EurAnalysis

http://finviz.com/fx_image.ashx?rela...16579033236250

US Dollar vs Canadian Dollar: The USD/CAD dropped 20 points to 0.9895 as Traders tentatively add risk to their portfolios. The main focus of the week will be the Jackson Hole announcement on Friday. The pairing should be contained between 0.9885 and 0.9940 barring any unforeseen data releases.

We expect a range today of 0.9880 to 0.9940

Canadian Dollar vs Euro: The Euro has been on a roller coaster ride over the last five trading days appreciating 300 points only to drop back 75 points. The Euro has been buoyed by several meetings taking place between EU leaders. The result of these meetings has yet to be seen and once the information is released to the market there will be considerable action in the EUR/CAD.

We expect a range today of 1.2350 to 1.2450

Canadian Dollar vs British Pound, Australian Dollar and New Zealand Dollar: A quiet session to kick the week off this week as the UK is off on a bank holiday. The GBP/CAD drifted slightly lower from Friday’s drop. The UK will have a light week of domestic data with no major data coming out. Global growth concerns continue to pressure the AUD. AUD/CAD continues to trade lower, testing support at 1.0280. A break below this would open the door to test 1.0185. NZD/CAD drifted slightly lower after Friday’s drop. Near term support for the pair comes in at 0.7960.

Data Releases
CAD: No data today
AUD: HIA New Home Sales
EUR: German IFO Business Climate
GBP: No data today
JPY: Small Business Confidence
NZD: No data today
USD: Fed Minor Speakers

An Update From My Earlier Post on NARE and Money Flow...

As we near 7:00 AM EST and the NAIR factor takes place I start my morning report.

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NAIR is the name given with pretty pictures. The original name is North America Retail Effect (NARE) or in Europe it is called Europe Retail Effect. (ERE)

I will explain it for all to understand now.

I will only address the NARE this morning. At about 7:00 AM the retail traders awake and join the retail traders from Europe and elsewhere.

They look at EUR/USD having reaching a low of 1.2489 near 3:00 AM EST at the start of the open for the European Equity Markets.

They started to move it up again past 1.2500 and by 4:00 AM EST it had reached near 1.2515 and as we neared 4:15 AM it reached the high of 1.2539 and it stayed around there in a range of 1.2535 to 1.2510 as we approached 6:00 AM EST.

By 7:00 AM now everyone online is seeing the same thing in the charts. The collective BIAS is being given by the RETAIL TRADERS so opinions form and then CNBC joins the fray and the morning newspapers and on it goes until the first hard data in the USA at 8:30 AM.

By the way this effect happens each and everyday that the forex market is open.

I use this knowledge to NOT ASSUME EUR/USD will go down or even continue up. I am just aware of it looking for a place to short the SUCKER since my short term call for this week is for EUR/USD to head down.

I can change that view in minutes if new factors come into play of a fundamental nature.

Once we reach 8:30 AM NEW INFORMATION comes out. By 9:00 AM EST we have the Dow Futures showing the way and then the North American Equity Markets open and MONEY FLOW kicks in heading to the Daily Option Expiry at 10:00 AM and also NEW DATA on some days at 10:00 AM. We then head to the Europe close at 11:30 AM EST and the MONEY FLOW is only determined by North American markets.

I will stop the explanation for now in case there are any questions on what I have already posted.

Have a good trading day.

Last edited Aug 27, 2012 7:10am (2 hr 46 min ago).

CurrencyMan:

My update is as follows; Please look at a 5 Minute Chart from 4:00 AM and you will see a Double Top at 4:00 AM and 9:00 AM

The Two Highs were there this morning. This pattern usually repeats most days. Are we paying attention ?

Now as we have Risk Off as the Dow is down 33 you can see EUR/USD move from 1.3535 near 9:00 AM EST to 1.2512 at the moment.

Keep riding those waves...

Flight to perceived safety plus USD has not moved. The bulk of U/CAD moves are based on the USD fluctuations. Cad itself moves on oil pricing and Canadian economic data.

Anyway, it has clearly formed a nice bottom. Now waiting for the right wave

http://www.surf-forecast.com/system/...jpg?1287542807

Have seen this lazy wave more than I can remember.

http://img.diytrade.com/cdimg/149787..._Wave_pool.jpg

Risk-off but USD is going somewhere else.

http://www.actionforex.com/action-in...0120827172988/

Snippet:

Latest CFTF data showed that net Euro shorts once again dropped to 123.9 contracts on August 21. That's the lowest amount of net Euro shorts since May and compares to the lowest point of 214k net shrots in June. Sterling net long also rose slightly to 7.8k contracts. Japanese yen net longs dropped sharply to 11.2k. Net Aussie long continued to jump for another week to 86.9k contracts, comparing to 66.7k net long on August 14. That's also firstly, the highest point this year and a drastic comparison to 51k net shorts back in June. Canadian dollar net longs nearly doubeled to 50.9k contracts, up from 28.59k in prior weak.

