Bank of Canada - Interest Rate Statement strengthens the Canadian Dollar

This Thursday afternoon of March 8th 2012 at 14:00 GMT (9:00 EST) the Bank of Canada released there announcement on Interest Rates. All analysts surveyed expected no change from the Central Bank, however they do release a statement about why they decided not to change the rate this time.

These statements are watched by the market to see if they give any clues about the next move from the Bank of Canada. Sometimes they include revisions to the Central Banks forecasts on GDP and CPI inflation.

Anyhow as expected the BOC left rates unchanged at 1.00% however they did make some positive statements on growth, they also said that monetary policy was already low and there was lots of stimulus which sounded like "we are not going to be giving you anymore because you already have enough"...this is what a parent says to a little child when they ask for more candy. The markets want candy, which is cheap money dumped on them from Central Banks. ;)

Anyway here is a link to the statement.

The Canadian Dollar appreciated by about 40 pips, however in the heat of the moment it may have been difficult to catch it if you were still reading thru the statement. There must be algorithmic language processing programs that interpret the statement pretty quickly. Here the charts:

First is the 10 second chart of the USDCAD

This is the 10 second chart of the CADJPY

New Zealand Interest Rates - RBNZ Bollard blames strong New Zealand Dollar

This evening on Wednesday March 7th 2012 at 20:00 GMT (15:00 EST) the Interest Rate Decision and accompanying statement were released from the RBNZ. All analysts expected the RBNZ to hold rates steady at 2.5% and that is exactly what happened, however as often happens with this release, despite no change to rates, the Kiwi Dollar price moves according to the statement which is released which is closely watched to try and figure out what and when the next move out of the RBNZ will be.

This time RBNZ's Bollard brought up the rapid appreciation of the New Zealand dollar as being a factor which makes further hiking of Interest Rates Unnecessary. Here is a link to the statement.

Here is the 30 second chart of the NZDUSD and NZDJPY both sold off when Bollard made this statement.

Australia RBA Cash Target - AUDUSD Drops on RBA statement of possible further easing

Last night Monday February 5th 2012 at 22:30 EST (03:30 GMT on Tuesday February 6th) the RBA made their decision on hold Interest Rates steady at 4.25%. This was expected by all analysts unlike last month where all but 3 of the 27 surveyed by Bloomberg expected a cut. The Australian Economy seems to be holding up well enough, despite a small slowdown in China, however the RBA is watching affairs unfold in Europe and is aware that this will affect the global economy and expressed their intention to lower rates if things get worse.

Here is a link to their Statements

So the market took this as a cue that the next move from the RBA could still be a cut and thus the Australian Dollar Forex pairs fell.

Here is a 1 minute chart of the AUDUSD forex pair:

and this is the 1 minute chart of the AUDJPY forex pair

Swedish Interest Rates - Riksbank cuts 25 bps as expected

This morning at 8:30 GMT (3:30 EST) the Swedish Riksbank released their Interest Rate decision. This came along with CPI Inflation figures. Out of 18 analysts surveyed by Bloomberg before the announcement, 5 expected the Riksbank to hold rates steady at 1.75% while the other 13 expect the bank to cut. They did as the majority expected and CPI also came out lower which means the Riksbank still has room to cut more...The CPI came out first and there was a small delay of 5 or 10 seconds before the Rate Announcement then came thru the wires.

Here is the Data:

Sweden Riksbank Interest Rate
Estimates- Median: 1.5% Average: 1.57% Range: 1.50% to 1.75%
Actual: 1.50% Prior: 1.75% no revision
5 out of 18 for hold, 13 for cut

Sweden CPI - Headline Rate (MoM)
Estimates- Median: -0.5% Average: -0.5% Range: -0.7% to -0.4%
Actual: -0.9% Prior: +0.2% no revision

Sweden CPI - Headline Rate (YoY)
Estimates- Median: +2.3% Average: +2.2% Range: +2.1% to +2.4%
Actual: +1.9% Prior: +2.3% no revision

Sweden SW CPI - CPIF (MoM)
Estimates- Median: -0.5% Average: -0.5% Range: -0.6% to -0.3%
Actual: -0.7% Prior: 0.0% no revision

