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FX Blog- GVI Forex Month Ahead Forex Forecasts for April 29, 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 29, 2009
The U.S. equity bounce might be maturing. Dealers are realizing that economic recovery will take time. Markets move much faster than the real economy.
Fed aggressively attacks weak economy. USD constructive, but impact of policy moves takes time.
USD still tied to stocks. Risk aversion play ebbs and flows eased.
Japan hard hit by sluggish export demand. Economy has fallen off a cliff. JPY bearish.
JPY usual beneficiary of risk aversion plays.
Bank of Japan to force funds into economy Quantitative Easing (QE). Fear of return to its old deflationary price pattern.
Bank of Japan ZIRP (Zero Interest Rate Program) with overnight rate target +0.10%.
Nikkei correlates closely to USD/JPY.
Tokyo wants JPY weaker. Carry trades to return?
Click on chart for two year history
ECB well behind the curve. EUR negative.
April -25bp cut to 1.25% a big disappointment. Expect -25bp in May.
Lack of a common E-Z fiscal policy a problem.
East Europe concerns persist; could force E-Z bond issuance.
PIGS (Portugal, Ireland, Greece, Spain) economic weakness worry with no weak fx option.
EUR heavy as markets are skeptical.
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.
GBP vulnerable vs. the EUR. CHF-
Swiss economy slowing. Inflation below target.
Swiss National Bank for all practical purposes has cut rates to zero. SNB would love to see a return of the carry trade.
SNB follows through on intervention threat (selling CHF vs. EUR).
CHF should trade weaker vs. the EUR.
Commodity Currencies CAD-
CAD not really a commodity currency, but heavily influenced by energy.
Canadian manufacturing and energy economy tied to the U.S. and weak.
Bank of Canada monetary policy aggressively easy. Quantitative Easing decision in motion. Inflation within BOC target range. BOC promises to hold o/n target rate at 0.25% through 2Q10.
CAD trades 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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