Three guess what is the forecast for the Australian Dollar against the New Zealand Dollar

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro's breakout over the channel top was short-lived and it has moved back inside the channel without making a higher high for the third time. See the special chart. We wrote last Friday "It "should" stop and reverse now." And so it has, but the path downward may be rocky. Note that the WSJ says the highest high in the professional market was 1.3299 while the retail platforms (eSignal) had a highest high at 1.3301 - this is the two points that retail foreign exchange traders pay for the privilege of being somewhat near the game. The broker ads that say retail traders with their piddly $20,000 capital stake (or still-piddly $100,000) are playing in the same game as the big banks - they lie. Retail traders always pay a premium. Two points is minor compared to some of the spreads.

The Mexican peso took a nosedive by the most in a single day since November, according to Bloomberg, on the outbreak of swine flu, which will damage tourism. We say this is just an excuse - it was always unlikely to cross the 200-day moving average considering Mexican dependence on the US economy. You don’t expect a satellite to shine while the star is fading. The US dollar was already oversold while Mexico continues to release ever-worse data, including the forecast of a drop in GDP this year of 2.8%.

Not to downplay swine flu, which is having a ripple effect around the world. Emerging market Asian currencies are all down this morning on the story. Bloomberg says the Australian Dollars and New Zealand Dollars were hit on the outlook for tourism, not that many Mexican take their vacations down under. Evidently a global slowdown in tourism is to be expected, since we don’t know how the flu spreads (it’s not food). Oh, yes, and the Reserve Bank of New Zealand holds a policy meeting this week and is expected to cut rates by 50 bp. The Reserve Bank of Australia also meets and is expected not to cut rates.

Three guess what is the forecast for the AUD against the NZD.

Pounds to US Dollars = 1.4599
Pounds to Euros = 1.1136
Euro to Pounds = 0.8975
Pounds to Australian Dollars = 2.0462

Bye For Now

Barbara Rockefeller
Foreign Exchange Trading
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