Forex Investment and Currency Trading

USD/CAD retains a heavy bias this morning after a rather choppy overnight session. USD/CAD dropped back to the mid 1.09 zone in London, driven by the apparent leak of Chinese data due for release later in the week (showing better than expected gains for industrial production, retail sales and investment) and the continued strength in oil prices. The CAD and crude remain tightly correlated at the moment (positive correlation of 85% on a 90-day rolling basis) so gains in oil (to the highest levels since November last year) should keep the tone in funds very heavy. Traders remain positive on the [...]

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The USD is on the back foot again this morning as equities pick up a little ground, investor risk appetite picks up and the markets reverse course after the broader USD short-covering that characterized the immediate aftermath of last Friday’s US non-farm payroll data. USD is more likely to head generally lower over the course of the next few months, reflecting mounting US debt levels and investor concerns about extending exposure to USD-denominated assets at the moment. While reports suggest that developing and emerging market countries intervened in their respective markets quite aggressively in May (Bloomberg reported that growth in [...]

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USD/CAD is looking quite vulnerable to the downside once again – which is quite the change of tune for this market after yesterday’s run up through the upper 1.12 zone. The rebound since Friday has barely made any sort of real impression on the major retracement zone of resistance and the failure to hold the break through trend resistance yesterday suggests that the underlying trend is lower still. The market is already leaning quite hard on the base of the upward channel that has guided price higher since late last week – a bear flag – and a clear break [...]

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Payroll Friday’s often seems to provide some sort of short term watershed for the markets and it seems that the May report for all its issues (higher than expected unemployment rate, question marks about the scale of the business births/deaths model job adds in the month) will provide a window for some short term USD strength at least. Weaker equity markets have allowed the markets to revert back to the risk on/risk off justification for a USD bounce this morning but some of the USD’s rebound reflects positioning rather than fundamental strength; certainly, some of the steepness in the US [...]

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