CAD Exporters have to adjust
30/03/10 08:17
CAD Exporters have to adjust
Two interviews from my friend Ashraf Laidi I recommend you listen to.
http://watch.bnn.ca/#clip281466
http://bit.ly/bPqfjz
Per previous Forex Notes, we did well last week in exiting some long risk positions in AUD and NZD prior to the pullback. This was noted/warned in the blog on Saturday March 20. As seen in Pro Traders Club, we reentered some longs AUDUSD at .9112 near close on Friday. So, we exited at open Sunday (beginning of the week) and bought back in on Friday near close (end of week). Please review Blog "Exiting Risk..." Read More...
Two interviews from my friend Ashraf Laidi I recommend you listen to.
http://watch.bnn.ca/#clip281466
http://bit.ly/bPqfjz
Per previous Forex Notes, we did well last week in exiting some long risk positions in AUD and NZD prior to the pullback. This was noted/warned in the blog on Saturday March 20. As seen in Pro Traders Club, we reentered some longs AUDUSD at .9112 near close on Friday. So, we exited at open Sunday (beginning of the week) and bought back in on Friday near close (end of week). Please review Blog "Exiting Risk..." Read More...
Eurozone Fiscal Problems
27/03/10 23:23
Only 6 Seats Remain for Chris Lori's
Workshop!
In Chris Lori's Forex Pro Traders Club and other commentary we discuss interest rate differentials as a primary FX driver. This concept is covered in detail in a video series called "Inside the Banks." Yield differentials are a core part of our long term strategy trading model.
We look at how yield differentials have moved for EURUSD and USDJPY as part of a broader look at the recent rally in Treasury yields.
In the current environment, we would advise some caution in determining that yield spreads will become a material driver of the FX markets. First, it is unlikely that volatility will remain subdued in light of the Greece crisis and normalisation risks. Bond vigilantes may be ready to come out in droves, but central banks will call their bluff in the current growth environment, leading to significant instability in yields. As such we would position for a general rise in FX volatility. As for yields, we will maintain focus on AUD, NZD and the coordinated positioning of BoC and the FED. The FED first needs to bring the bank rate higher before tightening the OCR.
Read More...
In Chris Lori's Forex Pro Traders Club and other commentary we discuss interest rate differentials as a primary FX driver. This concept is covered in detail in a video series called "Inside the Banks." Yield differentials are a core part of our long term strategy trading model.
We look at how yield differentials have moved for EURUSD and USDJPY as part of a broader look at the recent rally in Treasury yields.
In the current environment, we would advise some caution in determining that yield spreads will become a material driver of the FX markets. First, it is unlikely that volatility will remain subdued in light of the Greece crisis and normalisation risks. Bond vigilantes may be ready to come out in droves, but central banks will call their bluff in the current growth environment, leading to significant instability in yields. As such we would position for a general rise in FX volatility. As for yields, we will maintain focus on AUD, NZD and the coordinated positioning of BoC and the FED. The FED first needs to bring the bank rate higher before tightening the OCR.
Read More...
Dollar Likely to Strengthen
21/03/10 12:59
Workshops: Including Online Course!
The Only Chris Lori Professional Workshop in 2010!!
Charlotte, NC Workshop and Complete Trading Program
April 16-18
Includes:
* Inside The Banks
* Complete FX Course
* 2 Months PTC
* and more...
The dollar is likely to continue to strenghen as investors remain uncertain over the Eurozone's current policy on Greece, or if any policy exists at all. Greece is a proxy for other 'at risk' Eurozone regions (Spain, Portugal, Italy) as the market fears ECB or IMF may have to inject liquidity to provide a near term solution for the failing countries. Rate spreads between 10yr German Bunds and Treasuries support this view. This scenario is clearly EUR negative. Combine this with rumors of a hike in the discount rate (not the OCR/FED Funds rate) the FED will employ to begin normalization and tightening. The last discount rate announcement was made on Feb 18. In it, the Fed raised the rate and shortened the maximum maturity of loans. In particular, they said "effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight. Read More...
The Only Chris Lori Professional Workshop in 2010!!
Charlotte, NC Workshop and Complete Trading Program
April 16-18
Includes:
* Inside The Banks
* Complete FX Course
* 2 Months PTC
* and more...
The dollar is likely to continue to strenghen as investors remain uncertain over the Eurozone's current policy on Greece, or if any policy exists at all. Greece is a proxy for other 'at risk' Eurozone regions (Spain, Portugal, Italy) as the market fears ECB or IMF may have to inject liquidity to provide a near term solution for the failing countries. Rate spreads between 10yr German Bunds and Treasuries support this view. This scenario is clearly EUR negative. Combine this with rumors of a hike in the discount rate (not the OCR/FED Funds rate) the FED will employ to begin normalization and tightening. The last discount rate announcement was made on Feb 18. In it, the Fed raised the rate and shortened the maximum maturity of loans. In particular, they said "effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight. Read More...
Lack of Direction in Currencies
18/03/10 20:54
Hello
Traders...
