Fundamental Weekly Forecasts for US Dollar, GBPUSD, GOLD, USDJPY and AUDUSD
Until the market can close its disparate view for the timing and pace of rate hikes to that of the Fed or the Primary Dealers, premium will start to waver. And, this past week, 2-year break-even rates – a gauge of market-based inflation expectations – hit four year lows.
Japanese Yen Forecast – Japanese Yen May Turn Higher Amid Year-End Carry Trade Liquidation
The markets continue to seem relatively sanguine in
their outlook on Japanese domestic developments with the December 14
snap election drawing closer (as we discussed last week). That is likely
to keep external factors at the forefront in the near term, with
seasonal considerations becoming ever more important as the looming end
of the calendar year alters capital flows.
British Pound Forecast – Dovish Bank of England commentary leaves Sterling lower
Long-term seasonality studies suggest that
currencies will often set monthly lows/highs at the beginning and end of
the month, and the first week of December could see important currency
moves ahead of year-end. We will keep a close eye on key data to judge
the likelihood of a lasting GBP reversal.
Australian Dollar Forecast – AUD/USD Slides To A Fresh 4 Year Low On The Confluence Of Several Negative Cues
Net short positioning amongst speculative futures
traders is roughly half of what was witnessed in mid-2013. This suggests
the AUD short trade still has some room left before becoming ‘crowded’.
Downside risks for the AUD/USD pair are centered on the July 2010
trough near 0.8320.
