USDCAD – Retrace Done at 1.2400?

USDCAD – Retrace Done at 1.2400?

Chart Of The Day

For the past week, the loonie has been in a much need correction as the USDCAD bounced off the recent lows near the 1.2050 level. Some jawboning from BOC about the strength of the currency along with more hawkish Fed has helped push the pair back to 1.2400 figure, but even yesterday’s uber hawkish FOMC meeting could not push it past that level.

Tomorrow the market will get a look at CAD Retails Sales and CPI numbers. While Retail Sales are expected to slip, inflation is projected to rise. If the CPI numbers meet or beat the forecast USDCAD could quickly drop towards 1.2200 as expectations of yet another BOC hike will rise markedly.

USDJPY – Can it Hit 112.00?

USDJPY – Can it Hit 112.00?

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Don’t look now but USDJPY is up nearly 400 pips since it hit swing lows nearly 10 days ago. The pair is forming a classic V-shaped bottom after being grossly oversold. Despite lackluster US economic data, traders are betting that the Fed will maintain its hawkish stance and will guide to confirm that a December rate hike is on track.

US yields have also expressed that sentiment as they rose at their fastest pace since November.

Tomorrow’s FOMC statement could be the make or break moment for the pair. If the Fed reaffirms that a rate hike is a possibility USDJPY could explode beyond 112.00 and could even push through the key resistance of 112.50 triggering massive short covering rally as a result.

USDCHF – Who Wins Bulls or Bears?

USDCHF – Who Wins Bulls or Bears?

Chart Of The Day

Pity the poor SNB. No matter what the Swiss National Bank does, the Swissie refuses to go down. Even with the biggest negative in the world, the Swissie is near multi-month lows as risk aversion trumps the tempting yield spread. Today news that North Korea is about to launch another ICBM test sent the markets into a tizzy and USDCHF back below 9650 before the pair finally found some support.

North Korea remains a nuisance on the global stage, but its hard to believe that China would allow its vassal state to trigger a Third World War and upend the global economy. Still, the regime of NK is the most radical and unpredictable in the world and one of its provocations may get out of hand.

However, assuming the NK risk is pacified, the Swissie could see a furious relief rally especially if US data proves to be stronger than forecast. US Retail Sales are expected to be a little softer than the month prior at 0.3% vs. 0.6%. But if they beat their mark USDCHF could break out above the .9750 level and establish a clear bottom from which it could mount a rally towards parity.

NZDCAD – Back to 9000?

NZDCAD – Back to 9000?

Chart Of The Day

Overnight news that New Zealand center right has recovered its lead in the polls ahead of the national election on September 23, sent kiwi sharply higher and turned the commodity pair from a relative weakness performer to relative strength. The news that center-left held the lead for the past few weeks has weighed heavy on kiwi with markets worried that Labor would enact a series of anti-growth policies.

So the relief in the pair has been palpable and if Conservatives of the National party manage to hold on to their lead through election and hold on to power the kiwi could extend its gains. Meanwhile the loonie looks like its exhausted. USDCAD has found serious support above the 1.2000 level and that makes NZDCAD and interesting long as the pair tries to climb back towards the .9000 level.

USDCAD – Can it Hit 1.2100?

USDCAD – Can it Hit 1.2100?

Chart Of The Day

There is no doubt that the loonie has been the most powerful currency as of late. The pair, boosted by a hawkish BOC and surprisingly robust GDP growth has been on a one-way trip towards the key 1.2000 support level. Although the BOC appeared to indicates that its surprise rate hike this week may be the last one for the foreseeable future if the Canadian economy continues to surprise to the upside it may have to tighten monetary policy again.

To that end, tomorrow’s Canadian employment data is sure to be the focus of the market as loonie long try to press the pair through the key long term 1.2100 support. If the labor numbers which are expected to print at 19K exceed estimates, USDCAD could see 1.2000 by next week.

AUDCAD – Pop to Parity?

AUDCAD – Pop to Parity?

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Everyone has their eyes out for the Bank of Canada rate decision tomorrow at 1000 NY time. Aside from the ECB meeting a day later it is the most important event of the week. The market is leaning heavily long loonie anticipating that the BOC will signal that a rate hike is coming in October and given the positive stream of Canadian data of late the speculation may be correct. Still, there is not an insubstantial chance that the BOC may choose to hold its powder dry and remain stationary for the time being.

