The JPY moved back into the lead of the forex market ugly contest overnight.
- The EUR is difficult to buy with conviction whilst many member nations are in such economic difficulty and the issue of Eastern European debt has adequately to be addressed. The ECB (thankfully refusing to panic) cut their rates by the expected 50bps overnight.
- The US economy is also a basket case. With so much reliance on the service industry, it is difficult to see how they are going to stimulate their economy and then pay off their exponentially growing mountain of debt.
- Britain, according to most international economists that I have read, is the country most likely to endure the longest and deepest recession.
- The CHF is still seen by many as a relative safe haven but their economy is also suffering with the banking industry woes and then there is the issue of banking privacy negotiations with the US government.
- Trying to pick a trade out of EUR/USD or GBP/USD or EUR/CHF is pretty hard if you are relying purely on fundamental reasoning.
All of which leaves the JPY. The economic outlook for the Japanese economy is dire but, for now at least, the market has reaffirmed the JPY as the leading beauty in the FX ugly contest.