Forex Investment and Currency Trading

CAD
Weaker equities and slumping energy prices helped to fuel a rally in USDCAD during yesterday’s North American trading session. Overnight conditions were thin and choppy, with USDCAD trading in a 200 point range. The momentum in USDCAD appears to be pointing higher, and with today’s Canadian manufacturing shipments data expected to be pretty ugly, that should help to put pressure on the Canadian dollar.

Majors
It looks like market panic and recession worries are back in full force. We had announcements from both the BoE and the SNB overnight, who are pulling out some new tricks in an effort to help out the banking system. The Bank of England announced that it will now charge 25bps above the base rate at its Operational Standing Facility, compared to 100bps before, and that it will only publish OSF data once a month, compared to daily currently. They also announced the creation of a Discount Window
Facility and introduced a permanent long-term repo against a broader source of collateral, in an attempt to ease money market tensions. The Swiss National Bank said that it will assume up to $60B of risky securities from UBS and offered similar relief to Credit Suisse Group.

Overnight and early this morning we’ve seen some interest from some European leaders about discussing (or interfering in?) the currency markets. Sarkozy said this morning that the “global summit should discuss relationships between major world currencies.” And, the Italian Economy Minister said that Italy, which takes over presidency of the G7 in January, will propose a reform of the Bretton Woods institutions, and that they should “reopen the debate on foreign exchange” and the role of the dollar.

AUD and NZD got hammered overnight, falling to five year lows as equities and commodity prices also got pummelled, although they’ve both pared their losses this morning. The USD continued climbing yesterday afternoon, and nearly matched Friday’s highs against the Euro early this morning. EURJPY remains near its recent lows, as markets remain jittery.