Because of the holidays in the US, price movements have been restricted for most currencies other than the Euro. Yesterday, Miss Yellen confirmed that she will be leaving the Feds and while she was expected to talk today, investors will be tuned to hear what she has to say especially on matters interest rate path now that they are expected to hike rates one more time in December.
If she hints or comment anything positive about the situation of the US economy especially on topics related to inflation and labor conditions, the USD should strengthen. In Europe, it’s all about Merkel and how she will compose her government which is fractious and include some minority parties. How she will manage a win-win coalition is what investors are watching going forward. Otherwise, the Euro looks firm and has capped recent losses. This Euro and Yen strengthen can be partly pinned on improving fundamentals but mostly to reducing 10-year yields. Note that despite the fluctuation, any drop of this yield can trigger USD erosion and it did so yesterday after yields dropped 1 basis point to about 2.35%. Generally speaking, these yields have been flat but technically, it is bottoming and if it begins rising, Yen, commodity currencies and precious metals will bear the brunt.
To commodities now and the CAD is really suppressed with the increasing US oil output. Remember we have an OPEC meeting next month and while their effort has been commendable, the US oil production is steadily increasing and filling the gap left by the reduced oil production by OPEC countries. It is largely expected that they will extend this consensus but the question that lingers is for how long. Overly, judging from oil prices, the glut has been reduced somehow thereby shoring prices.
Technically speaking, the Mexican Peso is on a rampage, BUT, this is going to be a temporary bear run. In the monthly chart there is a stochastic buy signal. On the daily chart, the main support trend line was broken through on November 18 but if we paste a Fibonacci tool between July lows and October highs, then we realize that the support lines perfectly coincides with 38.2% and 50% retracement levels. Our entry will be in the 4HR chart and once a stochastics buy signal is printed and confirmed we shall enter long positions ideally at the marked buy-zone.