Bernanke Testimony Presses On (Midday Snapshot)


Currencies have given back some of their early gains as we head into the London fix with the ongoing testimony from Fed Chair Bernanke seen weighing somewhat on investor sentiment. The monetary policy report and accompanying testimony from Bernanke have alluded to a system that still remains under stress with the Fed needing to maintain a highly accommodative stance for an extended period of time as a result. Also seen weighing somewhat has been the latest talk of a potential bankruptcy in August for CIT. However, the markets have managed to hold up quite well, with some better earnings out from US firms helping to offset. In Canada, the Bank of Canada left rates on hold at 0.25% as expected, but the Loonie was well bid after the central bank raised growth forecasts and failed to introduce any additional monetary policy measures. Sterling continued to underperform, with the latest BOE Bean comments of a welcome weaker Sterling attributed to some of this weakness. On the whole, US equities are higher on the day, with oil also trading higher and gold unchanged.


Usd/Cad: We are sticking to Monday’s recommendation and will once again look to buy the pair on a dip today below 1.1000. This time however, we have moved our buy entry lower by a bit with the daily ATR projecting a potential daily low by 1.0960. The 78.6% fib retracement off of the major 1.0785-1.1725 move comes in just above at 1.0985 and we like the idea of establishing longs after stops have been cleared below 1.1000, in anticipation of a major upswing. We do not see a retest of the 2009 lows by 1.0785 at this point and instead look for a higher low to carve out in the 1.0900’s ahead of an eventual break back above 1.1725 and towards 1.2000. The daily RSI is also approaching the oversold 30 level, with a test by 1.0960 today to likely coincide with an oversold reading. Strategy: BUY @1.0960 FOR AN OPEN OBJECTIVE, STOP @1.0760. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON TUESDAY.

P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was been created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.

Additionally, please feel free to check out a [B]full profit and loss statement since inception on June 1, 2009[/B].

Written by Joel Kruger, Technical Currency Strategist for
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