Euro Stronger at Start of Shortened Trading Week


The euro jumped out to early gains against both the dollar and in the crosses during the overnight Asian session. This type of price action was seen last week when the euro came off of its lowest level in 10-weeks.

EUR – CPI Flash Estimate y/y – 09:00 GMT
Expectations: 2.8%. Previous: 2.8%.
The euro jumped out to early gains versus both the dollar and in the crosses during the overnight Asian session following a WSJ article highlighting Germany’s willingness to compromise on a rescheduling of Greek sovereign debt. An uptrend of euro zone CPI would increase the momentum behind today’s gains as well as growing expectations for an interest rate hike in July by the ECB. Initial resistance for the EUR/USD is found at the overnight high of 1.4405 followed by 1.4590.

CAD – BOC Overnight Rate – 13:00 GMT
Expectations: 1.00%. Previous: 1.00%.
No change is expected in Canadian interest rates but traders will be looking for hawkish talk by the BOC in the accompanying rate statement following yesterday’s better than expected GDP data. The last policy statement by the BOC was more dovish than expected and helped to weaken the Loonie. The USD/CAD continues to trade near the 100-day moving average at 0.9755 and a move above 0.9815 could open the door for gains towards 0.9970, a level where the mid-March high coincides with the 200-day moving average. Hawkish language could trigger CAD strength and the USD/CAD cold fall to the 0.9650-40 area.

USD – CB Consumer Confidence – 14:00 GMT
Expectations: 66.3. Previous: 65.4.
A slight uptick in US consumer confidence data may actually benefit the “risk-on” trade and feed into dollar selling, potentially a positive for spot crude oil prices. Resistance is found at $102.25 from the current consolidation pattern and a break above this level may add another $2.25 to the price.

Read more forex trading news on our forex blog.

USDCAD broke below 0.9743 support

USDCAD broke below 0.9743 support, suggesting that a cycle top had been formed at 0.9816 on 4-hour chart, and lengthier consolidation of uptrend from 0.9444 is underway. Further fall is expected later today, and target would be at 0.9650-0.9700 area. Resistance is at 0.9816, only break above this level could signal resumption of uptrend.


Forex Analysis

Bank of Canada Rate Decision Due Tuesday

Early indications are that the Canadian dollar could decline ahead of tomorrow’s Bank of Canada interest rate announcement. Despite recording a 3.9 percent increase in Gross Domestic Product for the first three months of the year, most observers expect Governor Mark Carney to announce that the Bank of Canada will not raise rates beyond the current 1 percent. This could have investors selling the dollar for currencies offering higher yields.

While few expect a rate increase, close attention will be paid to Carney’s statement in the hope that the Governor will provide a signal as to when he expects rates to increase. Most analysts feel that October is the earliest we can expect the Bank to introduce a rate hike as the short-term forecast is for the Canadian economy to slow slightly from the first quarter’s robust pace.

It was not that long ago that market participants were convinced that Canada was about to enter a period of sustained rate increases. Indeed, starting last June the Bank did introduce three successive quarter point rate hikes but the policy was abandoned after the Canadian economy slowed faster than expected.

Despite this, the Organization for Economic Co-operation and Development (OECD) recently urged the Bank of Canada to return to a policy of rate hikes. The OECD believes that Canada’s interest rate is currently too low and as a result, borrowers are taking on debt levels that would otherwise be beyond their means. Should these rates rise significantly later on, the OECD warns that a dramatic rise in the default rate is likely and this could place the Canadian economy at risk.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

Forex: Large Currency Speculators bet in favor of the US Dollar last week. Trim Euro, Pound positions


The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators decreased their short positions against the US dollar and bet against the euro for a third straight week. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $13.02 billion against other major currencies as of May 24th. The data is a decline from the total short position of $20.01 billion on May 17th, according to the CFTC data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

This week’s notable changes were British pound sterling positions declining further on the short side while Australian dollar positions edged higher after declining for six straight weeks.

EuroFx: Currency speculators decreased their net long positions for the euro against the U.S. dollar for a third consecutive week as of May 24th. Euro futures positions declined to a total of 19,129  long contracts following a total of 41,645 long positions on May 17th. Euro positions had marked the highest level since July 2007 on May 11th with 99,516.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions edged lower for the fourth straight week as of May 24th and continued lower on the short side. Pound contracts fell to a total of 14,143 net short positions following a decline the week before to a total of 928 short contracts on May 17th. This marks the British pounds lowest speculative positions since September 2010 when short positions numbered 16,060.

JPY: The Japanese yen net contracts dipped lower after increasing for four consecutive weeks through May 17th. Yen positions decreased to a total of 8,006 net long contracts reported on May 24th following a total of 15,373 net long contracts on May 17th.

CHF: Swiss franc long positions edged lower for a third consecutive week. Franc positions fell to a total of 14,725 net long contracts following a net of 15,661 long contracts on May 17th.

