NZD Headed for Weekly Loss | ForexGen

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The New Zealand dollar continued to lose against other currencies today (except the U.S. dollar) as the economy contracted in the first quarter and the expectations that the central bank will cut the interest rate rose.

Although, the New Zealand currency is rising today against the U.S. dollar, it’s still going down sharply against the yen, euro, and Australian dollars. It will probably end the week in the negative zone against those three currencies.

The gross domestic product fell 0.3 percent in the first quarter of 2008 in New Zealand showing that the 8.25 percent interest rate is pressing hard on the country’s economy. Output contraction may play a significant role at the next Reserve Bank of New Zealand monetary policy meeting.

Currency analysts now await at least 1 percent rate cut by the end of this year. Last several years high interest rate was one of the major reasons for NZD’s attractiveness on the currency market.

NZD/USD started the week at 0.7607 and is now trading at 0.7592 as of 9:22 GMT, it would be a deepr drop if not for today’s growth for about 45 pips. NZD/JPY opened at 81.52 this week and is closing near 80.65. AUD/NZD rose from 1.2528 to 1.2660 this week reaching its highest peak since July 2001.

Yen at Record Low against Euro | ForexGen

The Japanese yen reached another record low level against the Eurozone currency today as the ECB prepares to raise rates in July, while Japanese spendings may go abroad to seek the higher yielding assets.

The yen continued to fall today after its fastest fall against euro since June 9 after the Federal Reserve left the funds target rate unchanged at 2 percent yesterday, strengthening the euro’s positions on Forex. ECB is expected to raise the interest rate next month, while the BoJ is keeping rates low at 0.5 percent.

Strategists at the investment banks believe that the outflow of the investment from Japan will be a major driver for the currency’s loss in the short-term future. Meanwhile upward trend on the ECB rates may push euro to the new records.

EUR/JPY climbed up today from 168.96 to 169.06 as of 8:50 GMT with daily maximum at 169.46 — the highest level for this currency pair since the adoption of the European currency. GBP/USD also grew up today — it went up from 212.93 to 213.50.

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USD Falling after FOMC Statement | ForexGen Charts

The U.S. dollar dropped against the euro, pound and yen today after the Federal Reserve left the interest rate unchanged and released a statement showing no substantial signs that the rate can be raised by the end of the year.

As the majority of the market analysts expected, the Federal Open Market Committee left the federal funds rate at 2.00 percent at this meeting. The main question was the statement and the signals for the further rate hikes. The Forex market expected some strong signs that the rate will be increased soon. As the statement failed to meet these expectations, the market reacted with a fast and volatile dollar’s depreciation against the other currencies.

Although the Fed noted that the economic growth is probably going to expand and there are risks of uncertainty regarding the inflation, the statement missed any notions that usually predate the rate hikes. The only positive signal for the dollar bulls was one vote against this decision (Richard W. Fisher preferred to increase the rate):

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

EUR/USD went up today from 1.5571 to 1.5675 as of 19:45 GMT with a daily high at 1.5587. GBP/USD increased from 1.9709 to 1.9753, while USD/JPY went down 107.81 107.74 even with a falling yen.

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Dollar Declines against Euro before Fed | ForexGen Signals

The U.S. dollar declined today against the euro, extending its weekly drop, as the chances for the Federal Reserve to increase the interest rates next week became more slim.

The dollar also headed for a weekly loss against the Japanese yen as the weak macroeconomic statistics from the United States made traders believe that the FOMC will leave rates unchanged at its meeting on June 25.

While there is a great probability that the U.S. interest rate will remain at 2 percent until Fall at least, European Central Bank will probably signal that it will be raising the interest rates soon, as the inflation in Eurozone comes out above the central bank’s target level.

Today EUR/USD rose from 1.5500 to 1.5567 as of 9:00 GMT; the weekly gain for this currency pair is 1 percent so far. USD/JPY is down insignificantly today — from 107.94 to 107.87; the weekly drop is just 19 pips.

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Swiss Franc Lower after Rate Decision | ForexGen Latest News

The Swiss National Bank decided to keep the country’s main interest rate at its 6-year highest value facing the risks of both a higher inflation rate and a slower economic growth.

The Swiss franc fell today against the U.S. dollar in the Forex market as 3-month LIBOR target rate was left unchanged at 2.75 percent. It was an expected decision, but some analysts forecasted a possible 0.25 percent increase. The interest rate in Switzerland doesn’t change since September 2007.

Central banks across the world are facing a new dilemma — to raise the rates and get a lower inflation, or to increase them and prevent growth stagnation. European banks prefer to follow none of these ways and keep the rates unchanged (Bank of England, European Central Bank and now Swiss National Bank), American banks decide in the favor of growth (Federal Reserve, Bank of Canada), meanwhile Asian banks prefer to go up with the rates to fight the inflation (Reserve Bank of India, Central Bank of Philippines, Bank Indonesia).

Some market strategists stand on a position that a wage-based inflation is less likely to spiral in Switzerland than in the Eurozone countries. This factor may keep SNB from raising the rate in future and will decrease franc’s attractiveness in the medium-term period.

USD/CHF rose today after two days of decline when the dollar has been weak in the Forex market. The currency pair increased from 1.0364 to 1.0424 as of 8:57 GMT today. Before the rate decision it has reached a daily low at 1.0319.

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