Forex Investment and Currency Trading

Eurozone Wednesday’s data releases confirmed that April has seen a significant decline in business and consumer confidence, while inflation surprised on the downside compared to initial expectations. According to the European Commission index, the business climate index declined to 0.44 in April from a downward revised 0.79 in March. Consumer confidence was unchanged at -12. The overall economic confidence index fell to 97.1 from 99.6. As for inflation, the Euro area HICP inflation rate was 3.3% yoy, down from 3.6% in March. Country-specific data show that inflation fell most sharply in Germany, but it also declined in Spain, Belgium and [...]

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USD/CAD – Support at 0.9940 and 0.9724 is expected to attract buying interest for a return to 1.0343. USD/CAD remains locked in a broad 0.9700-1.0400 trading range as overbought conditions caused the rejection of the top end of the range two weeks ago. A base building processis is underway, with support at 0.9940 and 0.9724 expected to attract buying interest for another test of resistance at 1.0343. Adaily close above this level would resolve the consolidative rectangle pattern to the topside, targeting 1.0468 and 1.0653 thereafter. Target remains located at 1.0335.
EUR/USD – Close above the cyclical high at 1.5905 would favour greater [...]

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Carry trades were unwound overnight as increasing risk aversion saw low yielders outperform high yielders across the board. Equities drifted lower in both Asia (Nikkei down 1.05%, HSI 1.35% lower) and Europe (down ½-1%) in line with the flight-to-quality bid, as credit concerns were once again in the spotlight with news that Citigroup is currently in talks to sell $12bn of loans at a loss to Apollo Management, Blackstone Group LP and TPG Inc LP, sparking fears that other leveraged loan players maybe suffering similar problems with their leveraged loan portfolios. In terms of data, the only release of note [...]

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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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