Meanwhile the RBA last night reaffirmed it neutral stance but clearly tilted in the hawkish direction by noting that the growth and inflation were likely to increase and at very minimum suggesting that no easing will occur in the immediate future. This has helped to push the Aussie through the key .8000 level and it remains well bid into the New York close.

If the BOC does surprise to the downside the loonie is sure to crash which will pop AUDCAD through the parity level almost instantly. On the other hand, if the Canadian monetary authorities confirm a hike, the move could be more muted given the massive rally already in place.

EURUSD – Can it Recapture 1.2000?

EURUSD – Can it Recapture 1.2000?

Chart Of The Day

After 48 hours of correction, the euro ended the day on the highs once again as it recaptured the 1.1900 level. Not even jawboning by the ECB could keep the single currency down for long. Yet the strength today wasn’t really a function of euro buyers, but dollar sellers as the market went once again to hating the greenback.

Despite relatively decent data, traders continue to doubt Fed’s intention to hike rates by year end. Today’s lackluster PCE data which showed no inflation whatsoever did little to dispell that negative sentiment and if tomorrow’s NFP’s miss its mark the pile on against the buck will only get deeper which means that EURUSD has a decent chance of climbing the 1.2000 level once again

Has USDCAD Reversed?

Has USDCAD Reversed?

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With oil prices continuing to drift lower and with Canadian inflation subdued USDCAD made a major reversal in US trade today recovering above the 1.2550 level as longs pressed the pair higher. With ADP and US GDP on the docket tomorrow the greenback could have another strong day and could push the pair through the 1.2600 figure as the day proceeds.

In addition to US data, the market will be looking at US crude stockpiles which may have ballooned due to Hurricane Harvey. If Hurricane pushes prices of crude towards the $45/bbl level the loonie is sure to suffer a major blow and USDCAD short squeeze will accelerate.

EURUSD – Which Way Will it Break Out?

EURUSD – Which Way Will it Break Out?

Chart Of The Day

Tomorrow could be a key breakout day for the EURUSD. The market will be fixated on Jackson Hole speeches especially one by Mario Draghi. As we noted earlier today, “Mr. Draghi, on the other hand, must dampen any expectations of an immediate taper despite the fact that conditions in the Eurozone have improved materially and ultra – accommodative policy is no longer necessary. The ECB is keenly aware of a market overshoot vis a vis exchange rates and does not want to see EURUSD trade above the 1.2000 level into Q4 of this year for fear of making exports from the region uncompetitive.

Thus, Mr. Draghi’s task is in some ways more difficult and unless he unequivocally states that no taper is coming for the foreseeable future, the EURUSD could shrug off any knee jerk selloffs. “

The EURUSD has hovered on both sides of the 1.1800 figure for the better part of two weeks and if it makes a break tomorrow the direction could be long lasting with the pair setting the tone for the next few weeks.

USDCAD – Back to 1.2500?

USDCAD – Back to 1.2500?

Chart Of The Day

The loonie remains one of strongest currencies in the G-7 universe aided today by better than expected Retail Sales numbers which saw a jump of 0.7% versus 0.1% eyed. The economy up North continues to hum along despite lack luster oil prices as diversified services base delivers robust growth.

After a mild counter-trend rally USDCAD looks like it’s to test the key 1.2500 support level and tomorrow’s crude inventory numbers could be the catalyst for such a move. If the inventories show a larger than expected draw oil could climb towards the key $50/bbl level providing just the push that loonie needs to test 1.2500 support.

For now, the pair remains comfortably above that level, but a move lower could ultimately send it to a test of recent lows at 1.2419

CADJPY – Back to 85.00?

CADJPY – Back to 85.00?

Chart Of The Day

After making a double top at the 89.00 level CADJPY is failing ahead of 88.00 and looks to be headed towards a test of 85.00 as risk aversion flows once again dominate the market. With Washington DC in turmoil and President Trump greatly weakened in his power by the events of the week, markets are losing all faith in any policy progress by the end of this year.

In addition, the renewed terrorist violence in Barcelona is only adding to tensions amongst investors and USDJPY looks like it is ready to retest the 109.00 figure having caught many traders in a bullish trap. Meanwhile, oil continues to slide down and tomorrow’s Canadian CPI data could weaken the loonie further if it misses the mark and prints negative. With sentiment decidedly sour, CADJPY could see 85.00 by the end of the week.