CAD: The Canadian dollar positions declined lower for a fifth consecutive week to a total of 21,277 contracts as of May 24th. CAD net contracts had fallen to a total of 26,291 net long contracts on May 17th.

AUD: The Australian dollar long positions reversed and edged higher after declining for the six straight weeks. AUD contracts increased to a total net amount of 53,043 long contracts as of May 24th. AUD positions had totaled 50,919 net long contracts on May 17th.

NZD: New Zealand dollar futures positions rose to the highest level since December after a decrease the previous week. NZD contracts advanced to a total of 13,876 long positions as of May 24th from a total of 12,624 long contracts on May 17th.

MXN: Mexican peso long contracts increased higher after falling for four straight weeks. MXN contracts rose to 108,681 net long contracts as of May 24th from a total of 104,912 long contracts as of May 17th.


COT Data Summary as of May 24, 2011
Large Speculators Net Positions vs. the US Dollar

EUR: +19,129
GBP: -14,143
JPY: +8,006
CHF: +14,725
CAD: +21,277
AUD: +53,043
NZD: +13,876
MXN: +108,681


A Brief Explanation On What Currency Trading Really Is

By Cedric Welsch

Forex trading is unchartered territory for many people looking to earn from an investment. Many treat it as a financial transaction that is too exotic (and risky) for their taste. The truth is that forex trading is actually a type of investment that is well understood by traders around the world. To give you a better understanding about how forex works, here is forex trading explained:

What is forex trading?

Forex trading is simply the trading of the world’s currencies as they change in value. It is akin to pitting one currency against another and benefiting from their difference. The term ‘forex’ comes from the words Foreign Exchange and is generally used to refer to the foreign exchange market. Because currencies are exchanged or traded in order for countries to be able to do business with each other, traders can leverage the differences in the currencies to earn a profit.

Forex trading began in the 1970s and has grown to be the largest market in the world, with trade amounting to at least US$1 trillion dollars everyday. That is the kind of money that gets moved on a daily basis.

Forex trading is usually done through a broker, although there are also facilities that allow trading to be done online by the investors themselves.

How forex trading works

Foreign exchange requires the trading of currency pairs, such as the US$ against the Euro or the US$ against the Japanese Yen. A EUR/USD pair may have a currency quote of say, 1.312. In this pair, Euro is the base currency and is worth 1 unit while the US dollar is the quote currency. Using the above example, 1Euro will buy 1.312 US$. To make money, the investor will have to wait until one currency appreciates or depreciates relative to the other. If the Euro appreciates to 1.313 and the trader invested $100,000, he or she can earn a profit of $100. If, for example, the Euro fell, he or she will lose the equivalent amount.

Many people prefer trading in forex instead of stocks because the forex market offers more flexibility. It is a 24-hour market that usually begins on Sunday and trades until Friday. This availability allows people to trade as often as they like and to change their trading schedule as they see fit. It is also a very liquid market, allowing traders to open positions and close them in just a few seconds since there is no absence of sellers and buyers. Since virtually any currency can be traded, investors and individuals can choose which currency combinations they want.

A caveat: while it may seem very easy, forex trading can be quite complicated and it is recommended that you learn everything you can about the market before buying or selling anything. This will help improve your chances, use your knowledge for leverage and earn a profit.

About the Author

Do not belittle the capacity of the forex industry to make you a rich business person someday.
There is certain magic in fx trading that makes even the commoner to amass profits quick.

Forex Currency Correlations

Forex Currency Correlations

The Swiss Franc is enjoying it’s safe haven status and looking strong on the 4 hour, daily and weekly timeframe versus the other major currencies.

Both EUR/CHF and USD/CHF have seen record lows recently and could easily decline further.  Retail traders will no doubt be looking to pick a bottom but institutional traders are pushing price to new lows.

The New Zealand dollar has also also gained this week and is the highest ranking currency on 4 hour and daily according to the forex currency correlation charts.  The Aussie dollar also has my attention heading into this coming week.   As always withthis way of trading, I will favour all of these currencies for long trades if I can trade them against the weaker ones highlighted below.

At the negative end of the charts the CAD and US dollar are currently the weakest and therefore I will potentially be aiming to sell these currencies if a relevant opportunity comes.

If you are interested in learning more about this way of analysing currency strength see this forex currency correlation strength post.



USD Bearish as America Celebrates Memorial Day

Source: ForexYard

With the United States on holiday Monday, currency traders are likely to witness a relatively thin trading environment. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets.

Economic News

USD – Dollar Traders Weighing Momentum at Start of NFP Week

The US dollar has continued to plummet since Friday as dollar bears continued to move out of the greenback in exchange for higher yielding currencies. The Fed’s record low interest rates will likely persist for the foreseeable future, according to recent FOMC reports, and the dollar is expected to see little support this week as a result.

