The forex trading forecast for the U.S. dollar should consider that it is slightly higher right now. The greenback is edging higher in currency trading against the Canadian dollar, and also against the euro and the pound, as the markets fall into a wait and see pattern.
There is not a lot of economic data due to be released, so today's forex trading forecast is largely dependent on the release of housing market data today. The dollar is bid up, even though there are expected to be signs of stabilization in the housing market, and that means that in the future, the U.S. dollar won't be necessary as a safe haven.
Indeed, the forex trading forecast for the U.S. dollar in the long-term is expected to be one of weakness, since the greenback is expected to fall as economic recovery makes risk currencies more desirable.
Canadian Dollar Strength Ahead: Forex Trading Forecast
The Canadian dollar forex trading forecast calls for increased strength as the economic recovery progresses. Right now, the loonie is getting help in FX trading from the rallying stock markets around the world, as well as the price of oil.
With Canada's economy dependent on commodities -- especially oil -- it is no surprise that dollar weakness and commodities strength is driving the loonie higher in FX trading. Bloomberg reports on the help the Canadian dollar is getting for the forex trading forecast:
“It’s all part of the recovery story,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “I see the Canadian dollar appreciating pretty sharply in the next year or so. If you do get U.S. dollar weakness, you’re going to get higher commodity prices.”
The loonie is expected to continue in strength as the global economy recovers. And, if we see oil prices make a strong recovery, we might even see the Canadian dollar reach parity once again with the U.S. dollar.
Sterling Gains in Currency Trading
The sterling is gaining in currency trading on the FX market this morning. Indeed, in forex trading the U.K. pound is climbing to its highest point this year. Much of the help for the sterling in currency trading is coming from the stock market rally going on around the world.
Like the euro in forex trading, the U.K. pound is gaining as risk appetite improves. Forex traders are looking for something that is likely to give them solid gains, rather than being content with the capital preservation and safe haven of the U.S. dollar.
The sterling often moves in currency trading with stocks, oil and other commodities. With commodities on the rise, and stocks gaining, it is a sign that the global economy may be on the road to recovery. And as the global economy grows, that is expected to be reflected in forex trading with the performance of the U.K. pound.
Sterling Pulls Back in Currency Trading After S&P Rates
The sterling has pulled back in currency trading on the FX market today, mainly on the news that S&P rating are in. It is clear from British economic data that recovery is still a ways off. Even though there are hopeful signs of stabilization, conditions remain somewhat fragile, reports Action Forex:
It is so obvious that markets conditions are still fragile and market rallies cannot sustain for long, hence the whipsaws we see in currencies as traders are unsure of the short term market direction.
As a result of the uncertainty, the sterling is pulling back in currency trading. There are concerns that things could change quickly, and that is leading some forex traders back to the U.S. dollar as a safe haven currency. The euro is also dropping in forex trading today. It appears that there was a bit of overconfidence in these higher yielding currencies, and now that confidence has been shaken a bit -- or at least forex traders don't feel that economic recovery is immediately at hand.
Gold Prices and the U.S. Dollar
Gold prices often move inversely to the U.S. dollar movement on the FX market. Right now, U.S. dollar weakness is supporting gold prices in commodities trading. Indeed, as the greenback weakens, traders bid up gold prices. MarketWatch reports on the impact of dollar weakness on gold prices right now:
"The gold price is predominantly driven by the dollar weakness at the moment," said analysts led by Barbara Lambrecht at CommerzBank. "As long as the dollar remains on the back foot, gold should continue to rise."
Additionally, the strong gold prices will serve to help hold the dollar lower in forex trading. It is an interesting relationship that was interrupted earlier this year when the financial crisis and recession forced investors to use both as safe haven investments. But, now that there is optimism about the economy, the inverse relationship is returning.
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