Forex Investment and Currency Trading

Eurozone Higher than expected CPI estimates for the Eurozone and Italy, both at 4.0% yoy in June and up from 3.7% in May, play in the hands of the hawks on the ECB Governing Council. We need to wait for the second estimate to know if core inflation has accelerated noticeably, or if the rise in inflation is still a food and oil story. Market expects headline inflation to stay above 3% yoy until the end of this year, provided that oil prices stabilize. Meanwhile, growing unemployment in Spain, Italy and France should dampen second round effects through wages. Market thus expects [...]

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Forex is actually a short way of saying foreign exchange currency trading. Today the Forex market is by far the largest and most liquid market in the world. On average more than US$ 1.9 trillion is traded each day in the foreign exchange market. That’s several times more than the daily volume in the world’s second-largest market – the U.S. government securities market. In fact, Forex trading volume translates to more than US$200 in foreign exchange market transactions every business day of the year for every man, woman, and child on Earth!
Not only is the total volume hard to fathom [...]

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USD The USD began to weaken in mid month as expectations for Fed tightening began to subside. Renewed economic weakness in the months ahead should weigh on the USD, reversing recent gains.
EUR Recent Euro zone data have turned decidedly mixed, even in Germany. A July ECB rate hike will likely mark the final stage of the overshoot of the trade-weighted EUR, which is likely to fade in 2H2008.
JPY USD/JPY has kept failing to close above the 200-day moving average, suggesting near-term downside potential. Nonetheless, seasonal Japanese capital outflows should limit JPY appreciation.
GBP A strong retail sales report has boosted market [...]

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EURUSD: Euro usd re-traces the moves from Thurs./Fri., as it does, and seems set to test support at 1.5480.  Weak data from Europe continues to plague currency strength.  But given the comments from ECB members this week (Leibscher doesn’t believe the crazy idea that “slower economic growth…will damp inflation”), it seems a rate hike from the ECB is coming hell or high water.  Before that we have a 2 day FOMC meeting where the Fed should set the table for future rate hikes. That with rumors of some dollar positive M+A flows overnight, could provide some support in the short [...]

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