Forex Investment and Currency Trading

In terms of macro data the calendar was light overnight; however, the USD is finding itself well supported moving into the NY morning with it up against all G10 currencies as risk comes under pressure. Across assets, this has moved into equities with the futures off and oil is down roughly $1.25 from Friday’s close. In the larger picture this is likely more of a short-term reversal than a sustained move and traders remain bearish on the USD. Macro data was light overnight; however, some positive signs were seen in Dollar bloc currencies. Credit card spending increased for the first time since October 2008. In Australia, new motor vehicle sales showed improvement.

Preview: gearing up for the week ahead
Monday is unquestionably the lightest day event wise and the calendar, with only second-tier data in the Americas. Tuesday is slightly heavier with retail sales in Canada and Q2 NZ GDP. However, the tone will be set on Wednesday with the Eurozone PMI, Norges Bank and FOMC rate decision. This may prove to be one of the more important FOMC meetings as the timing of the meeting makes it likely that an exit strategy will take center stage. Market economists believe that movement will take place on two fronts: (1) Fed will confirm its plans to complete the MBS purchases but the end date will be moved back to 2010 and (2) with the Treasury’s announcement that they will end the Supplemental Financing Program, the Fed could announce a plan to offset the rise in reserves that would occur with its removal. German and EZ PMI earlier that day will be key for views on risk appetite. Composite PMI is likely the best fit, and is pointing to an acceleration. On Thursday, German IFO will be the early highlight with the business climate expected to print 92.0. A steady sentiment recover is expected which should translate into an IP rebound. IFO expectations is expected to rise the ninth successive gain for the series, and moving above its long-term average. Friday, US durable goods for August have a house forecast of a more modest rise.

Today: very quiet calendar
Again, the data calendar for the New York trading session remains exceptionally quiet, with very little data out at all. August leading indicators are out for the US, but these numbers really do not much have much significant for markets. In the New York evening we will get the New Zealand Q2 current account deficit, which markets expect to come in at 7.4% of GDP, which still represents an improvement from 8.5% of GDP in Q1. The data should show one of the reasons why traders expect NZD to soften up in the longer term and in 2010 forecast, even though such imbalances generally do not have much of a near-term impact.