The Bank of Canada’s Monetary Policy Committee has decided to lower its target fo the overnight rate by 50 basis points to 3.5%, the operating band for the overnight rate is now at 3,75%.

According to the Bank’s last monetary policy report, Canadian economy has grown as expected for the four quarters of 2007 with domestic demand performing very good and with commodity prices and high employment supporting income growth.

Canadian exports have weakened in the last month weighed by a strong Canadian Dollar, and a slowing down US economy, while Core and CPI inflation remain consistent with the Bank expectations growing 1.4 and 2.2% respectively in January.

The Bank affirms that US economy is facing a deeper slowdown than initially thought, as it seems having in account the further weakening of the residential housing market, which has already affected other sectors of economy.
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The dollar fell for a sixth day against the yen and traded near a record low versus the euro as traders increased bets that the Federal Reserve will cut interest rates by three-quarters of a percentage point this month.

The dollar also held near its lowest ever against a basket of currencies of major trading partners before an industry report tomorrow that may show companies in the U.S. added the fewest jobs since 2003.

The following technical analysis gives us a detailed lookout on what is expected to happen to NZD/USD

The buying point is at 0.8021; based on a failure swing bottom.

• Fibonacci 61.8% is the take profit at 0.8103
• Second Fibonacci 61.8% is the stop loss at 0.7985

The selling point is at 0.7970; based on a break strong support level.

• Previous support is the take profit at 0.7930
• Fibonacci 38.2% is the stop loss at 0.8022

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line below the zero level. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in an uptrend.

The ROC is very important to understand the demand of the market and as we see on the graph it is in a bullish direction. The Stochastic oscillator crosses %D line below 20% level and continues to go higher.

* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.

Finotec Group Inc.
http://www.finotec.com/

Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.

As the Euro reached to some new levels yesterday, with all the uncertainties surrounding the U.S. economy, and with some comments yesterday from Mr. Buffet the oracle of Omaha that the economy is actually in a recession, let’s take a look on how the European Union is doing…

The U.S. economy is between a rock and a hard place, between a definite recession and a potential stagflation, and that’s clearly why the U.S. currency is falling against all the majors, and that’s why the Euro is now achieving like all new all time highs… but the question is why the Euro??!!

The answer can be very simple or very hard, basically the Euro area was the least to be affected so far by the credit crisis, and the best to handle it before it actually strikes, at the same time the transparent policy that Mr. Trichet and his fellas are practicing is what keeps consumer confidence relatively high, while staying at a hawkish stand at a 4% interest rate without having the eco0nomy falling a part is quiet an achievement, and that is mainly why the European currency is being the super star in the Forex market.

Yet, the hard part relies on the fact that we already started to see some signs of moderating growth in the Euro area, some signs of turn over in the ECB’s stance on monetary policy, and as we are thinking that maybe the worst is behind us in the U.S. economy, maybe the worst is before us in the European economy!!!

I am just trying to display all the facts, but what I think is that the European economy is doing great, and that’s why the currency is having the edge all over the world, and that’s why even with such a high exchange rates for the Euro it’s not harming the economy that bad, because a glamorous economy needs a shining currency so let it be…

Today we have inflation and growth data a head of Thursday’s rate decision and press conference, where inflation measured by the PPI is expected to pick up real nice, while growth levels in the preliminary reading for the 4th quarter is expected to remain as is with no revisions whatsoever, at a 0.4% QoQ, and 2.3 annualized, those readings will build the base to speculate on Thursday’s meeting.

While Dollar watchers are waiting for Mr. Bernanke speech in Florida, maybe they can find a straw to rescue the greenback from drowning… as for the Euro we expect that this wave will continue and new levels will be achieved unless something happened and turned off the hawkish stand that Mr. Trichet is stubbornly holding

Crown Forex

disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

The Reserve Bank of Australia has hiked rates by 25 bps 7.25%, and has issued a statement which is relatively hawkish. This could continue to support the Aussie Dollar in the near term. However, the rate hikes from 2007 has been termed as "Substantial", no hike is seen next month.

The statement is given below.

From RBA Statement

At its meeting today, the Board decided to increase the cash rate by 25 basis points to 7.25 per cent, effective 5 March 2008.

