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FX Blog- GVI Forex Month Ahead Forex Outlook for February 11, 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
February 11, 2009
Economic stimulus and bank bailout plans in place in the U.S. Could bring some clarity to the markets and provide a psychological boost.
USD closely linked to stocks (risk aversion play).
Fed has been very aggressive in attacking U.S. problems.
U.S. economy continues weak. Expect a lead time between stimulus and an economic impact.
USD tone mixed, future performance depends on patience of dealers.
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.
Fiscal year end repatriations (March 31) and deleveraging favor JPY.
Click on chart for two year history
ECB policy behind the curve. ECB has lost a stellar reputation.
One concern is the lack in the E-Z of a common fiscal policy lever.
Monetary policy has room for ease. ECB focused on Germany to detriment of others?
Economic weakness in Spain, Ireland & Italy a worry without currency devaluation option.
EUR vulnerable until deleveraging ends.
Click on chart for two year history
U.K. economy in a bad state. As in the U.S., financial sector hard hit.
Bank of England aggressively easing. Close to a Quantitative Easing (QE) policy.
GBP fundamentally vulnerable vs. the EUR.
Swiss economy slowing. Inflation well below target.
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 and energy economy tied to the U.S.
Bank of Canada policy easy. Inflation 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´┐Żs degree in International Economics from Berkeley.
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