Markets look East for Hope

Posted on June 13, 2010 by larry | No Comments

Forex markets continued to trade off the back of equity markets and risk sentiment generally. The good news all came from the far east in terms of a big jump in Chinese exports and Japan 1st quarter GDP revision.
This helped steady and eventually rally the equity markets. So it was a softer dollar and yen against the Euro but even more so against the commodity currencies.The Ausie dollar in particular against the Yen.

At this stage it seems far to early to be thinking in terms of a low for equities even if we do see further improvements next week. For sure forex markets will continue to take their lead from risk sentiment and technically both equity market and forex market trends may just be enjoying a breather before we see an about turn for sentiment and a return of dollar strength.
This week sees a good deal of inflation data so probably less market sensitive although the German ZEW Economic Sentiment Index my shed more light on the mood in Europe.
Sterling faired less well last week on some disappointing data but has enjoyed a good run against the Euro so some pull back was to be expected. It does look as though BP will be needing quite a lot of dollars at some time in the future but difficult to see how that might directly impact the currency markets at this stage. The UK budget the week after next will definitely be a major market watch.
 

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