Month: September 2010

Good day FX peeps! To cap the week I present to you an update of the CADJPY. You see, the pair has consolidated within a small symmetrical triangle after it broke down from a bigger descending triangle formation. As of the moment, the pair is already nearing the apex of symmetrical triangle. This suggests that a break out whether to the upside or to the downside is imminent. But given the pair’s general trend (downtrend) and its recent break down from a descending triangle formation, I can say that it has a higher chance of moving south than north. Even it breaks the resistance of the small triangle, a solid resistance is still present at the 82.00 marker which incidentally is also the former support of the previous descending triangle to push back down. In any case, a move below the support of the present triangle could send it back to the previous low at 78.41. A move above the 82.00 level, on the other hand, could change the pair’s course to at least sideways.

In my post last September 6 (please see it here), I mentioned that it’s possible for the Bank of Canada (BOC) to hold its interest rate unchanged rather than hiking it. However, I was proven wrong when the central bank actually raised its benchmark interest rate as expected by the market by 0.25% to 1.00% from 0.75%, making the interest rate differential between the Canadian dollar and the Japanese yen wider. This decision, though, was not enough for the CADJPY to break key resistances at its long term downtrend line and at 82.00 as it only increased from an opening of 79.93 to close at 80.96. Yesterday’s weaker-than-projected housing starts number (183k vs. 185k) and the worsening of Canada’s trade balance figure to -C$2.7 billion from -C$1.8 billion did not help as well.

Canada’s employment change and unemployment rate for the month of August are on deck today at 11:00 am GMT. Canadian firms are seen to have added about 30,800 jobs in August after laying about 9,300 during the previous month. The country’s jobless rate, though, is still projected to remain the same at 8.0%. Generally, an improvement in Canada’s labor market is bullish for the economy and the Loonie. But is the expected increase in employment or better enough for investors to push the CADJPY above 82.00? Let us see.

More on LaidTrades.com …

EUR/USD

Remains weak off 1.2916, key lower top, posted 06 Sep with the loss of trendline support confirming the underlying bear structure. Initial targets lie at 1.2625 and 1.2586. Only regain of 1.2765/75 would delay weakness.

Res: 1.2765, 1.2775, 1.2840, 1.2875

Sup: 1.2658, 1.2643, 1.2625, 1.2586

GBP/USD

Price has been largely confined to a falling hourly channel over the past couple of weeks. Sustained break below yesterday’s low at 1.5375 would open a test of 1.5295/70, 07 Sep low/channel support, while break above 1.5476 would delay short-term weakness.

Res: 1.5476, 1.5492, 1.5532, 1.5543

Sup: 1.5358, 1.5344, 1.5336, 1.5325

USD/JPY

Remains in a near-term corrective mode off 83.33, 08 Sep year-to-day low, following prior downleg from 85.21 03 Sep rejection high. Break below 83.60, trendline support, will resume the underlying bear move for 82.98 next, while 84.28/47 limits the upside..

Res: 84.28, 84.47, 84.82, 85.00

Sup:83.79, 83.60, 83.51, 83.33

USD/CHF

Attempts to break through the upper border of the recent 1.0059/1.0236 band, with renewed attempt on 1.0223, overnight’s rejection high, underway. Sustained break above 1.0236 will signal resumption of recovery and expose 1.0310 first. Failure under 1.0236, however, would risk lower top, ahead of fresh weakness and open 1.0100/1.0059, possibly 0.9960 on a break.

Res: 1.0223, 1.0237, 1.0261, 1.0275

Sup: 1.0099, 1.0059, 1.0027, 1.0000

Source: ForexYard

Riskier currencies made significant jumps in overnight trading, as positive news from the US economy led to renewed optimism in the global economic recovery. The most recent US Trade Balance and Unemployment figure both came in better than expected, and led to gains for the Canadian and Australian dollars. Still, the news was not enough to help the euro, which took some losses against the US dollar.

Economic News

USD – Dollar Slowly Moving Away from Record Lows against JPY

The greenback has been slowly moving away from the 15-year low it recently hit against the Japanese yen. The USD/JPY pair has gone up over 65 pips since yesterday morning, and was largely helped by the positive US trade balance and unemployment figures. Currently the pair is trading around the 84.25 level. The positive news also helped the dollar gain on the euro. The EUR/USD pair has dropped close to 90 pips from yesterday’s high and is currently trading around the 1.2675 level.

