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Feds decision yesterday in line with expectations albeit the comments made with reference to the economy improving lifted the greenback strengthening across the board today. Dow finished lower again and lower at time of writing in Europe. Asian stocks having a boost over night, Yen down from same information given from the Fed. Oil this morning trading higher at time of writing and if continues, could see a return to the $70 and $75 per barrel as uncertainty still remains. Data from the States later could see the stocks tumble further should the jobless claims come in worse than expected. Conversely, should we see an improvement, the risk aversion trades could see a lift.

For the Euro, need to break the support level of 1.3920 for a push to 1.39 figure, before yesterdays lows of 1.3890. Resistance at 1.3950 which if breaks and holds will see a return back to 1.3990/00. Await the US stocks for direction along with the jobless claims. Euro pound strengthening this morning heading towards the Tuesdays highs of 85.95/00, along with the cross with the Yen which would indicate that the preference would be to see a return to the 1.4020 level.

For cable, seen a sell off this morning hitting lows of 1.6240/45. Awaiting US opening for direction along with the jobless claims which if better than expected will give a boost back to the pound and 1.63 and 1.63.30/35 (38.2% fib level for the last two days). Support at 1.6250 which if breaks and holds, expect a move back towards 1.62/10. Euro pound struggling to break the current levels of 85.70, good selling opportunity back towards the 85.30 level (if breaks the 85.40 level)

Yen this morning being hit reference the comments made from the Fed regarding the 'improving economy'. Currently trading at 96 35/40. Head and shoulder pattern forming at current levels, which if breaks, will see a move back to the 95.90 level. Resistance at 96.60 which if breaks and holds, could see a move back towards 96.70 ahead of 97.20. Details by fxstreet.com

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The Strategy Team of our Daily Expert View consists of:

David Karsbøl

Manager/Market Strategist, Saxo Bank

David Karsbøl holds a Master of Science degree (Economics) from the University of Copenhagen and has previously been employed as an insurance analyst. Mr Karsbøl works with fundamental analysis and research and contributes to Saxo Bank's strategy products. He also develops and maintains macroeconomic models and a number of trading models, which are designed to profit from co-variations between the Forex and fixed income markets. Mr Karsbøl is regularly appears on major financial news networks and comments several days a week on the financial markets via Saxo Bank's live Market Call webcast. He is a native Danish speaker and is fluent in English.

John J. Hardy

Asset Management, Saxo Bank

John Hardy publishes daily comments on the Forex market. Mr Hardy's analysis attempts to overlay short term technical developments and fundamental event risks with longer term themes and trends in the G-10 currencies. Mr Hardy considers inter-market correlations as paramount in understanding moves in the Forex space, so the analysis draws on a number of models based on other markets and gauges their correlation with Forex markets in an attempt to detect inefficiencies that may provide trading opportunities.Details by forextrading.com

U.S. Economy Recovery, Crude Oil Push Canadian Dollar Up

The loonie continued its rally after a day of losses as the main trading partner of Canada, the United States, is showing signs of an economic revival.

The Canadian currency has been benefiting from several international factors that are helping it to build the strongest bullish pattern in decades against the main currencies. Canada is one of the main global oil exporters, and since the demand for oil has rebounded in April, the loonie is rocketing against currencies like the greenback and the euro, helped also by the stocks rally, which add attractiveness to the Canadian dollar. After signs of economic recovery in Asia, now speculations about United States interest rate policy, are fueling demand for more risk in equities market, creating a perfect scenario for the loonie to grow stronger.

According to specialists, the current scenario for the loonie might be the most favorable in years, firstly the growing demand for oil, and now, being considered as a satellite for the U.S. economy, it is extremely likely that the loonie will remain stronger if its main trade partner finds a quick way out of recession, and signs that an eventual interest rate raise from the Federal Reserve are already having a positive impact for the Canadian currency.

Yen Continues Fall as Demand For Yield Rises

The Japanese currency had a day of losses against major currencies and higher-yielding assets as the global slump eases, improving investor’s confidence to take riskier positions.

The yen has been suffering multiple sessions of losses since the global recession gave its first signs of ending in the beginning of April, and being regarded by traders as a safe refuge for times of uncertainty and crisis, the Japanese currency lost most of the gains it posted during the worst moments of the crisis, in the last semester of the past year. The pound climbed significantly against the yen as the political crisis in the United Kingdom seems rather controlled. Australia’s dollar climbed versus the yen as an industry report showed an increase in the consumer confidence.

