*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

+EUR, +CHF, +GBP,
-CAD, -JPY
mildly +AUD, +NZD, -USD

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Will Oil Drive USD/CAD to 1.30?

Will Oil Drive USD/CAD to 1.30?

Chart Of The Day Uncategorized

Will Oil Drive USD/CAD to 1.30?

One of the biggest stories today was the sharp decline in oil prices. WTI Crude dropped 2.25% to $43.83, its lowest level since March 2009. Canada is a major oil producer and extremely sensitive to the price of crude. The last time we heard from the central bank, they signaled that rates would not be lowered again this year but if crude prices fall below $40 a barrel, they may have to reconsider their position. We will learn more about Canada’s inflation situation later this week but lower prices will drive down inflation expectations across the globe so even if CPI increases in February like economists expect, it could fall again in the coming months. This possibility could weigh heavily on the loonie, especially if oil continues to fall and that dynamic could drive USD/CAD to 1.30.

Taking a look at the monthly chart of USD/CAD there is resistance at Friday’s high of 1.2824 but above that, there is no major resistance until 1.30. Near term support is at 1.26 with more significant support at 1.2350.

USDCAD031615

BK BIG TRADE Exit USDCAD at market 1.1849 +108 on trade

Swing

BK BIG TRADE Exit USDCAD at market 1.1849 +108 on trade

BK USD/CAD Big Trade Alert – Lets Pick a Bottom in Oil

The Trade:

USD/CAD

Sell 1 lot at market (now 1.1948)

Place Order to Sell 1 additional lot at 1.2025

Stop for ALL at 1.2150

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

YES we are doing it Baby! We are PICKING a BOTTOM in Oil. While we have to admit that this could be more of a short than long-term bottom, it is enough for us to capture some respectable profits in USD/CAD. Fundamentally, the oil story hasn’t changed, the market share war is well underway and supply outstrips demand but after a 40% decline in 2 months, oil is deeply oversold and due for a recovery. By now everyone is calling for $20 oil and when sentiment reaches such extreme levels, it oftentimes marks a short and possibly long-term bottom. In the past year, the price of oil has fallen faster and more aggressively than any analyst predicted and those who were short the commodity made a lot of money while those who were long, lost their shirts.

At some point enough is enough and the current speed and magnitude of losses is just not sustainable long term especially in such a crowded trade. At $45 a barrel, some OPEC nations are really suffering and at $40 they could start to cry uncle. The lower crude oil falls, the greater the chance of OPEC nations reconsidering their positions on production cuts and all it takes is one announcement to turn everything around.

Oil is also approaching a 16-Year Trend line that marked a bottom in 2009. With bearish sentiment at an extreme, support could once again be found at this level.

USD/CAD is also approaching a key resistance level. We have been looking for USD/CAD to hit 1.20 for some time and now that it has happened, a deeper correction is likely. However since we don’t know if oil will bottom at $45 or closer to $40, we are laying out a market order to sell 1 lot USD/CAD with a limit order to sell 1 additional lot at 1.2025.

USD/CAD

Sell 1 lot at market (now 1.1948)

Place Order to Sell 1 additional lot at 1.2025

Stop for ALL at 1.2150

BK NZD/CAD Big Trade Update +72

Swing

Close NZD/CAD trade at market (now 0.9270) for +72 pips profit. Revisit Next Week

**We still like this trade will revisit this trade on Monday. 93 is an important resistance level for NZD/CAD. Taking a look at how it traded after the last 3 US and Canadian Employment reports, chance is high for a retracement on Monday.

BK NZD/CAD Big Trade -- Dairy vs. Oil Trade

The Trade:

NZD/CAD

Buy 1 lot at market between 0.9185-0.9210 (now 0.9198)

Place Order to Buy 1 additional lot at 0.9110

Stop for whole position at 0.8970

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

We Still Like the New Zealand Dollar

In yesterday’s EUR/NZD Trade, we talked about why we like the New Zealand dollar. Although we closed our EUR/NZD trade, we still believe that the New Zealand will outperform but the most attractive opportunity right now is to buy the New Zealand dollar against the Canadian dollars.

Commodity prices took a beating last year and we think dairy prices have a greater chance of stabilizing than oil. So in many ways, NZD/CAD is a dairy/oil trade. While both commodities are affected by Chinese demand, a drop in production in New Zealand helped dairy rebound from a 5 year low. Tuesday’s auction yielded the largest increase in prices in more than 12 months. Oil prices on the other hand are being artificially depressed by the oil price war that is expanding not easing. As long as Saudi Arabia refuses to back off its campaign to retain and gain market share, oil prices will remain under pressure.

And See More Pain in Canada…

However after four days of losses, oil prices rebounded on Wednesday leading some investors and all oil producers to hope for a bottom in oil. We believe that nothing has changed, the move in oil has been sharp and aggressive so a relief rally is certainly possible. With our Big Trades we are more interested in the medium term outlook for currencies and one view that we have strong confidence in is the idea that even if oil stabilizes, oil producing nations have a lot to lose with prices at current levels.

Remember economic data is released with a lag. This morning we saw just how much damage higher oil prices can have on Canada’s economy. The country’s trade deficit hit a 2-year high in November as exports dropped 3.5%. Considering that oil prices fell another 20% or approximately $20 a barrel in December, the deficit is likely to have worsened leading to more overall weakness in Canada’s economy.

Although some market participants believe that stronger U.S. growth will lift the Canadian economy, the pain of lower oil prices should precede that with Canadian data weakening before it improves. For this reason, we think that the Canadian dollar will continue to decline.

Get Paid on the Trade

The best part of buying NZD versus the CAD is that you also Get Paid on the Trade. New Zealand offers a 3.5% interest rate while Canadian rates are at a record low of 1%.

The only risk to this trade is if the rumors about the death of Saudi King Abdullah prove to be true. He’s battling pneumonia in a hospital in Riyadh. If he passes away, oil prices should rise as it would suggest a freeze on the market share war.

Chart – NZD/CAD Headed for 0.9450

We think NZD/CAD is eventually headed for 0.9450. Therefore we recommend:

NZD/CAD

Buy 1 lot at market between 0.9185-0.9210 (now 0.9198)

Place Order to Buy 1 additional lot at 0.9110

Stop for whole position at 0.8970

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

USD/CAD to 1.15 on Big Drop in Oil

USD/CAD to 1.15 on Big Drop in Oil

Chart Of The Day

Fundamentals

Oil prices collapsed in relatively thin trading on Friday, sending USD/CAD sharply higher. Crude prices fell more than 10%, to its lowest level since September 2009. On Thursday, OPEC decided against an output cut that could have carved out a bottom for oil but instead, it led to a deep sell-off. Their decision suggests that they no longer wants to bear the burden of lower prices alone and want other producers to adjust their production as well. Considering that most traders have not returned from their Thanksgiving Day holidays, we fear that oil prices will move even lower next week, closing in on $60 a barrel. If traders continue to drive oil prices lower on Monday, USD/CAD should hit a fresh 5-year high.

Technicals

Taking a look at the monthly chart of USD/CAD if the currency pair breaks its current 5 year high of 1.1467 1.15 will serve as near term resistance but 1.1540, the 38.2% Fibonacci retracement of the 2007 to 2009 rally will be the key level to watch. On the downside, 1.12 remains support for USD/CAD.