Tag : Crude Oil

Mulder FX Trade Tip: USD/CAD

Posted by Byung Koo at 12:40 pm

Canadian Dollar rallied last year from 1.30 USD/CAD to 0.9950 today. Recovery in oil price, gold prices and other metal prices gives Canadian Economy a major boost. Canada benefited form the Winter Olympic as well.  The question is; is it only good news at the horizon and could the CAD rally even further against the other major currencies?

We believe the rally will hold for at least the coming weeks and CAD will weaken against the U.S. dollar over the next three months. Looking at a long term chart (last 5 years). The rally will be stop around 0.98 and our target within three months, will be 1.07 around mid July!

Reasons:
The correction on the stock markets will be beneficial for the U.S Dollar against the Canadian Dollar.
Correction in Oil prices and other Metal prices (maybe except Gold) during the Summer. We predict an oil prices at 70-75 USD for next upcoming months.
Predictions of rate hikes by the Bank of Canada are unseemly.

Right now we already have a small position and are waiting to increase it when the CAD will rally to 0.98.

Trade wise and control your own money management before trading!

Forex Trading: AUD/USD

Posted by Byung Koo at 12:53 pm

In 2009 the Australian dollar appreciated a lot against the U.S. dollar but in my believe target for AUD/USD for 2010 will be 0,77. End of 2009 RBA raised the interest rate three times, on 7 October, 4 November and 2 December. The Reserve Bank’s objective of achieving an inflation rate of 2–3%, in latest report inflation was 1,3%. In latest Minutes of RBA you could hear, we won’t raise interest rates further in short term. The possibilities of rate hike by FED in 2010 increased a lot in late December, USD is in favor against the Australian dollar. Together with a drop in crude oil price in 2010(demand not so high as predicted) to 60 USD. The Australian dollar would drop sharply in 2010. In graphics you see a perfect triangle.

Forex Alert
Mulder Currency Fund will take a short position at 0,91. We could see this in the first weeks of January(see graphics).

Risk Aversion Leads Equities Lower, USD Higher

Posted by Mulder Venture at 2:37 am

A new week begins and risk aversion is the dominant driver of FX markets. The broad USD move lower began showing signs of fatigue last week, and after some disappointing US data (durable goods orders, existing/new home sales figures); the markets have reined back their longs in commodities and risky assets.

Gold is having to re-familiarize itself with three-digit prices (trading at $988 vs. highs last week around $1020), and crude oil is down over 8% from this time last week after US inventory numbers last week revealed a glut of crude and gasoline supplies. The euphoria of global recovery always felt slightly overdone and now it seems markets have snapped back to reality somewhat. P/E ratios for the S&P show equities are still expensive; trading around 19 times profit, much higher than historical averages (16.3 over the last hundred years); despite our belief the longer term trend is for appetite to return and the USD to continue lower, for now we respect this correction in the market and will look to the broader indicators of market risk sentiment (Shanghai Composite, Baltic Dry Index) to direct our FX trades.

The G20 did not precipitate any firm policy initiatives; discussion of banker pay featured on the agenda, but this topic always feels like a populist distraction from the more important issues. The communiqué reiterated commitment to continue stimulus measures which should appease any fears of premature exit strategies; it also seems the G20 are leaving themselves flexible to allow for differential withdrawal of stimulus across countries in the coming months.

There’s very little on the data calendar today, but if the previous week has taught us anything it’s to watch out for policy-maker rhetoric. After Mervyn King’s devastating effect on GBP last week and ensuing criticism from traders, the Bank of England responded over the weekend that they were not trying to deliberately talk down the currency, though this provided little  boost to GBP after the fact. Japan’s new Finance Minister Fujii is also learning the pitfalls of easily-misconstrued comments after being quoted overnight that “it would be a mistake to use FX policy to defend industry” and “recent USD/JPY moves not abnormal”. USDJPY dropped on the news, taking out stops through 89.00 before Fujii returned to say that his comments were misinterpreted and were not intended to reflect government support for a strong JPY. USDJPY pared back gains to 89.60 levels, and one can’t help but think the new Fin. Min’s credibility may also have lost some ground in the process.