EUR/CAD: Profit Taken At 1.5200, Sell Again At 1.5480
- Investors warmed to the Canadian currency after oil prices surged after Iran voiced support for a Russia-Saudi-led move to freeze production. Although Iran gave no commitment it would curb its own output to deal with a market glut, signs of cooperation between rival producers helped to boost battered oil prices. There are reports of a meeting between Iran, Iraq and Venezuela taking place with the hopes that they too will stabilize the production of oil.
- The rebound in oil prices coupled with strong US industrial production data helped markets recover from recent jitters. European and US stocks ended higher, while most emerging market currencies also firmed. Canada's main stock index jumped to its highest since early January.
- Canadian Finance Minister Bill Morneau on Tuesday effectively conceded the government could not balance the budget as quickly as promised, saying the return to surplus would be achieved over the long term. The Liberals won power last October on a pledge to run three consecutive budget deficits of no more than CAD 10 billion a year to help fund spending on infrastructure before balancing the books in 2019/20.
- We took profit on our EUR/CAD short (1.5705-1.5200) today and placed a sell order again, at 1.5480. Our USD/CAD positions are in good shape now.
AUD/USD Recovered From Weak Jobs Data
- Thursday's data from the Australian Bureau of Statistics showed a net 7.9k jobs were lost in January, when the market had looked for a rise of around 15k. This came on top of a fall of nearly 1k jobs in December. All the decline last month came in full-time employment, which fell 40.6k. The jobless rate ticked up to 6%, when analysts had expected a steady outcome of 5.8%.
- The Reserve Bank of Australia has cited the past strength of employment as a major reason for not cutting interest rates even as the global outlook was clouded by a slowdown in China and turmoil in financial markets. Currently, futures imply around a 50-50 probability of an easing in the 2% RBA cash rate by May. We do not expect a rate cut.
- The AUD/USD dropped to 0.7135 after Australian jobs data but it quickly recovered, because a jump in oil prices underpinned the commodity currency block. We raised our AUD/USD bid to 0.7120. The nearest resistance level is the session high at 0.7187. A break above this level will open the way to 0.7242 (high on February 4) and 0.7300.
Source: Growth Aces - Forex And Precious Metals Trading Strategies