FX Trading

The COT index indicates that traders are extremely pessimistic the Canadian dollar. Since this reading follows sideways trading, the CAD may soon break down.

FXCM Inc. announced today that it has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its Class A common stock.

The AUDUSD has pared yesterday’s advance as U.S. traders came back online today. With risk aversion regaining its footing, if we continue to see the U.S. dollar strengthen against the Aussie, and break below the rising trend line on the 15 minute chart, I would not rule out further downside risks.

The USD/CHF has been in a bearish trend on double dip concerns as the Swiss Franc has regained its safe haven status. Stronger than expected U.S. fundamentals has eased concerns, slowing downside momentum. However, we have seen volatility increase today as European banking concerns re-emerged which could decrease the attractiveness of the Franc as potential shelter. Therefore, we could see the pair stagnate as traders better assess the potential risks for lending institutions that are holding potentially toxic sovereign debt, making it a scalping target.

The Japanese Yen rallied to a fresh yearly high against the greenback on Tuesday and is the best performing currency amongst the majors, while the Euro pared the decline from the previous week and slipped to a low of 1.2736 as investors scaled back their appetite for risk.

The Bank for International Settlements (BIS) published its latest Triennial Central Bank Survey of the FX market on Wednesday, which draws on data from 53 central banks fortransactions in the month of April. The survey reveals that the market has continued togrow strongly, with a 20% increase in overall turnover since 2007 to a mind-bogglingUSD4,000bn – a day! This clearly illustrates that the FX market remains the largest and most liquid financial market.

Kasper Kirkegaard & Sverre Holbek, Senior Analyst, Danske Bank

The EURUSD decline from 12920 is in 5 waves (impulsive), which suggests that the larger trend remains down. This leaves the rally from the low as a 3 wave affair (corrective). The euro is vulnerable.