Archive for March, 2011

BNN Video Interview: Impact of Canadian Crisis on CAD

I was on BNN this afternoon talking about the impact of the Canadian crisis on the Canadian dollar. Click on the image to access the video

Forex Trading Strategies – Why Leverage is Like a Drug

Drug dealers often use an insidious strategy to obtain new customers. They provide free samples of their wares to children in the form of a lollipop or candy bar. A few licks of the drug covered sweet and the kids are hooked, frequently for life. Speculative markets can operate much in the same manner except [...]

100bp of Tightening Priced in for ECB?! See Latest G7 Rate Hike Expectations

Rate hike expectations are always changing and its important to keep track of them because they reflect what investors are pricing in.
Here are the latest numbers and highlights (compared to last week)
Fed – One 25bp rate hike expected by Q1 2012 > Minor increase in implied policy changes
BoE – 50bp rate hike priced [...]

What the Latest CDS Spreads Show about EZ Concerns

The euro has weakened this morning on fresh concerns about Ireland and Portugal who is scheduled to have an austerity vote this week. The following table of 5 year CDS spreads show that spreads of Portugal and Ireland have widened materially, reflecting a greater risk of a bailout. Ireland’s CDS spread is nearly [...]

BNN Video – Talking Yen Intervention

I was on the Business News Network talking about intervention in Japan, whether it has been successful, Libya and the outlook for the FX market. Click on the image to access the video

Japanese Intervention was Not Sterilized – What Does that Mean?

The Bank of Japan said explicitly last night that their intervention will NOT be sterilized. This is VERY good because it gives their intervention efforts a greater chance of succeeding.
Intervention by central banks is one of the most important short-term and long-term fundamental drivers in the currency market. For short-term traders, intervention [...]

Power of Past G7 Mtgs: Euro and JPY Charts

The following charts of the EUR/USD and USD/JPY shows the power of G7 meetings. As you can see, their announcements have frequently marked a top or bottom in the currency pairs. Sometimes this happens immediately and other times it takes a while longer. Judge for yourself what will happen this time around:

Diminishing Impact of Chinese RRR

China raised their reserve requirement ratio today for the third time this year and the ninth time since the beginning of 2010. I don’t have time to write much about this but I want to point out that Chinese is having a diminishing impact on the market.
This is what I wrote last month:
With [...]

Chart: Euro and Impact of Joint Intervention

The following chart shows how the EUR/USD traded after the G7 joint intervention in Sept 2000. The EUR/USD made a new low and the ECB followed up with more intervention a month later which finally carved out the bottom. Will USD/JPY behave the same way?

G7 Statement on Coordinated FX Intervention

18 March 2011 – Statement of G7 Finance Ministers and Central Bank Governors
We, the G7 Finance Ministers and central bank governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.
We express our solidarity with [...]