Expert Opinions

  The USD CAD fell by more than a penny on Wednesday fueled by a higher than expected consumer price report. News that domestic inflation soared further than economists forecast led to speculation that the Bank of Canada would raise interest rates sooner than expected. On Wednesday it was reported that consumer prices rose by 0.7% for the month of May, twice as much as expected. Gasoline prices led the surge, soaring a staggering 29.5% in the month. This was followed by a 4.2% increase in food prices. The surprise news led traders to increase their bets that the BoC would have to hike its benchmark interest rate before the fall as the market has been anticipating. The Canadian Dollar received its initial boost this morning after Greek politicians approved a 5-year austerity plan designed to prevent the country from going bankrupt. The favorable outcome allowed Greece to become eligible for part of a European Union and International Monetary Fund bailout package. The...

  Greece’s Parliament is expected to pass austerity measures this morning in a move that is necessary to ensure its continued existence. Protests and strikes continue in Greece as the country faces incredibly tough times. Some people are calling this morning’s vote a “suicide vote” because it means that the legislators who vote for austerity are likely to lose their jobs. Whether they vote yes or no, it appears the government officials are going to lose their jobs because the country will be out of money. Without the financial aid from the European Union and the International Monetary Policy that is expected to be delivered pending approval of the austerity measures, Greece will be bankrupt. If the measures don’t pass Parliament, then austerity measures are likely to kick in anyway, but that scenario will mean uncontrolled cuts in government services. At least with an austerity plan, the situation will be handled differently and in perhaps a more humane manner. Even if Greece passes the...

  The USD CAD continues to feel the pressure of a possible solution to the Greece debt problems. As the Greek Parliament moves closer to approving the budget cut package, investors are starting to speculate on the next move in the Forex markets. The strength in the Euro suggests that the market is setting up for a relief rally. At the same time, investors are shedding their positions in the safe-haven U.S. Dollar, putting pressure on the Greenback. With the U.S. Dollar falling, investors are taking an interest in the long side of the commodities markets. Solid up moves in crude oil and gold are helping to fuel a rally in the Canadian Dollar. The recent rise in the USD CAD, driven by demand for safety led some traders to believe that this currency pair would trade to 1.00 or parity before any significant selling pressure would hit the market. The main thought was that parity was likely to become a top since...

  The GBP USD posted a minor closing price reversal bottom on the daily chart on Monday. Although this was not the robust pattern typically associated with a major bottom, it could be a sign that weaker shorts are beginning to cover their positions. The key to a reversal bottom is the follow-through. In order to confirm Monday’s reversal bottom at 1.5913, the market must first trader through the day’s high at 1.6011. If this doesn’t happen then the British Pound may trade in a range or make another attempt to drive the market to new move lows. What makes this market attractive at current levels is that the possible bottoming action is occurring inside of a major retracement zone created by the December 2010 bottom at 1.5346 and the April top at 1.6746.  This retracement zone is 1.6045 to 1.5880. In addition to the retracement zone, several bottoms at 1.5962, 1.6030, 1.5977 and 1.5936 could be looked at as support levels. The first sign...

  The EUR USD traded in both directions on Monday before finishing higher. Trader uncertainty and nervousness ahead of this week’s key austerity vote in the Greece Parliament kept many investors on the sidelines. Based on the current trading activity, it appears that investors have drawn their lines in the sand. 1.4442 is the upper boundary and 1.4073 is the lower boundary. Trades through either one of these levels are likely to trigger volatile moves. Early in the trading session the Euro was under pressure. This was a follow-through move to the sell-off which began late last week, leading to the weak close on Friday. The sources of the downside pressure were worries that opposition to the austerity measures was gaining strength, leading to speculation that the proposal would have a hard time passing Parliament. Shortly before the New York opening the Euro began to stabilize while safe-haven currencies such as the U.S. Dollar and Swiss Franc began to weaken.  This trading activity was an...

