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02/17/2008 - G-10 FX goes range-bound

Posted by FOREX.com's Weekly Strategy in February 15th 2008  
* G-10 FX goes range-bound
* JPY-longs get squeezed out
* Bond insurers' credit ratings are the big near-term risk
* Key data and events for next week

USD strength that was evident late last week fizzled in the face of fresh signs of economic weakness and ongoing uncertainty over the near-term outlook. January advance retail sales printed better than market expectations, but after excluding gasoline and auto buying, they were flat, suggesting US consumers are indeed pulling back. Fed Chair Bernanke also kept the focus on the negative by citing the downside risks to the US growth outlook, while assuring legislators in testimony Thursday that the Fed would cut interest rates further if necessary. EUR weakness that was similarly apparent this time last week gave way to an unexpected improvement in ZEW surveys of Eurozone investor sentiment and jawboning from ECB Pres. Trichet. Trichet seemed intent on convincing market players that rate cuts are not on the table and that the ECB was still focused on restraining inflation. The net effect was for the USD and EUR to revert back to the middle of recent well-worn ranges.  Full text »

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Filed under: Weekly Strategy