This adjustment was made in order to contain and reduce inflation over the medium term. Inflation was high in 2007, with an annual CPI increase of 3 per cent in the December quarter and underlying measures around 3½ per cent. Domestic demand grew at rates appreciably higher than the growth of the economy’s productive capacity over the year. Labour market conditions remained strong into early 2008 and reports of high capacity usage and shortages of suitable labour persist. Inflation is likely to remain relatively high in the short term, and will probably rise further in year‑ended terms, before moderating next year in response to slower growth in demand.

The Board took account of events abroad and developments in financial markets. The world economy is slowing and it appears likely that global growth will be below trend in 2008. Recent trends in world commodity markets, however, have further strengthened prospects for Australia’s terms of trade.

Sentiment in global financial markets remains fragile. Australian financial intermediaries are experiencing increases in funding costs, which are being passed on to customers. Some tightening in credit standards for more risky borrowers is occurring.

There is tentative evidence that some moderation in household demand is beginning to occur, with business and consumer sentiment softer recently, and household credit demand slowing somewhat. The extent of that moderation is uncertain, however. As the Board noted last month, a significant slowing in demand from its pace of last year is likely to be necessary to reduce inflation over time.

Having weighed both the international and domestic information available, the Board concluded that a further tightening in monetary policy was needed to secure an inflation rate of 2‑3 per cent over time. As a result of this and earlier actions, and rises in borrowing costs which are occurring independently of changes in the cash rate, the overall tightening in financial conditions since the middle of 2007 is substantial. The Board will continue to evaluate prospects for economic activity and inflation in the light of new information.

The statemet has been taken from http://www.rba.gov.au/MediaReleases/2008/mr_08_03.html

Kshitij Consultancy Service
http://www.fxthoughts.com

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These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

The US dollar fell to a new record low against the Euro and 3 year low against the Japanese Yen as confidence in the once mighty greenback continues to subside. Dollar weakness however was not universal with a further decline recorded against the Australian and New Zealand dollars but strength recorded against the British pound and Canadian dollar. Commodity prices continued to hit record highs which explain the strength of the Aussie and Kiwi. However the Canadian dollar failed to join the party as a sharp drop in GDP weighs on the Loonie.

Manufacturing activity for the US held in line with expectations as the ISM Manufacturing index slightly fell from 50.7 to 48.3, and remains well above the typical recessionary level of 41. The minor decline in manufacturing activity was softened as US exports strengthened, and helped to ease recessionary fears for the economy. Following the ISM release, the repercussion of the housing crisis continued to drive home prices lower as the RPX Composite fell to minus 7.24 percent from minus 4.17 percent, with Construction Spending falling for the fourth consecutive time. Construction Spending fell at its fastest pace in 14 as it plunged to minus 1.7 percent from minus 1.3 percent, and will persist to be a growing concern as the housing market has yet to show any signs of a recovery.

The stock markets swayed back and forth as the US economy faced mounting growth pressures, but was able to hold up later in the session. The DJIA lost 7.49 points to stay at 12,258.90 as Boeing and United Technologies Corp posted the biggest fall in prices, while Alcoa and Caterpillar led the advancers. Among broader indices, the S&P500 rose a modest 0.71 points to hold at 1,331.34 points as Diebold and MF Global shares gaining the most, while IFC Capital and Thornburg Mortgage coming out as the forerunners for the losers.

US Treasuries were up as increased volatility in the securities market sent risk adverse investors seeking the safe haven of risk free bonds, and but came under pressure as equity prices accelerated by the afternoon. By the end of the session, the benchmark 10-Year yield climbed to 3.55 percent, while the 2-Year yield jumped to 1.63 percent.

Looking ahead, all eyes will be focused on the rate decisions by the RBA and the BOC, and will bring an eventful day of trading as the RBA is expected to raise key rates while the BOC is looking to cut rates. Following the rate decisions, we will get another look at the ABC Consumer Confidence index which is expected to hold at its 14 year low

DailyFX

Disclaimer

Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

Sentiment measures and chart patterns indicate that the USD is nearing a significant bottom. The commodity currencies look poised to fall the most in a USD recovery.

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EUR/USD

While the specific count eludes us, it is worth noting that the rally from the 2005 low at 1.1640 is now in 15 waves (derivative of a correction). The latest breakout is from a triangle, which is a terminal pattern. Expectations are for a top and reversal in the next few weeks that gives way to a corrective decline that could last over a month or more.

