USDCAD Overnight Range 1.1735-1.1782

FX markets were jittery overnight which is likely to be the theme for today.  USDJPY was extra choppy while AUDUSD popped higher on better than expected trade data. In Europe, mixed results for a series of PMI data, wariness ahead of the ECB meeting and renewed concerns surrounding Greece’s EU membership are weighing on EURUSD.

USDCAD is tracking US dollar movements, for the most part, although a poor result for the Raw Materials Price Index and WTI oil trading down at $48.90/bbl, should ensure a bullish bias to the currency pair.

Looking ahead, tomorrow’s release of the FOMC minutes may provide additional support to the US dollar as they will remind traders of the hawkish sounding FOMC statement just before Christmas.

USDCAD technical outlook

The short term USDCAD technicals are bullish looking for another test of 1.1835 with a decisive break above the intraday downtrend line, currently at 1.1780.  A failure to the tops risks a return to support in the 1.1735-40 area.

Range for the day   1.1760-1.1810

Chart: USDCAD 30 minute

After reading essays from political and financial pundits and looking at market charts, “Greece will be contained” seems to be the consensus conclusion following Samaras’ defeat — that no matter what happens in Greece, the ECB can and will purchase European sovereign debt; Greek stocks are a buy; Even the most dire outlooks have Greece exiting the Eurozone with grace.

Yet again, I am afraid that the financial elite have misunderstood social mood and the impact of chronic underconfidence….

CLICK HERE to read the complete article

The Financial Times ran a very interesting article last week called “China: Turning away from the dollar”. It got a lot of attention, at least among China analysts, and I was asked several times by friends and clients for my response. The authors, James Kynge and Josh Noble, begin their article by noting that we are going through significant changes in the institutional structure of global finance:

An “age of Chinese capital”, as Deutsche Bank calls it, is dawning, raising the prospect of fundamental changes in the way the world of finance is wired. Not only is capital flowing more freely out of China, the channels and the destinations of that flow are shifting significantly in response to market forces and a master plan in Beijing, several analysts and a senior Chinese official say.

While this may be true, I am much more skeptical than the authors, in part because I am much more concerned than they seem to be about the speed with which different countries are adjusting, or not adjusting, to the deep structural imbalances that set the stage for the global crisis…..  CLICK HERE to read Michael’s complete analysis

The anti-dollar contingent around the world who have preached that since Russia already trades its own currencies independently from the dollar and China has been trying to make the same move, are spinning the blogs claiming this is a “Zionist banker” conspiracy and this proves that all nations are tired of debt making Zionist banking. Well aside from the prejudice, this is not about merely debt and banking. I warned in the Greatest Bull Market that during a massive Sovereign Debt Crisis, there is nothing that remains standing. This is a complete control-alt-delete.

….continue reading HERE

Why Mark Twain thinks a major Euro bottom may be near

The inimatable American author Mark Twain once counseled, “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” This is, of course, great advice for life on the whole, but it has very specific application to trading in particular.

Flash back to six months ago: EUR/USD was the king of the forex world. Rates had just rallied to a 3-year high at 1.40 and the consensus trade was that the rally would stretch into the end of the year. As any experienced trader will tell you, these are precisely the times when a market is most vulnerable to a reversal. Sure enough, the pair reversed sharply off a multi-year bearish trend line and dropped through its rising wedge pattern in May, starting a six-month cascade of lower highs and lower lows down to the low-1.22s.

Now, as we head into the end of the year, the exact opposite situation is developing: the consensus 2015 trade in the forex market is to be short EUR/USD. At first glance, this is a very logical view: the US economy is accelerating, prompting speculation that the Federal Reserve will hike rates in the first six months of 2015, while the Eurozone is struggling with lackluster growth and fears of outright deflation, with most traders pricing in the start of sovereign quantitative easing (QE) program from the European Central Bank (ECB) in Q1.

*A Piercing Candle is formed when a candle trades below the previous candle’s low, but buyers step in and push rates up to close in the upper half of the previous candle’s range. It suggests a potential bullish trend reversal.

….continue reading page 2 HERE