Currency Trading — LaidTrades

Swiss Franc, Pausing Before Making Another Move North?

Hiyo FX friends! Here’s my short and sweet technical view on the CHFJPY pair. As you can see from its daily chart, the pair has broken out from a rare inverted head and shoulders continuation pattern. You see, an inverted head and shoulders pattern is generally a bullish reversal pattern although it can occur as a continuation from time to time as in this case. In any case, the upside target for the pair, judging by the height of the pattern and projecting it from the point of breakout, would be somewhere below 88.00. Sustained buying interest could push it over to that marker. At present, though, the pair’s move up north could take a halt given its overbought condition. Given this, it is possible for the pair to range or even retrace for awhile. If ever it weakens, the neckline of the previous formation should keep it afloat. Still, I could more or less say that things are looking up for the Swiss franc in the near term. Long Swiss franc anyone?

Australian Dollar To Rise By 10% Against the Yen?

It’s another manic week Forex friends! In today’s FX feature I present to you the daily chart of AUDJPY. As you can see, the pair has recently broken out (upside) from a nice symmetrical triangle formation. This breakout could swing the pair towards its previous high near the 88.00 marker. Projecting the base of the triangle from the point of breakout, the resulting upside target would be at 88.00 as well. The Aussie’s run, however, may be tempered for awhile because conditions are already overbought. The pair could range or retrace shortly before heading north again. And given it’s recent spike, it could potentially form a flag or a pennant pattern. At present, the AUDJPY pair is trading just above 80.00. Therefore, if it reaches 88.00, that would be a sweet 10% gain (1:1 margin).

The recent rally in the global equities market and gold’s rush towards fresh all-time high (see my recent post here) have helped the commodity dollars like the AUD. For this week, no high impact economic reports are due from Australia. The major releases, though, from the US, Canada, and New Zealand would more likely sway the Aussie’s short term movement. The US Fed, of course, will have its monetary policy decision on September 21. Building permits, new and existing home sales plus durable goods orders are due as well from the US. In Canada, the country’s CPI and retail sales accounts are on deck on September 21 and 22. New Zealand, Australia’s neighbor, will likewise publish its second quarter GDP growth. Risk appetite, resulting from one or all the these accounts could benefit the non-dollar currencies like the Aussie. The opposite, however, would weigh on it. Watch out for these reports!

Is the Euro Back on the Bullish Track?

Well, well, well. The EURUSD pair or the fiber as what traders call it in the streets appears to have broken out from a rectangle or consolidation. You see, the had been trending up from a low of 1.1876 last June 7 to a high of 1.3334 in August before correcting. All along I thought that the pair would already reverse but it did not. What it did was it only corrected to its 50% Fibonacci retracement level. It then continued to range or trade sideways until yesterday where it broke out to the upside when it finally breached the 1.2900 hurdle. However, the pair seems to be meeting some temporary resistance at 1.3000. If and when it moves past this number, chances are it would once again revisit its previous high just above 1.3300. Given the upside breakout, I can say that there is now a higher probability that the euro will move higher against the US dollar in the near term.

Germany’s September Zew economic sentiment index came in sour, unexpectedly falling to -4.7 (vs. 10.7) from from 14.0. The same sentiment index for the entire euro zone also slipped to 4.4 from 15.8. The slide in confidence can be attributed to the wide budget cuts done by the governments that make up the economic zone. Remember that the zone was being plagued with a credit crisis. One way to plug the countries’ deficit holes would be to drastically slash their spending. A cut in spending would obviously limit the business activity in the region but given Europe’s present fiscal situation, such move is really warranted.

Despite this, the euro still managed to outmaneuver the greenback thanks to the better than expected US core retail sales. Core retail sales in August grew by 0.6% which is twice of the market’s 0.3% consensus.

No high impact economic reports are due from the euro zone for the rest of this week. The euro, however, could take its cue from the releases from the United States. Today, the Us will publish its Empire State manufacturing index and its August industrial production. The former is seen to have reached 8.7 from 7.1 while the latter is expected to have increased again by 0.3%. The expected improvement in the Philadelphia Fed manufacturing index (from -7.7 to 0.9) which will be due tomorrow and the projected jump in the Prelim UoM Consumer Sentiment (from 68.9 to 70.3) could also induce some risk taking. Watch out for these reports.