Watch Chris Lori on Tradingviews TV Network!
Chris Lori, CTA appears regularly on MB Trading's TV network called TradingViews "The Interactive TV Network for Serious Traders"
Click this link for access:
http://www.tradingviews.com/trading/email/MRI-1291_lori_experts.html
We view the lack of direction in currencies at present as a function of the macro environment. Central banks' exit strategies are stymied by growth risks and investment is being held back by tight credit and heightened caution on the economic outlook. But clues to future direction can be found in watching commodity prices. Those are often better indicators of inflation and growth expectations, and, hence, currency direction in turn. We to take short JPY positions on JPY rallies against AUD, NZD and USD*. We will continue to cover the AUDJPY strategies in Pro Traders Club
Read More...
Watch Chris Lori on Tradingviews TV Network!
Chris Lori, CTA appears regularly on MB Trading's TV network called TradingViews "The Interactive TV Network for Serious Traders"
Click this link for access:
http://www.tradingviews.com/trading/email/MRI-1291_lori_experts.html
We view the lack of direction in currencies at present as a function of the macro environment. Central banks' exit strategies are stymied by growth risks and investment is being held back by tight credit and heightened caution on the economic outlook. But clues to future direction can be found in watching commodity prices. Those are often better indicators of inflation and growth expectations, and, hence, currency direction in turn. We to take short JPY positions on JPY rallies against AUD, NZD and USD*. We will continue to cover the AUDJPY strategies in Pro Traders Club
Read More...
BoJ Loosens Policy
17/03/10 21:30
Not a perfect storm, but a very good one, as seen in
risk price action the past few sessions. The BoJ
voted unanimously to keep the policy rate unchanged
at 0.1%. In addition, the policy board voted 5-2 in
favour of doubling the ceiling on one 3-month
fixed-rate lending facility, increasing the limit on
the maximum total size of all loans outstanding to ¥
20 tn from ¥ 10 tn previously. Finally, they chose to
allow another 3m loan facility, introduced in 2008 to
expire at the end of March as previously signaled.
Read More...
Read More...
Lower Volatility Prevails
15/03/10 18:58
Folks...
My friend Ashraf Laidi will be presenting in Vancouver this Saturday. I will also be in attendance checking up on him, so come by to say hello. Sign up through this link...
http://www.cmcmarkets.ca/static/pages/consolidating/index.html
Todays Forex Notes by Karl Schamotta of Custom House Foreign Exchange
Calgary Branch 1.888.987.7612
Currency markets remained locked into narrow trading ranges as the week began, with flaring trade tensions between China and the United States dampening optimism. The prospect of a trade war between the two great powers weighed on sentiment, and the US dollar eked out small increases against most currencies – other than the Canadian dollar.
The CAD is holding onto gains achieved after Friday’s employment report, and has convincingly broken through the critical 1.0225 resistance barrier. Momentum appears to be in favour of an eventual move through par, although a short-term CAD correction seems likely. Our national virility symbol has been boosted by a number of factors over the last few weeks, with commodity prices holding up and domestic fundamentals looking very appealing in relation to other industrialized countries. A key Canadian advantage in attracting international investment flows is the capacity and willingness of the government to shrink the federal budget deficit. With deficits increasing rapidly in many other developed nations, Canada’s fiscal position looks more stable, although the total public debt burden remains large in relation to the size of the economy. Read More...
My friend Ashraf Laidi will be presenting in Vancouver this Saturday. I will also be in attendance checking up on him, so come by to say hello. Sign up through this link...
http://www.cmcmarkets.ca/static/pages/consolidating/index.html
Todays Forex Notes by Karl Schamotta of Custom House Foreign Exchange
Calgary Branch 1.888.987.7612
Currency markets remained locked into narrow trading ranges as the week began, with flaring trade tensions between China and the United States dampening optimism. The prospect of a trade war between the two great powers weighed on sentiment, and the US dollar eked out small increases against most currencies – other than the Canadian dollar.
The CAD is holding onto gains achieved after Friday’s employment report, and has convincingly broken through the critical 1.0225 resistance barrier. Momentum appears to be in favour of an eventual move through par, although a short-term CAD correction seems likely. Our national virility symbol has been boosted by a number of factors over the last few weeks, with commodity prices holding up and domestic fundamentals looking very appealing in relation to other industrialized countries. A key Canadian advantage in attracting international investment flows is the capacity and willingness of the government to shrink the federal budget deficit. With deficits increasing rapidly in many other developed nations, Canada’s fiscal position looks more stable, although the total public debt burden remains large in relation to the size of the economy. Read More...
Eye's on JPY Policy
14/03/10 18:45
Hello Traders,
The BoJ's two-day meeting which begins on Tuesday is likely to attract a good deal more attention than usual. Not only has government pressure on the BoJ intensified in recent weeks, but a number of press articles have speculated that the policy board is poised to introduce additional steps aimed at running an even looser form of monetary policy.
Read More...
