Sunday, July 19, 2009

Forex Crunch

Forex Crunch

Canadian Dollar Outlook - July 20-24 2009

Posted: 19 Jul 2009 03:18 AM PDT

The Canadian dollar made a strong and independent move against against the greenback last week. This week features many important releases in Canada that could impact USD/CAD. Here’s an outlook for this week’s key events and a technical analysis for the loonie.

The interest rate decision dominates the scene, yet there are lots of other important releases:

  1. Foreign Securities Purchases: This figure actually shows the flow of money into Canada. We’ve seen nice surprises in the previous months. After standing at 9 billion last month, expectations are for a lower number this time - 7.17 billion. This is quite a late release, but it has importance this week due to timing - it’s released on Monday at 12:30 GMT (together with Wholesale Sales) at a time when no American figures are released, so it can sure move the loonie.
  2. Wholesale Sales: Similar to the Foreign Securities Purchases, it’s a late figure but with a good timing, Monday 12:30 GMT. Wholesale Sales are predicted to take a dive of 2.5% after dropping by 0.6% last time. There’s a good chance of a positive surprise here.
  3. Rate Decision: The Bank of Canada isn’t expected to raise the rock-bottom interest rates until the end of 2009. So, don’t expect the Canadian Overnight Rate to move from 0.25%. Traders will carefully read the accompanying BOC Rate Statement that is published at the same time. Will the statement show optimism for recovery, or complain about the current situation? The delicate wording and the commentary about the statement will sure move USD/CAD. It’s published on Tuesday at 13:00 GMT.
  4. Retail Sales: Retail Sales are an important release everywhere. Last month saw a big disappointment, with a fall of 0.8%. Consumers are still not confident. This time, Retail Sales are predicted to turn positive, and rise by 0.5%. The complementary figure, Core Retail Sales, is very important as well. Here, expectations are for a more modest rise - 0.3%. Published on Wednesday at 12:30 GMT.
  5. BOC Monetary Policy Report: On Thursday at 14:30 GMT, we’ll get a look into what the Bank of Canada thinks about the economic conditions, and especially about inflationary pressures. This insight is a basis for future monetary policy. The release of this quarterly report is followed by a press conference by BOC Governor Mark Carney. When meeting the press, Carney could face tough questions and release some interesting statements that could shake the Canadian dollar.

USD/CAD will naturally move on American events as well, with Existing Home Sales and Ben Bernanke’s testament being the highlights of this week. But with so many important Canadian figures, the focus for loonie traders will be on the northern side of North America…

USD/CAD Technical Outlook

The Canadian dollar began an independent move of strengthening last week. USD/CAD broke an uptrend support line and fell face down, from 1.1670 to 1.1120. This wasn’t correlated to other currencies’ moves against the dollar. Also the Japanese made an independent move one week earlier. Check out my post CAD/JPY Going Wild.

The loonie stopped at 1.1115, which now serves as a minor support line. Looking further down, 1.08 is a very strong support line. It served as a resistance line last year for several months, and was tested as a support line 6 weeks ago.

Looking back up, the 1.1470 point is still significant. Despite being broken recently, it served many times as a stopping point for USD/CAD in both directions. Further up, 1.1730 is another resistance line, far away…

For more information on this week’s events, check out the Forex Weekly Outlook.

Forex Weekly Outlook - July 20-24 2009

Posted: 18 Jul 2009 02:00 PM PDT

The upcoming week in forex trading has many important figures: Canadian rate decision, American Existing Home Sales and British GDP are the highlights, together with Ben Bernanke’s testament. Will the currencies break out of the ranges they cling to? Let’s see what can move them this week:

Monday, July 20th: British Rightmove HPI starts the week quite early. Later on, Australian quarterly PPI is predicted to continue falling, putting pressure on the RBA to lower rates. Speaking of PPI, German PPI is expected to start rising.

Across the ocean, Canadian Foreign Securities Purchases and Wholesale Sales are both expected to drop. Just before the day ends, Japanese Monetary Policy Meeting Minutes are released.

Tuesday, July 21st: Monetary Policy Meeting Minutes are released also in Australia. Will there be a hint of any policy change?

Swiss Trade Balance is predicted to squeeze again. In Britain, Public Sector Net Borrowing is expected to shrink.

In Canada, it’s time for a new Overnight Rate - it isn’t expected to budge from 0.25%. The focus of loonie traders will be on the BOC Rate Statement. Will the Canadian dollar continue to shine?

Ben Bernanke goes to Capitol Hill to testify once again, and might explain the Federal Reserve’s exit strategy from the crisis.

Wednesday, July 22nd: Contrary to the PPI, Australia’s CPI is expected to rise, this time by 0.5%.

In Britain, MPC Meeting Minutes are released. British CBI Industrial Order Expectations will also be of interest to cable traders.

In Canada, more important news is coming, with Retail Sales. Both Retail Sales and Core Retail Sales are expected to rise. Ben Bernanke will continue testifying today as well.

Near the end of the day, Japan’s Trade Balance is predicted to show an improved surplus.

Thursday, July 23rd: British Retail Sales will draw attention - they’re expected to turn positive. Also of interest: BBA Mortgage Approvals in Britain.

In the US, the weekly Unemployment Claims are expected to fall back to 560K, after improving steadily in the recent weeks.  Existing Home Sales are expected to be on the march, rising to 4.8 million.

Canadian data continues to flow, with the BOC Monetary Policy Report and a speech by BOC Governor Mark Carney.

Friday, July 24th: Lots of European PMI figures flow in today - it starts with French Flash Manufacturing PMI and Flash Services PMI, and then continues with the same German figures and then the all-European figures. All the PMI figures are predicted to rise, but they aren’t expected to reach the magical 50 mark.

Another important figure in Europe is the German Ifo Business Climate which will probably continue rising.

In Britain, Prelim GDP for the second quarter is expected to show a contraction of 0.3%, much better than the terrible first quarter. Britain was hit hard by the current crisis.

Revised UoM Consumer Sentiment will close the week in the US with an expected rise.

Now that I’m back, I’ll be getting back to daily outlooks, as well as special coverages for some currencies: the British Pound and the Canadian dollar look very interesting this week.
Posted by Abdelrahman Ellithy at 5:14 AM

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