We wrote Friday that “even if wave 4 is still forming, higher prices are a high probability next week as wave 5 is required to complete the entire bull cycle from 1.4438. Objectives lie above 1.5400; there are 261.8% extensions at 1.5429 and 1.5447. We will look for a top and reversal near there.” Our count favors the idea that wave 5 within the 5 wave rally from 1.4438 is underway now. Wave 5 would equal wave 1 at 1.5391, not far from the mentioned objectives of 1.5429 and 1.5447.

USD/JPY

Longer term, we maintain that a 12 year triangle ended at 124.13 in June 2007 and that the USDJPY is headed lower for a test of its 1995 low at 81.12. . There is plenty of room for the USDJPY to fall over the next few weeks and months. In fact, the pair is entering the most bearish part of its pattern since 124.13. As such, we are on the lookout for shorts. There are Fibonacci extensions (161.8) at 97.64 and 98.06.

Near term, the USDJPY is plunging. A drop below 102.62 could complete 5 waves down from 108.22. If this happens, then it is possible that we could get an opportunity to sell into a corrective rally that challenges former congestion in the 103.80/104.40 zone.

GBP/USD

The GBPUSD declined in 5 waves from 2.1160, indicating that a significant top is in place. The 5 wave decline is viewed as either wave 1 in a 5 wave bear cycle or wave A in a 3 wave bear cycle. In other words, longer term bearish potential is great. The rally underway now is either wave 2 or B and is nearing a top. We will look to identify a top in the 2.0033-2.0463 zone.

Cable still has a few hundred pips of upside potential. A triangle has formed since the 1.9970 high and is viewed as wave 4 within the 5 wave advance from 1.9361 (which itself is a C wave). As such, a terminal thrust above 1.9970 probably occurs this week. Resistance begins at 2.0033. Risk on longs can be moved to 1.9807

STRATEGY: Bullish, against 1.9807, target 2.0119

USD/CHF

The drop from 1.1591 is viewed as wave 5 within the 5 wave drop from 1.2569. Within this 5th wave, the USDCHF is currently in wave iii of 5, which should come under at least 1.0239 (where wave iii of 5 would equal wave i of 5). The 161.8% extension would be the next potential support at .9704.

A drop below 1.0307 would complete 5 waves down from 1.1033. This completes wave 3 within the 5 wave bear cycle from 1.1105. A shallow 4th wave correction is then expected. Resistance should be strong near 1.0420.

USD/CAD

The pattern in the USDCAD since the November low at .9055 is either an A-B-C rally that will lead to a new low (under .9055) or a 1-2 (expanded flat) base that will lead to a strong rally to new highs (suggesting that a multi-year USDCAD low is in place). In the case of the latter, the drop from 1.0378 has satisfied minimum expectations by coming under .9755. We will be able to indentify a low from the wave structure on the hourly (once we see 5 waves up).

The rally from .9710 could be counted as an impulse. As such, a bullish bias is warranted against .9710. Potential support begins at .9826. The next leg of the rally will be either wave 3 or C within the cycle from .9055. The rally will probably be strong. The goal for this week is to position for a big move higher.

AUD/USD

The AUDUSD is in its final stages of an A-B-C rally that began in 2001. We will look to identify the top on the short term charts.

It is tempting to attempt a bearish play against .9496 since the decline from there is in 5 waves. However, that decline could be wave C of an expanded flat from .9457 that completed wave 4 within the 5 wave advance from .8512. Under this count, price will exceed .9496, if only slightly, before forming THE top.

NZD/USD

In the daily, it is likely that the NZDUSD has formed a double top in the form of an expanded flat with the July 2007 high at.8108. Expectations are for the NZDUSD to begin accelerating lower in the next few weeks. The objective is below .6639.

The drop from .8214 has yet to complete 5 waves. Until that occurs, we will refrain from taking a bearish stance. If price does drop below .7922 in the next few days, then we’ll look to sell the 3 wave bounce that follows.

[1] STRATEGY is a quick summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughtout the week; these are published at separate articles at DailyFX.

[2] TREND ANALYSIS is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.

[3] SENTIMENT ANALYSIS takes into account COT reports and analysis of news headlines. Studies done by Jamie Saettele (to be published in an upcoming book) indicate that the greatest number of headlines and the most negative headlines about a currency appear at bottoms and that the greatest number of headlines and the most positive headlines about a currency appear at tops.

[4] ELLIOTT WAVE VIEW is our assessment of both the longer term (DAILY BARS) and shorter term (60 MINUTE BARS) EW structure. This is the basis for our STRATEGY.

DailyFX

Disclaimer

Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.