As we close out the week, traders can expect heavy volatility from the GBP/USD and USD/CAD pairs. While there is no US news scheduled to be released today, the UK PPI Input figure and the most recent Canadian employment data is likely to affect their respective dollar pairs. The USD/CAD in particular could see heavy volatility, following yesterday’s trading. The pair dropped over 80 pips throughout the day, before bouncing back to its current level of 1.0326.

Next week, USD traders will want to prepare themselves for a batch of significant news that is likely to impact the dollar. This includes the latest retail sales report as well as the PPI and CPI figures. Whether or not the dollar can maintain its small gains on the euro and yen is yet to be seen, but significant market movements are assured.

EUR – EUR Fails to Gain From Positive US Data

The euro was not able to take advantage of the return to risk taking yesterday, following a batch of positive news from the US economy. Analysts attribute this to persistent concerns in the euro-zone banking sector. Still, it seemed odd that the return to risk taking did not help the ailing European currency.

EUR/USD has continued to drop in overnight trading, while EUR/JPY has remained relatively steady since yesterday afternoon. Furthermore, the EUR/AUD pair has dropped close to 160 pips since yesterday, and is currently trading around the 1.3710 level.

Today, traders will want to pay attention to the news coming out of the UK and Canada. Both are forecasted to show marked improvements in their respective economies, which may further fuel investor risk taking. This would typically lead to gains for the euro, but with pessimism in the euro-zone still dominating the market, that remains to be seen.

JPY – Yen Takes Losses against USD and GBP in Overnight Trading

The return to risk taking did not help the yen yesterday, as it decreased sharply against the UK pound and US dollar. USD/JPY has been slowly moving up from its record lows and is holding steady around the 84.25 level. GBP/JPY has gone up close to 100 pips in trading since yesterday afternoon, and is currently at the 129.70 level.

Today, in addition to the news being released from Canada and the UK, yen traders will want to pay attention to any indication that the Bank of Japan may be moving in to limit further yen growth in the forex marketplace. Recent yen gains have hurt Japan’s export based economy, leading to increased speculation that the government will move in to devalue the currency. Should this occur, traders can assume that the JPY will see heavy losses against its main currency rivals.

Crude Oil – Crude Oil Sees Correction after US Data Released

Crude oil started yesterday’s session by taking heavy losses, but following a report showing US oil stockpiles unexpectedly dropped last week, was able to rally in evening trading. The latest US Crude Oil Inventory figure showed that stockpiles dropped by 1.9 million barrels. Typically a drop in supplies is an indicator of increased demand among the world’s biggest energy consuming nation; the United States.

Crude prices have gone up some 86 pips since yesterday evening, and currently stand at around the 74.75 level. Today, traders will want to pay particular attention to the Canadian news set to be released. News from Canada typically impact commodity prices, in particular oil. Should the latest employment figure, set to be released at 11:00 GMT, come in as expected, oil prices could rally in afternoon trading.

Technical News

EUR/USD

The EUR/USD has gone increasingly bearish yesterday, and currently stands at the 1.2670 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 4-hour chart’s RSI signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

The pair has recorded much bearish behavior. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s MACD signals that a bullish reversal is imminent. An upward trend today is also supported by the hourly chart’s Slow Stochastic. Going long with tight stops may turn out to pay off today.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/CHF

The typical range trading on the 4-hour chart continues. The 8-hour chart RSI is floating in neutral territory. However, the pair currently sits near the bottom border of the daily chart’s RSI, suggesting an upward correction may be imminent. Going long with tight stops may turn out to be a good strategy today.

The Wild Card

CAD/CHF

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the 4-hour chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

EURUSD trades in a narrow range above 1.2659, a breakdown below this level will indicate that the downtrend from 1.2917 has resumed, then another fall towards 1.2587 previous low could be seen. Resistance is at 1.2765, a break above this level will suggest that a cycle bottom had been formed at 1.2659 on 4-hour chart, then further rally towards 1.2917 resistance could be expected to follow.

