Cliff Off vs. Risk On And An Interesting CAD Set-Up

Overnight the big news (really wasn't that big we all expected it) was that the RBA cut interest rates by 0.25% to a historical low of 3%. Interestingly the Aussie rallied on this, obviously there were a fair few investors expecting a bigger cut. We highlight a reason yesterday to be Bullish Neutral.

There wasn't a lot of news today, which meant the markets remained pretty quite, just the usual price action rallying in the Euro. Bit of a rumour first thing, also repeated later on that Germany could lose its triple A rating this week, could be quite a market moving event if it does, that said we didn't really see much backing up this rumour.

Obama also made some comments on the fiscal cliff and after meeting Wall Street Execs Tuesday, he reiterated the stance of being able to get a deal done in time.

There is a real need to be careful here with the previous risk on / risk off sentiment of this year. With the news on the fiscal cliff dominating the US what could be perceived as risk on is more likely to be USD weakness on the cliff. Tread careful the themes of this year become challenged when there is perceived USD weakness people look to other safe heavens (granted there aren't many)

EUR/USD
Euro managed to maintain its almost unbelievable streak and seemingly defy gravity and push higher yet again. Reality is that this is probably more US dollar weakness than a strong Euro performance but interesting nonetheless. WE are now getting close to some extremely key levels towards the 1.32 mark. We maintain our current outlook but if we break these highs then out view will be negated.
EUR/USD Daily" title="$EURUSD (Daily) 07_08_2012 - 04_12_2012" width="500" height="431">
Just to demonstrate how key this level is here is the weekly chart for 2011 and 2012
EUR/USD Weekly" title="$EURUSD (Weekly) Week 52_2010 - Week 49_2012" width="500" height="449">
GBP/USD
Cable had a bit of a neutral day today, morning bounce was negated in the afternoon. We maintain our outlook on the pound. We have put in a small pin entry looking for shorts, it isn't really an obvious signal though and I would prefer to see this off a strong resistance level.GBP/USD Daily" title="$GBPUSD (Daily) 15_08_2012 - 05_12_2012" width="500" height="431">
AUD/USD
Given our analysis yesterday, I am standing aside on this pair for the time being. However having highlight the risk of further Bullish action on this pair it was nice to see it shoot up today.
AUD/USD Daily" title="$AUDUSD (Daily) 29_08_2012 - 05_12_2012" width="500" height="431">
USD/JPY
We maintain the view we are extended here on the Yen, and so it was nice to see this pair starting to play out to our ideal strategy. We will look for long signals on a test of a support level.
USD/JPY Daily" title="$USDJPY (Daily) 03_09_2012 - 05_12_2012" width="500" height="431">
GBP/JPY
Pair moved lower today but still has interim support. We need to break this initial support if there is any chance of this pair pushing lower to test proper support around the 129.50 mark. We maintain our position and outlook.
GBP/JPY Daily" title="$GBPJPY (Daily) 06_08_2012 - 05_12_2012" width="500" height="431">
EUR/SEK
Nice thing sometimes about trading some of the more exotic pairs (yen isn't that exotic but similar) is that if you account shows pips in profit they rack up bigger numbers quickly, always makes me smile. Anyway pair moved lower today, really looking for a sustained shift lower though and intend to try and hold this one for a bit; suggest sticking to your plan but could be an interesting ride...
EUR/SEK Daily" title="$EURSEK (Daily) 07_08_2012 - 05_12_2012" width="500" height="431">
EUR/CAD
Bank of Canada kept rates on hold today causing an interesting set-up on the Euro at a key resistance level.Support comes in by the 1.2890 level offering reasonable risk reward especially with a potential for a much larger move lower if the Bearish outlook on the weekly chart holds. Stochastic's in the 80s and RSI at that magic 70 level and this is probably a better set-up to consider, only concern on this trade is the gravity defying Euro...would like to think a nice German downgrade might solve that.
EUR/CAD Daily" title="$EURCAD (Daily) 17_08_2012 - 05_12_2012" width="500" height="431">