New Video Pending

Repeats the BOCs comment that the central bank will keep the rate at 0.25% until the end of the 2nd quarter. Says Canada strength continues to be a drag on the economy but the economy is likely to grow 2.9% in 2010.

The USDCAD remains contained in a narrow up and down range (see prior post). The 1.0706 level continues to be a ceiling today.

The Canadian dollar continued to strengthen against the greenback and is the best performing currency on Monday, while the New Zealand dollar extended the decline from the previous week and slipped below the 200-Day SMA (0.6870) to reach a low of 0.6857.

Forex options markets volatility forecasts continue to trend higher, pointing to major moves in the US Dollar and other major currencies through the coming weeks’ trade. In fact, implied volatility levels on 3-month Euro/US Dollar options now trade near their highest levels since July, 2009 and underline market fears of continued volatility. Given such robust expectations, we would like to position ourselves for volatility-friendly Breakout strategies and price-following Momentum trading systems. Our fast-moving Breakout systems have seen impressive performance through the past week of trade, and similar price action in the week ahead would hopefully bring similar outperformance.

The AUDUSD has stalled at the 87.07 resistance level (see prior post).  Above the level is also the high from last Friday which comes in at the 0.8717 level .  The high reached 0.8708. 

 The EURJPY has key resistance at the 122.42 level. The level corresponds with the 61.8% of the move up from the Jan 2009 low to the June 2009 high.  The price moved up and tested the level in the last move higher but has come off .   A move above is needed to inject more bullishness for the pair today.

The US dollar rally likely continues this week. The rally may even accelerate, especially against the Canadian dollar.

Click here to view the embedded video.

In December, I posted about Ben Bernanke (Bernanke’s Background and Near-Term US Monetary Policy), specifically about how a basic understanding of Bernanke’s academic background and philosophical approach to monetary policy could be useful for predicting the general direction of interest rates, irrespective of prevailing economic conditions. This post, is somewhere between a follow-up and a step back.