Verbal attack, carried out by the Japanese authorities for the protection of the competitiveness of its economy, begins to bear fruit, creating a common basis for the US dollar correction – in addition to a technical correction on the yen, which is grown in the range of 10 figures so all seemed overly stretched in such a short period of time. The dollar began to rise against the yen on Monday, after criticism by the Japanese leader excessively volatile currency markets, as well as after the consolidation of stock markets majority, weakened the demand for safe Japanese currency.
US dollar has moved away from the lows, but Abe reminded markets that intervention is possible. One reason for the weakening of the US dollar in 2016 became weakened expectations of further Fed policy tightening. Now the futures market indicates that traders estimate the probability of rise in US borrowing costs at the level of 30% in 2016. In this case, the chances of an increase in Fed rates exceed 90% by the end of next year.
After a short break, we switched to the active trading the US dollar last week. We bought 4 binary option for the US currency from 8. We held a negative outlook for the US dollar due to the fall of its popularity among buyers in the foreign exchange market, the likelihood reduce of an early interest rate increase in the US has led to this.
EUR Bulls Did Not Like Mario Draghi’s Comments
EURUSD depreciates due to the ongoing Friday demand for risky assets and the further sale of safe-haven assets such as gold, silver, the yen, the franc and the euro. However, in the last half hour, right after the ECB President Mario Draghi’s performance at the European Parliament Brussels, decline in EURUSD has accelerated.
Mr. Draghi confirmed the effectiveness of the ECB’s stimulus measures, but knocked down a single word about the currency that the ECB, though, will not buy bad debts of Italian banks, but will take them as collateral under repurchase agreements. It was also noted that the attitude to all the bad debts in the Eurozone is equal. Probably because of this, we can conclude that the admission of the Italian practice of distressed assets as collateral under repurchase agreements will be extended to troubled assets of other countries in the Eurozone.
Call binary option on EURGBP currency pair was the only financial instrument for the euro with which we worked last week. Euro increased significantly in the last week that has given rise to talk in the market about the single European currency is overbought. This situation brings uncertainty about the continuation of growth in the euro.
Cheap Canadian dollar Is Beginning to Bear Fruit
Possibility of new oil market panic attacks is possible, but we do not have the potential of falling prices that it used and the impact on the Canadian dollar may not be as important as before. In the rate of the Canadian dollar in recent months we have taken into account a lot of negativity, including the form of deterioration in the economy, but it should be borne in mind that a significant weakening of the loonie positions beginning to bear fruit. Trade deficit excluding energy, although remains high relative to historical averages, dropped to its lowest levels since 2011.
Changes cannot be called significant, but the fact that improvement gives reason to expect a positive contribution of the weaker national currency to economic growth and to hope that the statistics does not justify the pessimistic expectations. In the short term, we cannot exclude the growth of USDCAD and the rate may return to levels above 1.4000, but on the whole, taking into account the changes in the technical picture, the balance of risks is now favorable for the bears and the pair is expected to reduce to 1.3500.
We bought a Put binary option on USDСAD currency pair last week due to the prolonged correction of the Canadian dollar. World oil prices have stabilized at around $30-35 per barrel, so the Canadian currency received stimulus to stabilize at price levels reached earlier. Canadian economy is heavily dependent on oil prices, as this raw material is a major part of maple leaf country’s export.
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