Forex Investment and Currency Trading

Risk sentiment appears a little more positive again in early dealing, driving the USD mainly lower and allowing the “growth” currencies to regain a little more strength again as commodity prices perk up; Asian equities were firmer, Europe looks a little more mixed, sustaining the bid under risk assets broadly. For the CAD, the worst of all worlds would probably be a double dose of data disappointment; domestic prospects are not promising. Soft data and another weak Canadian report should check the CAD’s renewed rally. Some continue to think that the CAD rally versus the USD has run its course [...]

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RBA Rate Decision - Aug 4
While a steady rate decision is expected next week, the market appears decidedly nervous following the steady raft of better than expected data and recent upbeat commentary from the RBA. Analysts expect the RBA to shift to a firmly neutral bias, paving the way for the start of a normalisation of rates in early 2010. Uncomfortable with the cash rate so far below neutral, it is clear that the abnormally low level of cash is becoming increasingly inappropriate. The short accompanying statement is likely to acknowledge the continued improvement in the functioning of global markets, the [...]

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USD
US data due for release in the coming week is anticipated to be mixed. Key for the first half of the week is GDP - negative in absolute direction but positive relative to history. ISM starts off Monday and if Richmond Fed is to be believed the number could improve from last month’s 44.8 (although still remain below 50). ADP ought to take on a higher weighting for the market on  Wednesday as it picked NFP correctly last month (but given weak historical performance we could see some disappointment). All thrown into the salad bowl, while the figures still [...]

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A late sell-off in Chinese equities (Shanghai -5.0%), has left riskier currencies under some pressure in London and USD firmer.
Weakness in Chinese equities today has sent the FX markets scrambling for cover once again, lifting the USD broadly as “safe haven” trades are favoured once again. Commodity prices are weaker but the CAD and the NZD are holding up relatively better than the AUD against the generally stronger US currency, which suggests a rather patchy response to the risk switch being flipped back to the “off” position this morning. USD/CAD price action over the course of this week suggests that [...]

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