A rather mundane week for the forex trading market, with most of the major currencies rangebound and traders unwilling to force new boundaries. All concerned await the outcome of the monoline bond insurance fiasco and whatever is coming next in the ongoing credit crunch and increasingly global financial crisis.

As the RBA has confirmed higher than comfortable inflation in Australia and forecast it to continue through 2010, an interest rate hike in March and possibly also in May are strong bets, and the widening interest rate differential may give AUD/USD the necessary momentum to sustain Friday’s break through resistance at 0.9100, set 4 February and respected 5 and 12 February. A series of rising lows since 22 January confirm the bullish pressure.

Although U.S. exports for December and retail sales in January surprised to the upside, the overall economic picture for the world’s largest market remains bleak, and Chairman Bernanke’s assurance that the Fed “will act in a timely manner as needed to support growth” makes further interest rate cuts, beyond the 2.25% already slashed since September, another strong bet. U.S. data for next week concentrates on inflation and housing, and although poor numbers may be dismissed as old news, better than expected readings may cause short-term USD gains. Monday 18 February is a bank holiday in the U.S.

Economic data from the Eurozone, including disappointing industrial production and marginal strengthening in business sentiment, indicated slowing growth through 4Q2007 continuing through 1H2008, which should inhibit inflationary pressures without further rhetoric from M. Trichet. EUR/USD continues consolidating since late October 2007 in a trading range between 1.4900 and 1.4300, best seen on daily charts, and ended the week at 1.4678, practically the middle of the range.

The BoE’s quarterly inflation report, released Wednesday February 13, imposes a limit on how far and how fast U.K. interest rates can be cut, although the housing market downturn continues to drag on the economy. More hints as to the BoE’s future policy should be gleaned from the meeting minutes, due for release this Wednesday 20 February. Since late December 2007, GPB/USD has been rangebound between 1.9950 and 1.9400; until there is technical indication of a break from the range, there seems no reason to expect a change.

The Canadian dollar was the worst performer of all 16 major trading currencies due to lower than expected housing prices and manufacturing shipments. In particular CAD/USD rose back above parity, with a strong climb on Friday 15 February leading to a close at 1.0072. The boundaries for this range, entered late January, are 1.0100 and 0.9900, occasionally punctured by deep spikes.

Japanese real GDP recorded a growth rate of 3.7% in 4Q2007, with net exports and non-residential capital spending contributing surprising amounts to the final figure, although it is possible the data may exaggerate the true condition of the Japanese economy. However, yen trading depends little upon the fundamentals, rather following the equities markets, and as stocks recovered somewhat this forex trading week, so did the USD/JPY, breaking through the upper limit of its trading range of 107.90 and 105.60 midweek, then forming a textbook spinning top for Friday’s trading to close at 107.81.