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TheLFB Wednesday Currency Report

Written by A Forex View From Afar on Wednesday, May 20, 2009

Oil hit another milestone, as did the cad, breaking and holding above the $61 per barrel benchmark.

Commodities, led by crude oil are gaining ground fast as investors are becoming even more bullish on the global economy. To further feed these feelings, a report showed today that crude oil inventories dropped over the last two weeks, suggesting that demand is picking up again. Most market participants believe that the economy will bottom in the current quarter, something that goes hand-in-hand with demand for crude oil (energy) picking up, as the economy is expanding.

TheLFB-Forex.com Trade Team notes that the strong gains in the crude oil market empowered the Canadian dollar during Wednesday’s trading session. The cad was able to break below the 1.1490 level, which acted as support for almost half of year.

The pound outperformed the entire market again on Thursday, something that seems to have become a trend lately. At the time this article was written, the pound had gained 220 pips, breaking above the 200-day simple moving average for the first time in almost a year. It appears as though the pound’s strength comes as institutional traders consider the pair undervalued, something that TheLFB-Forex.com Trade Team have stated in the last few weeks.

The Japanese yen again became a safe heaven, after a release showed that the Japanese economy contracted 4.0% in the first quarter, the most on record. Some argue that, Japan’s lost decade has now become decades, since real GDP has fallen back to the 2003 level, while nominal GDP has fallen to 1992 levels…

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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