Forex Investment and Currency Trading

The markets still appear a little groggy after the holiday break and unsure of what to do with the major currencies – yesterday was a “risk on” sort of day on the basis of higher commodity prices and (mainly) higher global equities but the USD did relatively well, the JPY rebounded and the EUR turned in a rather middling performance – not exactly risk on sort of trends. The only thing that seemed to “fit” was a modest outperformance by the commodity bloc. It is notable that the inverse correlation between the USD and equities, which had shown signs of [...]

The New Year has seen the USD revert to its old ways to some extent; the late year gains in the USD were temporary in nature, and while the slide in EUR/USD extended further than expected, some still do not think the late year rebound in the USD represented a significant turning point. While long term rates in the US have been rising, shorter term rates remain very low; it has been noted before that very steep yield curves are not usually USD-supportive and the exceptionally low levels of short term rates remain a significant restraint on the USD – [...]

Risk sentiment is more positive this morning and the CAD is taking advantage of the better mood to push broadly higher, producing the second best performance among the major currencies in the overnight markets behind the NZD. Equity markets are positive in Asia and Europe and US futures indicate a strong opening this morning; investors appear a little less concerned by the UAE/Dubai World issues this morning, with Dubai World stating that it was in “constructive” talks with investors on restructuring that covered less than half its total debt. The impression is perhaps growing that the situation is a “little [...]

The Canadian dollar is still struggling today, with risk still firmly off. If the mood doesn’t change
and the S&P 500 ends the day in negative territory, that will be the first 3-day losing streak since the dying days of October, when USD/CAD rallied into the high-1.08 area.
Last night’s speech from Bank of Canada Governor Carney did not contain anything new for the FX markets, at least not for the short-term. Carney decided that it was his turn to speak out on China’s exchange rate, after recent comments from the IMF and from US President Obama, among others. Governor Carney spent [...]