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FX Blog- GVI Forex Month Ahead Forex Forecasts for April 1, 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
April 1, 2009
Stock rally in the wake of the bank bailout plan has been USD positive.
USD still closely tied to stocks. Risk aversion play has eased.
Fed has been aggressive in attacking U.S. problems. USD constructive.
U.S. economy remains soft. The Lead time between stimulus and response is expected to be long, but some recovery evident. USD positive.
Massive future USD supply on future budget deficits could trump everything else. Major potential USD negative.
Japan hit hard by sluggish demand foe exports. Economy has fallen off a cliff? JPY bearish.
Bank of Japan to force funds into economy Quantitative Easing (QE). Fear of return to old deflationary price pattern. JPY brearish
Bank of Japan ZIRP (Zero Interest Rate Program) with overnight rate target +0.10%. JPY bearish.
Japan embarking on third fiscal stimulus plan. PM Aso in a lot of trouble. JPY bearish
Nikkei correlates closely to USD/JPY.
Fiscal year end repatriation (March 31) about over. Tokyo wants JPY weaker.
Click on chart for two year history
ECB still well behind the curve. Quantitative Ease (QE) just a matter of time. ECB has lost a stellar reputation. EUR negative.
Talk ECB to announce plans to buy corporate bonds at Thursday meeting. EUR negative
Concerns about East Europe.
Lack of a common E-Z fiscal policy a problem.
April -50bp rate cut to 1.00% widely expected.
PIGS (Portugal, Ireland, Greece, Spain) economic weakness worry with no weak fx option.
EUR perceived as best alternative to USD, but overvalued.
Click on chart for two year history
U.K. economy weak. Financial sector hit hard. GBP weight,
Bank of England aggressively easing. Quantitative Easing (QE) policy in place.
GBP vulnerable vs. the EUR. CHF-
Swiss economy slowing. Inflation below target. CHF vulnerable.
Swiss National Bank for all practical purposes has cut rates to zero.
SNB follows through on intervention threat (selling CHF vs. EUR).
CHF should trade weaker vs. the EUR.
Commodity Currencies CAD-
Misnomer to call CAD a commodity currency, but heavily influenced by energy.
Canadian manufacturing and energy economy tied to the U.S. and slowing.
Bank of Canada policy easy. Quantitative Easing decision in motion. Inflation within BOC target range.
CAD trading mostly inversely with USD. Range trading
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.
Even more than CAD, expect AUD and NZD to trade inversely with the USD.
John M. Bland is an author and co-founder of Global-View.com. Prior that, he was a senior dealer in a subsidiary of the Continental Grain Company in NYC. Previously, he was a member of the Chemical Bank corporate advisory service in NYC. He also worked in international liability management. 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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