USD to CAD Daily Candle Chart - February 10th 2009

USD to CAD Daily Candle Chart - February 10th 2009

There is very little I can say about the usd to cad pair that I haven’t said before! Like many other currency pairs at the moment, the markets seem to be waiting, and consolidating sideways with not trend one way of the other. This is certainly true of the usd to cad pair, along with the majors such as the euro vs dollar, and dollar to yen. Whether they are waiting for the various bailout packages to be confirmed, or the G7 meeting on Friday only time will tell, but this makes trading currency this week extremely difficult.

Yesterday’s housing starts in Canada provided little to help this trend, coming in at 154,000 against a forecast of 165,000, so adding to an already gloomy outlook. The fundamental news today is all about speeches! This afternoon ( UK time) we have a statement from Mark Carney, the Governor of the Bank of Canada, to the Standing Committee on Finance, in Ottawa.Volatility is sometimes experienced during his speeches as traders attempt to decipher interest rate clues. As head of the Central Bank of Canada, which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy. If the statement is more hawkish than expected then this is generally good for the currency, in this case the Canadian dollar.

The second speech today is a statement by Fed Chairman Ben Bernanke, who is due to testify on the Federal Reserves efforts to provide liquidity in the current financial crisis before the House Financial Services Committee, in Washington DC. If the statement is more hawkish than expected then this is generally good for the home currency, in this case the US dollar.   The testimony usually comes in 2 separate parts, and in many ways similar to the ECB rate announcements which I mentioned a few days ago. The first part is a pre prepared statement which he reads, which is then followed by a question and answer session from the committee. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility, so we may see some movement in the euro to dollar pair this evening (UK time). As head of the Central Bank, Bernanke has more influence over the US dollar than any other person in the US administration and his words ( both scripted and unscripted ) are analysed for clues as to future monetary policy by the FED.

Whether either of these will be sufficient to provide us with some firm trading signals for the usd to cad ( or any of the other pairs ) is debatable, as I believe the currency markets in general are now waiting for the global picture to calm, before setting the tone for the next few months. I believe longer term we will see a return to somewhere near parity for the pair, but as always we have to wait for the signals to provide the clues, and be patient!

The short term outlook is sideways, the medium term is sideways, and the long term is bearish.