Loonieviews 22Aug16


More Hawkish Fed Chatter

USDCAD Open (6:00 am) 1.2934-41 Overnight Range 1.2917-1.2973 15Aug.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 22, 6:00 am EDT

The US dollar gapped higher at the open of FX trading in Asia and has managed to hang on to them as New York traders start the day. There hasn’t been any shortage of hawkish Fed speakers in the past two weeks and that was also the case on the weekend. Fed Vice Chair Stanley Fisher said “ the US economy is close to our targets” and that the “return to full employment is remarkable and underappreciated”. He added that core inflation was “within hailing distance of 2%”. Trader’s heard “Fed rate hike in September” and the dollar turned bid.

Bank of Japan Governor, Haruhiko Kuroda tried to weaken the Japanese yen when he said in an interview that the BoJ policy has not reached its limits. Those comments and Mr. Fishers remarks boosted USDJPY from 100.16 to 100.89. USDJPY chopped within a 100.20-100.90 range and was at 100.62 when New York trading started.

GBPUSD shrugged off the plunge at the open of Asia trading and climbed from a low of 1.3033 to a peak of 1.3120, in part because of the news at the end of last week that the UK may not trigger Article 50 until April 2017. EURUSD was not so lucky. It has only recouped ½ of the losses incurred at the Asia open and currently sits at 1.1244.

The USDCAD rally that started on Friday with the weaker-than -expected Canadian CPI and Retail Sales data continued overnight due to the hawkish Fisher comments and the decline in WTI oil prices from Friday’s close of $48.51/b to $47.11/b where it sits at the time of writing. There isn’t any US data today leaving FX markets to re-hash Fed expectations and watch oil prices for direction.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish. Friday’s move above 1.2950 snapped a two-week downtrend, The current uptrend from Thursday’s 1.2761 low remains intact while prices are above 1.2880 with the break of 1.2920 this morning targeting a re-visit to the 1.2990-1.3010 level. Above 1.3110 opens up a move to 1.3200.

A break below 1.2880 would lead back to 1.2810. for today, USDCAD support is at 1.2880 and 1.2840. Resistance is at 1.2940 and 1.2990

Today’s Range 1.2880-1.2980

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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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