The Federal Reserve announced that it generated record profits last year. Central Bank recorded gains of $52.1 billion, passing $46.1billion of that over to The Treasury Department. This marks the largest profit ever since the FED was established in 1914. Money was generated from selling of securities, which were acquired through its emergence buying programs aimed to stabilize the markets. Before we grab big, fat cigars and start puffing on them, it must be pointed out that the FED is still in the hole for about $1.5 trillion and some of its programs are not completed yet. Besides, it is easy post profits when you can conjure up funds out of thin air, or with few key strokes on the computer. 

Canada reported trade deficit for November of about $300 million. This was in sharp contrast with estimate of about $500 million surplus. The Loonie dropped, in a move largely blamed on the trade figures. Well, CAD has been showing signs of weakness for some time now. It started to get shaky last week, than recovered a little bit. I had some trades in Canadian Dollar crosses at the time, and looking for more this week. These came yesterday, before the trade report. Today’s sell off was simply continuation of a move already under way, only had a “reason” behind, something that press lacked before.

In the last post I added one more trade looking for weakness in the Loonie. This was a short of CAD-JPY, on a possible extension of an earlier move. Smaller trade yesterday took the price to just under 89.00 level. I was looking for a small bounce at that level, and then enter a short at 88.90, with 90 pips objective. Set up worked out exactly as scripted, something that doesn’t happen every day.

Other Canadian Dollar trades happened mostly yesterday, extension of earlier moves. As mentioned yesterday, they included EUR-CAD and GBP-CAD. I was simply looking for breakouts above recent highs on hourly charts. For EUR-CAD that was at 1.4885 with an objective of 100 pips. Following snapshot was taken yesterday and doesn’t include today’s price action. There was no trade today.

Same thing was done with GBP-CAD. Here set up was less crisp. Had to go for smaller pips, before next resistance was met. Trade was from 1.6561 producing 60 pips. I entered into next one at 1.6640, looking for 100 pips. This is a chart from yesterday, when I was done for the day. Second trade was left live, carried into today.

Today it came to conclusion, reaching target of 1.6740.

At this time I think the moves are a little overextended. I will be watching all CAD pairs going forward, but probably focus more on longer term charts, like 4H. Those will indicate if current Loonie weakness is consolidation within prevailing bull market, or a more substantial reversal. it will be discussed here when i have something more to add.

Feel like I have to cover EUR-GBP, following a Saturday’s post. After the weekend price gaped a little bit to the downside after which Euro took off. Today Pound has shown strength. My longer term bias is bearish for this pair, so I’d like to place a trade short trade at 0.8958, targeting 30 pips. Chart concerns me though. Repeated attempts at 0.9025 suggest that if it goes through it, the up move will continue. Something to keep in mind. At the same time, move under 0.8920 would swing the balance the other way. For now this small short trade stands.

Mike K.