Euro Stronger on German GDP

The United Europe’s currency gained a new strength on the Forex market today after the German quarterly GDP data was released and the investors got more confidence in the ECB’s hawkish stance.

According to a report that was released today at 6:00 GMT the Germany’s gross domestic product gained 1.5% in a quarter-to-quarter comparison in the first quarter of 2008 — a strongest growth for the GDP indicator since 1996.

This Q1 growth was significantly higher than both Q4 2007 0.3% expansion and the average forecast by the market analysts — 0.7%. All GDP growth figures are seasonally and calendar adjusted.

While the GDP gain rate dictates market to bet on a stronger euro, inflation data will be also important. And if the higher consumer price increase will improve euro’s position, lower values may shift the current stance of the European Central Bank on the interest rates.

EUR/USD rose today 1.5476 to 1.5546 and is trading near 1.5523 as of 8:22 GMT. EUR/GBP also rose today — it went up from 0.7949 to 0.7977 and reached its highest value since April 24.

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British Pound Grows on April PPI Report

The Great Britain pound rose today against the U.S. dollar and the euro, partially recovering its losses from the last week, as the record high PPI growth added confidence that the Bank of England will not lower interest rates next time.

The prices for the British long-term securities declined today, while their yields increased, showing a higher inflation pressure for the economy of the United Kingdom.

The country’s producer price index increased 7.5 percent in a year-to-year comparison in April — the highest annual growth in a 24-year period, since the PPI record began. April to March gain in PPI was at 1.4 percent — also a record monthly growth rate.

EUR/GBP had a first significant drop this day since May the 1st as the currency pair declined from Friday’s close level 0.7923 to 0.7889 as of 11:51 GMT. GBP/USD had a first large growth since 30th of April today, it went up from 1.9506 to 1.9578 as of 11:51 GMT.

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ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

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Korean Won at Lowest since 2005

The South Korean won declined to its lowest level since November 2005, as the country’s central bank said that the weaker currency will be helping against the economic stagnation.

The Bank of Korea decided to leave the interest rate unchanged at 5 percent points today as the inflation prevented using monetary policy easing to decrease the money cost and bust spending. This decision helped the Korean won to drop from 1033.3 to 1044.9 on Forex today.

Won is the worst performing world major currency this year. Like the other Asian free-traded currencies it’s being pulled down by high oil prices and the current account deficit spurred by the lack of financial liquidity.

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AUD Stops Growth after RBA Statement

The Australian dollar stopped growing on the Forex market today after the Reserve Bank of Australia mentioned economical growth moderation in its monetary policy statement.

The RBA kept its 12-year high interest rates unchanged at 7.25 percent points today during the scheduled monetary policy meeting ruled by Glenn Stevens.

The Aussie has reached its 24-year record high level against the U.S. dollar recently and traded near that level before the monetary policy meeting. Reserve Bank of Australia Governor Glenn Stevens mentioned that the output growth may moderate this year, causing the currency drop from its high. The drop was limited due to the mention of the remaining inflation risks that leave possibilities for the further rate hikes:

In order to reduce inflation over time, growth in aggregate demand needs to be significantly slower than it was in 2007. Evidence is accumulating that this is occurring. Indicators of household spending have recorded subdued outcomes over recent months, and demand for credit by both households and businesses has weakened… Given the opposing forces at work, considerable uncertainty remains about the outlook for demand and inflation.

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Bank of America Confident on INR Growth

The Indian rupee is going to grow in the coming months as the central bank will probably rise the interest rate and will allow currency’s appreciation according to Bank of America strategist.

This is not very popular scenario among the currency market analysts, but Bank of America and some other investment institutions think that the rupee will rise more than 9% by the year’s end and the India’s repurchase rate will be lifted from 7.75 percent to 8 percent on the next Reserve Bank of India meeting.

The growing inflation rate in India forces nation’s financial authorities to sacrifice exporter’s competitiveness. 7.57 percent inflation in India is one of the main driver for the rupee’s probable appreciation.

Yeo Han Sia, a strategist at Bank of America, spoke in an interview about the current situation with India’s inflation:

Currency appreciation is a monetary policy tool India will definitely have to explore in coming months… If you have a persistent overshoot of inflation, resulting in an erosion of market confidence over the central bank and the government’s credibility to fight inflation, then the issue that develops is much more serious.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

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Euro Rose on Support of ECB Rates

The euro rose today during the early Forex trading session, as the European politicians changed their mind on the ECB interest rate policy and traders became more confident that Jean-Claude Trichet won’t reduce the rates this week.

The ECB used its every recent statement to convince the market participants

that the inflation is a bank’s primary concern and that it won’t go for lower rates to sustain the economical growth. Meanwhile European government officials insisted on lower rates and a weaker euro to ease the pressure on the exporters.

Now the politicians from France, Belgium and Luxembourg, who previously insisted on weaker euro, agree that the current inflation rate is dangerous and that ECB shouldn’t lower the interest rates in this situation.

The European Central Bank refuses to follow Federal Reserve and Bank of England decisions to cut interest rates on the background of the global financial turmoil. Hawkish stance on rates allows euro to further appreciate against the other currencies.

Today EUR/USD rate increased 1.5429 to 1.5494 as of 8:29 GMT — the first daily growth after two days of dollar rally. EUR/JPY followed the trend and went up from 162.44 to 163.01 as the carry trade positions strengthened and the yen fell.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

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