Investors are clearly cautious ahead of the highly anticipated Jackson Hole symposium this week. Fed chairman Bernanke's comment that "there is scope for further action by the Fed to ease financial conditions" raised the expectation that he's give concrete message of QE3 during the event. But investors hesitate to jump in at this stage. Nonetheless, we'd like to point out that the price actions in EUR/USD, GBP/USD, USD/CHF and USD/JPY are corrective looking so far. And thus, more downside is still generally favored in the greenback ahead.

There are also expectations that ECB would kick start the bond buying program in September to cap yields within a certain band. But that's not likely to happen at the ECB meeting on September 6, but rather, after German Constitutional Court's ruling on ESM. Bundesbank chief Weidmann continued to voice his opposition to bond buying as he said urged not to "the risk that central-bank financing can be addictive like a drug." And he criticized that "such policy is too close to state financing via the money press". As he emphasized that ECB shouldn't "guarantee that states remain in the euro area at all costs."

After meeting with Greek prime minister Samaras, French president Hollande urged Greece to "demonstrate again the credibility of its programme and the will of its leaders to go through with it to the end, whilst ensuring it's bearable for the population". Hollande will need to receive the troika report at EU summit in October before a decision. And "once the commitments ... are confirmed, Europe has to do what it has to do". German chancellor Merkel shared the same position as she stated last week that she has to wait after the troika's report before making decisions on whether to give Greece more time on its austerity measures. She wanted evidence to show that the debt-ridden country is committed to reduce its deficits.

In UK, BoE chief economist Dale wrote an article to defend QE from criticisms that it hurts savers. Dale said that "the "suggestion by some commentators that savers and pensioners would be better off if interest rates had not been cut by so much is misconceived." He cited two reasons. Firstly, the economy would be "in a far worse state without quantitative easing (QE) and a Bank rate at 0.5pc." Secondly, "by lowering long-term interest rates and stimulating the economy, QE has helped to prevent asset prices falling by as much as they would otherwise have done". And that "helped to protect the value of savings and wealth invested in financial assets".
EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2472; (P) 1.2520 (R1) 1.2559; More.....
Intraday bias in EUR/USD remains neutral for some consolidations below 1.2589 temporary top. At this point, EUR/USD is staying comfortably above a near term trend line support and thus, rise from 1.2042 is still expected to continue. Above 1.2589 will target 1.2747 (50% retracement of 1.3486 to 1.2042 at 1.2764). Though, break of the trend line support (now at 1.2348) will indicate that such rebound is completed and will turn bias back to the downside for 1.2255 support for confirmation.
In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high). Bullish convergence condition in daily MACD raises the possibility of reversal. But we'd prefer to see sustained break of 1.2747/2764 resistance zone to give us more confidence. In such case, stronger rise should be seen to 1.3486 resistance for confirmation. But before that, another decline could still be seen to 1.1875 and below.

http://www.actionforex.com/images/st...20120827b1.gif

http://finviz.com/fx_image.ashx?rela...16609791673750


We also need to look at the US Bond Yields on the 2 Year US Bonds now at .26% and the Yield on the 10 Year US Bonds which is now 1.65% with the spread 139 Basis Points to see if the Money is FLOWING into the US Bonds or elsewhere.

Please post any follow up question that you or others may have. Thank you...

ya i just saw that cnbc report after writing the post...
thanks PT and Nathan

Wait, I Thought Hurricanes In The Gulf Were Good For Oil Prices…

Seems like Obama now has political cover to pump the SPR dry between now and November.

Typically, hurricanes prompt shut-downs of offshore oil rigs, crimping supplies temporarily.

The Strategic Petroleum Reserve is designed to add supplies to the market under such conditions. There was already tlk of SPR releases to influence prices before the election, so now that the storm is brewing, seems only a matter of time before the taps are opened.

Oil falling like a rock, down $3 to $94.44.

This is a CAD/JPY negative. CAD is closely correlated to the oil price, while Japan’s oil bill just fell significantly…

It may even have been a triple whammie because I also heard that there is going to be an SPR (Strategic Petroleum Reserve) release to make sure supply does not take a hit because of Isaac.

Yea I know. If it goes into Bonds should see USD gains.

Not if it goes into EuroZone bonds

Yeah I noticed that after I posted

Silver is the best performer and Oil the worst. We are still in low liquidity markets and also not much news today. These things can change day to day. Europe goes home over the next hour and then all we have to look at is hurricanes and the open of the Republican Convention and more HOT AIR whether from Romney or Obama Or Draghi or Merkel. Have I left anyone out ?

Yep.. Paul Ryan

Sums it up for today

I was bored. Now I'm bored and dizzy