About the Authors Mark Galant , Chairman of the Board, GAIN Capital Group As Founder and Chairman of GAIN Capital Group, Mark draws upon 25-years of capital markets experience and a strong strategic vision. Under his leadership, the Company has grown into one of the largest and most successful companies in the online forex industry. Prior to forming GAIN Capital in October 1999, Mark was the number two executive at FNX Limited, an international provider of trading and risk management systems.

* More downside for the USD ahead on expected Fed rate cuts
* BOJ to stay on hold, again
* Oil prices, credit concerns pose an obstacle to stock market recovery
* Heavy data calendar all around
* Fed rate decision on Wednesday; Oct. NFP on Friday

The US dollar lost further ground this week as the G7 failed to make any reference to USD weakness/EUR strength and incoming housing data highlighted only bleakness. Tellingly, the only time the USD experienced any strength was on Monday when a larger than expected write-off by Merrill Lynch triggered a stock market sell-off, which sent JPY-crosses (carry trades) plunging. The collapse in the JPY-crosses spilled into the USD pairs, triggering stop loss selling of the non-JPY dollar pairs (EUR/USD, GBP/USD, and AUD/USD, buying of USD/CAD). In other words, only an abrupt market dislocation sparked USD-buying, which only serves to highlight the lack of support for the USD from any fundamental source.  Full text »

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* Credit concerns, weak earnings reports pummel USD, carry trades
* Interest rate expectations reverse sharply to favor an Oct. 31 FOMC cut
* G7 unlikely to voice explicit concern on currencies
* More weak US housing data coming up, keeping pressure on USD

Just a week ago, financial markets looked to be further on the mend and it seemed as though the worst of the summer’s credit market crisis was past. Stocks were still on their highs, the USD was steadying on the back of reduced expectations of Fed rate cuts, and carry trades were making fresh highs after the July/Aug wipeout-all signs of markets normalizing and risk-taking behavior returning. But that was a week ago.  Full text »

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About the Author Rob Booker   is a foreign currency trader. He also trains traders around the world to be more disciplined and profitable. He has worked with traders on every continent that sustains life in any meaningful way. Rob ‘practiced’ law, printed t-shirts, sold magazines, taught Italian, recruited CPAs, started an advertising firm, ran an e-commerce company and roofed houses before he realized that he was better at getting jobs than he was at staying with them. Okay, since we’re

About the Author Rob Booker   is a foreign currency trader. He also trains traders around the world to be more disciplined and profitable. He has worked with traders on every continent that sustains life in any meaningful way. Rob ‘practiced’ law, printed t-shirts, sold magazines, taught Italian, recruited CPAs, started an advertising firm, ran an e-commerce company and roofed houses before he realized that he was better at getting jobs than he was at staying with them. Okay, since we’re

About the Authors John Jagerson has worked in the capital markets and private equity for most of his career-including investing, writing, money management, and as Vice President of Content for INVESTools, Inc (IEDU) the leading investor-education company in the United States. John earned his B.S. in Business Administration in 1997 and funded his first private placement in 1998. His experience in the Forex began as the owner of an import/export firm, and it quickly became a major focus for risk

* Fed Chair Bernanke to update on economic outlook on Monday evening
* G7 unlikely to take action; speculative positioning to rule in advance of meeting
* US data continues to weigh against another Fed rate cut
* ECB speakers ratchet up the hawkish rhetoric
* US housing data (bad) begins in second half of next week

The USD finished the week a bit lower in US dollar index terms, but the real play in the currencies was a renewed push higher in the JPY-crosses, the ‘carry trade,’ as was suggested in last week’s outlook. Commodities also pushed higher, but look set to finish below their highs for the week. In gold, I would note two attempts to surmount $750/oz spot, which have failed for the time being. I will continue to watch that level as near-term trigger to larger gains or for signs of a rejection/reversal. However, I am not expecting next week to be a major breakout week, due to the impending G7 meeting.  Full text »

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* Markets are reducing expectations of an Oct. Fed rate cut
* USD gloom remains post-NFP; carry trades/risky plays prevail
* Eurozone Finance Ministers to decry EUR strength to little avail
* BOJ will stay on hold for another meeting
* US Sept. advance retail sales are the next big clue

The USD finally found some support this week and managed to eke out small gains against EUR, GBP and JPY, but it remained weak against the commodity currencies AUD, CAD and NZD. JPY-crosses, the ‘carry trade’, along with other risky assets such as commodities and stocks, also posted solid gains for the week. In general terms, these developments suggest risk-aversion continues to wane and that should keep the upside open for further gains in JPY-crosses and commodity currencies versus the USD. The price action following the US NFP report was also revealing in that the USD was unable to sustain any of its gains from the data and looks set to finish the day weaker against EUR and GBP in particular. The daily candlestick pattern (a Hammer) from Friday suggests that the downward correction in the EUR/USD has already run its course, opening up the prospect for renewed attempts higher.  Full text »

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