Forex Investment and Currency Trading

G-8 Warns Rising Commodity Prices Pose Risk to Global Economy - Leaders from the Group of Eight countries said the rising cost of crude oil and food is posing risks to the global economy, and they called on energy-exporting nations to invest more in production. The world economy is facing “uncertainty” and “downside risks persist,” the group said in a statement issued today in Tokyo, Japan, where the leaders are holding their annual summit. They pledged to take “appropriate actions” to ensure stability. “We express our strong concern about elevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and increase global inflationary pressure,” according to the document posted on the Japanese Foreign Ministry’s Web site.  On the balance, they really avoided any direct FX talks and instead focused on commodities risk and environmental measures.

In other news, the Fed announced this morning that they may extend their new lending facilities (investment banks’ access to direct loans from the Fed) into 2009.  This is a really big deal for the equity market, and will take some of the worry out of the market.  The low yielders (not counting USD!) like CHF and JPY will be hurt if this news has legs today.

In currency land, the majors still seem range-bound.  After Thursday’s reversal in EURUSD after perceived dovish comments from the ECB (despite hiking rates 25bps), the pair seems short-term bearish but there are no much conviction in saying that.  USDJPY is pretty clean, position-wise, right now.  A failure to hold the 200-day moving average (107.61) and yesterday’s violent day in equities pushed USDJPY below 107 (low was 106.26 but we’ve since retraced).  Everyone still seems bearish GBP and AUD, and waiting for USDCAD to either break 1.03 or parity - in between it’s gotten boring.