Sweden SW CPI - CPIF (YoY)
Estimates- Median: +1.1% Average: +1.0% Range: +0.4% to +1.3%
Actual: +0.9% Prior: +0.5% no revision

Sweden CPI Level
Estimates- Median: 312.97 Average: 313.05 Range: 312.75 to 313.50
Actual: 311.85 Prior: 314.75 no revision

Here is a 5 second chart of the EURSEK:

Here is the 30 second EURSEK chart which shows the move continued:

Chinese Imports Much Lower - Australian Dollar Sells off

Overnight during the Asian Session on Febrary 9th 2012 at 22:04 EST(February 10th 2012 at 3:04 GMT) the Trade Balance, Imports and Exports data was released from China. It generally had lower estimates but the Import data came out much lower than expectations. As Australia sells alot of commodities to China the Australian Dollar sold off.

Here is the data:

China Exports YoY%
Estimates- Median: -1.4% Average: -0.2% Range: -10.0% to +8.4%
Actual: -0.5% Prior: +13.4% No Revision

China Imports YoY%
Estimates- Median: -3.6% Average: -2.4% Range: -14.0% to +11.0%
Actual: -15.3% Prior: +11.8% No Revision

China Trade Balance (USD)
Estimates- Median: $10.40B Average: $9.77B Range: -$0.43B to +$21.30B
Actual: +27.28B Prior: +$16.52B No Revision

Here is the 5 minute chart of the AUDUSD forex pair. The move lower actually started about 23:00 GMT or 18:00 EST just ahead of the Tokyo open, so there may have been some anticipation of this. After the data was released the pair sold off another 60-70 pips:

Here is a 1 hour chart of the EURAUD trade. Going short this pair is the Carry Trade of choice at the moment, because of problems in Europe and still better interest rates in Australia of 4.25%. Europe is just 1% but even though there is lower interest rates elsewhere this gives extra appreciation due to the European Soverign Debt Crisis.

Although this retacement looks quite good if you look at the Daily Chart you see that this is only a shallow retracement relative to the longer term:

UK BOE Interest Rates and Asset Purchase Target - BOE adds 50 Billion Quantitative Easing

This Thursday February 9th at 12:00 noon GMT (7:00 EST) the BOE announced their monthly decisions on Interest Rates and Asset Purchase Facility (APF). All Analysts of course predicted that the Bank of England (BOE) would stay on hold and leave interest rates where they are at 0.5%. However there was an interesting split between analysts surveyed by Bloomberg on the amount of extra QE they would add to the APF. Out of 50 analysts, 15 expected the BOE to add an additional 75 Billion to the APF to bring the total to 350 billion, 34 expected the BOE to only add 50 billion for a total of 325 billion, and 1 analysts expected them not to add anything. The estimates had come down since CPI appears to be confirming that inflation is finally turning around.

Last time the BOE raised the APF was on October 6th 2011 and the GBPUSD British Pound Sterling versus US Dollar Forex Pair dropped about 2 and a quarter cents from 1.5485 to 1.5270. However several hours after hovering and consolidating near those new lows, the pair lifted up and began an amazing rally which lasted until October 27th and brought the pair back up to 1.6150. The EURUSD, AUDUSD and other pairs bottomed out on October 4th and started their way back up. This was all in the midst of lots of negative sentiment..

Here is the 10 second chart of GBPUSD on the reaction. The BOE only hike 50 Billion instead of 75 Billion, so after a tiny dip the pair rallied:

There was always the risk that they could do the full 75 Billion, this would have been more bearish, as it was on October 6th 2011. As we can see from this chart the 1 minute chart of the 2.5 hours between the Trade Balance & Industrial Production at 9:30 GMT to the Interest Rates and Asset Purchase Target at 12:00. Adding any QE is bearish for a Currency and the initial reaction should be down, but longer term the QE can stimulate the economy and help support GDP which is bullish. Of course for this release, it was pretty much priced in that the BOE would do some QE.