Swiss Franc Flirting With All-time High Against the Greenback

Welcome to another day of FX trading! In today’s fx feature is the weekly chart of the USDCHF. As you can see, the pair has been losing a lot ground for several weeks now. After hitting a high of 1.1731 last May 31, it has slid since then. In fact, it had already touched the parity level early today. Still, previous supports around the 1.0000 psychological level have kept the price from falling any further. If if the 1.0000 marker gets breached, the pair could revisit its 1-year low at 0.9916. A break of this low could send it towards the pair’s all time low at 0.9635. But with investors protecting the price at 1.0000 and an oversold condition, the pair could, however, stage a rally.

Renewed confidence in the global markets have weakened the dollar’s valuation against its peers as of late. Both the DJIA and the broader S&P 500 have again logged in some beautiful gains yesterday, rising by 0.78% and 1.11%, respectively. Yesterday’s jump in confidence which was reflected in the rise in the equities markets was because of the Basel III agreement that was concluded yesterday. The Basel III is an international regulatory code that requires banks to raise their common equity to 4.5% from 2.0%. This equity will be used by the banks as buffer in case they encounter liquidity problems from say investor withdrawals and the like. In the East, China’s handsome industrial production (13.9%) and retail sales (18.2%) growth further supported the market’s optimism.

The highlight of this week for Switzerland is the Swiss National Bank’s monetary policy decision on Thursday (September 16). The SNB is expected to keep its interest rate unchanged at 0.25%. The bank, though, is very notorious in intervening in the fx market to prevent the Swissy appreciation. They do so because a higher Swissy negatively impacts their export industry. With the Swissy trading at an all-time high against the euro and flirting with historical highs versus the Us dollar, the SNB could indeed meddle in the market. If it does, then a sudden spike against the Swiss franc could occur. Nonetheless, even if the SNB intervenes, its effect would just be temporary. Market sentiment is still stronger and as long as optimism remains, the Swissy could strengthen still.

The Aussie’s Due For a Retracement

Happy weekend FX people! On today’s FX feature is an update of the AUDUSD pair which I posted last September 5 (please see it here). As you can see, the pair has continued to rise within an ascending channel. And as I’ve suggested, the pair indeed rose to mark its fifth wave (wave 5). If the Elliot Wave Principle holds true and if my wave counting is correct then as the theory suggests, the pair should be due for a retracement. Remember that the EWP predicts a correction in the prices after the completion of the fifth wave, starting with wave A and ending with wave C. And given the obvious technical resistances ahead and an overbought condition as indicated in the stochastics, the pair could indeed dip or at least move sideways. If the Aussie weakens against the US dollar, the peak of the third wave around the 0.9200 level and the channel’s support should keep it from falling further.

The Aussie along with the non-dollar currencies rose this Friday due to the better-than-expected July wholesale inventories report in the US. Wholesale inventories has risen by 1.3% as compared to the 0.4% market forecast. China’s better-than-projected industrial production (13.9% vs. 13.1%) , retail sales (18.4% vs. 18.0%), new loans (545 billion vs. 500 billion), M2 money supply (19.2% vs. 17.5%), and the slower PPI (4.3% vs. 4.6%), have also helped the Aussie. Remember that Australia is one of the biggest supplier of raw materials to China. Hence, an increasing business activity means more business for Australia. A weaker PPI, in the same way, benefits the Aussie since a monetary tightening by the Chinese government would be postponed which would allow for business to go on without additional restrictions as of the moment.

For the coming week, no market moving events are scheduled in Australia. Given the lack of economic reports from the country, investors could take this as a chance to pocket some of their profits from their long Aussie positions.

Canadian Dollar Remains Weak Versus the Yen Despite BOC Rate Hike

Good day FX peeps! To cap the week I present to you an update of the CADJPY. You see, the pair has consolidated within a small symmetrical triangle after it broke down from a bigger descending triangle formation. As of the moment, the pair is already nearing the apex of symmetrical triangle. This suggests that a break out whether to the upside or to the downside is imminent. But given the pair’s general trend (downtrend) and its recent break down from a descending triangle formation, I can say that it has a higher chance of moving south than north. Even it breaks the resistance of the small triangle, a solid resistance is still present at the 82.00 marker which incidentally is also the former support of the previous descending triangle to push back down. In any case, a move below the support of the present triangle could send it back to the previous low at 78.41. A move above the 82.00 level, on the other hand, could change the pair’s course to at least sideways.