Currency specialists affirm that refuge currencies like the Japanese and the North American may enter an important downtrend, as risk aversion is declining, favoring emergent market currencies like the South Korean won, and commodity-linked currencies like the Australian. It is very likely that a weaken yen will follow for the next months, according to specialists, even if the Japanese economy shows relevant signs of recovery, it won’t probably be able to sustain the yen at high levels, since the outflow of investors towards higher-yielding positions abroad will tend to be much larger.

Dollar Climbs Before G-8 Meeting

After several days of losses, the greenback rebounded, ending the week with a rather neutral performance before a G-8 meeting, where Timothy Geithner may state in favor of a strong U.S. dollar.

The U. S. dollar pared its weekly losses after a Wall Street journal report affirming that the U.S. government will continue its policy to avoid bond purchases, resisting the pressure in order to control the supply of dollars. Another factor favoring the greenback is the incoming G-8 finance ministers meeting, in which speculations lead to believe that Treasury Secretary Timothy Geithner may suggest that a strong dollar is likely to be positive for a healthy world economic scenario. Comments in European financial organizations about the problems of a strong euro to exporters also helped the dollar to pair its weekly losses.

Analysts evaluate the speculations towards the G-8 meeting as a consequence of fundamental and technical factors moving the euro-dollar currency pair, as the market sentiment is not willing to push the euro to higher levels. A part from the problematic scenario the euro brings to the European agonizing exporting market, other factors such as the obscure future of the U.S. dollar as the main world currency make it hard to define in which direction the U.S. will point towards the next months.

South African Rand Post Gains as Emergent Markets Attractiveness Rise

The South African rand had a third consecutive day of positive performances as the global economic conditions are evidently improving, adding attractiveness to emergent market currencies.

The rand is one of the most volatile and influenced by the international world economic scenario among the most traded currencies, and a numbers of factors is helping the South African to climb since this April. Being one of the most liquid currencies available for trading, the South African rand is currently highly attractive, since interest rates in developed nations are rather low, and the economic recovery as its being perceived by traders decreased risk aversion in financial markets, adding to the already interesting profile of the rand. The current spiking oil price and this week’s U.S. reports added confidence to purchase currencies like the Brazilian Real and the South African rand, thanks to their high-yielding profile.

Analysts refer to the South African rand as a currency which is highly subjected to the international situation of the world economy. The richest African nation is a commodity exporter, without a high political influence internationally, being the domestic country’s conditions not so influential as the conditions in the United States for example. It is likely that the South African rand will remain strong as long as the investors continue their confident bullish pattern of asset purchasing.

USD/ZAR traded at 7.9808 as of 4:10 p.m. GMT this Thursday rising from a previous price of 8.1085. The rand already gained 19 percent against the dollar since the beggining of the year.

Canadian Dollar Falls as Crude Oil Price Declines

The loonie posted the sharpest fall in 4 days against all major currencies, interrupting a bullish trend as the price of crude oil stopped its rally, damping demand for the Canadian currency high-yielding profile.

The Canadian dollar had a day of negative performance after Bank of Canada Governor Mark Carney stated that a strong loonie may affect the Canadian economic, as exporters would lose competitiveness having less significant profit margins. The Bank of Canada may take measures to stop the national currency rally which has started since the demand for commodities improved in April, Carney also eased the expectations for a quick world economic recovery, in an attempt to control investors’ bullish sentiment towards the Canadian dollar. The loonie, among the main six traded currencies, posted the highest gains related to the commodities and stocks rally that were triggered by signs of an economic recovery coming firstly in Asia, followed by emergent markets and Europe.

It is natural that the Canadian dollar is losing strength, according to economists, the rally it witnessed was too sharp, and after Carney’s declarations together with a correction movement in the oil price, the loonie was totally unable to keep its bullish pattern. Even thought analysts are uncertain about Canada’s dollar future, it is well agreed that some factors will stop or at least ease its current strength.

USD/CAD closed the session at 1.1181 from Thursday’s rate of 1.1015, ending this week with a virtually neutral performance.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

FOREXYARD News Center

Dollar Up as Russia Sees No Other Alternative to the U.S. Currency

Monday, 15 Jun 2009

The EUR came under selling pressure against the greenback on Monday after the UK Daily Telegraph reported on its website that Germany's top industrial group has warned that Germany's credit crunch is deepening. The dollar also drew some support after Russia's Finance Minister said the nation has full confidence in the U.S. currency. His remarks came ahead of the first summit of leaders of Russia, China, India and Brazil on Tuesday, at which the leaders are expected to discuss issues including foreign reserve diversification.