This is the 10 second chart of GBPCHF & EURGBP

and the 30 second chart of the GBPCHF to show more of the move:

and the 30 second chart of the GBPJPY and EURGBP:

It was a choppy day, up and down, up and down...little resolution one way or the other...

Australia RBA Cash Target - Unexpectedly Hold Rates lead to rally in AUDUSD

Last night February 6th at 21:30 EST (02:30 GMT on February 7th) the RBA released their Interest Rate decision. Out of the 27 analyst estimates only 3 expected the RBA to hold rates steady at 4.25%. The other 24 expected them to cut 25 basis points to 4.00%. They surprised the market by not cutting interest rates and instead holding rates steady at 4.25%. The AUDUSD forex pair rallied over 120 pips on the news. Other Australian Dollar pairs: AUDJPY, EURAUD has similar gains.

The past 2 meetings the RBA has cut rates by 25 basis points each meeting. The analysts were roughly split in estimating they would do these cuts each time with about half predicting a cut and the other half predicting the RBA to hold. This time nearly all the analysts jumped on the band wagon and predicted a cut. However these predictions were quite backward looking as since the last FOMC meeting on January 25th 2012 and the NFP on this past friday, market sentiment has in general been alot better. An article appeared from Sydney Morning Herald just before Sunday night's Retail Sales report about the likelihood of a RBA rate cut diminishing, however no analysts modified their expectations over the next day before the RBA announcement.

Here is the 1 minute chart of the AUDUSD:

Here the 5 minute charts of AUDUSD and EURAUD. EURAUD dropped on the news but during the European Session some positive developments on situation in Greece turned the pair aroung. The AUDJPY got a further lift when the Japanese Yen started to weaken through out the day:

New Zealand Interest Rates - Unchanged again

Tonight at 15:00 EST (20:00 GMT) the interest rates from New Zealand were released. The Royal Bank of New Zealand (the RBNZ for short) has been on hold since March 2011, when they cut 0.5% to 2.5% in response to the earthquake to help things recover. The RBNZ had said they would hike this rate back up as the rebuilding progressed. Since then however the global economy has weakened and New Zealand funding costs have gone up in response the debt crisis in the Eurozone.

There was no hike but RBNZ's Governor Bollard indicated that the domestic economic growth had been mild and inflation was contained and stated the obvious situations overseas. There had been some expectations the RBNZ would hike in mid-2012, this had been pushed out from March 2012 during the December statement, but the NZDUSD still rallied because it still seemed like this was on the horizon. If anything today's statement seems like this hike might be put off even more, if not turning into a possible cut at some point. OF course it depends how situations develop, but Isreal, Thailand & the Philippines have cut recently. Hungary did not hike when they were expected to. Australia is expected to cut in February.

Despite all this the NZDUSD did rally 60 pips, but this was due to the fact that Ben Bernanke was still speaking at his press conference, and all the markets were rallying to what appeared to be some hint of QE3 for March.

Here is a 10 second chart on the NZDUSD forex pair:

and here is a 1 minute chart showing the extension of this run-up after the news:

Israel Cuts Rates - The shekel weakens against the Greenback -> Hint of RBA's cut on February 6th?

On January 23rd at 10:30 EST (15:30 GMT) the Bank of Israel cut their interest rates by 25 basis points. The USDILS forex currency pair spiked higher, but not that much after the spread, however it did continue to move up - with Israeli Shekel weakness - thru the day, making a more substantial move. Basically out of 23 analysts surveyed 13 expected the Central Bank to hold rates steady at 2.75% however 10 analysts expected a 0.25% or 25 bps cut to 2.5%. So really whatever happened the Shekel would have moved.

First here is the 1 minute USDILS chart which show the spike:

and here is the 3 minute chart of USDILS which shows more of the continuation of the move after the initial spike:

However the US Dollar has been weakening against most pairs since basically the better Chinese Figures on January 17th, or the Spainish and Italian Bond auctions on January 12th however Friday January 13th was the S&P downgrade of France which was a risk-off day...as always a bit of whipping around near a reversal point. Anyhow not to get sidetracked, the point is that the EURILS was a better pair to play as the Euro gets a bit of retracement finally from weeks/months of selling pressure...no more sellers left perhaps? So here is the 1 minute chart of the EURILS:

and here is the 5 minute chart of EURILS which shows more of the follow thru:

Also finally the 5 minute chart again, this time rewinded to the start of the week, so the trend heading into the news can be noticed:

Another chart to share here is a comparison of Interest Rate moves by the Bank of Israel and the Royal Bank of Australia. RBA rate decision is on February 6th and most analysts expect a cut.

