Loonieviews 11Aug16


Kiwi soars, Sterling sinks and Loonie goes nowhere

USDCAD Open (6:00 am) 1.3037-41 Overnight Range 1.3024-1.3078 11 Aug.16

FX-At-A-Glance

NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close (4::00pm) to NY Open Aug 11, 6:00 am EDT

The Reserve Bank of New Zealand got the overnight session started off with a bang . No one should have been surprised by the announcement of a 0.25 bp. cut in the Official Cash Rate (OCR) and they weren’t. What was surprising was the Kiwi reaction. NZDUSD dipped to 0.7163 immediately following the announcement and then screamed higher to 0.7342. It has declined steadily ever since and currently sits at 0.7235, well above the pre-announcement levels. That is because the RBNZ Assistant Governor John McDermott said that the risk of the OCR “falling below 1.5% is very high”. The OCR is currently at 2.0%.

Elsewhere, Japan was closed for Mountain Day. AUDUSD bounced higher following the Kiwi news but drifted lower in Europe. EURUSD failed to add to yesterday’s gains in Asia and drifted lower throughout the European session.. GBPUSD pushed below support at 1.2950, triggered some stop losses and then drifted higher as New York walked in. USDJPY is at the top end of its narrow 101.00-101.50 range.

WTI oil prices have bounced off the overnight low of $41.07 but are still below the intraday downtrend line at $41.80 and pressure by yesterday’s news of record Saudi output.

US Jobless Claims and Canada New Housing Price Index are the only economic data points of note today, which suggests more choppy but rangebound trading for USDCAD. The Loonie remains torn between weak oil prices (USDCAD bullish) and diminishing US rate hike expectations (USDCAD bearish)

USDCAD technical outlook.

The intraday USDCAD technicals are the same as yesterday; bearish while trading below 1.3070 and looking for a break below support in the 1.2980 (55 day moving average) –1.3000 area to extend losses to 1.2940, the 100 day moving average. The USDCAD uptrend from the middle of June remains intact while prices are above 1.2990 and it is guarding the uptrend line from May 2, which comes into play at 1.2870. A break above 1.3080 will extend gains to 1.3150. For today, USDCAD support is at 1.2980 and 1.2940. Resistance is at 1.3080 and 1.3120

Today’s Range 1.2980-1.3070

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Author: Loonieviews

In the past 30+ years, I have been an FX interbank market making trader, a high performing FX and Derivatives Sales person, creator of simple and complex risk mitigation strategies and a manager of high performance FX teams. The Trade of the Day is a culmination of that experience. Retail FX traders have access to a well-crafted and carefully researched FX trade strategy designed to generate FX profits while mitigating losses.

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