The EUR/USD rose to a nine-day high Friday, reaching towards 1.4320 before settling slightly lower. The GBP/USD witnessed a similar bull run, climbing to an 18-day high of 1.6513. The USD/JPY joined the chorus, despite weak fundamentals in Japan, and fell to a two-week low of 80.80 from the recent high of 82.21 seen last Tuesday.

Today, with the United States on holiday for Memorial Day, the Canadian economy will be one of the few major global economies releasing data sets on Monday. The most impactful figure being published will be the GDP report for America’s northern giant, set to be released at 13:30 GMT. With global industry faltering these past few weeks, the GDP report from such industrial economies may get released somewhat below expectations, driving more investors into the safety of the USD. With Non-Farm Payrolls (NFP) this Friday, the week should be exciting for forex traders.

EUR – EUR Continues to Post Gains

The euro has been a top performer against the US dollar following last week’s detrimental downshift in greenback values. The EUR began the middle of last week strongly bullish and has since tapered off mildly, but still maintains its momentum; albeit weakly.

With Great Britain and the United States on holiday Monday, currency traders will likely be witnessing a relatively thin trading environment today. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets.

As for Monday, the euro looks to be gaining against the greenback as traders are largely absent from the region to shift investments, but global traders are still bullish on Europe as the USD remains in freefall. Canada will publish its GDP data today, which should be the most relevant data release on the day. These factors, however, will likely be outweighed by the shift in sentiment towards the buck. Look for long positions on the EUR to continue through this week unless this week’s employment figures or monetary policies yield shocking results.

JPY – Japanese Yen Moving Upward as Data Supports Growth

The USD/JPY has been trading lower recently as investors flee the greenback. After reaching upwards of 82.21 on Tuesday, the pair quickly dropped to a two-week low of 80.80 as of this morning. Japan’s economy has published several positive figures over the last week, much of which has helped establish the yen’s recent bullishness. Whether it will be enough to reverse much of the negative sentiment surrounding Japan is yet to be determined.

The yen suffers from its own economic concerns, while shifts in consumer sentiment have helped lift yen values against a number of its rivals. Last week’s data, however, provided a ray of light which caused a secondary shift towards the yen for reasons other than safety. The USD/JPY looks to be continuing this movement for the foreseeable future as a result, especially given the massive shift away from the US dollar which is helping to lift the island currency.

Oil – Crude Oil Prices Steady Near $100 a Barrel

Oil prices held steady this morning with the $100 price level acting as a firm footing for this commodity. US oil stockpiles rose a half a million barrels last week, beating expectations and helping to hold the value of light, sweet crude steady near its current mark. The price of black gold has been trading within a consolidation pattern these past several days and traders are beginning to anticipate a breach sometime this week.

The value of the US dollar versus the euro in recent trading has also dropped towards a nine-day low of 1.4300, which has helped support oil prices. With today’s steady sideways movement, traders appear likely to see oil reaching a decision point this week. Whether oil traders decide to lift oil prices from a buy-in on physical assets, or pull away from oil out of a perceived glut, is something traders will bear witness to this week.

Technical News


The failure of the EUR/USD to move below its 100-day moving average may be a telling sign that the price declines in May have subsided. While the price action remains capped below the 50-day moving average at 1.4350, a close above this level would put the bulls back in the driver’s seat with a target at the May high of 1.4940. However, traders should not overlook the monthly and weekly charts’ stochastics which remain rolling lower. A break below two key levels at the 100-day moving average at 1.4020 and the support at 1.3970 could open the door to 1.3860 as well as the 200-day moving average at 1.3705.


Cable received a strong bounce higher at a level that coincided with the rising trend line off of the May 2010 low. As such momentum has swung back in favor of the pound. Rising weekly stochastics support further gains. Resistance is found at 1.6520 followed by the April high at 1.6750. A breach here would target the August 2008 high at1.7040. To the downside, support comes in at 1.6000 followed by the trend line at 1.6120. Below the trend line the March low at 1.5935 comes into play.


The yen’s rally failed to breach the 82.25 resistance as well as the 100-day moving average before the pair turned sharply lower while making a significant close below the rising trend line. Falling daily stochastics point to further declines in the pair. Therefore traders should be short on the USD/JPY with initial support at 80.35 followed by the May low at 79.50. A breach here would expose the pre-intervention low at 76.10. A move to the upside and the pair may encounter initial resistance at the previous trend line which comes in at 81.90, followed by 82.25, and retracement targets from the April to May move at 82.50 and 83.25.


In almost textbook like fashion, the USD/CHF rose as high as the trend line off of the February high only to encounter resistance and plummet, ending the week at a new all-time low at 0.8464. A retracement back to the falling trend line would offer traders better levels at which to enter the trend with a stop above one of the resistance levels near 0.8890 and 0.8945.

The Wild Card


Spot gold prices have come off of their early May lows and continue to rally higher while making a strong close into the weekend. forex traders should be targeting the all-time high at $1,576 with a stop loss order placed below the near-term support level at $1,514.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.