Today's Forex Analysis summary.

The key story this week affecting the Forex markets turned out to be the global economy rather than the U.S. Treasury auction and the Fed’s preliminary bank stress test report.

The Euro rose this week but next week’s European Central Bank interest rate decision could pressure the EUR USD if it slashes rates by more than expected. Most investors are looking for a cut to 1.0%. If the interest rate cut doesn’t rattle traders then there is still the possibility that the ECB’s new quantitative easing plan will not be accepted by traders.

The GBP USD posted a big gain for the week. Strong equity markets provided most of the support but the market surged on Friday following news that U.K. production was better than expected. Traders should be concerned about the widening U.K. deficit.

News that Japan’s unemployment rose was not a good sign for the economy. Chrysler declaring bankruptcy put even more pressure on the Japanese Yen. Many Japanese companies will be affected by this financial disaster.

The U.S. Dollar closed lower versus the Swiss Franc. Once again increased appetite for risk sent Swiss investors out of the Dollar seeking better returns elsewhere. The Swiss National Bank can still act on its currency if deflation becomes an issue.

The USD CAD fell sharply lower for the week. The Canadian Dollar is locked onto the rally in the equity markets. A top in the stock market could trigger a short-covering rally in the USD CAD.

The AUD USD followed the stock market higher most of the week as traders sought the higher yield in exchange for more risk. The Aussie may fall if tourism drops because of the Swine Flu outbreak.

Selling pressure hit the NZD USD late in the week as the Reserve Bank of New Zealand cut its benchmark interest rate by 50 basis points. This cut was already priced into the market but the statement by the RBNZ following the rate cut was not. Like Australia, a slowdown in travel because of the Swine Flu outbreak could hurt the economy.

By the portal for Analysis, Education and exclusive timely market Gann Analysis

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