A typical summer’s end for the forex trading market, with light volume, high volatility, and illiquidity leading to rangebound conditions and little directional consistency. Although credit concerns remain, financial market turmoil has again receded. Hurricane Gustav entered the Gulf of Mexico and threatens U.S. offshore platforms and refineries, and potentially crude oil prices as well.

The RBA meets Tuesday and has clearly signalled their intention to ease rates by 25–50bps. Private credit expanded 0.5% in July, with the trend falling from 1.3% m/m growth to 0.45%, and construction work performed unexpectedly contracted by −2.6% in 2Q2008. AUD/USD consolidated between 0.8500 and 0.8700, closing the week at 0.8586 with only a slight downward trend.

U.S. real GDP in 2Q2008 was revised up to 3.3%, with almost all of the growth in exports, which surged 13.2% q/q; however, if global growth continues to cool, a statistical payback in 3Q2008 becomes possible. Advance durable goods orders rose 1.3% in July (same as June) while shipments rose 0.6%.

The ECB meets Thursday and is widely expected to hold rates steady although August inflation slid to 3.8%. The German Ifo index declined in almost all categories, most noticeably the Eurozone economic climate, which fell from 76.3 in 2Q2008 to 61.9 in 3Q2008, and EUR is seen as overvalued versus USD and JPY. Thursday will also print the detailed 2Q2008 national accounts and final PMIs for the Eurozone, and could be a lively trading day. EUR/USD, although down 6.3% for the month of August, consolidated between 1.4600 and 1.4800 with low volume.

The BoE meets Thursday and is widely expected to hold rates steady although the forex trading market has already priced cuts of approximately 75bps into GBP to date. Consumer confidence held near a record low in August and average house prices are down 11.5% since beginning to slide in October 2007. GBP trended down against EUR (2.3%) and USD (8.2%) in August, with GBP/USD remaining within a regression channel for the week since falling beneath support at 1.8535, best seen on four-hour charts.

The BoC meets Wednesday and is widely expected to hold rates steady, with q/q 1Q2008 GDP revised down to −0.2% with 2Q2008 growing at 0.1%. Much of the slowdown is directly due to four consecutive quarterly declines in exports. USD/CAD rose from the 38.2% Fibonacci retracement level, drawn from the low at 0.9990 and the high at 1.0726, on Friday’s GDP revision announcement, while AUD/CAD traded roughly flat for the week.

Better-than-expected economic data from New Zealand was led by August business confidence, which printed at −20.5%, up from −43.2%, and a 4.7% rise in July building consents. July food prices rose by 0.6%, and the RBNZ raised their one-year inflation expectation to 3.6% and two-year to 3.0%. NZD/USD bounced mainly between 0.7000 and 0.7100 and AUD/NZD was also flat.

Japanese inflation rose to 2.4% y/y in July although core inflation remains at 0.2%, and industrial production rose 0.9% m/m, beating market expectations. JPY rose as the government announced an economic stimulus program, with USD/JPY trending down for the week within a regression channel, best seen on four-hour charts, and AUD/JPY rangebound between 93.40 and 95.40, ending the week resting upon that support.