Tuesday, April 12, 2011

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

Link to Forex Trading Education : Forex Trading Blog by FOREXYARD

USD/CAD Hits 40-Month Peak ahead of BOC Meeting

Posted: 11 Apr 2011 09:26 AM PDT

printprofile

The Canadian dollar (CAD) has clambered its way to a 40-month peak against the US dollar (USD) as rising oil prices and solid fundamentals out of Canada push the Loonie higher.

Although tomorrow's rate statement from the Bank of Canada (BOC) is expected to show a continuation of the nation's 1.00% interest rate, last week's European rate hike has at least a few analysts expecting a surprise.

The rising value of the Canadian dollar also suggests a change in rates is needed. Exports out of Canada have demonstrated their decline with last month's trade balance figures revealing a drop from growth of 3.0B in February, to 0.1B growth in March. Tomorrow's trade balance may show a surplus increase of 0.6B, but much data out of Canada seems to suggest it will fall short of this figure.

It seems unlikely the BOC will adjust its interest rates tomorrow, but it may be hard pressed not to reveal stronger commentary in its policy statement. Global fundamentals appear to be demanding a shift in monetary policies from most major economies, especially as we approach this weekend's meeting of the G7, G20 and IMF.

EUR Fundamentals Mismatch Currency Strength

Posted: 11 Apr 2011 09:24 AM PDT

printprofile

The euro has gained against almost all of its currency rivals over the past several trading days, though many analysts attribute this rise to factors outside of the region's fundamentals.

A quick look through Europe's economic reports from the past several work days reveals this sentiment to be true. Today's French industrial production figures rose 0.1% less than forecast, while last Friday's German trade balance showed a reduced surplus. The French trade balance actually revealed a widening deficit.

Additionally, last month's regional retail sales reports showed a 0.1% contraction, highlighting a minor downturn in consumer spending and confidence. What we've seen from the EUR, to the contrary, however, is a growth in currency strength.

Many analysts attribute this to last week's interest rate hike by the European Central Bank (ECB) from 1.00% to 1.25%. But more than that, as the EUR climbed after the announced rate increase, several technical buy-in points appear to have been hit, generating a momentum boost and flinging the currency to its recent high points.

Today's technical levels do not seem to be signaling any significant resistance to the EUR's recent climb, suggesting a continuation to last week's climb.

Weekly Outlook Shows Crude Oil Rising

Posted: 11 Apr 2011 09:20 AM PDT

printprofile

The price of oil, peaking over $107 a barrel last week, remained flat at the start of this week, trading mildly downward on a bullish USD.

With traders eyeing this weekend's meeting of the G7, G20 and IMF in Washington, D.C., dollar volatility is expected to soar this week, driving commodities into potentially wider swings of value.

Crude Oil prices, gaining strong support from global fundamentals these past several weeks, are also expected to continue rising.

This news is not unexpected, though, as multiple analysts have been calling for the same since last year. Bullish oil prices coincide with global unrest and 2011 has been an especially turbulent year.

With a string of reports emanating from the United States this week, dollar-linked assets will surely undergo intense trading sessions as the week progresses.

Dollar Starts the Week on a High Note

Posted: 11 Apr 2011 05:40 AM PDT

printprofile

In a relatively quiet European trading session the greenback moved higher versus the majors as a host of US central bankers will be on the speaking circuit today.

The dollar was bid in a relatively slow European trading session with a lack of data releases on the calendar. At lunchtime in London, the EUR/USD was down at 1.4438 from its opening week price of 1.4480. Last week's interest rate increase by the ECB and talk of central bank diversification out of dollars has kept the euro buoyant. Friday's low of 1.4380 followed by 1.4250 should serve as support levels with an initial target at the January 2010 high at 1.4280.

The GBP/USD was trading at 1.6347 from 1.6376. Tomorrow key CPI y/y data will be released and anything at or above the expected outcome of 4.4% should be a catalyst for the pound as strong inflationary pressures may force the BOE to raise interest rates as early as its next meeting in May. Support is found at 1.6250 followed by 1.6090. To the upside, Friday's high at 1.6426 will be followed by 1.6460 with a target of 1.6880 from the November 2009 high.

The USD/JPY was relatively unchanged as the dollar failed to hold its gains from the last minute budget compromise. Bank of Japan Governor Masaaki Shirakawa said the Japanese economy will remain under pressure as the country moves to recover from the earthquake and tsunami. USD/JPY support is located at 84.50 followed by 84.00. Resistance is at 85.50 with a target of 85.90.

This afternoon the dollar may give back its gains as FOMC member Janet Yellen will be on the speaking docket at 16:15 GMT. Yellen, a known dove on inflation and a strong Bernanke supporter should expand on her dovish opinion when she was previously quoted as saying, “In my personal opinion, economic conditions do not yet call for the Fed to exit from unconventional monetary policy.” This could lead to further dollar weakness in line with the long term trend following the implementation of the Fed's quantitative easing program.
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)