  The USD CAD posted a daily closing price reversal top after taking out the swing top at .9898 failed to attract aggressive buyers.  The subsequent weak close put the market in a position to break uptrending Gann angle support at .9864, making it vulnerable to further downside pressure. Based on the last swing of .9700 to .9912, traders should look for a 2 to 3 day break back to .9806 to .9781. The reversal top often gives weak longs an excuse to exit their positions early. The pattern may become major top, however, it make take 3 to 5 days to confirm it. Otherwise, all the reversal is suggesting is a temporary top. The main trend will remain up until the .9700 bottom is broken. In the meantime, the key upside target remains .9973 to 1.00. Until Monday’s reversal top, the USD CAD’s upside momentum indicated that parity was the next likely resistance.  At this level, Canadian exporters were expected to initiate...

Fundamentally the biggest story this week for the EUR USD is the Greece Parliament vote on austerity measures on June 28. Although the Greek government has approved the austerity plan, there are opposing voices that could make Tuesday’s vote go down to the wire. The EUR USD has been rangebound on the weekly chart since topping in early May at 1.4940 and bottoming in late May at 1.3969. This range has created a key retracement zone at 1.4454 to 1.4569. The recent short-term top at 1.4696 represented the market’s attempt to breakout over this retracement zone, however, rumors over the possibility the Greece austerity vote would fail, triggered the start of a hard break late last week. The weekly swing chart indicates that the Euro is in an uptrend versus the U.S. Dollar. This trend is a combination of a favorable interest rate differential and positive expectations for a solution to the Greek sovereign debt crisis. The fact that the European Central...

After making a recent attempt to breakout to the upside, the USD CHF failed to attract enough buy-side pressure to shift sentiment to long, leading to another break and the resumption of the downtrend. The late session break on Friday through the previous bottom at .8328, not only reversed the trend lower, but also triggered a break to a new historical low for the pair at .8308.  The rise in the Swiss Franc last week in the face of an appreciating Dollar against all other majors made it clear that the Franc is the safe-haven currency at this time. The main reasons for making the Swiss Franc the safe currency are two-fold. Firstly, the on-going problems in the Euro Zone are forcing investors to liquidate the Euro out of fear of contagion spreading to other peripheral nations. Secondly, concerns about the weakening global economy make the stable Swiss Franc an attractive alternative to other so-called safe currencies like the U.S. Dollar...

The USD JPY traded lower on Friday. Since bottoming on June 8 at 79.69 and topping on June 15 at 81.05 the market has been rangebound. Trading inside the major retracement zone at 80.94 to 79.86 seems to be indicating a stable currency. The fact that the market is almost exactly in the center of the tsunami low and the central bank intervention high is also an indication of a stable market. The problem is the Japanese Yen needs to be lower in order to stimulate its economy and increase exports. Since there isn’t a blue print on how long it takes a country to recover from an earthquake, tsunami and near-nuclear disaster, my guess is a stable currency is alright given the circumstances. While speculators may find it difficult to trade the USD JPY while it trades in a tight range, Japanese officials may finally be getting what they have been looking for – currency stabilization. If you’ve been following the...

Forecasts of continued slowing growth in the U.K. kept pressure on the British Pound on Friday. While the U.S. Federal Reserve is ending its second quantitative easing program with no other stimulus plan in the works, speculation is abuzz the Bank of England is leaning toward keeping interest rates at a record low. The recently released minutes from the BoE’s last meeting showed that members voted 7 – 2 to hold interest rates at the historically low 0.50% level. Some members are even suggesting that the weakening economy is calling for another round of quantitative easing. In the meantime, the market seems to be anticipating another round of bond purchases. Another factor pressuring the British Pound is the current strength in the U.S. Dollar. Although Fed Chairman Bernanke acknowledged the U.S. economy was weak, he offered no insight into any new quantitative easing plans after letting the last program run its course at the end of June. Technically, the GBP USD traded lower...