The Forex Daily Digest - June 12, 2009

It’s the end of the week and we’ve seen some definite economic challenges as well as several terrific Forex trading opportunities over the past few days. Some of the economic reports on Thursday offered few disappointments. Retail sales finished up in May and weekly unemployment claims fell. Some money managers are remaining guarded, saying the economy still may be looking at some epic challenges, despite hundreds of billions of dollars of support from the Obama government.

Former Federal Reserve Chairman Paul Volcker had some optimistic words for an audience in Beijing when he said, “the global economic slump is easing most clearly in the U.S. and the U.K.” Volcker also said that the sudden drop in economic activity beginning last fall is slowing, most clearly in the United States and Great Britain, and still less clearly in Japan.

In Europe, the euro seems to be heading for a weekly high against the USD before reports that economists say will show industrial output declined in Europe and the U.S. at a slower pace and consumer confidence improved in the world’s largest economies. The USD lost 6.6 percent versus the euro last month which is the biggest monthly decline this year. This is due to speculation that the quadrupling of the U.S. budget deficit and the Fed’s increase of the money supply will weaken the role of the USD as the world’s main reserve currency.

At a conference in Athens, Greece this week, Nouriel Roubini, a New York University economics professor, who predicted the current global financial crisis, said the dollar’s status as the world economy’s main reserve currency may deteriorate; although he also admitted that isn’t something that will happen overnight – if at all.

In economic reports scheduled for release today, look for the Import and Export Price figures. Last month the Import Prices came in at a negative 0.7 percent and exports were at a negative 0.3 percent, excluding agriculture. Also, the Michigan Consumer Sentiment report will be released shortly before 10 am (Eastern Time) and is expected to come in at 69.5 percent. Last month the Michigan sentiment numbers were at 68.7 percent.

As we mentioned earlier in the week, Canada’s currency has shown some gains from several international factors this week that are helping it assemble the strongest bullish pattern in decades against the major world currencies. Canada is one of the main global oil exporters, and since the demand for oil has rebounded, the loonie is gaining strength against currencies like the USD and the euro. The CAD has also been helped by a stocks rally. Speculations about U.S. interest rate policy, is fueling a perfect situation for the loonie to develop even stronger in the coming weeks. An analyst for Lloyds TSB said that the normal, negative connection between the dollar and oil prices has strengthened considerably recently and inflationary concerns, emphasized by the increase in oil, have taken a toll on the greenback.

Don’t forget about the G8 ministers meeting this weekend in Leece, Italy. Financial representatives will be discussing methods of restoring global financial growth and stability. Those watching the upcoming events say that Treasury Secretary Tim Geithner can point to some restored financial stability at the gathering, but he will also have to reassure his counterparts the U.S. can indeed handle a growing debt load amid new challenges to the USD.

There’s a lot to watch in the coming weeks. The political situation in Great Britain, the price of oil and gold on the global markets, the latest economic reports from the U.S. and abroad, the world’s stock exchanges as well as the usual news of the day. Any and all of these factors could, and probably will, affect your Forex trading. Stay tuned to the James Dicks Forex Network to get all the latest news and numbers that pertain to the Forex. And be sure to listen to the JDfn traders everyday to get their take on the day’s trading opportunities and setups.

Happy Trading –


James Dicks