Forex Investment and Currency Trading

Fed shifts towards neutral…
The minutes from the April FOMC meeting indicated that the Fed believed that the risks to the economic outlook were becoming more balanced. The summary of policy-makers’ discussions opined that the policy easing already undertaken had diminished the threat to growth. Furthermore, the
Committee added that “future policy adjustments would depend on the extent to which economic and financial developments affected the medium-term outlook for growth and inflation”. Some members went so far as to argue that further easing would be inappropriate unless there was “significant weakening in the economic outlook”. Indeed, Kevin Warsh expressed exactly that sentiment [...]

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Relative rate dynamics point to GBP/CAD falling further from current 15 years lows.
In the case of GBP, weakness is likely to be compounded by diminishing policy credibility.
Rallying back month energy futures (gas as well as oil) add to the case for selective long CAD positions.

Rate dynamics point to GBP/CAD lower
Although this week’s smaller than expected fall in UK April retail sales challenges the expectation of an August MPC cut, rates strategists remain convinced that the next UK rate cut is merely a question of timing.
Policy credibility adds to the case
Beyond simple interest rate spreads, questions over the credibility of [...]

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During the long-term down-cycle for the USD, the EUR has been the leading currency versus the USD, with some arguing that the EUR may challenge the USD as the world’s reserve currency. While that debate is one that is likely to persist for many years to come, there are signs that cyclical leadership may be shifting to the AUD. During the period of extreme EUR weakness in 2000, EUR/AUD fell to 1.5001, the low since the introduction of the single currency. Strong global growth enabled the AUD to climb toward that high last year, reaching a low of 1.5478 on [...]

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In recent days, the USD/ARS moved quickly higher from 3.16 to 3.19 on the heels of strikes in the agricultural sector and concern regarding the prospect for a further move higher. Although the government will likely experience ongoing challenges, the probability of a sharp move higher in
USD/ARS is extremely low in the near term.
USD/ARS has drifted back towards 3.14 thanks to some intervention by the central bank (BCRA). In April, in order to offset a move higher in the currency pair, net central bank USD/ARS sales were $840mn. This compares to net central bank USD/ARS sales of $840mn in August [...]

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