Chairman Bernanke is in Congress to for his semi-annual testimony before the House Financial Services Committee. Not sure why it is called a “testimony”. Should be more like “confession” or “defense”. Seems like everybody is hostile towards him, so no matter what he says, criticism will follow. Of course, it doesn’t help that he lacks clarity. He speaks about on going recovery in one sentence and no job creation in the next. Depressed interest rate are necessary for prolonged period of time, yet the Fund Rate was bumped to 0.75% last week. No wonder the Dollar is confused. Probably most traders, too.

USD received nice boost when the rate increase was announced few days ago, but so far this week not all that much has happened. That’s not the case for the other dollars. All three of them AUD, CAD, and NZD sold off quite a bit, with largest moves coming Tuesday. Today they have been consolidating, undecided which way to go next. This was of interest to me, because of my focus on those currencies. I outlined a long trade in EUR-CAD in previous post and it happened. Order was filled yesterday and closed today, not that long ago.

Price came very close to my intended entry point, and then retreated. This established additional resistance at the level of interest, which was eventually broken. My objective was probably a little over ambitious at 120+ pips. Obviously I didn’t foresee the large sell off in EUR yesterday. Thankfully, Loonie was even weaker, so I scrambled few pips. Price came close to the target today, but failed, so I decided to close it for 82 pips profit.

Canadian Dollar lost ground against most other currencies, too. That includes GBP-CAD, where hourly chart created decent looking bottom. When I was planning the trades, Euro seemed much stronger that the Pound. This reversed yesterday. Since I expected GBP-CAD to trail EUR-CAD, target here was smaller, at 100 pips. Much to my surprise it was reached in a straight run shortly after the breakout and this turned out to be a better trade.

After the steady run up last week, AUD and NZD finally broke to the downside yesterday. Hourly charts build nice sell set ups. I took a trade in AUD-JPY, since I had been tracking it for some time now. Entry was at 81.60 and transaction brought 75 pips. Chart contains an error of my doing. Currently price is moving sideways, without any indication of next move. I would like to think that this is a start of a bigger drop in commodity dollars, but not convinced yet. For right now tentative sell is planned if the price moves under recent low. Also, 81.20 could be another short zone. Level of my activity will remain low, since I’m busy with other things. This means probably no update until Friday. Good trading to all!

Mike K.