Mar 2, 2010

Forex Crunch Collapse of the Pound, State of Euro and more, on the Video Outlook

Forex Crunch Collapse of the Pound, State of Euro and more, on the Video Outlook

Collapse of the Pound, State of Euro and more, on the Video Outlook

Posted: 02 Mar 2010 12:49 AM PST


In the weekly interview on Forex TV, I spoke with Julie Sinha about the collapse of the Pound, the factors that will influence the Euro, American Non Farm Payrolls and more events.

In addition, I covered expected technical breakouts, including some the EUR/AUD cross as well. Enjoy!

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Forex Daily Outlook – March 2nd 2010

Posted: 02 Mar 2010 12:36 AM PST


The week began with a strong start, especially for the British Pound, which was knocked down. Today, more important events are awaiting us with rate decisions in Australia and Canada being in the limelight. Let’s see what’s up for today.

Australian action starts the day: Retail Sales made a nice leap last month, rising by 2.2%, but now they’re expected to rise by only 0.7%. In the housing sector, a disappointment came from last month’s dropping Building Approvals. They’re predicted to rise by 0.8% this time. Now for the main dish:

The Australian central bank is expected to raise the interest rate to 4%. This will be the fourth rate hike since the financial crisis broke out. Australia is the first and only Western country to raise the rates. After a surprising pause last month, Glenn Stevens is expected to resume the moves. Also note the tone of the RBA Rate Statement regarding future moves.

For more on the strong Australian dollar, read the AUD/USD forecast.

In Switzerland, the GDP is expected to rise by 0.4%, more than 0.3% in Q3. This might stop the Swissy’s retreat.

In Britain, Construction PMI is expected to edge up from 48.6 to 48.9 points, still under the critical 50 point mark. Yesterday’s British figures were OK, but the news hurt the Pound.

For more on the Pound’s (low) technical levels, read the GBP/USD forecast.

The Euro is weaker, but hanging on to the critical 1.3423 level, helped by a drop of the unemployment rate below 10%. Today will see the CPI Flash Estimate which is expected to show an annual rise of 1% in prices.

Also note the European producer prices. PPI is expected to jump by 0.7%, significantly more than last month’s 0.1% rise.

For more technical levels, read Casey Stubbs’ latest analysis and for events, check out my EUR/USD forecast.

The Canadian dollar enjoyed an excellent GDP result yesterday: the economy grew by 0.6% in December 2009, and at an annual rate of 5% in Q4. This helped the loonie. And today there’s another test.

The Bank of Canada will probably leave the Overnight Rate unchanged at 0.25%. The focus will be (as usual) on the BOC Rate Statement. Mark Carney has clearly stated that the timing for raising the rates is June 2010, which is now only three months away. Will he talk about an earlier schedule? It didn’t happen before…

Check out the USD/CAD forecast for technical levels.

That’s it for today. Happy forex trading!

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CAD Overcomes Dollar Storm On Strong Economy

Posted: 01 Mar 2010 06:17 AM PST


USD/CAD is now falling and approaching an important resistance line. This happens as the US dollar is strong, with traders focusing on the collapse of the Pound. The loonie has reasons to rise – a strong economy that is accelerating. The pair is now facing a test:

The dollar is storming through the markets. This is strongly felt in GBP/USD. The Pound totally collapsed, broke through the key level of 1.50 and triggered more stop order. It stopped only at 1.4780, the last line that I mentioned in the GBP/USD forecast.

Also the Euro, the Aussie and others are surrendering to the dollar. But let’s focus on one strong currency: the Canadian dollar.

After failing to break the 1.04 line last week, it retreated back up and stopped to rest. Now it has new fuel. The monthly release of GDP showed a stronger than expected rise in December, 0.6%. This concludes a strong fourth quarter, with a growth rate of 1.2%, not bad at all!

Translating the number to an annualized format, the Canadian economy grew at a pace of 5% in the Q4, better than 4.5% that was predicted. This still lags the strong 5.9% growth rate that was reported in the US. So, if the only thing that matters is GDP, then the Canadian dollar should stay behind as well.

The major difference between the two North-American countries is seen in the job market: while jobs are growing in Canada, they continue to bleed in the US. The unemployment rate also reflects a significant gap: 8.3% in Canada and 10% in the US.

What’s awaiting us in the American job market? Here’s my Nonfarm payrolls preview.

USD/CAD

Following the Canadian GDP release, USD/CAD fell from 1.0570 to 1.0470 at the time of writing. For this pair, 100 pips is a lot. It’s still not close enough to the critical 1.04 line mentioned over and over in my USD/CAD forecasts. But it’s getting close.

If this line is broken, 1.02 is the next and last support line before the ultimate line – USD/CAD parity. 1.02 was the 2009 low and was also approached this year.

Upon another retreat, 1.0680 is a minor resistance line with 1.0780 being a big stronghold.

Next Events

Anything can happen in this busy week, that already began with a strong start. The next big event in Canada happens tomorrow: the Bank of Canada announces the interest rate.

While here there’s no difference between the US and Canada on the low rates, the Bank of Canada has a clear schedule for raising the rates: June 2010. As in previous rate decisions, an acceleration of this schedule will boost the Canadian dollar, but this probably won’t happen.

I’ll continue following this strong currency.

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