Interest rates expected to remain steady

The Australian dollar is turning lower in currency trading on the FX market today as interest rates are expected to remain steady for some time.

Today, RBA Governor Glenn Stevens pointed out that things have slowed dramatically in the Australian economy recently, and the need for higher rates has been put on hold. GFT’s Boris Schlossberg reports in FX360 on Aussie rates:

Although RBA’s communiqu

Interest rate hike could be delayed

U.S. economic data continues to conflict, indicating that the U.S. economic recovery is going to continue to experience slow going. This morning, consumer price data showed a drop in April, as retailers respond to weak demand with a high employment rate and continued housing market woes.

As a result, it is likely that the Fed will delay raising interest rates, keeping from normalizing monetary policy. GFT’s Kathy Lien explains in FX360 what the Fed is likely to do:

The lack of inflation is not surprising considering that global demand remains weak.

Forex trading with GBP/USD

The sterling can’t seem to get ahead in currency trading on the FX market. Even though the FTSE 100 is doing well right now, the pound remains down in forex trading. Indeed, the euro is doing better, in spite of continued concerns over euro zone members’ debts.

And, debt and political concerns are weighing on the sterling besides, reports Boris Schlossberg in FX360:

Meanwhile fears over a hung Parliament continue to dog sterling with the pair tumbling below 1.5200 in London morning trade. A report in the UK Telegraph

Retail sales unable to boost greenback in forex trading

The U.S. dollar is down in currency trading on the FX market this morning as forex traders look for higher returns. Even the improved retail sales data could not get forex traders to focus on fundamentals — especially since the Fed has been reluctant to jump on board with optimism regarding economic recovery.

However, there are hopes that things may change today. GFT’s Kathy Lien reports in FX360 on the economy and hopes for a change in the Fed’s stance:

Despite the obvious improvements in the labor market, the financial markets and consumer spending, the Fed is not buying it.

Forex trading with the greenback

The U.S. dollar is higher in currency trading on the FX market this morning, thanks to the news that the U.S. economy added jobs. Indeed, the U.S. saw the biggest boost to jobs in three years.

As a result of this news, the U.S. dollar jumped against the sterling and the euro in forex trading, heading higher on stronger economic fundamentals. And there is a good chance that the dollar’s gains won’t ended today by a risk rally.

GFT’s Kathy Lien reports in FX360 on the U.S. dollar:

As for how the dollar could trade for the rest of the day, with the absence of U.S. equity traders, we did not see the risk rally that tends to occur near the U.S. equity market open.

Sterling in forex trading

The pound slipped below 1.5000 in currency trading on the FX market earlier in trading. The move was not much of a surprise, with the news that inflation is cooling in Britain, giving rise to the assumption that quantitative easing will continue for a while.

Other pressures on the U.K. pound in currency trading include the fact that Greece remains a sore spot in the European Union. While Britain is not part of the monetary union, it is still affected by what happens in the euro zone.

The U.S. dollar continues to hold its own. The health care reform bill is unlikely to damage the U.S. dollar, since it means an overall reduction in deficit, and a degree of reining in spending on Medicare.

See AlsoSterling in Forex TradingCurrency trading on the FX market

Sterling in forex trading

Currency trading on the FX market should consider that the sterling is dropping as traders consider the latest warning from Moody’s. The credit rating agency issued warnings that the U.S., U.K., France and Germany could face ratings downgrades soon with regard to their sovereign debt.

The countries that are considered most vulnerable right now are the U.S. and the U.K. And Britain is considered even more vulnerable than the U.S., reports Boris Schlossberg in FX360:

Although both Anglo-Saxon economies face serious challenges in managing their fiscal deficit problems, the UK is far more vulnerable that the US to a potential downgrade because of the relatively small size of capital markets and high dependence of its economy on the finance sector for growth.

It is little surprise that this news is resulting in a drop by the sterling in forex trading against the U.S. dollar. Added to the fact that the Bank of England might start quantitative easing again, and the fundamentals for Britain look shaky indeed.

See AlsoSterling in Forex TradingCurrency trading on the FX market

Kathy Lien quoted by corporate fx.

The dollar is not under threat from a rallying euro because “fundamentally, the Eurozone is in worse shape than the US,” one foreign exchange hedging strategist has claimed.

Writing for FX360, Kathy Lien, director of currency research at GFT, explained that while the euro rallied against the dollar at the end of last week, it is likely to progress further and will have difficulty hanging on to those gains.

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