All Eyes On The Bank Of Canada: Analysts are expecting Poloz to hold tight on rates at this meeting. Many in fact are actually forecasting the rate cuts to be entirely over for Canada. OPEC’s Doha Meeting Leads The Week: The discussion will centre around how long the production freeze will last as well as whether the $50 per barrel price target for Oil can be reached. Dollar Bulls Get Hurt: From a trader’s perspective, with the USD continuing to drop from already low levels, in which direction lies the greatest risk? An NFP Evaluation, The RBA Are Up, Yen Smashes Expectations…
All Eyes On The Bank Of Canada
13.04.2016 Analysts are expecting Poloz to hold tight on rates at this meeting. Many in fact are actually forecasting the rate cuts to be entirely over for Canada. As I’ve mentioned numerous times, Canada has been struggling for awhile now in regards to its global economic situation. Almost all the doom and gloom came from the dramatic fall in Oil and its effect on the highly correlated Canadian currency. The move away from commodity driven exports however, has managed to help Canada’s overall GDP over the last few quarters. Canada’s economy looks to be slowly improving now; helped no doubt by the global commodity rally that began around the beginning of March. The question now is whether commodities will indefinitely recover or turn back towards their south side. The markets still interpret Canada’s economy to be commodity driven and despite the effort of both Poloz (BoC) and the Canadian government to diversify their exports away from raw commodities, if Oil doesn’t see another test of $25 a barrel, we’ll all most likely see another big dramatic sell off in the Loonie; which will no doubt coincide with further fear surrounding Canada’s overall economic situation. For now though, expect no change in rates and listen closely for any mention of a move away from any potential further easing from Poloz.
OPEC’s Doha Meeting Leads The Week #TradeSmart
11.04.2016 Expect Crude to come to the forefront of both Forex and Commodities Trader’s watch lists this week, as the world’s major producers both within and outside OPEC come together in Doha, Qatar. The talks are a follow up talk on the current production freeze and encompass a wider range of non-OPEC nations. The discussion will centre around how long the production freeze will last as well as whether the $50 per barrel price target for Oil can be reached. To start the week, pretty much everything I’ve seen in the press has been positive, obviously reflected in the recent rally that we see here in Oil. This week’s trading is however going to be almost exclusively driven by headlines, something which is never a good thing for the clean, consistent moves that are easy to trade, so tread carefully.
Dollar Bulls Get Hurt
8.04.2016 Despite the release of the FOMC Meeting Minutes, which printed headlines galore around the ‘no hike in April’ theme, yesterday just wasn’t the day for U.S dollar bulls. That’s not to say however, that it was a unanimous decision. Hikes were definitely discussed with the old data dependent line being whipped out once again: “If the incoming economic data remains consistent with expectations for moderate growth in output, further strengthening of the labor market, and inflation rising to 2% over the medium term…” From a trader’s perspective, taking in those fundamental take-a-ways above and with the USD continuing to drop from already low levels, in which direction lies the greatest risk? By determining this, you can try to take advantage of the big moves when the market is forced to re-price if the fundamentals surprise. It is however, hard to shy away from the idea that the greatest risk in the Greenback is to the upside. Sure this completely rules out April, but the chatter about the next hike is getting stronger and price will have to start to price this in soon enough. If you think that price is overstretched, then you can try to take advantage of this in your trading.
An NFP Evaluation
8.04.2016 NFP Monday, the Monday after… So, this is what we got out of NFP, last Friday: “USD Average Hourly Earnings m/m (0.3% v 0.2% expected)” “USD Non-Farm Employment Change (215K v 206K expected and 245K revised up previous)” “USD Unemployment Rate (5.0% v 4.9%)” As you can see, 215,000 jobs were added in March with a healthy +3,000 February revision. Average hourly earnings also increased from 0.2% to 0.3%, but the unemployment rate crept up to 5.0% from the previous 4.9%. This number was blamed on more people being roped into looking for work within the faltering bigger picture. The night was another mixed bag, with the headline print ‘not terrible’, which shows strength is still there. But the tick up in the unemployment rate can be viewed as a sign that the weak underlying economy is forcing people back into the job market when maybe they wouldn’t have to if things were more stable.
The RBA Are Up
8.04.2016 If you’re a keen trader of the antipodean currencies, then you should be up at 0530 (GMT+1) for the RBA rate announcement. While the decision isn’t expected to deliver a cut, looking at the guidance for the next meeting is probably what will cause volatility. If we remember a couple of weeks back, Australian Prime Minister Turnbull threw a spanner into the works regarding AUDUSD by announcing that parliament would be recalled early to try to push Australian Building and Construction Commission legislation through the senate, ASAP. “If the bill doesn’t go through the senate then an early federal election will be called. A Federal election campaign that the RBA will surely at all costs avoid cutting rates in the midst of.” What wasn’t mentioned however, was that the next RBA rate decision in May actually falls on the day the Australian Federal Budget is released. Considering the RBA’s track record, the likely scenario says that the RBA is much more likely to sit on their hands come May, but the economist survey actually goes from a unanimous ‘hold’ decision Tuesday morning, to a 25% cut in May.
Yen Smashes Expectations
8.04.2016 The Japanese Yen hit it’s highest levels against the US Dollar in well over a year yesterday. Something that obviously isn’t good news for the Bank of Japan and “friend of Forex traders everywhere”, Haruhiko Kuroda. Back to business and the runaway strength of the Yen. With the BoJ needing the weaker currency to boost stubbornly low inflation that just seems to be unmovable no matter what they do, this isn’t going down well. QE stimulus, even negative interest rates, just nothing is working for them and the constant comments that hit the newswires day after day have certainly lost their bang. With the risk-off theme carrying the day, the 110.000 level in USD/JPY was touched. The level is HUGELY significant, because not only is it the psychological go-to level, but made even more significant by the fact that the BoJ was thought to have been testing the intervention waters at 111.000.
