The Forex Daily Digest – June 9, 2009

Another day and another opportunity for some great Forex trades. The USD and equities moved indiscriminately in Monday’s trading session. The dollar is totally mixed, ending higher against the euro and commodity currencies, but lower against the yen and pound. Monday’s trading developments seemed to spell out the fact that, since economic data is at a minimum this week, no one can ascertain a definitive direction. International political and economic news seems more uncertain as the waiting game is on for economic information that will not really be presented until the Retail Sales report much later in the week. Until then, markets will hang on every word of the Fed or other international economic decisions.

Sterling surprisingly has fallen off of earlier lows even as political uncertainty still threatens. It seems that there is an impending governmental shift in the United Kingdom, as Prime Minister Brown’s party was only able to garner 14 percent of the votes in recent elections. The Bank of England was allegedly satisfied with the progress of its asset purchase program and was guarded about expanding the plan any further but it hasn’t worked out that way. The Bank of England has revealed its intentions to develop purchasing programs which will reportedly include secured commercial paper.

There is also considerable speculation that recent economic data, principally the May U.S. non-farm payrolls, is showing a definite bottom in the current global economic downtown – which is triggering an improvement in the USD and declines in stocks but some inflationary concerns persist. The Fed’s current monetary policies remain highly encouraging and the signs are pointing to stay that way for the remainder of the year and into early 2010. Although there are some Fed officials promoting interest rate increases, it may be premature for markets to begin pricing FOMC rate hikes.

The economic calendar from the U.S. today will see the April wholesale inventories. It is expected to come in at negative 1.1 percent.

In other Forex news today, speaking in Singapore, Jim Rogers, the author of Hot Commodities and Chairman of Rogers Holdings, said that the U.S. dollar will be “devalued” as policy makers look for ways to weaken it, undermining the greenback's role as an international reserve currency. Rogers told the audience the dollar advanced against 15 of the 16 most-traded currencies since the end of May, losing out only to the yen. He said this is a global financial crisis that pushed many investors to the apparent safety of Treasuries. Rogers also told those in attendance that he is buying the Japanese yen.

RBC Capital Markets says the Canadian dollar’s rise to levels approaching parity with the U.S. dollar risks derailing the nation’s recovery and may force the Bank of Canada to launch a “counter strike.” Canada’s currency increased in value 9.4 percent against the USD last month, the most in almost six decades.

Even with the current global economic downturn, 2009 is turning out to be a very profitable year for currency investors. The changing monetary policies happening in almost every capital city is allowing Forex investors and traders to take advantage of some huge opportunities. Don’t be left out! Get the education you need; keep in touch with the international headlines that can definitely make a difference in your Forex trading. This is an exciting time to be trading the Forex – don’t be left behind. I’ll see you tomorrow with another edition of The Forex Daily Digest.

Happy Trading –

James Dicks