Bank of Canada hold rates steady at 1% - USDCAD gets choppy whipsaw

No analysts expected a change in Interest Rates today at 9am EST (2pm GMT) from the Bank of Canada today. Last month there was a rumor that the Bank's Governor Carney would sound dovish and signal rate cuts in 2012, but he did not, thus last time the USDCAD did have a strong move down.

This time there were no such expectations, although there are a few who still expect a cut sometime in the 1st half of 2012 as Australia, norway and sweden cut last month. Canada figures have not been bad but Carney's comments mentioned the situation in Europe, so basically the Bank of Canada remains on hold. Perhaps the slight upward bias on USDCAD (Canadian Dollar weakness) could be attributed to his emphasis on the crisis in Europe

If you look at the Statement Here for Bank of Canada Rate Decision Statement for January 17th 2012

you will notice it really isn't that much different than the Rate Decision Statement for December 2011

What is different was they revised their GDP forecasts while keeping inflation forecasts the same. The last time they gave GDP forecasts were during their October 2011 Rate Decision Statement so although they forecast 2.1 for 2011 it came out at 2.4, so they raised GDP for 2012 from 1.9 to 2.0 but lowered GDP for 2013 from 2.9 to 2.8...so a mixed bag so to speak.

Anyhow here is a 10 second chart of the whipsaw on the USDCAD:

Of course the forex pair had moved down quite a bit overnight, so a bit of a retracement was due. The market was preoccupied with talk of S&P downgrading European Banks after their Downgrades of several European countries on Friday January 13th.

ECB Rate Announcement and Press Conference - Pullback and Blast higher for short squeeze

This morning at 12:45 GMT (7:45 EST) the ECB made their Interest Rate Announcment followed by ECB's Mario Draghi's Press Conference 45 minutes later at 13:30 GMT (8:30 EST). Out of the 53 analysts surveyed by Bloomberg only 6 expected a further cut of 25 basis points today, the rest expected the ECB to keep rates steady. Since they cut at their last meeting and there have been a few signs that things have improved and about 2-3 hours before the Rate announcement there were very successful Bond Auctions for Spain and Italy. Click here for another article from Reuters.

So basically the EURUSD had been rallying since these bond auctions anyhow, but after the release the pair did retrace some and actually the US Retail Sales did come out just as Mario Draghi was about to release the ECB statement. Here is a 10 second chart of the price action on the EURUSD after the No Change rate figures was released thru the wires, the EURUSD was basically at its highs for the day when it came out, but it was a no change as expected, and the fact that 6 analysts expected a cut was not enough to push the pair up when the decision no to cut was made by the ECB. Basically the ECB has a little breathing room with the recent LTRO bonds and today's successful Italian and Spanish auctions:

We can see from the 1 minute chart below the Yellow Arrow is the release of the Rates then the Red Arrow is when the US Retail Sales number hit. It was a poor reading the EURUSD also sold off along with all risky assets...then there was some chop as the Daily Central pivot was tested at 1.2724 before it rallied thru Draghis Speech and the Q&A session which followed. Here are links to the Text of the Speech: ECB's Draghi Speech Text Part 1 and Part II, a Summary of Draghi's Statements, Summary of the Q&A session, Another Summary, More from MNI Link 1 Link 2 Link 3 Yes that's alot of stuff to read...the chart is alot more simple and straight-forward!!! 8)

Swedish Interest Rates - Cut 25 bps as expected and SEK strengthens?

This morning at 8:30am GMT or 3:30am EST the Swedish Riksbank announced their interest rate changes.

Out of 24 analysts surveyed by bloomberg, 9 expected the Riksbank to hold steady at 2.00%,
11 expected a 25 basis point (bps) cut to 1.75%, and 2 expected a full 50 bps cut to 1.5%.

