In its quarterly currency and commodity markets forecast, FOREX.com, a division of GAIN Capital Group, LLC, is predicting a gradual global recovery as investors continue to seek returns in risky assets in 1Q 2010.
Chief Currency Strategist for FOREX.com, Brian Dolan, believes that risk sentiment will mostly be in the “on” position throughout the first quarter, but obviously subject to hiccups on data disappointments or credit surprises.
“U.S. dollar weakness is likely to fade as a driving theme, as U.S. data may prove slightly more upbeat than reports out of Europe, the U.K. and Japan. Additionally, marginally higher U.S. market rates may induce further unwinding of short-USD positioning,” stated Mr. Dolan in the report. “Overall, we think trading conditions will favor short-term mini-trends and anticipate another target-rich environment as market correlations remain high.”
Other first quarter predictions from the report include:
* High unemployment will continue to restrain consumer activity throughout the G10, resulting in further uneven economic data overall* Currencies that are most likely to outperform are those where growth has returned most solidly and where interested rates are being raised such as AUD, closely followed by the NOK* The risk of a double dip recession will recede and, as the impact of the fiscal stimulus tapers off, growth in 2010 will likely be slow in much of the G10

The FOREX.com research team also highlights expected ranges for key pairs for the first quarter, such as:
* EUR/USD: 1.4300/1.5000; risk to 1.3800 if below 1.4300* Gold: 1050/1150; risk to 1250 if above 1150/70

“FOREX.com Markets Outlook” provides commentary and market forecasts with its view of the direction of the world’s major currencies as well as key commodities including gold, silver and oil. In addition to Brian Dolan, the report was prepared by UK Research Director Jane Foley and Currency Strategist Jacob Oubina.
To view the full FOREX.com First Quarter Markets Outlook report. this is report for new year

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