Theme of the day again: NZD strength. NZD/JPY and NZD/USD two of the biggest % gainers on the day. EUR/NZD, AUD/NZD the biggest losers on the day, all in NZD strength.

General euro weakness abounds across the board.

NZD GDP expands the first time since the March 08 quarter.

BOE voted 9-0 to keep rates on hold.

Fed announces interest rates today @ 2:15pm EST. No change expected BUT it’s what they say in their statement that could make a difference. Supposedly, they’ve been talking with bond dealers about taking some of the stimulus back out of the economy. We’ll see if there’s any mention of this today.

Tomorrow: German IFO, U.S. Unemployment Claims, U.S. Existing Home Sales, G-20 meeting starts.

NZD going up on milk? Recovering Dairy prices could help New Zealand. Fonterra says that global dairy prices may make a slow, gradual recovery. Since they are one of NZD’s biggest companies & exporters of one of their biggest products…that’s a good sign for NZD.

FxBootcamp.com and FXstreet.com are celebrating its 40th edition of the popular live training event “Trade Non-Farm Payrolls Live” with a special contest!.

Click HERE: http://www.fxstreet.com/forum/showthread.php?t=52742

Do you want to know how to participate? OK, here’s the deal: just write a brief essay answering the following question: What I have learned from trading NFP live with FX Bootcamp? Yes, just that: post below this message a brief essay about what have you learned with Wayne. Deadline for your answers is September 7th, 2009 at 12.00 h. (08.00 h. EST).

After the deadline the jury, compounded by Wayne McDonell, Valeria Bednarik and FXWizard, will choose the three best essays and announce the winner.

Prizes will be as follows:

For the very best essay:

- 1 free pass to the International Traders Conference hosted by FXstreet October 14-16 2009 in Barcelona – Spain

- 2 free nights during the conference at the Hotel Barceló Atenea Mar.

For the second and third best essays:

- 1 free pass to the International Traders Conference hosted by FXstreet October 14-16 2009 in Barcelona – Spain

Good luck and happy pips!

First Few Postings:

Peter

All the Best

Jonnie

Scheduled on the same day, both the UK inflation report and FOMC rate decision are expected to jolt the FX market this week, at least a tad. Set for Wednesday, the UK report is anticipated to show a further slowdown in consumer and producer prices with additional central bank statements alluding to a continued slowdown in the UK economy. Recent reports show nothing but support for the near term decline in prices. For the month of June consumer prices rose a paltry 1.8 percent from the year before as producer prices rose at the lowest level in eight years. What pound bulls will most likely be attuned to will be the probable downgrade in overall growth by the Bank of England. Following the expansion in quantitative easing of an extra 50 GBP billion last week, traders are expecting the worse for the subsequent statements. If the same fears are proven right, the underlying currency will come under pressure as further accommodative policies are likely to emerge in the coming quarters. Even worse has been speculation of a deflationary trap in the country, where prices continue to move low enough to choke off spending by both consumer and producer sectors, leading GDP further lower. Adding fuel to the fire has been Governor King’s refusal to completely rule out further expansion of cash injections into the financial system.

To Buy or Not To Buy

Currency traders will also be eyeing the Federal Reserve’s interest rate decision later on in the day, following the UK inflationary report. Although most, if not all, are expecting the benchmark rate to remain the same, the question hovers over any further plans to expand the program to buy long dated government Treasuries. Heading into the month of August, the Federal Reserve has already fulfilled a majority of its previous commitment, purchasing approximately $250 billion of the allotted $300 billion. In addition, the central bank is set to purchase $1.45 trillion in mortgage debt by the end of the year. All of this in order to boost liquidity and lending while ensuring that benchmark rates remain relatively stable. However, given the recent unemployment report, will there really be a need to expand the program? Market participants answer with a resounding “no”. Given the uptick in non-farm payrolls last week, stable economic indicators and a relatively thawed credit market, central bankers will favor completion of the program over expansion. The sentiment is likely to give risk tolerance a boost as slim anticipation still lingers of a rise in interest rates at the tailend of Q4.

Retailers Find a Silver Lining

US retail sales are expected to have kept positive in the month of July, which would be the third consecutive month in a row and a definitive sign of economic stabilization. Set for release on Thursday morning, the report is forecasted to show a rise of 0.5 percent. Good support for market bullishness, speculative sentiment will be focused on the contribution and effects of the Cash for Clunkers program on the actual figure. Beginning last month, the administration’s plan for boosting auto sales may temporary increase the figure, leading some to believe the improvement will be a flash in the pan. Estimates are for the ex-auto number to be considerably lower, rising by only 0.1 to 0.2 percent for the month.