Daily Forex Signals

By GCI Forex Research

FUNDAMENTAL OUTLOOK at 1400 GMT (EDT +0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2665 level and was capped around the $1.2740 level.  Many European Central Bank officials were on the tape today.  ECB member Stark reiterated some German banks require more capital and there is speculation some eurozone banks will struggle to raise additional capital.  German authorities are speculating Germany’s ten largest banks may require about €105 billion in additional capitalization.  ECB member Liikanen said global current account imbalances remain while ECB’s Mersch said stricter bank capital rules will benefit the eurozone.  Liikanen added inflation expectations are consistent with the ECB’s target.  Mersch also said the ECB will next deliberate the ECB’s emergency policy measures in December.  The European Central Bank’s monthly bulletin reported economic growth momentum is “moderating somewhat” and said inflation risks are “slightly tiled to the upside.”  The ECB also confirmed emergency bank lending will extend into 2011.  Greek finance minister Papaconstantinou reported the Greek economy will shrink less than 4% in 2010.  Data released in Germany today saw August consumer price inflation up 0.0% m/m and 1.0% y/y with the harmonized measure up the same amounts.  Also, French Q2 non-farm payrolls were up 0.2% q/q.  In U.S. news, data released today saw the July trade balance narrow to –US$ 42.8 billion from the revised prior reading of –US$ 49.8 billion.  Also, weekly initial jobless claims came in less-than-expected at 451,000 and continuing jobless claims printed at 4.478 million.  The U.S. labour market remains unable to gain much traction.  President Obama yesterday said he does not support tax breaks for wealthier U.S. taxpayers.  Traders are still digesting yesterday’s Fed Beige Book. Euro offers are cited around the US$ 1.3240 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥83.60 level and was capped around the ¥84.00 figure.  Bank of Japan Governor Shirakawa defended the central bank’s self-imposed limit on Japanese government bond purchases, citing “adverse effects” on economic growth.  DPJ officials today again called on the central bank to purchase more JGBs on top of the ¥1.8 trillion in bonds it purchases every month.  Shirakawa reiterated there are increasing downside risks to the Japanese economy.  Some traders are still anticipating yen-selling intervention from Japanese monetary authorities.  Finance minister Noda stepped up the verbal rhetoric today about, saying authorities “are conducting various simulations” to arrest the yen’s strength and pledged to take “decisive steps” in the exchange rate market when necessary.  Noda also said the government is closely monitoring China’s decision to increase its purchases of Japanese debt.  Data released in Japan overnight saw the Q3 BSI large all-industry index improve while the Q3 large manufacturing index also improved.  Also, August consumer confidence waned to 42.5 and August machine tool orders were up 170% y/y.  Q2 GDP data will be released tonight along with the August corporate goods price index.  The Nikkei 225 stock index gained 0.82% to close at ¥9,098.39. U.S. dollar bids are cited around the ¥84.60 level.   The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥105.95 level and was capped around the ¥106.95 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥128.65 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.30 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7837 in the over-the-counter market, down from CNY 6.7912.  U.S. Treasury Secretary Geithner called on China to allow the yuan to appreciate more quickly.  People’s Bank of China member Xia Bin warned economic growth will slow and said China’s 2010 loan policy should not change.  PBoC Governor Zhou warned zero per cent interest rates may discourage banks from lending.  PBoC’s Li said the central bank needs to better manage inflation expectations.  Chinese economic data will be released on Saturday instead of Monday and this has created rumours that PBoC could raise rates on or before Monday.  There is speculation inflation may have increased to 3.5%.

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5375 level and was capped around the US$ 1.5475 level.  As expected, Bank of England’s Monetary Policy Committee kept its benchmark Bank rate unchanged at 0.50% today and kept its asset purchase target unchanged at £200 billion. There is fresh speculation BoE may be forced to embark upon a new round of bond purchases following the recent pullback in housing, manufacturing, construction, and services.  Some BoE-watchers are speculating the new stimulus could emerge in February.  Deputy Prime Minister spoke today and sterling came off on his remarks that the U.K. economic recovery will be “choppy and uneven.” Data released in the U.K. today saw the July total trade balance worsen to -£4.916 billion.  Cable bids are cited around the US$ 1.5115 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8260 level and was supported around the £0.8210 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0165 level and was supported around the CHF 1.0100 figure.  Data released in Switzerland this week saw the August unemployment rate remain steady at 3.6%.  August producer and import prices will be released on 13 August.  This week, Swiss National Bank reported its foreign currency holdings fell to CHF 218.1 billion in August from CHF 219.5 billion in July, partially reflecting gains in the franc.  In June, the SNB reported it will intervene less in the markets by selling fewer francs after its currency holdings quadrupled.  The SNB has likely not officially intervened since June.  U.S. dollar offers are cited around the CHF 1.0980 level.  The euro appreciated vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.2920 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.5580 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Greg Holden – The EUR has been falling against a number of its currency rivals over the past day-and-a-half due to a sudden rise in risk aversion. However, yesterday’s successful debt auction in Poland and Portugal helped add a minor boost to the 16-nation single currency. The US Federal Reserve’s Beige Book release also highlighted a growing stagnation in US economic growth, fueling a large number of concerns worldwide.

