The Forex Daily Digest - June 22, 2009

There seems to be some positive economic signs brewing for the second half of the year. Although growth is expected to be rather fragile at first; not able to sustain any massive push forward – especially in the critical job market. Most of the benefits will come from the massive cash infusions the Obama government has completed over the past few months. The bad news is – the economy continues to collapse. The good news is – it’s collapsing at a much slower pace.

This week the Federal Open Market Committee will be meeting in Washington DC. Following their two-day meeting which ends on Wednesday, the FOMC members are expected to squash growing expectations that they will raise interest rates in the months ahead. Watch for the FOMC statement which will be released at 2:15 pm (Eastern Time) on Wednesday afternoon. However, the statement could propel the USD lower. Any news that is encouraging for the stock markets may be unsupportive for the USD, which has been trading, at times, as a safe-haven asset.

There are some national polls out suggesting the American population believes restraining the federal debt is a much bigger concern today than stimulating the economy. Commodity, fixed-income and foreign exchange markets are said to be telling us that inflation and a debased currency are inevitable if simulative policies are not reversed – and reversed right now.

This week will see a number of economic reports scheduled for release. The parade starts on Tuesday when Existing Home Sales for May will be released. The rest of the week will show us Durable Goods, New Home Sales, Gross Domestic Product for the first quarter, Personal Income and Spending and the revision to the University of Michigan Consumer Sentiment report.

Forex traders found that most of the major currencies were limited to ranges in the past week, but with a number of U.S. growth indicators scheduled for released and a rate decision by the Fed expected to be announced, increased US dollar volatility could ignite some major breakouts. You’ll want to watch for these throughout the week ahead.

The third and final round of U.S. first quarter GDP estimates are scheduled to hit the streets and the fallout could be market-moving if they miss expectations. According to an article I was reading in Bloomberg, a poll of economists reflected consensus forecasts for GDP is forecasted to go unrevised at negative 5.7 percent, which marks an improvement compared to the fourth quarter 2008 result of negative 6.3 percent.

The JPY fell as rising stocks encouraged investors to look for returns in higher-yielding assets, which has reduced the demand for the Japanese currency as a haven. In other news from Asia, the World Bank has raised its forecast for growth in China this year, explaining the Chinese economy will expand 7.2 percent this year, up from a 6.5 percent forecast in March. Japan’s central bank this week raised its assessment of the economy for a second month after industrial production advanced at the fastest pace in 56 years.

Don’t forget, this will no doubt be an extremely volatile week and that’s what we look for when trading the Forex. Be sure and listen to the morning setups on the JDfn Internet broadcasts. It’s important that you avail yourself to all the information possible in order to put your trades in the best positions possible.

Happy Trading –

James Dicks