Sorry for the delay in this post. This was originally written on Monday02/04/08.
Comments:
This week we have the RBA, ECB, and BOE all meeting to determine interest rates in their respective countries or regions. We see the RBA raising rates, the ECB holding rates steady, and the BOE cutting rates. So as mixed a bag as you can get. This should cause even more volatility than we have already seen. The fact that each region is going in different directions should lead to many of the correlations traders have relied on in the past to begin to break down. This week we expect to see the dollar move sideways to slightly lower.
Eur:
The Euro did test 1.49 as we expected and again failed to hold those levels. We see the Euro continuing to be range bound in the weeks ahead. It is a wide range between 1.4955 and 1.4362 but very tradable. Be careful in the ladder half of the week as we go through the ECB rate decision. Sell rallies above 1.48 with stops above the highs and buy dips below 1.45 with stops below the lows.
GBP:
The cable pushed a bit above 1.99 but failed to reach 2.00 and then did end the week breaking down below 1.97 as we forecasted last week. We covered our shorts on Friday and are now looking to buy dips in the early half of the week with stops below Friday’s low and targeting a move above 1.98 by mid week. Here too we must advise caution in the ladder half of the week due to the BOE rate decision.
CHF:
The chef did stop many of our longs out late last week but we got back in above 108 and remain long. We are now looking to target a move to 1.10 by the end of the week.
JPY:
We are long this pair from last week’s entry recommendation with stops now working at breakeven. We continue to target a longer term rally in this pair taking us to 110. This week we are only targeting a move above 107.50.
AUS:
The Ausi has now broken out of it range and could begin a run back toward the highs near .9400. This is an anticipatory rally so if the RBA fails to deliver a rate hike this evening this pair will fall back into its range.
Cad:
We continue to be sellers of rallies over parity targeting a move below .9800.