Today’s major economic releases:

11:00 GMT: GBP – Official Bank Rate

Great Britain is due to release its interest rate figure today, with high volatility being forecast as a result. Even though expectations are for interest rates to be held steady today, the announcement coincides with the Asset Purchase Facility update and a subsequent rate announcement which provides further details on the state of the British economy. This makes today an important day for GBP traders and many investors may want to be on the lookout for intense volatility.

12:30 GMT: USD and CAD – US and Canadian Trade Balance Reports

Both the US and Canada are scheduled to publish their trade balance figures today. These figures report on the difference between imports and exports in each nation’s economy, and have a direct correlation with supply versus demand. As a result, the USD and CAD will likely see high volatility, and potential growth if positive numbers are released.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

EUR/USD

Yesterday’s failure to sustain break below trendline support at 1.2672, with 1.2658 low reached, triggered a correction higher to leave a lower top at 1.2762, ahead of fresh weakness. Market currently attempting through 1.2658 and clear break here to open 1.2625/1.2586, with extension to 1.2522 not ruled out. To improve immediate bear tone and delay weakness, regain of 1.2762/75, is required.

Res: 1.2762, 1.2775, 1.2840, 1.2875
Sup: 1.2658, 1.2625, 1.2586, 1.2522

GBP/USD

Recovery off 1.5295, 07 Sep low, cleared 1.5490, an hourly trendline resistance, drawn off 1.5596, extending gains to 1.5532 yesterday, ahead of reversal. Fresh weakness is now underway, looking for possible retest of 1.5295, while 1.5532 caps. However, underlying bear trend remains intact as long as 1.5575/1.5617 zone holds.

Res: 1.5476, 1.5492, 1.5532, 1.5543
Sup: 1.5357, 1.5344, 1.5336, 1.5325
USD/JPY

Yesterday’s break below the recent 83.66/51 floor, reached 83.33, before bouncing to mark a likely lower top at 84.05. Potential break below 83.33 will open next target at 82.98. Upside, break above 84.05 would delay, risking 84.28/47 first.

Res: 84.05, 84.28, 84.47, 84.82
Sup: 83.51, 83.33, 82.98, 82.30

USD/CHF

Attempts to break higher, following bounce off 1.0059, yesterday’s low, with market currently breaking through 1.0138/45, previous highs. Sustained break here is needed to resume recovery and expose 1.0237/61, 03 Sep/31 Aug highs. Otherwise, fresh weakness and retest of 1.0059 would be the likely scenario.

Res: 1.0186, 1.0237, 1.0261, 1.0275
Sup: 1.0099, 1.0059, 1.0027, 1.0000

Forex Market Analysis by windsorbrokersltd.com

Source: ForexYard

The EUR rose against the U.S. dollar on Wednesday, buoyed by successful bond auctions in Portugal and Poland that made the single currency’s fall the prior session look overdone. The EUR rose 0.4% against the USD after an early fall as low as 1.2660.

Economic News

USD – Dollar Drops against the Majors

The U.S. dollar fell against most of its major currencies on Wednesday after the Federal Reserve’s Beige Book cited a slowing economy and limited inflation pressure, though stayed lower amid better news out of Canada and the U.K. As a result, by yesterday’s close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.2730. The dollar experienced similar behavior against the GBP and closed at 1.5470.

The greenback also remained under selling pressure on expectations that U.S. interest rates will stay at very low levels for some time. Low interest rates make the dollar less attractive to investors than higher-yielding currencies, stocks and commodities. In addition, economic recovery does not appear to be improving at the speed many investors were hoping for, and currencies appear to be tracing the movement of stocks as a result.

Looking ahead today, the two main news events that may have a very large impact on the greenback and its main currency pairs in today’s trading are the Trade Balance and Unemployment Claims around 12:30 GMT. These reports are very important and likely to impact the dollar’s volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.

EUR – EUR Gains on Successful Debt Auctions

The EUR rose against the dollar and Swiss franc on Wednesday, buoyed by successful bond auctions in Portugal and Poland that made the single currency’s fall the prior session look overdone. By yesterday’s close, the EUR rose against the USD, pushing the oft-traded currency pair to 1.2730. The 16-nation currency also rose against the CHF and closed around 1.2865.

