Benchmarking the Economic Recovery is the Next Major Fundamental Driver

Written by John Kicklighter, Currency Strategist
During the worst of the financial crisis through the end of 2008 and even into the opening months of 2009, the market’s primary concern was risk appetite. Interest rate cuts were pervasive and expected return was the last thing on any traders mind. Sharp losses in nearly every investment class leveraged capital preservation into the upper echelons of importance. However, with interest rates bottoming out and safe havens no longer essential, we have seen speculative funds slowly finding their way out of risk-free zones and coming off of the sidelines to once again be put back to work. This leads us to a natural market truism: when fear isn’t the dominant influence, greed takes over.
Always trying to beat the market, traders are trying to find outsized returns and doing so by investing in the economy that is expected to recover from its economic recession first and most aggressively. This evaluation of relative growth potential comes with a hearty mix of objective data and highly-sensitive speculation; but with the markets, the latter is always more influential.
Since this market dynamic is developing greater clout among the speculative class, we should gauge which economies are considered leaders and laggards in the early global ‘recovery’ by market participants and which actually have the fundamental underpinnings for a timely return to expansion. As this is a highly speculative endeavor, we will have to leave out a number of factors to simplify a complex market appraisal; so we will need to narrow our focus for contributing factors. We will go over those dynamics that are essential for a genuine recovery; and you can decide whether the market’s outlook (and therefore the currency) has overshot or come up short of fundamentals

Tech Talk 08.13.2009

Written by Joel Kruger, Technical Currency Strategist

Euro-Zone Economic Contraction Set to Ease (Euro Open)

Written by Luis Gil, DailyFX Research
The growth rate of the Euro-Zone economy will be highly watched tomorrow and is likely to shake markets if the published number deviates from expectations. Contractionary conditions might not actually be as bad as originally thought after Spain, the country with the worst jobless rate, had to revise its unemployment rate down

Short-Term Forex Technical Outlook: GBP/CHF

Written by David Song, Currency Analyst
The British pound weakened against the Swiss franc for the fourth day, but looks to be finding short-term support near the 50-Day moving average (1.7743), and the GBP/CHF may continue trend higher over the near-term as market sentiment improves.
Currency Pair: GBP/CHFChart: 60 Min ChartsShort-Term Bias: Bullish

Does the Prospect of a Strong US Recovery Alter the Dollar's Profile

Written by John Kicklighter, Currency Strategist
We’ve seen the dollar endure significant volatility over the past week; but not much direction has come out of it. From pulling itself up from the next leg of a long-term decline to fading its aggressive recovery, the market’s most liquid currency is clearly at the mercy of fundamental uncertainty. As has been the case for many months, the market is having to weigh two significant fundamental themes and each is taking a different path.

FOMC Rate Decision and BoE Statement Will Have Long-Term Impact (Forex Video)

Written by John Kicklighter, Currency Strategist and Jaclyn Sales
The Fed puts a timeline on its quantitative easing and the BoE warns interest rates could be held down well beyond the first half of 2010.

Cable Supported by 50-Day SMA...For Now (Daily Classical

Written by Joel Kruger, Technical Currency Strategist
• Euro confined to inside day ahead of 50-Day SMA• Dollar/Yen fails above Ichimoku to leave sour taste• Cable well still very well supported by 50-Day SMA• Dollar/Swiss locked in mid-range and consolidating