Forex Market Updates & Commentary

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• Canada Ivey comes in 57.8. Weaker than expectations
• USDCAD tests intraday 38.2% level
• AUDUSD good support at 1.0634 but need to get above 1.0675
• Silver below 50% of the 2011 range
• Canada Ivey PMI Due at 10AM
• GBPUSD tests floor area and finds support
• EURUSD fall sharply on “dovish” Trichet
• Trichet. We will raise rates whenever appropriate
• USDJPY watching 79.89 for bottoming clues
• Excuses. Excuses. Excuses. OR are they warranted?
• Canada Building Permits Soar
• Jobless Claims Rise, Unit Labor Costs & Productivity Show Stronger Data
• Trichet speaks and says “monitoring closely” all developments
• Look for “strong vigilance” in Trichet for tightening clue next month
• The FXDD NY Opening Forex Call for May 5th 2011

Canada Ivey comes in 57.8. Weaker than expectations Posted: 05 May 2011 07:00 AM PDT The Canada Ivey PMI comes in at 57.8 seasonally adjusted. This is weaker than expectations.  The USDCAD fell before the release and has revovered a touch. The support now comes in at the 0.9621 level. A move below this level would not be welcomed.  A move back above the 0.9640-45 level would be positive intraday

USDCAD tests intraday 38.2% level Posted: 05 May 2011 06:48 AM PDT The USDCAD will be tied to oil and oil is volatile but the price has continued its move higher today. In the chart above the pair is testing the 38.2% of the days range which could provide trend resumption clues. If the level holds, the pair could see some additional upside potential. On the daily, the trend down is still in charge, as the price remains below the upper trendline in the chart below. That level comes in around the 0.9711.  Is it possible to get there? Of course. Last month the price was at the level. The non trending nature and break out over the last few days is a clue that corrective moves are in place and it could trend.  So be aware. PS Canada Ivey PMI due with expectations of 65.

AUDUSD good support at 1.0634 but need to get above 1.0675 Posted: 05 May 2011 06:32 AM PDT The AUDUSD his approaching support against a key trendline going back to April 5th. The level comes in at the 1.0634 level.   This level will provide some key clues for traders in this pair.  Hold the level and a correction higher should ensue. Break the 1.0634 level and look for further liquidation (do not trade against a break as the price should move lower). A clue a bottom is in place (temporary) would be for a move above the 1.0675 level. This level was the bottom on April 26th and has so far been the ceiling for the AUDUSD over the last 4-5 hours. A break above should release the log jam and lead to higher levels. So key time for the AUDUSD.  Are longs still caught and wondering about AUDUSD with a 1.06 handle, or is it a buying opportunity?  The technicals should tell the story.  Be aware.

Silver below 50% of the 2011 range Posted: 05 May 2011 06:20 AM PDT Six days and 50% of the 2011 range is gone.  The level comes in at 38.09.  A move above this level will be needed to solicit any buying. Just like the trend higher is fast and directional, the countertrend lower, can be just as fast. Just as directional. And it has a lot of longs wondering and fearing where the bottom is located. A move back above the 38.09 level will be eyed for clues of a bottom  Above that level will is the 38.40 level from the trendline in the hourly chart below.

Canada Ivey PMI Due at 10AM Posted: 05 May 2011 06:14 AM PDT

GBPUSD tests floor area and finds support Posted: 05 May 2011 06:10 AM PDT The 1.6426 to1.6438 level was a “Remembered area” for the GBPUSD and the market has found some profit taking buyers against the level (see lows and highs in the chart above). The move to the downside did take out the 50% retracement on the move at 1.6454 but now with the price back above this level, the market will need to get back below this level to keep the pressure on. Watch 1.6454 for clues in the volatile morning market. On the topside a move above teh 1.6480 level will be indicative of more buying interest for the pair.

EURUSD fall sharply on “dovish” Trichet Posted: 05 May 2011 05:55 AM PDT The failure to say “vigilant”  and the comment that the ECB is taking into consideration the value of the EURO is leading to a sharp fall in the EURUSD. Risks remain to the upside for inflation he warns, but with commodities coming down the market is interpretting that risk may still be up but they are “less up” then they were last week. The EURUSD has moved through support at the weeks floor. The 200 hour MA (Green line in the chart above) now looks to target the 1.4640 level which is the 38.2% of the move up from the April 18th low to the high. On the topside, I will eye the 38.2% of the move down from the high prior to the 8:30 comments. That level currently comes in at 1.4741.

