Forex Forecast

Fed On Hold For Longer The FOMC surprised markets by first pledging to leave rates on hold until late 2014 and secondly committing to an explicit inflation target. The Fed will target the y/y change of core personal consumption expenditure (PCE) at 2%, moving away from the previous informal target range of around 1.7% to […]

Dollar Bid Into FOMC The dollar gained across the board in the European session as investors geared up for the monthly FOMC meeting. Despite a strong German IFO print, the euro dropped one big figure, a further indication that the recent risk rally is losing some steam.

USDJPY Firm Into FOMC USDJPY continued to march higher during the Asia session despite domestic Japanese exporters selling into the rally. The move got underway during the US session yesterday, likely in anticipation of a significantly less-dovish Fed.

Fed On The Horizon Risk assets gave back some of their recent gains on Tuesday ahead of a busy day of data releases. There were few developments on Greece, following the conclusion of Mondays monthly finance minister meeting, although the continued uncertainty is likely to keep investors cautious.

Strong Eurozone PMIs There were few developments on Greece, following the conclusion of last night’s monthly finance minister meeting. Finance Minister Venizelos said he expects to conclude a PSI deal in the next few days and has a green light from the Eurogroup to do so.

Ministers Reject Tentative Bond Plan Eurozone finance ministers concluded their regular monthly meeting overnight. Most notably, the ministers rejected the tentative deal already struck provisionally between Greece and the IIF on the terms of the upcoming bond swap.

Euro Breaches 1.30 The euro settled above 1.30 during the US session as investors remain hopeful of a settlement on the Greek PSI. However, reports remain conflicting – a finance ministry source noted that there will be a final offer on the bond swap by February 13th, and the Eurogroup said that current talks on […]

Eurogroup Meeting Eyed The euro rallied midway through the European morning, following comments from German CDU budget spokesman Barthle. He said that running the EFSF and the ESM in parallel is being discussed within the party. While investors reacted favourably to the comments, this has been suggested on many occasions in the past.

Greece Deal Delayed The details of the Greek bond swap have yet to be finalized, despite hopes of conclusion being reached on Friday. The Financial Times reported that terms had in fact been provisionally agreed between Greece and the IIF, but that the EU/IMF objected to the plan on the grounds that the proposed coupon […]

Euro Holds Gains EURUSD consolidated its recent gains overnight and pushed to a new two-week high, trading in a 1.2929-1.2973 range. The latest China Flash PMI for January was benign and not market-moving. The triggers for the latest bout of euro strength are clear: Spanish and French auctions were taken favorably by the markets.