Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (18218)	5/29/2016 6:01:59 AM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Room for $CAD to weaken further -- am inclined to stay short ------CANADA FX DEBT-C$ weakens as oil dips, Yellen bolsters U.S. rate hike bets * Canadian dollar ended at C$1.3038, or 76.70 U.S. cents * Bond prices lower across the maturity curve By Fergal Smith TORONTO, May 27 The Canadian dollar weakened against its broadly firmer U.S. counterpart on Friday as oil prices fell and after a speech by Federal Reserve Chair Janet Yellen bolstered the case for a The U.S. dollar strengthened against a basket of major currencies after Yellen said the Federal Reserve should raise interest rates "in the coming months" if the economy picks up as expected and jobs continue to be generated. The loonie was caught up in a "broad wave of U.S. dollar buying," said Adam Button, currency analyst at ForexLive. It may weaken further if there is follow-through buying of U.S. dollars when investors return after a long weekend in the United States, he added. Oil fell for a second day in a row as some investors took profit on a surge to seven-month highs. U.S. crude oil futures settled 15 cents lower at $49.33 a barrel. Speculators only modestly reduced bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed. Net long Canadian dollar positions fell to 20,047 contracts in the week ended May 24 from 22,706 contracts in the prior week. The market has remained "stubbornly long" the Canadian dollar in the face of recent wildfires in Alberta and hawkish comments from Fed officials, said Button. The Canadian dollar ended at C$1.3038 to the greenback, or 76.70 U.S. cents, weaker than Thursday's close of C$1.2970, or 77.10 U.S. cents. The currency's strongest level of the session was C$1.2970, while its weakest was C$1.3068. On Thursday, the loonie posted a one-week high at C$1.2912 as oil briefly moved above $50 a barrel and after the Bank of Canada was less dovish this week than some investors expected, signaling the impact on the economy of the Alberta wildfires will be transitory. Canadian dollar-implied volatility, which traders use to price options on the currency, has tumbled since the interest rate decision and ahead of a U.S. holiday on Monday. For 3-month options, implied volatility was at 9.415 percent on Friday, near its lowest since January. Canadian government bond prices were lower across the maturity curve, with the two-year price down 6 Canadian cents to yield 0.649 percent and the benchmark 10-year falling 26 Canadian cents to yield 1.358 percent. The Canada-U.S. two-year bond spread was 1.2 basis points more negative at -26.2 basis points as U.S. Treasuries underperformed. reuters.com ---------- late month 60 minute CAD chart JP --------------------------- The US dollar pulled back to almost CAD1.29, which is a 38.2% correction to greenback's rally from the key reversal low on May 3. We suspect that is sufficient from which to continue the US dollar recovery. We note that the US dollar rarely moved above its 20-day moving average as it fell from the end of January through early May. The 20-day moving average is now acting as support for the greenback on the way up. A move above CAD1.3080 would raise our conviction of re-test, and likely penetration of the CAD1.3190 high see on May 24. Our near-term target is a little above CAD1.33. The Australian dollar's decline does not appear finished either. It spent the past week nesting. Participants seem more eager to sell upticks than buy dips. A break of $0.7140-$0.7160 would signal a resumption of the down move. Initially, we look for $0.7065, but a move below $0.7000 seems to be a matter of time. The firmer US dollar has not derailed the recovery in oil prices. The July contract flirted with the $50 barrel level but the market could not sustain the initial thrust. The pullback was shallow. Supply disruptions (and the drawdown in US inventories) appear to be the fundamental catalyst. OPEC is unlikely to reach an output freeze agreement. The RSI and MACDs suggest the market is stretched, but have yet to turn down. We will be on the lookout for a reversal pattern after the strong run-up. seekingalpha.com