CAD USD Currency Futures - Daily Chart 20th March 2009

Whilst the futures contract for the CAD/USD finished higher yesterday the move was less than convincing, with a shooting star candle being formed on the daily chart, and despite the closing price finishing above all three moving averages, this is a warning signal, given the length of the upper wick. In addition we also need to note th volume that has followed the move, which is the same as for Wednesday, suggesting that the volume of Thursday has failed to push prices higher, and that selling pressure is now coming into the market for the contract. It is also interesting to note that the high of the day failed to pierce the resistance level of February in the 0.82 region, and coupled with our analysis of the volume and spread of the candle using volume spread analysis, would suggest that we may see prices fall in the next few days, and continue the bearish trend of the lat few weeks for the currency future.

The latest currency news is updated three times a day on the TV video channel, and the economic calendar provides all the fundamental news for the day, along with the live news feed and live currency charts. Note today that it is a national holiday in Japan.

Aussie Dollar - Daily Futures Chart 20th March 2009

Yesterdays wide spread up candle added to the bullish tone following Wedneday’s wide spread up bar, which reacted to the FED news in the evening along with many other major currencies around the world. With the futures price now having cleared the resistance level at 0.678, this should provide support for a move higher in due course with all three moving averages turning higher. The only slight concern in the candle from yesterday, is the relatively lareg shadow both top and bottom which would suggest some indecision entering the market, and therefore I would suggest a wait and see approach before buying into the market. As always I would use the hourly chart for your entry and exit points.

Looking at the volume, as we would expect in any move up this is now increasing suggesting the move has momentum behind it, and is therefore likley to continue for some time, with any turning points being identified using volume spread analysis techniques. The latest currency news is updated three times a day on the TV video channel, and the economic calendar provides all the fundamental news for the day, along with the live news feed and live currency charts. Note today that it is a national holiday in Japan.

USD CHF - Daily Currency Future 13th March 2009

Yesterday’s sharp rise in the usd chf was largely as a result of the action taken by the Swiss National Bank in order to combat the threat of negative inflation, and the following is an excerpt from their press release:-

“The economic situation has deteriorated sharply since last December, and there is a risk of negative inflation over the next three years. Decisive action is thus called for, to forcefully relax monetary conditions. Against this background, the Swiss National Bank (SNB) is making another interest rate cut and acting to prevent any further appreciation of the Swiss franc against the euro. To this end, it will increase liquidity substantially by engaging in additional repo operations, buying Swiss franc bonds issued by private sector borrowers and purchasing foreign currency on the foreign exchange markets. The SNB is lowering the target range for the three-month Libor by 25 basis points, narrowing it to 0–0.75%, with immediate effect. It will use all means at its disposal to gradually bring the Libor down to the lower end of the new target range, i.e. to approximately 0.25%. Thus, the Libor now has a narrower target range of 75 basis points, compared with 100 previously. With these exceptional measures, the SNB is helping to cushion the effects of the economic and financial crisis, with the aim of limiting the risk of deflation. The SNB has a mandate to ensure price stability, while taking economic developments into account. This mandate, the National Bank will – as it has in the past – base its decisions on an inflation forecast.”

Following the news the usd chf contract moved sharply higher violently breaking out of the narrow trading range of the last few weeks, and finishing the day with an extremely wide spread up bar, which just failed to breach the 1.20 level on the day. Today’s price action has been muted in contrast, but with the congestion area now cleared, and with prices well above the moving averages, we should see a move higher in the next few weeks to retest the highs at 1.21 once again, with the support level below acting as support.

USD EUR Futures Chart - 13th March 2009

With the USD/EUR currency future once again failing to penetrate the 0.78 region, the contract now look set to retrace further from the high of last week, with prices falling below both the 14 and 40 day moving averages. With a bearish sentiment to the daily chart, we will need to see some strong signals in order to see a reversal in the short term, and any confirmed breakout higher will need to clear this resistance significantly for the bullish tone to be re-instated. A move through the support line at 0.77 could see a further fall, possibly as low as 0.75.

USD/GBP - Currency Futures Daily Candle Chart

Following the sharp rally on Monday with the wide spread up bar in the usd/gbp currency future, this failed to follow through during the remainder of the week, with each subsequent day moving off the high of Monday. However it is interesting to note than none of these candles have formed wide spread bars, suggesting that any move lower may only be temporary and simply a reaction to Monday’s strong move upwards. In additon the last three weeks have seen the pair bounce off the 9 day moving average adding to the view that this is a temporary pullback before moving higher in the medium term with higher highs and higher lows. The previous high at 0.7350 will come into play shortly, and a move through this area will confirm the move higher.