Quite similar to the expectations for the NorgeBank last week where only a few expected a
50 bps cut and that is what they did, instead the Riksbank today only cut 25 bps as the
majority of anaylsts expected and was the median & average estimate based on all 24 surveyed.

The EURSEK rallied into the release, indicating Swedish Krona (SEK) weakness, as would be
expected by a lowering of interest rates, but this was basically a buy the rumor sell the news
case for the EURSEK pair (or sell the rumor buy the news for the Swedish Krona as a whole).
As soon as the news was released and it was only a 25 bps as expected the EURSEK turned around
and dropped in SEK strength (it is the 2nd currency of the pair). So the SEK weakness, and
EURSEK rally before the news was on the possibility of a 50 bps cut, which when it did not
materialise promptly unwound.

Here is the chart:

Norwegian Interest Rates - Cut more than expected

Out of the 17 Analysts polled by bloomberg, 5 expected the Norge Bank to hold rates
steady at 2.25%, 2 analysts expected a full 0.5% cut, and the remaining 10 expected
just a 0.25% cut. They cut a full 50 basis points (bps) and the Norwegian Krona
rallied. Here are the 5 second charts of EURNOK and USDNOK:

Also a 1 min chart

FOMC Statement - EURUSD drops on Merkel Comments leading into a FOMC Statements

Below is a chart of the Price Action leading into the FOMC Statement by the Fed on December 13th 2012 at around 19:15 GMT or 14:15 EST. Sometimes they are a few minutes late but this time they
were a few minutes early actually...anything but consistent.

Just under an hour after the New York Cash Equity Open Germany's Merkel made comments about the new ESM upper funding limit...

This is shown by the 1st green circle on the chart. The 2nd green circle shows when the FOMC Statement was given, there was no change in rates or Policy, however the statement did basically
say that the economic situation remained risky, this was enough to push the sell-off further.
Here is a link to the Side-by-side statement from the FOMC compared to the last release on November 2nd...

Here is the 5 minute chart of the EURUSD:

...and here is a 5 minute chart of the EMini S&P 500 Future of the same timeframe with green circles at the same places in time as the first chart (this is a spreadbet platform so prices are similar but might be slightly different in places)

ECB Cuts Rates 25 bps to 1.0% as expected then announce Bond Buy and GDP forecast cut

54 out of 58 analysts surveyed by Bloomberg expected the ECB to cut rates today by 0.25% or 25 basis points. 2 analysts expect them to hold rates steady at 1.25% and another 2-3* expected a bigger cut of 0.5% or 50 basis points (bps) to 0.75%

Some expected the EURUSD might sell off on this news, but the cut was highly expected and had been already priced into the market as we had already seen the EURUSD sell off from 1.3430 to 1.3380 before the rate announcement. So actually the EURUSD rallied on the announcment up 40 pips to 1.3320 into the 8:30am EST ECB Press Conference which saw the announcement of 2 further Bond Buying programs and we see the EURUSD then did rally into the 1.3340-50 area.

After this ECB then cut their GDP forcasts and the EURUSD sold off over 100 pips to 1.3310-15.

* Bloomberg reported 2 but talking-forex write said 3

Canadian Interest Rates Decision - No hint of rate cut ahead

Some analysts were expecting some signal from the Bank of Canada's Carney to cut rates sometime in the new year. These rumors were squashed during today's announcment.

Instead they said that:

European recession to be deeper than thought
2nd half of 2011 slightly stronger than anticipated
Inflation slightly firmer than expect; to ease going forward
Additional measures will be needed to contain European crisis

USDCAD sold off from 1.0200 to 1.0120 quickly as the New York cash equity indices opened and the CAD Ivey PMI was released.

Australian RBA Interest Rate Decision

The 25 analysts polled on Bloomberg roughly half expected the Royal Bank of Australia - the RBA to cut rates 25 basis points to 4.25%, while the remaining half expected the RBA to hold rates steady at 4.5%

This setup a situation where there was a guarenteed move, since the 50% expectation of a cut had been priced into the market, so if they held rates steady some of that priced in cut would unwind and the Australian Dollar would rally.

