Forex Investment and Currency Trading

Market continues to believe that the Fed will remain on hold, as downside growth risks remain important.
Volatility in interest rate space has increased macro uncertainty….which is likely to exert upward pressure on equity market volatility.
Equities also likely to feel the pain as central banks talk tough and cyclical picture remains weak
Market continues to believe that inflationary pressures will moderate later in the year as slack emerges and commodity prices stabilise…
…However in the near-term equity markets are likely to face significant challenges from the macro front.
Global equity markets continued to come under pressure yesterday with SPX and DJ Stoxx shedding 0.24% [...]

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Dollar strength across the board, yet aussie and kiwi still holding up quite well with employment numbers out of both countries this evening (645pm NZ release, 930 AU). With inflation pressures continuing to rise, in particular RBA’s commodity index which was up 10.6% last month, employment data and wage pressures will be a key concern for both central banks. With the vix now breaking the December lows keep an eye on the 16 level for further confirmation and support for cross antipodes.
More cause for concern out of the BOE this morning as manufacturing data weakens. Odds of a cut has [...]

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There is no doubt that the correlation between oil prices and various Dollar crosses has risen notably over the last few years. But it matters how you measure this correlation. For example, if you calculate the correlation between EUR/$ and WTI in levels over the last year, you will get a figure around 95%. This is misleading, however, as the two variables have been trending in the same direction over the period, and that will tend to generate misleadingly high correlations.
To get a better sense of the underlying link, it is more informative to look at correlations in changes. Looking [...]

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Amid signs of an economy that struggles to remain afloat and rising price pressures, minutes from the March 18 FOMC meeting reveal the Fed’s concerns about the economic outlook, credit stresses and the importance of maintaining its inflation-fighting credibility. This week’s data releases on retail sales, housing and industrial production will show continued weak product demand and output, while reports on the CPI and PPI reveal significant increases in headline inflation.
The minutes from the March 18th FOMC meeting reveal the Fed’s concerns on many dimensions. They describe in detail how strains in financial markets had increased, and describe Fed initiatives [...]

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