Canadian dollar downtrend any time

It’s time for me to continue updating the blog on important Forex releases. This week hasn’t been very rich in fundamental events and we haven’t seen much action yet. Yesterday’s FED minutes failed to create volatility and market participants will probably trade with the bias that they have rather than information that they got from fundamental news. I am looking at various Canadian dollar pairs now and I see that ‘the loonie’ has a huge potential to fall long term. Weekly charts clearly show that there is a big probability of breakouts in various CAD pairs and this is not good news for the currency.

We have CPI from Canada this Friday and it could be a real catalyst for sharp move of prices. It is always very difficult to say when will the break occur, but in my opinion the phrase ‘sooner rather than later’ fits very well in this case. British Pound Canadian dollar pair was able to break about 200 sma on a weekly chart. After being for a very long time in a downtrend the pair went above the average this June, then broke down, but for the last three weeks it regained the lost ground and is above it again. The pair is playing with 1.6400 level which is the breakout point and I intend go long if the pair goes above it next time. The same can be said about other CAD pairs. Be aware of that. There might be some rest and consolidation happening right now, but as I said, I think the time of the breakout is near. Let us wait for tomorrow.

I also suggest you reading my previous post: http://forex-news-trading.blogspot.com/2013/08/ultimate-guide-to-successful-day-trading.html

Sharp US dollar fall

As I wrote yesterday, it is far more important to pay attention to what key financial people (like Ben Bernanke or Mr. Draghi) say during press conferences than what they present on paper. Yesterday was a clear example of that. When FED meeting minutes from June were released nothing really happened. US dollar went down slightly, but recovered in fifteen minute time. However, very strong pressure for the US dollar came when the FED chief Ben Bernanke started delivering a speech at a press conference. That’s when dollar plummeted. In some pairs it lost over three hundred pips in less than twenty four hours. 

This suggests that the downtrend in the greenback may continue till the end of the week. For the time being Euro remains one of the strongest pairs and should be bought on tips till other important Forex news data is released that could revert its’ trend. The Bank of Japan governor Kuroda also slightly surprised the markets by saying that the Central Bank of Japan may not increase its’ stimulus. It indicates that Japanese Yen may finish its’ downtrend and start going up very soon. Although fundamental data from Europe is not very encouraging, Euro still has potential to go beyond its’ recent highs of 1.3400.

US dollar bearish after FED

Market participant expected to see more bullish FED minutes today, but Federal Reserve committee published slightly more dovish report that most traders expected. As a result US dollar fell, together with major stock indexes. On the other hand, the minutes are quite positive about the path US economy is taking with a slight concern about employment situation. If that improves the stimulation process would end sooner rather than later. Most speculators expected more hawkish statement though. 

Anyway, there is one more risk event lying ahead of us today and that is Ben Bernanke’s press conference coming in less than one hour. This can turn things around and US dollar may rebound or continue falling even faster than after minutes. Oil as you may see is rising. It has broken key resistance levels and is probably headed to all time high at 150 dollar per barrel. Gold seems to have formed double top on hourly charts. This is not a very serious indicator since it is on hourly charts, but I still see it as a possible sign of a reversal and going down to 1180 low that was reached at the end of June. I am also bearish towards S&P500 and other stock indexes.

News can push European currencies lower

A few releases from Europe are scheduled today. From technical point of view all European currencies look extremely vulnerable, particularly against commodity currencies: NZD, AUD and CAD. Swiss Franc has already broken key supports in these pairs and is rapidly going down. Other crosses, such as eur/nzd and gbp/nzd as well as eur/aud and gbp/aud are threatening to break down any time now. What could trigger their fall?

IMF global economic outlook may trigger a sell-off in Euro and NIESR Gross Domestic Product Estimate may break the British Pound. Pound has already been hit by poor economic data today and is likely to continue going down. This is confirmed by both fundamental and technical factors. Euro is in a slightly better position, but the situation may change any time now. One of the greatest events that could turn everything around is tomorrow’s FED minutes from last month coming at 18:00 GMT, followed by FED’s Ben Bernanke speech at 20:10 GMT. 

Pound pairs should be sold on rallies. US dollar still remains the strongest currency for the time being and should be bought on dips. The fate of commodity currencies will be decided upon on Wednesday night when data from Australia is released. See you then.

Key Forex releases this week

Hi, although this week does not seem to be as rich in Forex releases as last week was we still have some very important macroeconomic events on our hands coming. Let me give you them. 

Monday

Europe – Euro zone finance ministers meet in Brussels at 13:00 GMT. Mr. Draghi is scheduled to speak in Brussels at the same time. This can seriously impact most Euro pairs. And IMF will issue Euro Area article statement. Watch what happens to Euro currency at the time.

Tuesday

China – Consumer Price Index and Producer Price Index coming at 01:30 GMT.

Great Britain – NIESR Gross Domestic Product Estimate coming at 14:00 GMT. Major Pound breaks are expected (Pound to go down). 

Wednesday

Europe – German Consumer Price Index coming at 06:00 GMT.

US – FED releases minutes from previous FOMC meeting at 18:00 GMT. This could be the most important event of the week. It will affect all major pairs and their crosses.

US – Ben Bernanke speaks on Economic Policy in Boston at 20:10 GMT. That is probably the second most important event of the week. I doubt if we hear anything new, but who knows.

Thursday

Australia – Australia unemployment change and rate coming at 01:30 GMT. Will it save aussie from falling? Maybe!

Japan – Kuroda holds Post meeting press conference at 06:30 GMT.

Europe – ECB publishes monthly report at 08:00 GMT.

Friday

US – Michigan Confidence coming at 13:55 GMT.

Ok, these events are very important and markets will be closely monitoring them. And so should you. See you tomorrow with more updates on how Forex news impacted currency pairs today.