Anyway they did go ahead and cut, and the Aussie Dollar sold off. This makes 2 cuts of 25 basis points in a row. The RBA is mostly doing this in response to the slowdown of the global economy as a whole, which is mostly being created by the Eurozone Debt Crisis which impacts business all around the globe.

UK BOE Interest Rates - GBPUSD surges despite any change

The Bank of England BOE made their announcement on Interest Rates and Asset Purchase Target (APT). Rates remained unchanged at 0.5% and APT also was unchanged at 200 Billion. All economists had predicted the BOE not to change rates or most had expected APT to stay the same as well, there was however 5% of economists who were expecting APT to rise 50 Billion. This was odd since earlier last week with the higher UK GDP figures there was a chatter reported among dealing desks that the BOE could hike rates before the end of the year. With Australia, New Zealand, Norway, Sweden and Canada already having raised rates, traders are wondering when the ECB and BOE will follow. The US FOMC is still raising Quantitative Easing (QE) so there appears to be a growing rift between the USA and the rest of the world.

Anyhow just the small 5% of analyst who had predicted more APT, which is bearish for the British Pound, was enough for the GBPUSD to have a bit of an expectation of more APT priced in...indeed many link the UK economy to the US economy and were perhaps thinking that the BOE would follow the FOMC in QE2. The recent positive data out of the UK has for the meanwhile stopped this from occuring. Traders should stay aware of all the data to get the full picture, the BOE will not add QE just because the FOMC is, they will watch their own data to make that decision.

The USD has continued to sell-off as US traders wake up and join the rally started during the European session. Perhaps there was just many traders waiting to go long GBPUSD but wanted the news to get out of the way first. Initial move on GBPUSD from 1.6180 to 1.6220, my usual charts got jammed during the release so I post the British Pound FX Futures chart, which trades just a few tics from the spot fx rate. Another chart shows how the GBPUSD just kept moving up over the next 45 minutes, basically the USD sell-off had another lef as New York got going.

RBA Unexpected Raises Interest Rates to 4.75%

At 3:30 am UK time and 11:30 EST the RBA (Royal Bank of Australia) hiked rates again. This was largely unexpected with 17 out of the 23 economists predicting the RBA to hold and only 6 expecting them to hike, but hike they did to 4.75% interest rate, and an instant 100 pip move occurred in the 1st minute after the release. Many traders in the ProfitMongers room earned a great amount of pips trading the spike using the Secret News Weapon trading forex futures and spot fx. There was also an afterspike opportunity which created about +15 pips, but after such a move, especially during the asian session, price action just consolidated.

A few hours later european traders started waking up to see the news, a nice trade setup occurred about 15 minutes before the London open. We took advantage of this trading opportunity in the live trade room, going long the AUDUSD at 0.9983 and taking profit above parity at around 1.0010. Did hold some in case of a further move but as other bad news hit the pound it caused the USD to appreciate versus the rest of the pairs, so the rest was out at breakeven.

RBA Raises 0.25% but some expected more

Here is a trade from last night Nov.3rd 2009, Austrailian Central Bank was expected to raise rates by 0.25%, however 20% of analysts expected a 0.5% rise. This meant if they only raised 0.25% as most expected we could get a short trade because some expected them to raise rates more. If they did raise to 0.5% this would have been an excellent long trade, and if they held study this would be even a better short trade.

As you see in the image, there was some volatility before the release, looks like some rumor was leaked that the AUD central bank would not raise so much, anyhow the price came back up just as before the news release. They only raise 0.25% and I go short on AUDJPY, I was saving AUDUSD for a bigger trade if they held at no change, or raised 0.5% for a bigger move. Quickly AUDJPY moves about 18 pips in my favor, and I cash out, mostly because of the strange prenews volatility (did someone know something I did not) anyhow I was out a bit too early as AUDJPY hung in this price zone for about 1 minute, but then fell another 25-30 pips, again I take the safe pips. I will work on exiting half and leaving a bit for a continued move, however having traded these for awhile, I know sometimes they can reverse pretty fast.