In my post last September 6 (please see it here), I mentioned that it’s possible for the Bank of Canada (BOC) to hold its interest rate unchanged rather than hiking it. However, I was proven wrong when the central bank actually raised its benchmark interest rate as expected by the market by 0.25% to 1.00% from 0.75%, making the interest rate differential between the Canadian dollar and the Japanese yen wider. This decision, though, was not enough for the CADJPY to break key resistances at its long term downtrend line and at 82.00 as it only increased from an opening of 79.93 to close at 80.96. Yesterday’s weaker-than-projected housing starts number (183k vs. 185k) and the worsening of Canada’s trade balance figure to -C$2.7 billion from -C$1.8 billion did not help as well.

Canada’s employment change and unemployment rate for the month of August are on deck today at 11:00 am GMT. Canadian firms are seen to have added about 30,800 jobs in August after laying about 9,300 during the previous month. The country’s jobless rate, though, is still projected to remain the same at 8.0%. Generally, an improvement in Canada’s labor market is bullish for the economy and the Loonie. But is the expected increase in employment or better enough for investors to push the CADJPY above 82.00? Let us see.

Singapore Dollar Trading At An All-Time High Versus the US Dollar!

Good day Forex friends! In today’s FX special, I present to you the monthly chart of the US Dollar versus the Singapore Dollar (USDSGD). As you can see, the USDSGD pair has been sloping downwards for quite some time now. Last Friday, however, it was able to cross below the psychological 1.3500 support, marking a new all-time high for the Singapore dollar. With an oversold condition (as indicated in the stochastics), the pair could still rally. Though the long term downtrend line should keep it from rising further. A potential descending triangle could be forming if that scenario occurs. In any case, a clear break below the 1.3500 support could send the USDSGD pair lower by about 4,000 pips! Long SGD anyone?

Last week’s better-than-expected employment and housing figures in the US have sparked some risk taking among investors, causing them to leave the safety of the greenback for the like of the SGD. Singapore is actually a highly developed economy in Asia despite its size which makes it a prime place of investment. Everyone knows about the double digit growth in China but Singapore is actually the fastest growing economy in the world, expanding by 17.9% for the first half of 2010! In any case, some analyst say that the Monetary Authority of Singapore (MAS) would intervene in the market to prevent the SGD’s rapid appreciation in order to protect the country’s export industry which is its main source of revenue. But if risk taking persists, a higher valuation of the Singapore dollar could be very well tolerated.

British Pound Weakening Against the Swiss Franc

Hiyo FX peeps! Here’s a weekly chart of the GBPCHF pair. As you can see, the pair has been trading sideways after hitting a low of 1.5118 back in December 29 back in 2008. Just recently, however, the Swiss franc was able to hurdle below the 1.5825 marker against the British pound. Given this price action, the next support that I see for the GBPCHF pair is the low that it marked in 2008 (1.5118). Hence, the pair could fall back to around the mentioned low unless it is able to climb over the support-now-turned-resistance at 1.5825.

The main event of this week for the UK will be the will be the monetary policy decision of the Bank of England (BOE) on Thusday (September 9). Last month, the bank’s MPC kept its monetary policies unchanged. It left its interest rate at 0.50% and its asset purchase facility at 200 billion. The UK’s economy began to grow during the last quarter of last year. It even expanded by 1.2% during the second half of this year. The bank, however, views that there is still a big chance that this recovery will not be sustained. It said that there are still a lot of uncertainties and risks surrounding the UK’s market.

From then until now, the UK’s economic environment remains mixed. While the country’s retail sales came out with a 1.1% growth against the 0.7% consensus, the country’s home prices remain subdued. In fact, the UK’s HPI is on a 3-month losing streak, dipping by another 0.9% during the last month. Both manufacturing and services PMI also showed weakness during the last couple of periods. Switzerland, on the other hand, showed surprising 4.8% jump in their retail sales, more than doubling the 2.3% market estimate. So between the UK and Switzerland, the later appears to be the less fragile.

