NZD/USD – Kiwi at a 10-Month Low due to an Apparent Recession and Rates' Drop

The New Zealand dollar reached its 10-month low on Thursday, due to growing concerns about an extended period of recession and a rapid fall of interest rates. I think this is due to the combination between the pessimistic comments made by Alan Bollard, the Governor of the Reserve Bank of Australia, as well as further negative data will contribute to the kiwi's weakness.

Next week's employment data and labor costs are expected to drag the New Zealand currency even lower. The monthly business outlook released by the National Bank of New Zealand reflects the companies' pessimism regarding the conditions of their trade for the fifth month in a row this July. This is the lowest consecutive negative reading in 20 years. According to senior economists, this is not only negative data, but it reflects the recessive state of the country.

New Zealand's Central Bank is expected to further cut interest rates in a meeting on September 11, by a quarter point to 7.75%, this is after they were already cut for the first time in five years last week. Analysts believe that if next week's wage and jobs figures point to a further easing the labor market, the market may start factoring in the risk of a 50 basis point cut.

As I have previously mentioned, The New Zealand currency dropped to $0.7316 its lowest reading since September on Wednesday due to a statement made by Alan Bollard about the various interest cuts ahead, due to the weakening of the economy and inflation pressures. It strengthened on Thursday and was set at $0.7356, yet analysts say that a further weakening of the economy may prove that this change is only short-lived.

The Kiwi stabilized at $0.7329 in comparison to Wednesday's $0.7345.

USD/JPY The main reasons and prediction for US Dollar volatilities according to the news updates by FINEXO.……

The main reason for US Dollar volatilities in the next week according to the news updates by FINEXO are.……

1. The continued drop in oil prices added up to $20 from the all-time peak of $147 hit on July 11. Furthermore, President George W. Bush threatened to veto a bill meant to salvage the housing market. These factors contributed to the reinforcement of the dollar.

2. The dollar received further support from the president of the Philadelphia Federal Reserve Charles Plosser who stated that the Fed might have no choice but to raise interest rates to counteract inflation. According to senior traders, this reflects that market sentiment is now inclined to dollar buying.

3. The fact that the dollar managed to hold its position after breaking the 200 day moving average against the yen was considered a great supportive factor by analysts who stated that if the dollar manages to break the 108.59 barrier of mid June, it could reach up to 110.00 yen.

4. Furthermore, U.S. Treasury Secretary Hank Paulson emphasized the importance of a strong dollar. These statements provoked speculation among traders, and reinforced the dollar. Yet analysts explain that these statements represent the minority's opinion, as the rest Fed members give a higher priority to ending the credit crisis first.

5. According to analysts, the dollar broke through some key levels and has upside momentum; however Japanese exporter selling could emerge at these levels and further weaken the dollar.

Get the best updates of market and trading platform
http://www.finexo.com/

EUR/USD – Euro Falls Following the Raise in Interest Rates

In a press conference held by the European Central Bank President Jean-Claude Trichet, the highly anticipated rise in interest rates to 4.25% was revealed, the first rise since June of last year. He added that the current interest rates will contribute in achieving price stability in the region.

Analyst believe that this statement means that only the next set of economic data will determine the possibility of further interest rate rises, which are not expected anytime soon.

This increase follows the release of data showing that the European inflation had reached 4%, a 9-year high, doubling the inflation rate the ECB had planned to keep when the euro was first launched in 1992.

The euro stood at $1.5890 before the Trichet's statement, which brought about a fall of 0.5%, leaving the euro at $1.5803.

GET THE BEST RECOMMENDATIONS OF FOREX