We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Mixed
More View more
Real Time News
  • LIVE IN 30 MIN: Join Senior Currency Strategist @CVecchioFX as he reviews key event risk in the week ahead and help strategize how to approach FX markets. Register here: https://www.dailyfx.com/webinars/390818203?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.90%, while traders in US 500 are at opposite extremes with 77.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/BZpmb8E27U
  • LIVE NOW: Join Analyst @nickcawley1 as he discusses the outlook for UK financial markets in the week ahead! Register here: https://www.dailyfx.com/webinars/614330707?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Tune in to @CVecchioFX 's #webinar at 7:30 AM ET/12:30 AM GMT to prepare for major event risk in the week ahead. Register here: https://t.co/QscMCDP1ud https://t.co/KJpPdsyeGn
  • Commodities Update: As of 11:00, these are your best and worst performers based on the London trading schedule: Silver: 0.22% Gold: 0.22% Oil - US Crude: -0.89% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/64XxgDkWYe
  • Fear the steepeners https://t.co/fEfBdKDfYR
  • Forex Update: As of 11:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.29% 🇯🇵JPY: 0.12% 🇪🇺EUR: 0.11% 🇨🇦CAD: -0.05% 🇳🇿NZD: -0.18% 🇦🇺AUD: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/s12V6FC6jq
  • Indices Update: As of 11:00, these are your best and worst performers based on the London trading schedule: US 500: -0.02% Wall Street: -0.02% Germany 30: -0.06% France 40: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/G9ieYqoCfz
  • LIVE IN 30 MIN: Join Analyst @nickcawley1 as he discusses the outlook for UK financial markets in the week ahead! Register here: https://www.dailyfx.com/webinars/614330707?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/5KBXSdj8OD
British Pound Advances as Inflation Expectations Push Higher, Euro Holds Tight Range

British Pound Advances as Inflation Expectations Push Higher, Euro Holds Tight Range

2010-03-11 11:56:00
David Song, Currency Strategist
Share:

Talking Points
•    Japanese Yen: Mixed Across the Board
•    Pound: Inflation Expectations Jump to Highest Since 2008
•    Euro: ECB Reiterates Rates Are “Appropriate”
•    U.S. Dollar: Trade Balance on Tap

British Pound Advances as Inflation Expectations Push Higher, Euro Holds Tight Range


The BoE quarterly inflation attitudes survey showed consumer price expectations rose to an annualized rate of 2.5% from 2.4% in November to mark the highest reading since 2008, and the rise could lead the central bank to maintain a wait-and-see approach over the coming months as policy makers aim to balance the risks for the U.K. economy. However, as market participants speculate the MPC to expand its asset purchase program in the month’s ahead, dovish rhetoric from the BoE could drive the exchange rate lower as policy makers continue to see a risk for a protracted recovery. Nevertheless, the National Institute of Economic and Social Research said economic activity increased 0.3% during the three-months through February after expanding a revised 0.6% during the previous month, but went onto say that the economy will not return to “its peak at the start of 2008 until 2012.”

The Euro tipped higher for the second day, with the exchange rate rising to a high of 1.3666 during the overnight trade, and we may see the single-currency continue to trend sideways going into the U.S. trade as the European Central Bank maintains a cautious outlook for the region. The central bank’s monthly report reiterated that interest rates remain “appropriate,” and said that the large deficits in the economies operating under the single-current puts carries an additional burden on monetary policy. Moreover, the ECB pledged to “provide liquidity support to the banking system,” while gradually phasing out its emergency measures, and went onto say that its decision to tighten its terms of lending will “ help to avoid distortions associated with maintaining non-standard measures for longer than needed.” At the same time, Governing Council member Yves Mersch said that the push for a European Monetary Fund is nothing more than “a lot of fantasy,” and cautioned on using “central bank money to bail out fiscal deficits.”

The greenback was mixed across the board, with the USD/JPY crossing back above the 50-Day SMA (90.50) to reach a high of 90.55, and risk trends are likely to drive price action going into the North American trade as the economic docket for the U.S. remains fairly light. The trade deficit for the world’s economy is expected to widen to $41.0B in January from $40.2B in the previous month, while initial jobless claims are forecasts to weaken to 460K in the week ending March 6 from 469K. At the same time, continuing claims is anticipated to hold steady at 4500K for the week ending February 27, while the Fed is scheduled to release its Flow of Funds report at 17:00 GMT.


Do You Expect a Breakout in the EUR/USD This Month? Join us in the Forum

Related Articles: 

Euro Forecast to Recover Against US Dollar on Options Sentiment


To discuss this report contact David Song, Currency Analyst: instructor@dailyfx.com

Market Brief

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.