Last week we posted three comments on specific moves in the currency markets, and one commentary regarding US Treasury Yields.
Our posting from June 8 that the next large move in GBP/JPY would be lower has yet to work out. We thought then that the technicals of the pair were leaning towards a gentle roll-over and cause the pair to give up a few big figures. But GBP/JPY has held on and even rallied up to the 162.00 level. So far today the pair has fallen hard. We still think that the fundamentals will bring this pair significantly lower in coming weeks; and we continue to search for technical indicators to confirm our beliefs.
US 10 year Treasury yields have in fact dropped as we mentioned. This has been closely tied to the USD strength and the tunr lower by the major commodities. Please visit our blog posting from June 9 to review our analysis (http://www.backbayfx.com/blog.php)
Canadian Dollar. Our call to watch for a falling Canadian Dollar (best expressed through a long EUR/CAD position) worked out well last week. We noted that the fundamentals and technicals were lining up for a drop in CAD and when the Bank of Canada gave his speech on June 11, EUR/CAD powered higher as we expected. The move went as much as 250 pips in the money, and is presently still 200 pips higher than our trade entry levels.
Our Friday posting that EUR/USD was breaking through support levels was spot on and we are presently trading at the next levels of support as we expected (www.backbayfx.com/blog.php). We continue to watch for the next leg lower in EUR/USD but would not chase this move with a market order at these levels. We will look for a pullback to slightly higher levels before initiating another short positon.
Stay Nimble!
Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com
