The Canadian Dollar has been the weakest one of the commodity currencies for some time. It also lost ground against the USD, which rallied to above 0.9800 for the first time since late March. With this in a background, today’s interest rate decision by the Bank of Canada was highly anticipated. While the market participants did not expect a hike, yet, everybody wanted to hear what the central bank is going to say about possible future actions, especially since economic indicators from Canada have been mixed and hard to interpret.
Turned out that the forecast was correct – the BoC left interest rates unchanged at 1%. However, the Governor Mark Carney said that the economic recovery was proceeding as expected, and promised a raise “eventually”. That is a very vague term, revealing, well, nothing, but markets took it to heart and the Canadian Dollar rallied. Now we need to see a continuation tomorrow, otherwise today’s action is only a correction within earlier weakness.
After the holiday lull, I expected increased activity on Tuesday choosing the USD-CHF to trade. I placed a straddle, with each trade seeking 40 pips. The pace picked up as soon as new day started and the USD-CHF sold off. Unfortunately, not as much as expected, the move stalled about 15 pips short of objective. I closed at for 13 pips profit.
Looking back, I should have cancelled the buy order, but left active. It was hit a later in the day. This part of the straddle also did not work out, I settled for a few pips loss. The way things look now, the USD-CHF may be forming a bottom on the hourly chart, so I could have left the buy trade on. However, this straddle was strictly a one day play, while the potential long now would be under different principles, not included in the original plan.
Couple of thoughts here. These trades in USD-CHF after holidays have been producing good results for years, so I will try it again after the 4th of July. There is a risk that the USD-CHF behaves differently now, at record lows, not quite the way it used to. Will find out in about a month:).
While waitingfor that, I am going to try a long in the EUR-JPY, using hourly chart. There are couple of possibilities, depends which way the price moves first, a breakout or a pull back. Either way, the objective is 100 pips. I will not post an update tomorrow, but you can check out an interview with me by Casey Stubbs from Winners Edge Trading. Let me know what you think and leave a comment!
Mike K.
About the author: Mike Kulej
 |
