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FX Blog- GVI Forex Month Ahead Forex Outlook for January 14, 2009
US Currency Outlook -- Forex Currency Pairs
Forex Currency Pairs
January 14, 2009
Forex Forecast of Major Currency Pairs
The Global-View.com Month Ahead Currency Outlook is prepared weekly by the trading professionals at GVI Forex. For information on the GVI Forex Service Click Here
Seasonal USD recovery has followed its usual late December weakness.
U.S. government and Fed are thought to have been very aggressive in attacking U.S. problems.
Fed has pulled out all stops?
U.S. economy continues to weaken. 1Q09 will be worse than 4Q08.
Credit markets in the U.S. have been unfreezing, but deleveraging is not done.
USD tone positive for now.
Japan has been hard hit by sluggish demand for its exports from abroad.
Fears of a return to the deflationary price pattern that has plagued Japan over the past two decades.
Bank of Japan has effectively returned to a ZIRP (Zero Interest Rate Program) with its target or overnight funds now +0.10%.
Nikkei closely correlated to USD/JPY values.
Deleveraging play favors JPY. Tokyo unhappy with strong JPY. JPY remains bid.
Click on chart for two year history
ECB behind the curve and playing catch-up?
ECB has lost its stellar reputation in the markets by appearing to be out of touch.
Monetary policy still has room for additional ease. ECB too focused on Germany to the detriment of other members?
EUR vulnerable until deleveraging ends.
Click on chart for two year history
U.K. economy in a bad state similar to the U.S.
After a slow start, Bank of England has become aggressive in policy. Close to a Quantitative Easing (QE) policy.
GBP seen vulnerable vs. the EUR. CHF-
Swiss economy slowing.
Swiss National Bank for all practical reasons has cut rates to zero.
CHF trades in a relatively steady range vs. the EUR.
Commodity Currencies CAD-
Probably a misnomer to call CAD a commodity currency, but it is heavily influenced by energy prices.
Canadian economy heavily influenced by the U.S.
Bank of Canada policy very easy at the present time. Inflation back within BOC target range.
CAD tending to trade somewhat inversely with USD.
Australia and New Zealand heavily dependent on global demand for commodities. Demand is way down, so the two are suffering.
Both banks have already eased aggressively; additional stimulus in the pipeline.
More than CAD, expect AUD and NZD to trade inversely with the USD.
John M. Bland is co-founder and a partner of Global-View.com. Prior to Global-View, he was a Vice-President and senior dealer in a forex inter-bank and futures trading arm of ContiCurrency, a subsidiary of the Continental Grain Company in NYC. Prior to that, he was an early member of the Chemical Bank corporate advisory service in NYC, and also worked in international liability management for that bank. John holds an MBA from the Hass School at the University of California at Berkeley and a bachelor´┐Żs degree in International Economics from Berkeley.
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