BOC Signals Rate Hike in “Near Term”

The Bank of Canada today stated that rising inflation and strong economic growth may require a increase in interest rates - but held the rate at 4.25% as was expected.

The Chart Below shows the continuing drop of the US Dollar vs. the Loonie

US Consumer Confidence

US Consumer Confidence was surprisingly stronger than expected coming in at 108.0 vs 106.3 in April - This despite rising prices for gasoline and continued strains on the housing markets.

British Sterling Staying Stable - Relatively… 

The US Dollar hardly budged vs the Pound on the better than expected confidence numbers. On a Daily Chart the Pound has been slowly giving back it’s gains after penetrating the 2.0000 mark in April, The chart below shows the Cable stuck in a range between the 25 and 28.2 retracement’s.

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As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST -

While the US Dollar has enjoyed a nice rally - Nothing goes in a straight line.

Fundamentally - My guess is that the old adage of the markets hate uncertainty. Well we have a new French President and a new British Prime Minister taking the stage soon. Add in a Japanese carry Trade growing long in the tooth and you have a rising US Dollar. Gold is also falling to support levels.

So is this the end of the US Dollar Rally - or just the Beginning?

The Daily chart below shows how the USD-CHF is approaching the 200 SMA and two Fibonacci retracements that are close enough to be considered a a Fibonacci Cluster. Add the 200 SMA conveniently in between the fibs and we have a formidable resistance point.

Click on the Chart to Enlarge

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST - Click Here to Register

Despite last weeks US Dollar strength - The Loonie is quickly regaining it’s lost ground - trading currently at 1.1055 Bloomberg is reporting that Citigroup has a price target of 1.0400.

Parity in Sight?

With Citigroup making such a bold prediction - we could see US Canadian parity before the end of the summer (If not sooner) as commodities and pressure on the Dollar increases - Despite Treasury Secretary Paulson’s interviews with Maria… But then again if the US has decided that a weak dollar is not coming too easily, then there may be a trading range across the board for the foreseeable future.

The chart below shows the 1.0932 low put in on May 31, 2006 as a double bottom. If that support does not hold - all bets are off.

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST

Currencies on the Move!

After an uninteresting bunch of Interest rate Announcements from the US - England and Euro land - the US Dollar was busy taking out stops left and right against the Euro and the Pound - even the Loonie is suffering! However the Yen May Be The Culprit!

No News Points to Carry Trade Unwinding

Some news services are pointing to a 130 point drop in the US Indexes (At writing The Dow down 130 - SP down 15)  However the Yen is appreciating against the US. EURO, and GBP as the Carry Trade is Seeing Some People Run for the Exits.

Forked Tongue?

US Treasury Secretary Paulson has been granting interviews to the general media the last two days and he has been stating a "strong dollar" is always what the US wants… Funny - I could have sworn he stated that he would let market forces dictate exchange rates and the value of the dollar should go where ever…. I need to do some quote research… Feel free to email me your comments…

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST and Click Here to Register http://www.fxstreet.com/live/sessions/session.aspx?id=0dfccab3-208d-4cba-a8f3-a227c3b44b1a

All Eyes Turn to the FOMC in the US as Ben Bernanke and Team are expected to keep Interest Rates in the US stable. The calls for a Rate Cut in the US keep coming - but it is highly unlikely.

US economic Growth is slowing as Inflation continues to rise - however this is more due to rising energy prices vs. traditional inflation factors of rising wages causing higher prices.

Dollar Strength Tested Ahead of FOMC Announcement

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST and Register for His Live coverage of the FOMC announcement May 9th beginning at 13:30 EST .

Click Here to register: http://www.fxstreet.com/live/sessions/session.aspx?id=729422f8-3aa1-4b7d-85ef-72befedffd0c

Riot Police Deployed as Conservative is Elected

France has elected a new president to replace Jaques Chirac, a staunch conservative that has promised wide economic reform from it’s current policy of being a liberal social welfare state. The Sunday Times reports that the Paris suburbs have thousands of riot police on stand-by. 

Why do currency traders care - If you are asking this question - you should consider another way to put your money at risk. The French suburbs erupted in violence in 2005 and spread throughout France - causing the Euro to tumble. 

Combine this with the fact that Nicolas Sarkozy has repeatedly made comments regarding the Euro being too strong and that its strength versus the US Dollar is "a serious mistake". 

Below is a 60 minute chart of the Euro-USD that shows the currency pair trading in a Fibonacci Box. (Click to Enlarge)

Interesting Week Ahead

Lots of news scheduled on the economic calendars. Most notably is Wednesday when Ben Bernanke and his team make the decision on whether to hold or raise US interest rates. A cut is unlikely with the US economy showing decent strength.

Thursday has interest rate announcements from the Bank of England and the European Central Bank.  The current consensus is that both banks 

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am EST and Register for His Live coverage of the FOMC announcement May 9th beginning at 13:30 EST .

Click Here to register: http://www.fxstreet.com/live/sessions/session.aspx?id=729422f8-3aa1-4b7d-85ef-72befedffd0c

Euro Makes Historic Highs Vs. the Yen

No end in sight as Japans Interest rates are likely to stay low giving no incentive for those carry trades to come to an end. The problem with this is that currencies often move very quickly when they correct - or change course.

When so many people become involved in Carry trades - this creates the "Fire Exit" syndrome. Briefly, this is when everyone will try and escape their Carry trades at once.

All those slow and hard earned gains of patiently watching the hedge and adjusting positions - can be wiped out, fast. 

As Sr. Analyst, and Trader Jerry Furst - Founder of Investors Education Network (IEN),  is also a mentor and trading coach to select clients. Tune in to see his live Webcasts on FX Street.com every Monday at 7am ESt and Register for His Live coverage of the FOMC announcement May 9th beginning at 13:30 EST .

Click Here to register: http://www.fxstreet.com/live/sessions/session.aspx?id=729422f8-3aa1-4b7d-85ef-72befedffd0c