The Bank of Canada Could Hold Its Rate Unchanged

Welcome to another week of forex trading! In today’s FX feature is the daily cast of the CADJPY. As you can see from the chart, the pair broke down from a descending triangle pattern. Since then, it has been trading between 78.60 and 81.70. Last Friday, we the Canadian dollar rallied against the Japanese yen to push the CADJPY pair closer to where the former support of the triangle. In my view, there is still some room for the pair to move higher although it could turn back when it hits a resistance at this former support. If it does, it could fall back to around 78.60.

The Bank of Canada will hold its monetary policy decision this coming Wednesday (September 8). The bank is expected to raise its interest rate to 1.00% from 0.75%. But like what I said in my title, there’s an outside chance that the BOC could surprise the markets by not hiking its benchmark interest rate.

Let’s us check Canada’s recent economic data to see why. First of all, the country’s unemployment rate unexpectedly rose to 8.-% from 7.9% with firms cutting about 9,300 jobs. Its Ivey PMI, which gauges the activity of both manufacturing and sercies industry through the eyes of purchasing managers, also dipped by several notches to 54.0 from 58.9. More importantly, Canada’s wholesale and retail sales have continued to suffer with the former slipping by 0.3% and the core retail sales sliding again by another 0.5%. As a result, the country’s core CPI for the month has also slipped by 0.1%.

The above data shows that the situation as of the moment does not merit a rate hike as of yet especially with the unexpected slide in the latest month-ever-month CPI. The Loonie would almost surely take a hit if the BOC surprises the market by not raising its interest rates. But in case it does, the Canadian dollar could still trade on a range bound fashion or even fall since a rate hike is already forecasted and priced in by the market.

Australian Dollar’s Silent Rise

Good day to you my fellow FX men and women! Today I present to you the daily chart of the AUDUSD. As you can see, the pair has been trading within an ascending channel since the middle of May 2010. Of course, the pair would more like trend higher as long as the channel’s support does not buckle. The Aussie, however, could meet some resistance at the pair’s previous high near the 0.9200 level. With the stochastics in the overbought area, it could rest for a while before making another move to the north. A move past the 0.9200 level could push it towards 0.9300. The Elliot Wave Principle (EWP) also seems to confirm this potential price action. If my wave counting is correct, the AUDUSD could already be in its fifth wave. This then suggests that the next short term up-move would more likely surpass the peak at 0.9200.

Recent economic data in Australia goes to support the positive sentiment towards the Aussie. For one, the corporate profits of Australian firms for the second quarter of the year have unexpectedly soared by 18.9% compared to the market’s 5.9% growth forecast. The firms’ 1Q scores were also positively revised to 4.3% from 3.9%. The country’s building approvals have also expanded for the first time in 5 months. The account surprisingly rose 2.3% in July after dipping by 3.4% during the previous month. Retail sales for the same period have also shown some good figures, expanding by 0.7% in July and 0.4% in June. More importantly, the country’s second quarter gross domestic product (GDP), has surpassed the market’s 0.9% forecast with a 1.2% growth. the first quarter’s overall output expansion was also revised upwards to 0.7% from 0.5%.

On Tuesday (September 7), the Reserve Bank of Australia will have its monetary policy decision. While the bank is still expected to hold its benchmark interest rates at 4.5%, the bank’s tone would more likely lie towards the hawkish end of the spectrum given the improvements economy. Any positive outlook regarding the country would of course be bullish on the Australian dollar as well.

The Aussie Bears’ Return – August 25, 2010

It’s a bad day for the Aussie bulls since it seems that the bears have just taken over the trading driver seat. As you can see from the AUDUSD’s 4-hour chart, the pair appears to have broken down from a head and shoulders pattern. Remember that the Australian dollar had risen to as much as 0.9200 over the greenback early this month after touching a low of just above 0.8100 in June. though, by the looks of it, it’s luck has already turned. Yesterday’s movement pushed the prices below the pattern’s neckline and also under the previous resistance-turned-support. Given this, the price could head all the way down to 0.8500 though the previous support at 0.8600 could possibly halt its descent. In any case, things still look bearish for the AUD unless it is able to move back up above the neckline.

