Forex Bull

The New Zealand dollar turned a blind eye to the event risks scheduled for the week as the higher-yielding currency bounced back to pick up 200+ pips against the greenback. However, deteriorating fundamentals paired with dovish commentary by RBNZ Governor Alan Bollard suggests that the central bank will continue to ease policy throughout 2009, which is likely to spur increased selling pressures for the kiwi going forward.

The Australian dollar started the week on a positive note when consumer confidence unexpectedly rose 7.5%. The bullish momentum would continue throughout the week sending the comm.-dollar to as high as 0.6800 before the failure of the U.S. auto bailout plan sparked risk aversion and unwinding of the carry trade.

On balance, the data docket is unlikely to stir meaningful volatility in the Franc exchange rate, with markets already betting that Switzerland will follow the lead of other European nations into a protracted downturn.

The Japanese yen saw a massive surge across the board through Friday?s Asian session; but this momentous move would ultimately be unwound before volatility receded for the weekend. Now traders are left to wonder whether this was the sign of a bigger fundamental shift behind the carry strategy?s perennial funding currency or a errant technical move that has altered the fundamental future of the key FX safe haven.

Has risk sentiment taken a significant turn for the better or is the dollar losing its status as a safe haven currency? This is the fundamental question for dollar traders and even to those market participants in other currencies and securities.

Dollar Losing Its Safe Haven Status As Risk Rises And Returns Plunge Euro Outlook Remains Bullish on Breakout Versus US Dollar Japanese Yen Surge: Trend Exhaustion Or Reminder Of Risk?

A larger-than-expected Bank of Canada interest rate cut made the Canadian Dollar one of the worst performing G10 currencies on the week, but an outright tumble in the US Dollar left the USD/CAD marginally lower through Friday?s close.

The euro posted its best single-week performance in eight years, as an outright tumble in the US dollar left the Euro Zone currency as the prime beneficiary of a turn in market sentiment.

Risk sentiment has delved into a period of protracted congestion over the past few months. However, with the global economy heading deeper into recession and investor/lender sentiment fading, it is only a matter of time before the markets find their bearings once again.

The British pound climbed against the US dollar throughout last week, but the currency?s status versus the euro is a bit more indicative of the fundamental outlook for the UK economy.