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Interest Rates Driving Euro and British Pound Higher

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Feb 24, 2011.

  1. forextrends24

    forextrends24 New Member

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    Today’s sample of Forex Analysis from ForexHound.com

    The surprise this week in the Forex markets is the inability of the U.S. Dollar to attract fresh investors given the escalating problems in the Middle East and North Africa. With crude oil and gold rising as traders take protection, many traders thought the Greenback would benefit from flight-to-safety buying. This has not been the case, however, as traders instead have chosen to focus on the strengthening economies in the U.K. and the Euro Zone and the threat of central bank interest rate hikes.

    In early January a comment from European Central Bank President Jean-Claude Trichet set off a rally in the Euro when he mentioned that the ECB was beginning to look at inflation. Although inflation was taken out of the February policy statement, traders are anticipating that the ECB will revive this discussion at its March 3 meeting.

    Yesterday the Bank of England minutes revealed a 6 -3 vote against hiking interest rates. This vote showed an increase of two members who preferred to hike rates. Although this doesn’t mean rates will move higher within the next month, it does indicate that economic data has changed enough that members are beginning to shift their thinking toward increasing its benchmark rate earlier this year than previously thought.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.
     
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