Trichet. We will raise rates whenever appropriate Posted: 05 May 2011 05:50 AM PDT Taking exchange rate into account Noted the US pledge for strong dollar Geithner comment on dollar was important ECB does not have policy of normalization Takes decisions to deliver price stability COnducts policy for entire region Some nations have very encouraging growth levels Some nations are lagging It is not time to claim victory on growth

USDJPY watching 79.89 for bottoming clues Posted: 05 May 2011 05:47 AM PDT Claims were horrible but the excuses are surfacing including a change in Oregon, spring break in NY and Japan supply shocks in automotive.  The USDJPY moved lower but did not take out the low for the day.    The 79.89 level remains a level for me to watch this morning. This is the 61.8% of the move up from the low to the high and the corrective point today (after reaching the low - see chart below).  A move above should lead to more covering of shorts with a move above 80.00 the next clue for the intraday dip buyers.

Excuses. Excuses. Excuses. OR are they warranted? Posted: 05 May 2011 05:43 AM PDT Oregon change in claims method, Timing of spring break and Japanese earthquake/supply shock all combine to cause the surge in Unemployment claims. The employment report is becoming more and more a gamble tomorrow given the surge in the claims over the last month.

Canada Building Permits Soar Posted: 05 May 2011 05:32 AM PDT Canada Building Permits:    Survey: -2.5%         Actual:  17.2%        Prior:  9.9%     Revised: 9.8%

Jobless Claims Rise, Unit Labor Costs & Productivity Show Stronger Data Posted: 05 May 2011 05:32 AM PDT Jobless Claims:  Survey:  410K    Actual: 474K   Prior: 429K    Revised:  431K    Continuing Claims:  Survey: 3649K    Actual:  3733K    Prior: 3641K  Revised: 3659K Nonfarm Productivity:    Survey: 1.1%         Actual:  1.6%        Prior:  2.6%       Revised: 2.9% Unit Labor Costs:    Survey:  0.8%      Actual:  1.0%       Prior:  -0.6%    Revised: 2.9%

Trichet speaks and says “monitoring closely” all developments Posted: 05 May 2011 05:32 AM PDT The market is interpreting that the comments (highlights) below are “less vigilant” and as a resul the EURUSD has fallen despite the weak jobless claims. Upward pressure on inflation Monetary expansion moderate Underlying economic momentum remains positive Monitoring closely all developments (not “strongly vigilant”) All non standard measures are temporary Risks are broadly balanced Fin mkt tension among downside risk Energy price rise among downside risk Inflation to stay above 2%in coming months Important to avoid 2nd round effects Inflation expectations must remain anchored Risk on inflation remains to the upside Rate increase was warranted in April Monetary stance remains accomodative Uncertainty remains elevated. Banks must retain earnings, turn to mkt if needed. Nations must meet fiscal targets

Look for “strong vigilance” in Trichet for tightening clue next month Posted: 05 May 2011 05:09 AM PDT The wordsmiths say if Trichet says “strong vigilance” it will be interpreted as a clue for a tightening next month.  The market is targeting 2% by the end of 2011.  The Fed is not indicating a change.  This should help keep support in the EURUSD.  The warning is we take our clues from the charts and the charts have defined the boundaries nicely. From a technical perspective the non-trending nature of the market is suggesting it (the “market” ) is waiting for this moment. The 100 hour MA is moving sideways (blue line). The price has clearly defined support and resistance (Yellow areas). It is a matter of making a break and “listening” to what the market is saying through the chart.  One has to think that since the ECB started the process, to not follow through with additional tightening measures would not be logical.  They have indicated that one change does not guarantee another, but inflation remains high they are intent on wiping out inflation. So next month nudge would be likely - or so the market is expecting.  The decision will be made. The market is likely to react.  Watch the clues.

The FXDD NY Opening Forex Call for May 5th 2011 Posted: 05 May 2011 05:00 AM PDT

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