Expect the USD to surge this week as Ben Bernanke’s plan to inject money to the US economy is approved. However, there are still uncertainties in the US economy, as the jobless numbers are still uncomfortable for investors all over the world. Although the US economy itself is easing through the recovery process, the unemployment figures are still up there and the world, particularly the investors, has yet to see concrete plans to lower this figure. Except for the part that Apple decided to shift back part of its supply chain back on American soil, there’s practically no improvement in the manufacturing end.
However, in the other side of the globe, the dismal figures showing performance of the New Zealand economy has made the Kiwi freefall, especially against the Greenback. Analysts are blaming this for the apparent overvaluation of the New Zealand currency, but I believe the issue is more than overvaluation. Their economy is not entirely balanced. With a staggering trade deficit of -774 billion, there is clearly an internal problem as regards their fiscal policy to motivate internal investors to push their exporting activities. Unless and until we see clear-cut policies to address this mind-boggling figure, expect that the Kiwi and other New Zealand-related securities to dip in the foreseeable future.
If you think that the New Zealand news is already bad, it gets worse. Thailand has entered into a recession. Absolutely, it is partly influenced by the unstable political landscape considering the frequent outbreaks of anarchy in the Thai capital. Furthermore, it is observed that their economy has yet to fully recover from the floods it has sustained a couple of months back. This is another hit to the already weak, recovering global economy, though it is believed that the Thai recession will have only minimum impact on the global Forex market as the Baht is not among the pillars of the global market.
Generally, the USD will pick up steam this week, with considerable bearish effect from the red side trade for Kiwi. Moreover, it is expected that Asian currencies to tumble a bit considering the Thai recession, but it will be barely noticeable. On top of this, the Ghost Month will end soon, thus trading is expected to gain momentum once we exit this superstitious period of trading.