Wednesday January 28, 2009 - 13:31:37 GMT
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FX Blog- GVI Forex Month Ahead Forex Forecasts
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
January 29, 2009
New U.S. government hits the ground running. Geithner approved as Treasury Secretary to relief of Wall Street.
Good bank/bad bank scheme seen by markets as constructive, depending on details.
Reduced risk aversion bad for USD and good for shares if it lasts´┐Ż
Fed has been very aggressive in attacking U.S. problems.
U.S. economy continues to weaken. 1Q09 may be worse than 4Q08.
USD tone now mixed, depends on risk assumption posture of markets.
Japan has been hard hit by sluggish demand for its exports.
Fear of return to deflationary price pattern that plagued Japan over past two decades.
Bank of Japan return to ZIRP (Zero Interest Rate Program) with overnight rate target +0.10%.
Nikkei correlates closely to USD/JPY.
Deleveraging favors JPY. Tokyo unhappy with firm JPY.
Click on chart for two year history
ECB behind the curve. It lost a stellar reputation by being out of touch
Monetary policy has room for ease. ECB focused on Germany to detriment of others?
Uncertain how economic weakness e.g. Spain, Ireland & Italy, plays out with no currency devaluation option.
EUR vulnerable until deleveraging ends.
Click on chart for two year history
U.K. economy in a bad state. Like U.S., financial sector hit hard.
Bank of England now aggressively easing. Close to a Quantitative Easing (QE) policy.
GBP vulnerable vs. the EUR. CHF-
Swiss economy slowing.
Swiss National Bank for all practical purposes has cut rates to zero.
CHF trades in a relatively steady range vs. the EUR.
Commodity Currencies CAD-
Misnomer to call CAD a commodity currency, but heavily influenced by energy prices.
Canadian manufacturing economy tied to the U.S.
Bank of Canada policy easy at the present time. Inflation back within BOC target range.
CAD trading mostly 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.
Key inflation measures contained.
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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