Due tomorrow (August 26) at 00:00 GMT and at 1:30 am GMT are Australia’s Conference Board leading index for the month of June and the country’s second quarter private capital expenditure. The CB leading index had risen by 0.3% in May though it could print a lower gain or even a contraction given Australia’s weak home loans figure and the country’s high unemployment rate. In case you do not know, home loans have fallen by 3.9% in June after posting a jump of 3.0% during the other month. Unemployment rate has also jumped to 5.3% from 5.1%. The country’s private capital investments for the 2Q, on the other hand, is projected to have expanded by 2.3% after dipping by 0.2%. Capital investments take up about 28.54 of Australia’s overall GDP or output. Hence, an increase in this number could push the Aussie higher in the near term. Though in my opinion, a hike of 2.3% or lower is not enough to push the Aussie back on the bullish track unless of course the figure prints a much stronger score. Watch out for the report tomorrow!

EURO Breaks Out! But to the Downside! – August 24, 2010

Good day FX friends! Here’s an update on the EURUSD which I posted last August 17 (please see my previous blog here). In that post, I mentioned the possibility of the euro breaking out to the upside. It turns out that I was wrong as the EUR, instead of moving north, slid and broke down. As you can see from its chart, it appears that the euro’s recent rally over the greenback is over. After breaking out from an inverted head and shoulders pattern, the fiber or the EURUSD pair managed to achieve its minimum target and more. It then continued to rise and it even marked a new 3-month high at 1.3334 before dipping again. After its drastic slide from its 3-month high I though that it would reverse and turn up as suggested by what appeared to be another inverted head and shoulders. However, a break out from this pattern did not materialize. Its price then formed a head and shoulders (bearish and not to be mistaken with the inverted version) pattern. Its price action during the first days of this week proved costly as it pierced through and below its uptrend line and the formation’s neckline. Given this, the pair could now fall all the way to the 1.2150 area. Even if it rallies, the head and shoulders neckline at 1.2750 would prevent it from rising any further.

The euro lost its appeal on fears over Europe’s economy. The services PMI of France, manufacturing PMI of Germany, and the euro zone’s overall manufacturing purchasing manager index all failed to meet the market’s consensus. The French services PMI fell to 59.9 (versus 60.7) from 61.1. Germany’s manufacturing index also weakened to 58.2 from 61.2 which resulted into a broader fall in the euro zone’s number to 55.0 from 56.7. Note that the index can be used to gauge the business activity of the respective sectors in the economy. Why? Well, purchasing managers hold perhaps the most current and relevant insight into company’s view of the economy. For example, if the company is starting to pile up their invetory then perhaps it is expecting a uptick in its business in the near future. In any case, a drop in these figures suggests that the recovery in the euro zone’s economy could have slowed down.

On tap on August 25 and 26, respectively, are the German Ifo business climate index and the GfK German consumer climate index. Ifo’s account is seen to have retreated to 105.8 from 106.2 while the GfK index is projected to have increased to 4.1 from 3.9. But given the weaker-than-expected PMIs in the euro zone and the recent tentativeness in the global markets, business climate in Germany and the euro zone could have dipped as well.Such could very well reflect in the upcoming business and consumer climate surveys. If this is the case then the euro could once again take another hit.

US Dollar Index Breaks Out! – August 23, 2010

Welcome to another week of FX trading! In today’s fx feature is an update of the US dollar index. In my last post, I took specific note of the inverted head and shoulders pattern that was brewing at [Read more...]

US Dollar to Make a Comeback? – August 19, 2010

Hiyo forex peeps! In today’s FX feature is an update on the US dollar index (please see my my previous post here). As you can see from its daily chart, the index appears to be poised for a break to the upside. Why? Well, [Read more...]

Short Term Bullish Reversal Seen on the Euro? – August 17, 2010

Good day forex peeps! Here’s an update on the EURUSD pair or the fiber. Last August 12 (please see my last blog here), I noted the pair’s disastrous month when it fell by more than 450 pips after reaching a new 3-month high of 1.3334 on August 6. It’s a good thing that the previous support at 1.2750 and the uptrend line. Since August 11, the pair, however, has been consolidating into what appears to be an inverted head and shoulders formation. Are we about to see a bullish reversal in the euro’s valuation? Maybe. Anyway, if the pair breaks above the neckline of the formation then it could go all the way back to 1.3300. A fall below the uptrend line, on the flip side, could push it back to 1.2750. But since the uptrend line is still intact, the pair has a higher chance of moving north.

