Evening can bring surprises…Rate dynamics and recommendations on USD-CHF and USD-CAD. by OpenForex.com

Evening can bring surprises…Rate dynamics and recommendations on USD-CHF and USD-CAD.

11:06 06/18/2004

Evening can bring surprises…Rate dynamics and recommendations on USD-CHF and USD-CAD. Geo-political factor’s impact is still great. Thus, 35 people were killed and more than 100 people were wounded, as a result of yesterday explosion in Baghdad. The given fact clearly demonstrated dollar rate dependence on events like that. Another event was also had anti-dollar direction: National Bank of Switzerland said interest rate target was raised in the country. Thus, the range of three-month LIBOR rate on Swiss frank rose from 0.00%-0.75% to 0.00%-1.00%. The given decision was a surprise for the market (National Bank of Switzerland did not make such decision since the year 2000) and it crushed USD-CHF rate almost two patterns down. Such decision was more of an unexpected one, as prior to that Swiss official expressed concerns about excessive rise of national currency. On the background of those events, positive series of economic data on U.S. was continued. Thus, Philadelphia Fed index made up 28.9 in the U.S. in June, whereas forecasted 26.0 and previous value of the given index equaled 23.8. Leading indicators index made up +0.5% in the U.S. in May, whereas forecasted +0.4% and its previous value equaled +0.1%. Jobless claims in the U.S. in the week ended June 12 came out lower than forecasted and made up 336 000, whereas forecasted 330 000, previous value equaled 351 000. Today, attention of market participants will be fixed on the release of the U.S. balance of payments in the first quarter of this year. Data release is scheduled for 12:30 GMT. Balance of payments for the first quarter is forecasted to be –140.5 billion dollars, the previous value equaled –127.5 billion dollars. Taking into account Friday evening, when American session players rule the market, we do not exclude slight correction of major currencies against the dollar. Thus, fall of support at 1.2500 on USD/CHF will be the first strong signal of correction. Pushing 1.2495 and 1.2470 levels down gradually might result in the situation, when there will appear numerous intraday rate speculators among the sellers. The rate will find the first resistance only at 1.2350 key support. The situation is similar with USD/CAD rate. The prices had drawn classical triangle, which might be a reliable pattern of continuation. However, there is a series of moments that make us doubt it. First of all, the price had entered a “beak” of triangle. Secondly, we think that USD/CAD had not shown “good” correction on the way to overcoming such significant levels, as 1.3780-1.3800. Let us remind that we presupposed rate correction that would have enabled further long-term purchases as deep as 1,3550. Thirdly, tonight is the best opportunity to cut numerous speculative “longs”. There is a probability that big players won’t waste such chance. Fourthly, so far, charts lack “break” figures (“thorns”, “bear” and “bull” traps of various kinds). That means that the moment has not yet come. Recommendations: we recommend doing the following today: close out major part of long positions on dollar and wait for safe confirming trend signals, for example, for “sowing” the both ends of triangle, or for fake “bull” discharge with further rapid decline of the rate, or for similar “bear” discharge. Make trade decision only after the mentioned above signals are received. Let us remind that selling USD-CHF from 1.25 can quickly bring the pair to the key level of support at 1.2350. Decline of USD/CAD rate under 1.3660 is likely to take the pair to 1.3550-60. Recommendations: we recommend doing the following today: close out major part of long positions on dollar and wait for safe confirming trend signals, for example, for “sowing” the both ends of triangle, or for fake “bull” discharge with further rapid decline of the rate, or for similar “bear” discharge. Make trade decision only after the mentioned above signals are received. Let us remind that selling USD-CHF from 1.25 can quickly bring the pair to the key level of support at 1.2350. Decline of USD/CAD rate under 1.3660 is likely to take the pair to 1.3550-60.

The forecast was created by trans1.