Euro: Will We See 1.40 Before 1.4350? (page 2 of 2)

Over in the Eurozone, we are expecting the German ZEW survey of analyst sentiment along with consumer prices for the Eurozone and producer prices for Germany, all which could skew to the downside. As a result, we could see a more Euro weakness before continued strength.

British Pound: In for Some Action Next Week

The British pound will be in for some action next week with an extremely heavy economic calendar. We are expecting UK consumer prices, labor market data, retail sales, third quarter GDP and the minutes for the most recent Bank of England meeting. These reports will help to determine whether the Bank of England's next move will be a rate hike or a rate cut. Based upon this week's hawkish comments from central bank Governor King, the latter is more likely even though we think most of next week's UK economic data will surprise to the downside. The strength of the pound should take its toll on consumer prices and the Bank of England minutes should express continued concerns about whether the BoE has done enough to calm their financial markets.

Australian, New Zealand and Canadian Dollars Continue to Power Ahead

It has been an amazing week for Australian, Canadian and New Zealand dollar traders with the Australian dollar hitting a fresh 23 year high and the Canadian dollar hitting a new 31 year high on a near daily basis. The strength of the trend in these three currency pairs is a testament to how much more money is made following the trends in the currency markets than trying to fight it. The main reasons why these currencies have been doing so well is due to the rise in commodity prices; just today, oil prices hit a new record high. The Canadian dollar will be in play next week with the Bank of Canada interest rate decision, leading indicators and consumer prices on the calendar. We are expecting bearish numbers for the loonie, but will need to see USD/CAD bottom first before attempting to buy it. The only pieces of data of consequence for the AUD and NZD are Australian import and export prices and New Zealand consumer prices.

Carry Trades Will Continue to Track the Dow

With no important economic data next week, Yen traders should continue to keep an eye on US equities, but be careful of G7 risks. European officials have indicated that currencies will be discussed at the meeting and as a result, the Yen and the Yuan may become scapegoats for politicians who need to go home having criticized some currency for their excessive weakness.