Earlier today, Germany’s and the euro zone’s Zew economic sentiment indices for the month of August came in mixed. Germany’s index unexpectedly slipped 14.0 (versus 20.9) from 21.2, registering a new 6-month low. The broader sentiment index for the euro zone, on the other hand, surprisingly jumped to 15.8 from 10.7 (vis-a-vis 10.6). Mixed data from these two accounts caused the euro to just trade flat. And with no more data coming out of the euro zone in the horizon, the EUR could just trade in a range bound fashion for the mean time. Still, the top tier economic reports in the UK and US tomorrow could cause some volatility on the euro’s short term valuation. UK is seen to have posted another 0.4% gain in its retail sales on top of its 0.7% hike in the previous month. Initial jobless claims in the US, on the other side, for the recent week is seen to have tapered to 479,000 from 484,000. Also the US’s Philadelphia Fed manufacturing index likely reached 7.2 in August from 5.1. Watch out for these reports on August 19 at 8:30 am and 12:30 pm, respectively! Upbeat tallies from any of these accounts could bolster the demand for the non-dollar currencies like the EUR.

Are the Pound Bulls About To Strike Back? – August 16, 2010

Welcome to another week of forex trading! In today’s FX feature is an update of the GBPUSD pair which I posted back on August 4 (please see my previous blog here). As you can see from its 4-hour chart, the GBPUSD or the Cable has retraced downwards after reaching a 6-month high of 1.5998 on August 4. But despite its recent weakness, I am still bullish on the British pound. At present, the pair is trading just about just above 1.5500. The previous high at 1.5500 plus the uptrend line should be able to prevent the pair from falling further. A bounce off these supports could push the pair back up to 1.5900. A break below 1.5500, on the flip side, could send it down to 1.5100. But with an oversold condition, as indicated in the stochastics, and an intact uptrend line, the pound, in my opinion, has a higher chance of moving north at least in the short term.

On the economic front, the UK’s inflation and retail sales figures are scheduled to be released on August 17 and 19, respectively. Month-over-month CPI in July is seen to be at -0.2% due to weaker consumer spending. Because of this, the year-over-year count is projected to have slowed to 3.1% from 3.2%. July retail sales is also anticipated to have tapered to 0.4% from 0.7%. And according to the data that was published by the British Retail Consortium (BRC), sales in the retail level have indeed weakened as fears over a probable slash in government spending caused the consumers to only spend for their essential needs.

Since a dip in the UK’s inflation and retail sales accounts is already expected, the market has likely priced this. Given this, the pound can just trade in a range-bound fashion unless a worse-than-projected tallies are printed. A surprise upticks in the accounts, on the other hand, can push the pound higher.

The Euro Came Crashing – August 12, 2010

What’s up forex peeps?! Welcome to another day of forex trading! We have the EURUSD in today’s fx pick. As you can see from its 4-hour chart, the EURUSD or the fiber came crashing in yesterday’s trading. After reaching a new 3-month high just above 1.3300. , the euro slid, breaking the pair’s uptrend line in the process. In less than a week, the fell by more than 400 pips against the greenback! Ouch! At present, the pair is trading just below 1.2900 and since the next obvious support is still somewhere within 1.2800 and 1.2700, it still have some room to move lower. If the support here gets taken out, beware as the pair could fall all the way to 1.2500! But given its recent drop and its oversold condition, it can also range or even retrace as sellers pocket some of their profits.

Fundamentally, the slide in the the euro was caused by several factors. The weaker-than-expected retail sales (17.9% versus 18.5%) in China damped the confidence of the market. You see, a 17.9% is not really weak but apparently the market is expecting a lot from China. Why? Well, China is now the number 2 biggest economy in the world and a robust figure in its retail sales could mean business for all its trading partners. The number 3 economy, Japan, also failed to impress with only a 1.9% jump in its machinery orders, lower than the 5.6% forecast.

The Bank of England and the US Federal Reserve worsened the situation further by saying that risks are still present in their respective economy.

As a result, risk aversion in the broader market made a comeback, leading investors to flee to the safety of the greenback. Stocks, as well as currencies like the euro, as a consequence, were sold off.

