year, and the IMF bailout was not enough to revive growth in the nation.
Analysts indicate that even if speculations are suggesting a 0.5 percent slash for the national interest rates in Hungary, the central bank may once again surprise economists as the previous time and go for a full 1 percent cut, which would be definitely worse for the forint’s performance.
EUR/HUF traded at 268.70 as of 10:21 GMT from an opening rate today in Budapest of 268.50. USD/HUF followed the same trend climbing slightly to 187.68.

Will the Dollar Rebound This Week?

The U.S. currency lost towards the end of the past week as several factors improved investors’ confidence worldwide, attracting investors to emergent-market currencies, as commodities and stocks surged fueled by positive reports in Europe and Asia, shunning investors from greenback priced assets.
Last week’s end was predominantly optimistic in markets around the world, mainly with Germany and France posting signs of economic growth as PMI increased in both countries and as Federal Reserve Chairman Ben Bernanke stated that the recession is easing adding to the already risk driven attitude among traders globally. The greenback suffered significant losses due to this new wave of risk appetite, since the global slump easing is reflecting in higher-yielding assets appreciation, which declines attractiveness for the relative safety of the greenback.
The forecast for this week regarding the U.S. dollar will rely mainly on reports to be released in Wednesday, when new home sales and durable good orders will be published, and mainly on Thursday, when the quarterly gross domestic product performance is due to be released together with unemployment claims, which are likely to reflect positively for the greenback if the data comes beyond expectations, mostly regarding the GDP, which is forecast to indicate a decrease in the U.S. recession figures, but still remain in the negative field.
EUR/USD ended the week traded at 1.4328. GBP/USD closed at 1.6501.

German Manufacturing Provides Support for Euro Climb

Germany and France posted favorable reports today indicating that the wealthiest countries in the Eurozone may be finding its way out of recession, evidence which helped the euro to gain versus several currencies towards the end of this week’s session.
After surprising economists worldwide several days ago when Germany and France posted an unexpected growth for the second quarter, today, the strongest economies in the Eurozone bloc posted a rise in manufacturing and services industries, once again going beyond estimations and bringing optimism suggesting that the current recession in the region may be having its final days. The PMI numbers were not sufficient to make the euro to rally versus the yen, since China affirmed that it may restrict capital requirements for domestic banks, causing an instant negative reaction in Asian stocks, which is a yen positive factor.
Analysts evaluate the current market reaction to European PMI numbers as a short-term market impulse, even though the data provided are solid and indeed an evidence of economic improvements, mainly in Germany, while France performed less positively in these reports. Germany is the Eurozone’s economic heart, and when the country finds its way out of recession the Euro is like to be bullish.
EUR/USD traded at 1.4303 as of 9:55 GMT from a previous rate of 1.4237 in the intraday comparison. EUR/JPY traded near neutrality from yesterday’s rate at 134.12.

Quantitave Easing Speculations Affect Pound Performance

The pound erased yesterday’s gains this morning after the Bank of England may insist in further quantitative easing measures as an attempt to revive the weakened British economy, which was one of the most affected by last year’s credit crunch.
The pound is losing today versus most of the 16 major currencies after Bank of England Governor Mervyn King suggested that further measures should be taken in order to rescue the British economy from the current recession, raising speculations that interest rates in the country will remain in bottom levels. Quantitative easing measures, such as printing out more bank notes are likely to be used by the Bank of England to stimulate the economy domestically, which would certainly reflect in a prolonged period of losses for the pound, currency which declined massively since last year’s second semester. Naturally opposed to the pound’s movements, U.K. gilts rose today.
The pound will remain pressured in the short-term, according to analysts. The United Kingdom is being one of the most affected countries by the current global recession, and measures taken so far proved to be ineffective to reestablish a sustainable economic growth in the country, which is influencing the nation currency negatively, being the pound one of the most uncertain bets among the top 6 traded currencies.
GBP/USD traded at 1.6422 as of 11:12 GMT from 1.6588 hours before BOE’s last declaration. EUR/GBP rose to 0.8600 from 0.8525.

Euro Reverts Losing Trend on Confidence

The euro stopped its decline versus the yen and the dollar today as optimism reappeared in Europe after a report indicated that German business confidence had the highest rise in more than a year, spurring demand for the Eurozone currency in forex markets.
After several days of consecutive declines the Eurozone currency reverted its trend and climbed after the German ZEW economic sentiment, a highly considered index by traders, climbed the most in more than a year, indicating that the wealthiest economy in the European Union may be dodging its way out of recession. A part from regional news in Europe, an U.S. housing report is likely to show positive numbers today, which declined attractiveness for the currencies which gained the most versus the euro during the past days, the Japanese yen and the U.S. dollar.
The surprising high ZEW economic sentiment helped European markets to pare some of the losses from previous days, but even with a record high for this report, the euro’s did not manage to rally sharply, still indicating that traders remain rather cautious while investing in euro-price assets. Analysts forecast that the euro may gain further if the U.S. housing reports push risk appetite higher today.
EUR/USD traded at 1.4119 as of 10:23 GMT from a previous rate of 1.4047 yesterday. EUR/JPY traded at 134.28 from a previous rate of 132.73 yesterday.

Pound Falls as Real Estate Crisis Deepens

After rallying to a 10-month high versus the dollar two weeks ago, the pound is declining severely versus most of the main traded currencies, as the real estate scenario deteriorates in the United Kingdom, shunning investors from pound-priced assets.
The most reliable internet real estate portal in the U.K., Rightmove Plc, indicated that house prices in Britain declined 2.2 percent this month, after climbing 0.6 percent in July, a fact which immediately declined attractiveness for the pound, since the real estate sector in the U.K. was the main responsible to plunge the country in its worse recession since the Second World War. Stocks worldwide also declined, pushing investors to safer bets, making the Japanese yen and the U.S. dollar the biggest winners today versus the Great Britain pound, as reports indicate that economic conditions in Europe remain worse than in other areas like in South Pacific and Latin America.
Both international and domestic events are affecting the pound this week, and may plunge it to lower levels in the short term as risk aversion is growing worldwide, at the same time that the British economy is unable to show signs of solid recovery, which push traders naturally away from investing in the country.
GBP/USD traded at 1.6301 as of 11:14 GMT from an opening price of 1.6488 yesterday. EUR/GBP rose to 0.8626 from 0.8595.

Negative News Fuel Yen’s Rally

The Japanese currency started another week gaining versus most of the main currencies as several domestic and international events spurred demand for refuge currencies, affecting negatively mainly currencies in Europe this Monday.
Today’s Japanese quarterly GDP figures were posted reaching a 3.7 growth in the second quarter, which was below expectations, raising concerns that an economic recovery in Asia may take longer to appear, oddly enough favoring the yen in foreign-exchange markets. Colonial BancGroup Inc., a traditional U.S. lender, had its operations terminated due to its incapability of managing its growing debts, being followed by other lenders in Arizona and Pittsburgh, raising the number of total banking bankruptcies to 77 in U.S. this year, a fact which certainly adds to pessimism in trading markets. The pound was one of the biggest losers versus the yen today, as home prices continue an historic decline in their price in Great Britain.
Traders are once again purchasing the yen massively in order to guarantee their portfolio’s safety, according to analysts. Even if an economy recovery starts indeed to happen, there are still many global slump consequences that will become evident, raising the number of bankruptcies and unemployment figures worldwide, which will certainly raise attractiveness for the safety profile of the Japanese currency.
GBP/JPY traded at 154.37 as of 9:34 GMT from a previous rate of 156.35 when markets opened this morning in Asia. EUR/JPY continued its decline, being traded at 133.36 from 134.41.