THE sovereign debt woes that were strangling the euro last week may have been diminished after the successful bond issues, and further upside has been delivered from agreement amongst finance ministers to increase the size of the bailout fund. However both the psychological level of $1.3500 and the fact that further draws on the stability fund look inevitable could start to constrain the rally. IG Index quotes euro-dollar at $1.3395-$1.3397.
Play dollar-yen from the short side because it looks likely that the consistent selling interest in euro-yen from Japanese exporters and investors will put pressure onto it. On the topside, market offers are at ¥83.40-60 and the three weeks high is at ¥83.70. On the downside, bids remain at ¥82.50 but stop losses are placed below ¥82.30 which is the Ichimoku cloud bottom. For a short term view play dollar-yen from a short perspective and sell on any rallies towards ¥83.00 with the stop loss above ¥83.50, initial target at ¥82.30 with stops below to exaggerate the down move to ¥81.70-80. ETX Capital quotes a fixed 2 basis point dollar-yen spread.
Excitement has been surrounding the Canadian dollar as investors await the Bank of Canada’s interest rate announcement. It is expected to remain at the 1 per cent level as the Canadian government wishes to tighten. The loonie has risen against 12 of the 16 most traded currency counterparts, and hit levels against the dollar not seen since 2008. On the technical side, the relative strength indicator is around the 30 mark, which is quite bearish. Capital Spreads is quoting $0.9840-$0.9844.
Last week’s tipster call that sterling-Aussie would reach $1.60 was achieved on Friday as the pair surged to highs around Au$1.6075. It seems to have found some technical resistance there, which has held it in check since then. But the momentum still seems strong and could well see it push through and shoot to Au$1.6220 before long. Spread Co offers a spread on sterling-Australian dollar of $1.6020 – $1.6032.