The highlight of today will be the release of the US’s unemployment claims for the week ending July 31. Initial jobless claims are seen to be at 465,000, lesser than the 479,000 tallied the week before. Now, lesser jobless claims could ease the markets while a worse count would more likely extend the losses. Watch out for its announcement today at 12:30 pm GMT.

US Dollar Remains in a Funk – August 11, 2010

Good day forex peep! In today’s fx special is the US dollar index. As you can see from its 4-hour chart, the index, which weighs the valuation of the greenback against a basket of currencies like the euro, pound, yen, [Read more...]

Canadian Dollar Slips on Bleak Employment – August 9, 2010

Welcome to a brand new week of forex trading! On today’s canvas is the 4-hour chart of the USDCAD pair. As you can see, the pair has been trending south for the past month. After hitting a new 3-month low of 1.0107 on August 5, it then rallied strongly. At present, it is trading below 1.0300. A break above this could send it to 1.0350 or at 1.0400. However, it looks like the pair is experiencing some selling pressure at 1.0300. Interestingly, this mark almost falls in line with the 38.2% Fibonacci retracement that I drew. Hence, if the pair is unable to break above the resistance at 1.0300, it could once again revisit its previous low at 1.0107.

Fundamentally, the Canadian dollar or the loonie weakened against the greenback which is represented by the recent rally in the pair because of the dismal employment figures of Canada for the month of July. Canadian firms unexpectedly slashed about 9,300 jobs in July after tallying about 93,000 in job additions in June. Initially, Canada’s employment change number was seen to post about 13,700 new jobs. This drop in Canadian employment caused the nation’s jobless rate to worsen to 8.0% from 7.9%, further lessening the possibility of a central bank rate hike.

For this week, Canada’s July housing starts and trade balance in June are due on Tuesday (August 10) and Wednesday (August 11), respectively. Housing starts for the month of July are seen to be at 185,000 which was a little modest than the previous month’s score of 193,000. Canada’s trade balance for the month of June, on the other hand, are seen to have posted a surplus of C$400 million from a deficit of C$500 million. Better-than-expected results from these reports could resume the USDCAD’s downtrend.

EURO Soared Over the US Dollar On Dismal NFP Result – August 6, 2010

Hello forex peeps! On today’s fx feature is the 4-hour chart of the fiber or the EURUSD pair. In my previous post about it (please see it here) last August 3, I mentioned that as long as its uptrend holds, it would continue to move higher… and it did. As you can see, the pair had consolidated into a symmetrical triangle after reaching a high of 1.3262 on August 3. It then broke out to the upside after finding support at the uptrend line. The presence of a hidden bullish divergence (where the price moves higher and the stochastics moves lower) and its oversold condition when it fell back to the uptrend support could have also led the investors to buy up the euro in exchange of the USD. Still, the pair is facing some heavy selling pressure at 1.3300. Given this, it might a harder time in moving above the mentioned level. It would more likely consolidate again or even retrace before it shoots up again. A break, however, of the uptrend line could push the EURUSD back to 1.3100. But since it is on an uptrend, a move higher is more likely to take place.

The euro’s recent jump was due to the dismal result of the US’s non-farm payrolls (NFP) report. Imagine, US firms about 131,000 jobs in Jul which was far worse than the expected 63,000 job cuts. The country’s unemployment rate, though, managed to remain at 9.5%. Nonetheless, the worse-than-projected NFP count spurred some risk aversion in the market. The difference this time though is that the euro, as mentioned, soared against the greenback. Usually, the EUR gets sold off whenever there is risk aversion in the markets since investors generally seek shelter under the safety of the USD whenever these happen. But apparently, the market is already becoming wary of the US’s recovery which in turn leads them to question the viability of the US dollar.

For the past week, I have observed that the movement of the USD has been more or less positively in line with the US’s fundamentals.Will this trend continue? We will see. If it does then any weak economic update from the US next week could push the EURUSD higher. The Fed is scheduled to release its interest rate decision on Tuesday (August 10) while the US’s inflation and retail sales numbers are due on Friday (August 13). Watch out for any downbeat outlook and dovish statements by the FOMC and/or weak inflation and retail sales numbers!