Comdoll Trading Kit (April 16-20, 2012): Midweek Market Analysis

Got any comdoll trade ideas for this week? Let my midweek market analysis guide you on what’s moving the commodity currencies these past few days.

Market Themes

RBA hints at potential rate cut in May
Even though Glenn Stevens and his men decided to keep rates on hold during the RBA policy decision early this month, minutes of their actual meeting revealed that policymakers are actually mulling a rate cut for next month. They cited weak demand, the slowdown in China, and the return of euro zone debt woes as reasons for their dovish outlook. Word through the forex grapevine is that they would take a look at the upcoming quarterly CPI report due next week first to figure out whether they have room to ease or not. Keep an eye out for that!

BOC considering a rate hike?
In stark contrast to the RBA’s downbeat outlook is that of the BOC, as Governor Mark Carney announced that they were considering a rate hike sooner or later. After all, the Canadian economy is being strongly supported by rising crude oil prices and the recovery in the U.S. so they could probably get by without extra stimulus. However, they did also note the potential comeback of euro zone debt woes, which was one of the reasons why they decided to keep rates on hold for the time being.

IMF upgraded growth forecasts
Last but certainly not least, another factor keeping riskier currencies afloat lately is the IMF‘s revised growth forecasts. The agency now expects the global economy to grow by 3.5% this year, higher than the initial estimate of 3.3% in January. Although they predict that euro zone will continue to slump for the rest of the year, they project that growth will come from other major economies such as the U.S., Japan, U.K. and Canada.

Comdoll Review

It’s time to check out how the comdolls are faring lately!

Comdolls

For now, it looks like the Aussie is keeping its head afloat despite the negative news earlier this week. Although downbeat RBA minutes weighed on the Aussie, AUD/USD is still in positive territory thanks to the improvement in risk appetite.

The Kiwi, on the other hand, doesn’t seem to be faring so well as it is currently the only loser among the comdoll gang. NZD/USD is a few pips below its week open price, giving it a 0.42% loss for now.

The biggest gainer among the bunch is the Loonie, as it got a strong boost from the upbeat BOC statement earlier on. USD/CAD just broke back below parity and seems ready to take out the next level of support at .9850 as well. Hmm, that could be a good trade setup to take this week…

Comdoll Event Highlights for April 16-20, 2012

Calendar

Unlike in the past couple of weeks, China won’t be releasing many major economic reports this week. In fact, the spotlight is scheduled for the commodity-producing countries’ central banks and the U.S.

We start off with the U.S. retail sales report due today around the same time as Canada’s foreign securities report is due. The RBA will then take the stage on Tuesday as it releases its meeting minutes. Take note that although the central bank kept its rates at 4.25% this month, it was also more dovish than investors had expected.

The Bank of Canada will steal the spotlight by the middle of the week as it releases its interest rate decision and give a conference. Though market players expect the BOC to keep its rates at 1.00%, keep an eye out for any comments on the U.S. economic recovery and the oil prices. Remember that the oil and Loonie are highly correlated!

Aside from New Zealand‘s quarterly CPI report, no other major reports are scheduled for release from the commodity-producing countries near the end of the week, so make sure you’re on your toes in case there are any reports that might influence risk sentiment!

Now let’s take a look at the significant inflection points on our comdoll charts:

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0298
1.0125
0.8185
Previous Week High (PWH)
1.0453
1.0128
0.8322
Previous Week Low (PWL)
1.0226
0.9926
0.8121
Top Weekly ATR (tWATR)
1.0496
1.0069
0.8349
Bottom Weekly ATR (bWATR)
1.0257
0.9920
0.8158
Other significant levels
1.0450, 1.0260
1.0050, 0.9950
0.8240, 0.8170

In case you’re wondering what ATRs are all about and how I computed those figures, make sure you check out my entry explaining my trading strategies.

If you’ve got any trade setups you’d like to share, you know where to reach me!

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Good luck in your trades this week, buddies!

Happy time

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