Forex Investment and Currency Trading

USD
Event risk: Mixed messages from the chain-store data but broad recessionary conditions and 4 consecutive falls in retail jobs suggest downside risk to consensus calling for a 0.2% rise in core retail sales (Mon). The ECRI leading index hints at still more potential downside for the Empire survey (Tue) and Philly (Thur). A 7%+ fall in Feb permits warns March housing starts (Wed) could fall sharply too. The Fed’s Beige Book (Wed) is likely to be peppered with anecdotes of yet more slowing in activity while the core CPI (Wed) should bounce back from an aberrant flat outturn to [...]

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There is usually a fair amount of discussion in advance of G7 finance minister meetings about major outcomes that could be announced at such gatherings. While there have been notable exceptions – particularly the Dubai G7 gathering in September 2003 – for the most part the volume of speculation usually exceeds the concrete outcomes by a meaningful multiple. It appears that will be the case later this week.
A number of issues have interested market participants in recent weeks. The fall in the USD back toward record lows in late March rekindled talk of potential intervention. However,the US position is likely [...]

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EUR USD - Price is currently locked within a relatively broad/choppy 1.5350 - 1.5900 interweek trading range. Longer term direction will be dictated by the correct interpretation of the current price action.
The first (favoured) interpretation is one of topping behaviour, prior to primary uptrend reversal. Factors which support this view are the recent upside acceleration (potential blow-off trend ending phase) of the primary uptrend, on approach to the 1.6045/1.6365 target zone (Fibonacci projection off the December 2007 reaction low and projected multi-year channel top), with the subsequent choppy price action symptomatic of sharp changes of sentiment (market participants reluctant to [...]

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EUR wins ‘ugly contest’- easily
EUR/USD peaks after, not before, Fed Funds target rate has bottomed, so not yet. Cue a break through 1.60 as the Fed cuts to 1.50%, or less. Relative to the end January Quarterly, we are much less sure that ECB cuts soon and a bit surer that Bank of England cuts more. So EUR/GBP breaks and holds above 0.80 into the summer, much higher than previously forecast. If EUR/USD rises hard, Cable is static. If the dollar rallies, Cable falls, hard. Either way, Cable has peaked for this cycle, for sure.
Markets have given up pricing more [...]

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