Wednesday February 4, 2009 - 14:49:14 GMT
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FX Blog- GVI Forex Month Ahead Forex Forecast for Frebruary 4, 2009
US Currency Outlook -- Forex Currency Pairs
Forex Currency Pairs
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
February 4, 2009
New U.S. government has stumbled a couple of times already. Markets waiting for stimulus and bank bailout plans.
USD still trades with stocks (risk aversion plays).
Fed remains very aggressive in attacking U.S. problems.
U.S. economy continues weak. 1Q09 should be worse than 4Q08.
USD tone now mixed, depends on risk assumption posture of markets.
Japan has been hard hit by sluggish demand for exports.
Fear of return to deflationary price pattern that plagued Japan over past two decades.
Bank of Japan ZIRP (Zero Interest Rate Program) with overnight rate target +0.10%.
Nikkei correlates closely to USD/JPY.
Deleveraging plays favor JPY. Tokyo unhappy with firm JPY.
Fiscal year end repatriations (March 31) favor JPY.
Click on chart for two year history
ECB behind the curve. It has lost stellar reputation.
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.
Swiss economy slowing.
Swiss National Bank for all practical purposes has cut rates to zero.
SNB has threatened intervention (selling CHF) vs. the EUR.
CHF should trade weaker vs. the EUR.
Misnomer to call CAD a commodity currency, but heavily influenced by energy.
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 dependent on commodity demand. Demand is down, so both suffer.
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's degree in International Economics from Berkeley.
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