Forex Investment and Currency Trading

EURUSD Outlook
Trichet, Fed comments fail to reverse EUR rise
The ECB kept policy on hold as expected and said little to suggest that rates will be raised anytime soon. And although on the currency side Trichet did mention the desirability of a strong dollar, the standard phrasing used did not suggest any real sense of urgency to act on this. A raft of hawkish-sounding comments from the Fed’s Bernanke, Lacker and Hoenig, plus Obama advisor Summers, pushed the USD stronger against most majors in the Asia morning. The message was the by-now familiar ‘rates will have to be raised at some [...]

[Read more →]

Fed Chairman Bernanke’s speech last night on the Fed’s balance sheet and this morning’s press reports that the Fed has begun conducting small-scale tests of reverse repo trades have prompted much market discussion about the timing of the Fed’s exit strategy. A few points:
Fed Chairman Bernanke noted that “accommodative policies will likely be warranted for an extended period,” which is slightly different than the latest FOMC statement that said “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Bernanke may have changed the statement to “accommodative policies” from “exceptionally low levels [...]

[Read more →]

USD: For USD, the outlook continues to be for a bit more depreciation in the near term, and then appreciation through 2010 against most of G10. In general there should be no substantial pullback in risk appetite over the remainder of the year, and the correlation between positive risk and a weaker USD will continue to hold at the same time.
EUR: The near-term outlook for EUR is for a bit more appreciation for the rest of the year. The relationship between positive risk sentiment and gains in EUR has really been a force, one that is unlikely to shift in [...]

[Read more →]

Dallas Fed Fisher: Policy reversal could be swift “When it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation,” Fisher said in remarks prepared for a speech to the Texas Christian University Business Network of Dallas. For now, Fisher expressed “cautious optimism” about the economy in general and the housing market in particular. There is some concern that the hope for a housing rebound could succumb to the headwinds experienced earlier if the efforts of fiscal [...]

[Read more →]