Tuesday, February 6, 2018

Canadian dollar

Canadian dollar is steady in the Tuesday session, after considerable losses in the past two sessions. Currently, the pair is trading at 1.2556, up 0.16% on the day. On the release front, there are two key Canadian events. Canada’s trade deficit is expected to narrow to C$2.3 billion, and Ivey PMI is forecast to improve to 60.7 points. In the US, the key event of the day is JOLTS Job Openings, which is expected to climb to 5.95 million. On Wednesday, Canada releases Building Permits.
The US dollar continues to post broad gains this week, and the Canadian dollar has declined 1.0% and is at its lowest level since mid-January. The greenback has pushed higher as global stock markets are in red territory. US stock markets started the week with strong losses, and the Dow Jones posted its biggest loss in one day on Monday, losing 1,500 points at one stage. The index ended the day down 4.6%, and the downward trend has continued in the Asian and European markets on Tuesday. As investors head for the hills, analysts are scrambling to find the reasons behind the massive sell-off in the stock markets. Some experts are pointing to the changing of the guard at the Federal Reserve, with Jerome Powell replacing outgoing chair Janet Yellen on Saturday. However, Powell is not expected to change current monetary policy, so it’s unclear how Powell would have rubbed the markets the wrong way after just one day at his new job.

Friday, February 2, 2018

EUR/USD

There were no dramatic announcements from the Federal Reserve on Wednesday, and EUR/USD showed little movement in the Wednesday session. The Fed held the course on monetary policy, with the benchmark rate remaining between 1.25%-1.50%. In the rate statement, policymakers said that they expected the economy to continue to expand at a moderate pace and that the labor market would remain strong in 2018. What was more noteworthy was that the Fed predicted that inflation would rise to the Fed’s 2 percent target this year. This marks an upgrade in the inflation forecast, as the December statement said that inflation was expected to “remain somewhat below 2 percent.” Higher inflation is likely to open the door to tighter monetary policy, and the Fed appears on track for three, or even four rate hikes in 2018, assuming that the US economy remains strong.

Thursday, February 1, 2018

dollar fall against the Japanese yen

The dollar fall against the Japanese yen "has established a near-term bottom at the 108.50 level," according to BK Asset Management. USD/JPY is last up 0.1% at 109.30. With U.S. non-farm payrolls expected to come in higher on Friday--up by 177,000, compared with a 148,000 increase in December, according to a WSJ poll--and with "the Fed appearing resolute to normalize monetary policy in earnest, the decline in the dollar may be coming to an end for the near term," says BK. Still, against the euro and sterling, the dollar continues to lose ground, with EUR/USD up 0.3% at 1.2452 and GBP/USD rising 0.2% to 1.4222.

Wednesday, January 31, 2018

Canadian dollar

There is still room to grow for the Canadian dollar, says Audrey Childe-Freeman, chief strategist at FX Knowledge. "Once the NAFTA [negotiations] element is removed, it should catch up with the interest rates market," she says, which are pricing in three rate increases by the Bank of Canada this year. CAD has held its ground during the recent sixth phase of NAFTA talks. "I was holding on to the trade [during the talks] and it has paid off," says Ms. Childe-Freeman. CAD rises versus USD, with USD/CAD down by 0.5% at 1.2270 after Canadian November GDP showed a rise of 0.4% month-on-month on Wednesday.

Monday, January 8, 2018

RBC Capital Markets

Potentially higher euro rates volatility from "extremely low" levels at present and higher yields prompts RBC Capital Markets to recommend so-called payer swaptions: options to enter a swap and pay the fixed leg while receiving floating rates. Option premiums are cheap when volatility is low, as the underlying asset is less likely to move to in-the-money territory. And higher rates are beneficial for those paying fixed rate to receive floating

Thursday, January 4, 2018

pushes EUR/USD

A mix of upward revision of eurozone PMIs and higher than-expected U.S. jobless claims on Thursday pushes EUR/USD up 0.6% to 1.2087, just a shade below the September high of 1.2093, which would mark its highest in around three years, according to Factset. Eurozone December final composite PMIs were revised slightly upwards from the flash estimate to 58.1. And U.S. jobless claims rose by 250,000 during the last week of December, above forecasts in a WSJ poll for a 240,000 increase. Private sector jobs rose by more than expected, however, according to the ADP report.

Tuesday, January 2, 2018

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