Forex Investment and Currency Trading

News

• US ABC consumer confidence for week of June 15:  -44 - near expectations.  Consensus -45. Previous -45.
• US MBA mortgage applications for week of June 14:  -8.8% w/w. Previous +10.9% w/w.
• Bloomberg Berry : Oil Price Realities May Soften Fed Rate Moves. The Federal Reserve, when considering how much to raise interest rates to keep inflation in check, might call upon the law of gravity: nothing, even the price of oil, goes up forever. When the cost of a barrel of crude oil touched $140 on June 16, almost double its price a year earlier, the sky may have seemed the limit.
• FT : Goldman’s SIV deal welcomed. Investors, bankers and policymakers have welcomed a deal reached by Goldman Sachs to restructure the first of a string of collapsed investment vehicles, seeing it as a sign that the private sector is finally starting to craft solutions to the long-running problems of distressed assets and structures in the credit markets.

Trading Strategy - Currencies have been volatile, for sure, but in the past couple days the ranges themselves haven’t really changed.  Take EURUSD, for example, currently at 1.5480.  The pair is caught in a tug-of-war between a skeptical US media that doesn’t believe the futures market (doesn’t think the Fed has enough inflation ammo to hike rates beginning in August), and a cautious ECB that has been doing damage control ever since Trichet’s devilishly hawkish comments a couple weeks back (which at the time caused a renewed EUR rally as investors took it as a given that the ECB would hike come July).  Now add to the mix BoE governor Merv King’s very dovish letter to the Chancellor yesterday, despite higher-than-expected UK CPI.  In it, he implied that instead of hiking rates, the MPC would (or has already) merely cut rates to a lesser extent.  So despite the fact that we have seen USD strength in recent weeks, it’s now being tempered by dovish chatter from abroad, not to mention continuing lackluster data of our own.  Yesterday the current account got a little worse, PPI reached over 7%, and the housing market (vis-à-vis housing starts) shows no signs of recovery anytime soon.  Today is a lighter data day.  All we have on the calendar is MBA Mortgage Applications, so it will take technical breaks or media headlines to make waves today.