The BoJ's two-day meeting which begins on Tuesday is likely to attract a good deal more attention than usual. Not only has government pressure on the BoJ intensified in recent weeks, but a number of press articles have speculated that the policy board is poised to introduce additional steps aimed at running an even looser form of monetary policy.
Read More...
NZD Policy Stimulus
11/03/10 07:17
The RBNZ left the OCR unchanged as expected at 2.5%
and reiterated the 'around the middle of 2010'
guidance for when the Bank expects to begin removing
policy stimulus. With the RBNZ Governor, Alan
Bollard, commenting that all options are open in
terms of rate hike sizes (they will 'wait and see'),
we continue to anticipate a June start to withdrawing
monetary policy stimulus. We continue to see June and
July 50bp hikes (taking the OCR to a more 'normal'
low), reverting to 25bp moves thereafter, taking the
OCR to 4.25% by year-end. AUDNZD jumped above 1.30 on
the back of the release but as our RBNZ call has not
changed.
Read More...
Read More...
CAD Outperforming
08/03/10 22:29
UBS and other banks economists expect a June rate
hike by the Fed of 25bp. That puts our Fed rate hike
forecast ahead of much forecasted July BoC rate hike
by approximately one month. However, it may be useful
to examine a period in which the monetary policies of
the Fed and the BoC have diverged in the event that
BoC decides to hike earlier or by more than 25bps
initially, given the BoC's hawkishness, or our Fed
rate hike spec gets pushed back.
The US was in recession from March 2001 to November 2001. Canada, however, did not go into recession during that period as it did not suffer relatively as much from the after effects of the burst tech bubble and the 2001 terrorist attacks. Through January 2002, the BoC had cut 375 bp to 2.00% while the Fed had cut the fed funds by 475 bp to 1.75%. In April 2002, the BoC commenced a tightening cycle independent of the Fed based on stronger than expected economic growth. The BoC noted that there was still substantial monetary stimulus in place and eventually hiked its policy rate to 3.25% by April 2003 and kept it there through mid-July 2003. From April 2002 to mid-July 2003, however, the Fed cut the Fed funds rate another 75bps to 1.00%. When the spread between the BoC and Fed policy rates widened during that period, the CAD appreciated against the USD by approximately 13%.
Read More...
The US was in recession from March 2001 to November 2001. Canada, however, did not go into recession during that period as it did not suffer relatively as much from the after effects of the burst tech bubble and the 2001 terrorist attacks. Through January 2002, the BoC had cut 375 bp to 2.00% while the Fed had cut the fed funds by 475 bp to 1.75%. In April 2002, the BoC commenced a tightening cycle independent of the Fed based on stronger than expected economic growth. The BoC noted that there was still substantial monetary stimulus in place and eventually hiked its policy rate to 3.25% by April 2003 and kept it there through mid-July 2003. From April 2002 to mid-July 2003, however, the Fed cut the Fed funds rate another 75bps to 1.00%. When the spread between the BoC and Fed policy rates widened during that period, the CAD appreciated against the USD by approximately 13%.
Read More...
Next Wave of Central Bank Decisions
01/03/10 22:45
Hello Traders;
The Olympic games are over and I'm back in action and reconnecting with the market. The best show of psychological tenacity was Canadian Bobsledder Lynden Rush, who, while in bronze medal position in the 2man, crashed in the second heat, giving up all hope for a medal. Remarkably, he came back the second day and finished the race. This is the Olympic ideals in its truest form. He came back the following week and won a bronze medal in the 4man. The psychological profile of a winner, indeed! The mind of a trader!
Update:
The next wave of central bank decisions are upon us and the RBA is the one where we could see some movement, which has benefited the Australian dollar in the lead up to the meeting. The ECB and BoE are unlikely to do anything materially different as sovereign fiscal pressures are restricting the ECB to a certain degree and BoE officials have signaled more quantitative easing could be in the cards, both of which are pressuring the domestic currencies. But for the BoC, inaction at its upcoming meeting will not necessarily weigh on the Canadian dollar. I have covered a lot of this in todays Pro Traders Club.
Read More...
The Olympic games are over and I'm back in action and reconnecting with the market. The best show of psychological tenacity was Canadian Bobsledder Lynden Rush, who, while in bronze medal position in the 2man, crashed in the second heat, giving up all hope for a medal. Remarkably, he came back the second day and finished the race. This is the Olympic ideals in its truest form. He came back the following week and won a bronze medal in the 4man. The psychological profile of a winner, indeed! The mind of a trader!
Update:
The next wave of central bank decisions are upon us and the RBA is the one where we could see some movement, which has benefited the Australian dollar in the lead up to the meeting. The ECB and BoE are unlikely to do anything materially different as sovereign fiscal pressures are restricting the ECB to a certain degree and BoE officials have signaled more quantitative easing could be in the cards, both of which are pressuring the domestic currencies. But for the BoC, inaction at its upcoming meeting will not necessarily weigh on the Canadian dollar. I have covered a lot of this in todays Pro Traders Club.
Read More...