range bound Posts on Forex Blog
FX Markets to Trade on Gloomy News
Jul 7, 2008
Central banks are navigating choppy waters. And so too, are Forex traders.
With so much uncertainty over slowing economies and rising inflation, it is little wonder.
In this double negative environment, the majors are likely to remain confined to recent ranges.
Today was a perfect example. First, the Pound took a dip as UK industrial production dropped -0.8%, a stumble considering expectations for a drop to -0.1%.
90 minutes later, the Euro followed suit, as German industrial production fell at even faster rate. The Germans reported a drop to -2.4%, a major tumble considering market forecasts for a +0.3% reading.
Next it was the Dollar's turn. First, Lehamn Brothers warned that Fannie Mae and Freddie Mac may face their own credit problems, as they may need to raise a combined $75 billion to offset write downs on largely prime loans. And SF Fed President Janet Yellen suggested home prices will continue to deteriorate into 2009. Those 2 reports stoked minor rallies for the Euro and Pound.
With inflation ramping up, markets cooling down, and central banks hoping that slowing economies will bring prices down - their is little reason to believe the forex markets will behave any differently in the near future.
For the duration of the summer the EURUSD will likely to remain between 1.53 - 1.59, while the GBPUSD will likely trade 1.94 - 2.00.
EUR, range bound, GBP, USD
