Forex Investment and Currency Trading

The week ahead includes a fair amount of economic data, the highlights being May retail sales, April business inventories and the latest instalment of the Federal Reserve’s Beige book. On Thursday, the Fed will also release Q2 Flow of Funds figures which should confirm an ongoing destruction of household wealth, given poor equity market performance and ever-lower home prices. Several Fed official speakers are on tap, though the calendar begins to wind down ahead of the upcoming FOMC meeting on 23-24 June. At the end of the week, Treasury Secretary Geithner will head to Italy to join the G-8 group [...]

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EUR

EUR-USD raliied since putting in higher lows
EUR-USD short term fair value overvalued vs. S&P 500 IRS spreads
EUR-USD short term fair value undervalued vs.Baltic Dry Index
EUR is benefiting from broad USD weakness in 2009

JPY

JPY NEER has stabilised for now after correcting lower
Japan’s external surplus continues to collapse
Japanese investors continue to invest in foreign assets
Weak oil, domestic demand should eventually boost C/A surplus

AUD

Australia is heading into recession
Markets are focused on limited further room for RBA easing
AUD-USD looks well-positioned to benefit from USD weakness

NZD

New Zealand’s economy remains in a deep recession
Market expects the RBNZ to keep cash rate at 2.5% through 2009
Fiscal and [...]

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EUR

EUR-USD is range-bound, but has put in higher lows
EUR-USD s/term fair value overvalued vs. Baltic Dry, S&P 500
EUR-USD s/term fair value undervalued vs. IRS spreads
EUR benefiting from broad USD weakness from H2

JPY

JPY NEER has stabilised for now after correcting lower
Japan’s external surplus continues to collapse
Japanese investors continue to invest in foreign assets
Weak oil, domestic demand should eventually boost C/A surplus

AUD

Australia is heading into recession
Markets are focused on limited further room for RBA easing
AUD-USD looks well-positioned to benefit from USD weakness
AUD-USD is 3.74% overvalued on OECD PPP basis

NZD

New Zealand’s economy remains in a deep recession
Market expects the RBNZ to cut rates to [...]

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Japan saw some more weak price data overnight with the corporate service price index down 2.1% Y/Y in March, though that wasn’t quite as soft as the -2.6% reading that was expected. The all industry activity index was also released, where we saw a 2.0% drop in February after the 1.7% decline in the prior month.
This morning’s Eurozone surveys followed the recent trend, and continued to improve. Germany’s IFO survey improved from 82.1 to 83.7 in April. But unlike the ZEW earlier this week, we actually saw an improvement in the current assessment, which increased from 82.7 to 83.6.
Expectations were [...]

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