Forex for the week of February 17, 2013 – Risk On?
The Forex markets were heavily weighted towards the late part of the previous week as far as momentum is concerned, and without a doubt the most interesting pair was the GBP/USD. This pair has been one that we have been looking to buy on the breakout, and we got that chance this past week – especially on Friday as inflation numbers in the United Kingdom were a bit better than anticipated.
With this move, we are expecting more bullish action in the GBP/USD, and we believe that pullbacks are going to end up being buying opportunities. We are targeting the 1.70 level over the next week or two, as the momentum has certainly shifted into a higher gear at this point.
Another pair that has caught our intrest is the USD/CAD. The market looks as if we are starting to see support again – and at an important area the 1.10 level. The area looks like a “thick” zone, as it extends all the way down to the 1.0850 level. The candle on Friday was a nice hammer, so we think that the momentum to the downside is failing. In fact, if you draw a Fibonacci retracement from the bottom, we found support at roughly the 38.2% area as well. This may play into the hands of those expecting a move above 1.10 for a run to the 1.12 area.
In the metals market, we have seen a break out towards risk again, as the gold markets shot straight up. Friday was good to the gold and silver markets, so it appears the hunt for metal begins anew. The market has cleanly broken above the $1300 level, and now looks poised to run to the $1400 level. This should have the markets thinking “risk on.”
Monday – NZ Retail Sales q/q, Japan Monetary Meeting Minutes, Bank of Japan Press Conference
Tuesday – UK CPI y/y, German ZEW
Wednesday – UK Claimant Count Change, Unemployment Rate, MPC Official Bank Rate Votes, USA FMOC Meeting Minutes
Thursday – USA Core CPI M/m, Unemployment Claims, Philly Fed Manufacturing Index
Friday – Canada Core CPI m/m, Canada Core Retail Sales m/m, USA Existing Home Sales