The EUR also gained support after Ireland’s finance ministry said nationalized lender, Anglo Irish Bank, would be split to wind down its assets. Concerns about how Ireland dealt with the troubled bank had weighed on investors recently.

The single euro zone currency tumbled 1.5% versus the dollar on Tuesday after a news report that recent stress tests of European banks sector underestimated some lenders’ holdings of potentially risky government debt.

JPY – Yen Hits 15-Year High vs. the Dollar

The yen struck a fresh 15-year high against the dollar and edged closer to a 9-year peak against the EUR on early Wednesday on a flare-up in worries over euro zone banks, prompting market players to test the will of Japanese authorities to intervene. The USD/JPY fell as far as 83.35 before correcting itself. Currently the pair is trading around the 83.95 level.

Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing although he indicated the central bank was weighing its options on how to deal with the economic impact of the yen’s strength.

Investors worry over a recent rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains primarily against the dollar, much of the yen’s bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to more investment in the Japanese currency.

Crude Oil – Crude Oil Inventories to be Released Today

Oil prices rose on Wednesday for the first time in three sessions to trade around $75 a barrel, bouncing with equities and supported by a weaker dollar as concerns over the European banking system eased and investors cautiously bought riskier assets.
A weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive for their product.

Today, the release of crude oil inventories is likely to help determine the market’s next direction for crude oil. Moreover, a release of a string of positive economic figures from the U.S. could help its bullishness. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.

Technical News

EUR/USD

The range-trading pattern on the hourly chart continues. The daily chart’s Slow Stochastic is floating in neutral territory. However, the 4-hour chart’s RSI is already floating in the over-sold territory, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be a preferable strategy.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/JPY

The pair has recorded much bearish behavior in the past several weeks. However, the technical data indicates that this trend may reverse anytime soon. For example, the weekly chart’s RSI signals that a bullish reversal is imminent. An upward trend is also supported by the daily chart’s RSI. Going long with tight stops may turn out to pay off today.

USD/CHF

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI, indicating an upward correction may be imminent. The upward direction on the weekly chart’s Momentum oscillator also supports this notion. Going long might be a wise choice.

The Wild Card

Gold

Gold prices rose significantly yesterday and peaked at $1,261 an ounce. However, the daily chart’s RSI is floating in the over-bought territory suggesting that the recent upward trend is losing steam and a bearish correction may be impending. This might be a good opportunity for forex traders to enter a modest correction at a very early stage.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The Commodity Futures Trading Commission (CFTC) released their final rules regarding the retail forex market. The rules  were established in order to provide industry regulation and more protection to retail forex traders by making retail forex businesses come into compliance with CFTC requirements.

You can find the announcement and more information here: http://www.cftc.gov/PressRoom/PressReleases/pr5883-10.html

By CountingPips.com

The Canadian dollar has advanced against the US dollar today in forex market trading following the interest rate increase by the Bank of Canada (BOC). The BOC raised its benchmark interest rate by 25 basis points earlier today to 1.00 percent from 0.75 percent as widely expected by market forecasts. This follows the July interest rate increase by 25 basis points as the BOC moves to bring the rate to normal levels after a prolonged period of ultralow rates following the financial crisis.

The Canadian currency has been charging higher against the other major currencies today on the news as the loonie has made gains against the euro, Japanese yen, Australian dollar, New Zealand dollar and the British pound.

The bank statement accompanying the rate decision said that the Canadian economy was “slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated.  Going forward, consumption growth is expected to remain solid and business investment to rise strongly.”

The statement also said that Canadian economic recovery may not come as quickly as previously expected as the bank sees a “weaker profile” in economic activity in the U.S. , a major export destination for Canadian goods.

Other Canadian news releases today showed that Canadian building permits fell by 3.3 percent in the month of July following a 6.9 percent increase in June, according to Statistics Canada. Market forecasts were expecting building permits to fall by 4.9 percent. The Ivey purchasing managers index was also released today and showed an increase to 65.9 for the month of August. This follows a score of 54.0 in July and surpasses the market forecasts looking for a 55.5 score for the month.

Forex chart: USD/CAD Hourly – The US Dollar falling against the Canadian dollar today in forex trading following the bank to Canada’s interest rate increase to 1.00 percent. The USD/CAD pair is trading lower after increasing yesterday and fell through the 50-hour moving average in purple, looking to test the recent support level near 1.0330.