For the past month, the June British pound was in a choppy, sideways range between $1.95 and $2.00. The inability of prices to close above the 6-month moving average was a weak sign and so was the new ten-week low on May 7th (updated 5-7).

Fundamental Stats -

Real GDP was up 2.5% in the first quarter from a year ago after gaining 3.0% in 2007. Consumer prices were up 2.5% in March from a year ago. The (ILO) unemployment rate for December to February was 5.2%, the lowest since 1975. On April 10, 2008, the Bank of England lowered its interest rate from 5.25% to 5.00%. It was the second reduction in 2008.

In terms of economic freedom, the Heritage Foundation has the U.K. ranked tenth in the world. The government spends 45% of the GDP which is high, but of course, they also offer more public services, like universal healthcare. The top individual income tax rate is 40% and the top corporate income tax rate is 30%. The U.K. also charges a value-added tax and an environmental tax. Altogether, tax revenues amount to 37% of the nation's income.

For the past seven weeks, the June Canadian dollar has traded in a range between 97 and 100. As long as prices remain below the 6-month moving average, this chart looks weak. A close above $1, on the other hand, would be bullish (updated 5-9).

Fundamental Stats -

Canada's economy is slowing, affected by the credit crisis in the U.S. Real GDP was up 1.5% in February from a year ago. In 2007, real GDP was up 2.7% after gaining 2.8% in 2006. The unemployment rate in April inched up from 6.0% to 6.1%. The consumer price index for March was up 1.4% from a year ago. The latest change in interest rates occurred on April 22, 2008 when the Bank of Canada reduced the overnight rate from 3.50% to 3.00%. It was the third cut in 2008. As of April 24, 2008, the Bank of Canada expects real GDP to be up 1.4% in 2008, up 2.4% in 2009, and up 3.3% in 2010.

In terms of economic freedom, in 2008, the Heritage Foundation moved Canada from 10th to 7th in the world. The government spends 39% of the nation's income and they offer many public services, like healthcare. The top individual tax rate is 29%, but the provinces add more. The general corporate income tax rate is 20.5%. Tax revenues amount to 34% of the nation's income.

The June euro's strong uptrend peaked on April 22nd and it is likely over... possibly for a long time. The 20 day moving average supported the uptrend since late-February, but was broken on April 24th - the first sign of weakness. Prices have traded lower since then (updated 5-7).

Fundamental Stats -

The European economy is slowing, but not as bad as elsewhere, making the euro currently the strongest of the major currencies. In 2007, real GDP was up 2.6%, down slightly from a 2.7% gain in 2006. On April 28, 2008, the European Commission estimated real GDP growth at 1.5% in 2008 and 1.7% in 2009. In February, the unemployment rate in EU-15 stayed at 7.1%, the best in eight years. The consumer price index was up 3.6% in March from a year ago, the biggest increase in 16 years. On June 6, 2007, the European Central Bank raised its key interest rate from 3.75% to 4.00%, the highest level in almost four years and it has remained there with concerns about inflation.

In terms of economic freedom, old Europe still lags behind. The Heritage Foundation has the three largest economies - Germany, France, and Italy - ranked 23rd, 48th, and 64th respectively in the world. The governments in those same three countries consume 47%, 54%, and 49% of their nation's incomes, making it very hard for the private sector to grow. Germany's top income tax rate is roughly 48% and the top corporate rate is somewhere between 26% and 39%. As if that was not enough, in 2007 they also increased their value-added tax from 16% to 19% - not a sign of progress (just ask Japan how their value added tax increase went in 1997).

Fortunately for Europe, many of the other countries are more favorable to do business in, such as Ireland. The Heritage Foundation ranked them 3rd in terms of economic freedom. Ireland's government spends 34% of the national income - much lower than the rest of Europe. The top income tax rate is high, at 42%, but the corporate income tax rate is low, at 13%. Total tax revenues amount to 31% of the nation's income. And, surprise, they have the second highest per capita income and some of the lowest unemployment rates in Europe. It is too bad the Irish don't run the European Union.

The June yen's strong uptrend peaked on St. Patrick's day and then broke below the 15 day moving average that supported it on April 1st. Prices have fallen since, but may now have found support from the 6-month moving average. The higher close on May 9th is a decent sign of strength (updated 5-9).

Fundamental Stats -

Japan's economy is struggling along and may be improving. Real GDP was up 2.1% for all of 2007, down slightly from a 2.2% gain in 2006. The unemployment rate improved from 3.9% to 3.8% in March. Consumer prices in Japan were up 1.2% in March from a year ago, the biggest annual gain in ten years. On February 21, 2007, the Bank of Japan raised the interest rate from .25% to .50%, the highest level in over ten years. On April 30, 2008, the Bank of Japan said that it expects real GDP to increase 1.5% in 2008-2009 and 1.7% the following year. Japan's fiscal year ends on March 31st.

Why has the world's second largest economy been stuck for so long? In short - bad economic policy. For years, the government wrongly believed that public spending would stimulate the economy and a value-added tax would reduce their deficits. The result was that the economy tanked (especially retail sales) and Japan's budget deficits soared. Unfortunately, there are still some in Japan who think that the government should fix the problem by raising taxes. Another problem has been that they believed increased exports were the road to prosperity, so they intervened to keep the yen low, spending a record 20.0 trillion yen in 2003. By increasing public spending and taxes, and undermining their own currency, they discouraged investment in the economy. Put it all together and you have a 13-year (plus) decline that the economy is still struggling to recover from.

As bad as the economic climate has been for the past decade, there are some positives. In terms of economic freedom, Japan's world ranking improved from 39th in 2005 to 17th in 2008, according to the Heritage Foundation. Japan has a top individual tax rate that can reach to 50% and a top corporate rate as high as 41%. The government spends 37% of their national income, not bad compared to other leading economies. This economy has big potential, but they need a less burdensome public policy.

A 7.25% interest rate in Australia while the U.S. is at 2.00% has favored the Australian dollar, but for how long will it keep stretching? So far, the June Australian dollar is staying above the 25 day moving average and, as long as it does, it looks strong (updated 5-9).

Fundamental Stats -

According to the Heritage Foundation, Australia is ranked 4th in the world in terms of economic freedom, just ahead of the U.S. The government spends 35% of the nation's income, which is admirably low when you consider that they also fund two-thirds of the country's healthcare expenses. The top income tax rate is high, at 47%, but the corporate rate is 30% and overall tax revenues only amount to 31% of the nation's income.