Forex Investment and Currency Trading

It’s a US holiday and that can only mean one thing; wall to wall coverage of Warren Buffett on CNBC – again. That will not make the day any shorter for our markets and once Europe goes home in a few hours, the activity will trail off very quickly. USD/CAD be heading for another weekly gain (the third consecutive) but the momentum behind the move up in funds looks a little less convincing this week as the market has again struggled to hold gains above the 1.16 point. CAD is looking oversold on a medium term basis (and not just against [...]

Payrolls declined by 467k in June, a larger decline than the consensus (-365k) expected, while the unemployment rate rose to 9.5%, a smaller rise than the 9.6% figure market projected. The report on balance was weaker than expected, owing to the weak payroll print and a decline in the workweek. The main message is that last month’s slowing in the pace of payroll decline overstated the pace of improvement in the labor market; but the report does not fundamentally change the trend of gradual improvement.
There was a net revision of +8k to the prior two months, and despite the weaker print [...]

This morning, China’s Vice Foreign Minister He Yafei said he was not aware of reports that China had requested a debate about global reserve currencies at next week’s G-8 meeting in Italy, but he also flagged that Beijing expected the issue to be discussed informally. There are clear signs that China and other surplus countries are working on USD exit strategies. It is clear that such exit strategies can only work within an environment of strong global risk appetite. The IMF will have to play a key role.
This morning saw the Riksbank cutting rates by 25bps committing itself to the [...]

Canadian Dollar
The CAD has a data-free week (or little more) ahead of it, with no major domestic economic reports due until building permits on July 7th and no major speeches scheduled. Left to its own devices, it remains to be seen whether the CAD can recover some of its recent relative under performance. Analysts remain bullish on the CAD versus the USD from a longer term point of view given Canada’s stronger structural position relative to the US, sounder financial system and lack of credit/quantitative easing policies and feel that global investors who are seeking a safe, hard currency alternative [...]