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•RBNZ Rate Decision – March 10, 20:00 GMT
The RBNZ is expected to keep rates on hold at 2.50% and if policy makers re-commit to leaving monetary policy unchanged until the middle of the year we could see a bearish reaction from the “kiwi”. The RBA, New Zealand’s antipode counterpart, raised their target rate for a fourth time last week. Earlier hikes have raised the outlook for RBNZ tightening, but we have seen Overnight index swaps go from pricing in 191 bps of hikes to 140 bps since the beginning of February. Therefore, a dovish statement from New Zealand policy makers may not generate a substantial reaction but does hold the potential to weigh on “kiwi” sentiment.
•Australian Employment Change (FEB) – March 11, 00:30 GMT
Forecasts are for the Australian economy to have added jobs in February, for a sixth straight month. The 15,000 that is expected would be the smallest gain over the period which could be a sign that the central bank’s tightening is beginning to curb growth. Following the RBA rate hike last week there may be limited upside potential for the Aussie following a positive employment report as tightening is a clear sign that the economy is experiencing significant growth. However, a downside surprise or job loss could weigh on the antipode currency as it would dim the outlook for interest rates.
•SNB Rate Decision – March 11, 14:00 GMT
Preceding employment, inflation and retail sales reports may take away from the potential impact of the SNB rate decision. Nevertheless, it will be important to see the comments from policy makers as the Swiss National Bank is suspected to have been intervening in currency markets to limit the Franc’s appreciation. There is virtually no chance that the central bank will raise rates and may look to temper any expectations for future tightening. Deflation remains a concern and with consumer prices expected to remain at 1.0% on an annualized basis, any dip in growth would increase downside risks for inflation. The Swiss Franc has yet to regain its safe-haven status which has seen it maintain a positive correlation with risk appetite, limiting the impact of yield expectations on volatility.
•Canada Net Change In Employment (FEB) – March 12, 12:00 GMT
The Canadian economy saw a string of positive fundamentals end with the unexpected 4.9% decline in building permits which was followed by a miss in the Ivey PMI. A weaker than expected employment report could start to raise concerns that growth is waning as weak U.S. demand catches up with the export driven economy. Emerging markets have been the main consumers of Canadian exports which may not be sustainable as inflation concerns have led to countries like China to take steps to slow activity. However, evidence of sustainable job growth will raise the outlook domestic demand which could help offset weakness from abroad. Downside risks may be greater following the recent rally which makes the release significant, especially if risk appetite has started to fade.
•U.S. Advance Retail Sales (FEB) – March 12, 13:30 GMT
Consumption figures from the world’s largest economy have the potential to be the greatest event risk on the week. Judging by the reaction to a small surprise in the employment figures, an improvement in domestic demand could generate its own bout of risk appetite. However, early forecasts are for a 0.2% decline as severe weather which shutdown large parts of the country. is expected to have weighed on demand. State specific cash for appliances programs could have created some artificial demand. Additionally, cash strapped Americans were filing their tax returns as soon as possible which had several receiving their rebates at the end of the month. A dip in retail sales will fuel speculation that absent government stimulus growth will stagnate which may generate broader risk aversion.
Read more: DailyFX - Weak U.S. Retail Sales Could Overshadow Improving Labor Markets http://www.dailyfx.com/forex/fundame...#ixzz0hb2xLf9w
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Fundamental:
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DislikedUSD/CAD is at a critical level. This mornings SSI reading came out at 4.67. That means there are 4.67 positions long the USD/CAD for every position short. SSI is used as a contrarian indicator, meaning it believes the majority of traders will be wrong. This occurs frequently during trending markets because retail traders like to pick tops and bottoms, trying to catch reversals and trade a range.Ignored
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eurusd rolling over from channel res.
Trading the FOMC rate decision is certainly not as clear cut as some of our previous trades but nevertheless, comments from the central bank could set the stage for a long U.S. dollar trade as the MPC prepares to unwind its emergency measures this year. Therefore, if the Fed holds an improved outlook for the economy and sees scope to normalize policy in the second-half of 2010, we will need to see a red, five-minute candle following the release to generate a sell entry on two-lots of EUR/USD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance taking volatility into account, and this risk will establish our first mark. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade reaches its target in order to preserve our profits.
On the other hand, the ongoing weakness in the private sector paired with tightening credit conditions may lead the Fed to maintain its current policy stance going into the second-half of the year, and dovish remarks following the rate decision are likely to weigh on the exchange rate as investors scale back expectations for a rate hike this year. As a result, if we see the FOMC hold a cautious outlook for the region and reiterate borrowing costs will stay low for an “extended” period of time ,we will favor a bearish outlook for the greenback, and will utilize the same strategy for a long euro-dollar trade as the short position laid out above, just in reverse.
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USDCAD – Continued USDCAD declines have left the pair’s SSI ratio in strongly net-long territory, but it is interesting to note that said ratio has not hit further extremes as the pair drops to fresh lows. The ratio of long to short positions in the USDCAD stands at 2.95 as nearly 75% of traders are long. Yesterday, the ratio was at 3.48 as 78% of open positions were long. In detail, long positions are 2.5% lower than yesterday and 2.4% weaker since last week. Short positions are 14.9% higher than yesterday and 49.3% stronger since last week. The small drop in long interest and the relatively sharp climb in short positions leave us on the lookout for trend reversals as crowds begin to join the trend.
Read more: Forex Sentiment | Forex Technical Analysis http://www.dailyfx.com/technical_ana...#ixzz0iYMc50rI
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Sometimes when you take a step back, you can see things more clearly.
This chart of the US Dollar Index is a good example of what I mean.
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