Forex Forecast

Bernanke Weakens USD Those hoping for less dovish commentary from Fed Chair Bernanke were mostly disappointed. Although he acknowledged the recent “genuine improvement” in the labour market, he again emphasised that the situation is  still “far from normal”. What hurt the dollar most was Bernanke’s view that “continued accommodative policies” could help boost employment.

Post-Bernanke Dollar Decline Those hoping for less dovish commentary from Bernanke overnight were disappointed, as the Fed Chairman put the US dollar on the defensive by asserting that “the continued weakness in aggregate demand is likely the predominant factor” behind the increase in long-term US unemployment.

Bernanke’s Speech Eyed It was a relatively quiet European session until all three major components of Germany’s IFO survey came in fractionally ahead of consensus expectations. The margin of surprise was marginal but the numbers came as a relief after last week’s extremely disappointing PMI report, and the euro got a brief boost. Heavy euro […]

Yen Weakness Anticipated The last week of Japan’s fiscal year got underway overnight, and anticipation is already building that the crossover to the new year will prompt a resumption of the five-week-old USDJPY rally. Softer-than-expected US housing data on Friday forced USDJPY sharply lower, although we see this as only a temporary setback for the […]

Dollar On The Back Foot The US dollar is starting the new week on the back foot, unable to fully shake off the effects of Friday’s softer than expected US housing data. The retreat in February new home sales to a 313k annual rate fell short of the 325k consensus, while the January sales print […]

Risk Off Continues Markets were quiet overnight but risk continued to trade on a weak tone ahead of Chairman Bernanke’s comments later today. There is very little data due and it appears the market is simply inclined to work on adopting defensive positions especially if data up ahead will continue to disappoint to the downside.

BoJ Board Changes Loom The absence of fresh economic data releases overnight did nothing to address lingering investor uncertainty over the sustainability of the global recovery. This made for generally range-bound FX trading conditions, although optimism was momentarily boosted when USDCNY fixed at a new all-time-low of 6.2891.

Risk Retreat Continues Heightened concerns about slower global growth have sustained the risk retreat, manifest in weaker equities, lower UST yields, softer commodities, and a firmer yen. In the wake of the data disappointments over the past 24 hours – stretching from the Q4 GDP print in New Zealand (0.3% q/q) to the March flash […]

PMIs Hit Risk Hard Risk was hit repeatedly through overnight sessions as successively weak PMI numbers globally have now again led to investors questioning whether the early 2012 bounce in growth was simply not sustainable. Chinese and German PMI figures both showed significant contraction in their key sectors, while Japanese trade numbers also suggested global […]

China PMI Injures AUD AUDUSD dropped 100 pips after China’s flash PMI estimate for March came in well below February’s final print (48.1 versus previous 49.6). The PMI also added to the kiwi’s troubles, compounding the selloff that began earlier after a very weak New Zealand GDP report.

Trade Deficit Watch In Japan Having slipped from its overnight highs above 84 amid the softer UST yield profile, USDJPY has steadied going into the release of Japan’s February trade report, which should not provide much encouragement for the yen. While exports are likely to improve in the wake of the distortions caused by the […]