Analys från DailyFX

USDCAD Implied Volatility Swells Ahead of Expected Rate Hike

Published

7 år ago

12 juli, 2017

DailyFX

What’s inside:

BoC expected to raise rates for first time since September 2010
One-day implied volatility balloons to over 19%
Projected range overlaid with key daily price levels

Looking for a longer-term view on USDCAD? Check out our Q3 Forecast.

Below, you’ll find implied volatilities for the major USD-pairs we track looking out over one-day and one-week time-frames. Utilizing these levels, we’ve calculated the projected range-low/high prices from the current spot price within one-standard deviation for specified periods. (Statistically speaking, 68% of the time price should remain within the lower and upper-bounds.)

USDCAD short-term implied volatility ramps up ahead of expected BoC rate hike, central bank outlook

At 14:00 GMT, the Bank of Canada (BoC) is expected to raise rates for the first time since September 2010, and while it anticipated that they do so, the options market is still pricing in substantial volatility to follow the meeting’s outcome. Currently, one-day implied volatility is at 19.26% which, based on a one-standard deviation move, projects the intra-day range for USDCAD to be between 12792 and 13052 from the current spot price. A move to either bound would be in excess of 1%.

Given the market is already expecting the central bank to raise rates, the biggest surprise would come if they didn’t raise rates by the expected 25 bps. In this event, CAD would almost certainly sell off sharply, bringing into question strength we’ve seen for the past couple of months.

For live coverage of the BoC announcement, join analyst David Song at 13:45 GMT.

But going with the expectation that the BoC raises, attention will be on the central bank’s intentions moving beyond today. This is where things could get interesting and volatility could surge. The day-range high is projected at 13052, which aligns with the top of a resistance zone extending back to September. A move to those levels may offer traders in the days ahead to join the downtrend off the May high should we see any spike higher only prove to be short-lived. Looking lower, should we see USDCAD decline sharply following the meeting outcome, the projected low of 12792 aligns with support from August, and may act as a short-term floor as the trend becomes exhausted. Sell the rumor, buy the news.

In any event, expect out-sized volatility, and depending on what the BoC has to say (assuming they raise rates) USDCAD could move into either key support or resistance.

Other key event risk this week for FX markets is Fed Chairwoman, Janet Yellen, testifying in Washington today and tomorrow. For details on times, see the economic calendar.

For other currency volatility-related articles please visit the Binaries page.

USDCAD: Daily

See the Webinar Calendar for a schedule of upcoming live events with DailyFX analysts.

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

What’s inside:

EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
Resistance in vicinity of 11825/80 likely to keep a lid on further strength
Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form