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The U.S. dollar has reached a low not seen for three years against the Canadian dollar. The loonie is gaining in forex trading on the currency market against the greenback, thanks to a better economic outlook and increased commodity prices.

As a commodity currency, the Canadian dollar receives some help when commodities like oil and gold head higher. And, with oil prices surging above $107 a barrel, Canada is getting plenty of support. Also helping is the fact that the U.S. job market is starting to improve, and that means that there is a chance that consumers could help boost the global economy.

With investors and forex traders anxious for higher yields, and feeling a little safer, it is no surprise that other currencies are getting some play. The U.S. dollar is also down against the euro, pound and Aussie.

In the next two videos (five minute each) I explain my continued bearish stance on the U.S. Dollar. I’m open and frank about my positions that are relying on continued weakness or at least a flat dollar and where I will change my opinion about the negative sentiment.

There’s been a lot of talk about why the dollar “should” go up and my take has always been that by the time I hear it, it’s been “baked into the cake” aka already discounted.

That’s not to *dis* fundamentals. I simply feel that the rally from February 2 – 12 may have been when the fundamentals were moving the U.S. Dollar Index higher.

For those of you who are thinking “Raghee I’ve heard there will be a rate hike.” Well, watch the videos and see for yourself what the Fed Funds futures are reflecting and then ask yourself how realistic is a rate hike before October to December this year? I don’t feel we’ll see one until late this year or early next.

Full article…

Euro is moving higher in forex trading against the U.S. dollar today, thanks to a round of news that is translating into possible economic success for the euro zone.

German factory orders exceeded expectations, helping provide a little jolt for the euro zone. European markets, including the euro in forex trading, are headed higher on the news. As the largest economy in Europe, Germany is naturally the leader when it comes to euro zone economics.

Also helping the euro in forex trading is U.S. dollar weakness. The dollar is down as speculation runs rampant that America will participate in another round of quantitative easing in the name of economic stimulus.

The big news in the forex market these days is the plight of the dollar. After a vigorous recovery in the first half of 2010 which was marked by the weakness of the Euro, the greenback has falled to an eight month low against a basket of other currencies and is exploring the edges of a 15 year low agains the Yen (click here for an analysis of the USD/JPY).

This comes as traders are worried that the Federal Reserve will take further actions to ignite a renewed financial recover in America. This basically means keeping interest levels low and printing more money. Both of these steps are bad for the Dollar.

However, there’s another dark cloud looming in the dollar’s horizon: the midterm elections in the United States which will be held in 4 weeks time.

No one knows exactly what is going to happen in these elections nor what the political landscape will be the day after.

Full article…

Quote of the day: Fortune favors the prepared mind. – Louis Pasteur

EURUSD

Trading strategy: standing aside

The dollar recovered some losses and former resistance region at 1.3680 is still under pressure as the pair continues to orbit on a 80 pips range – around it. Current pullback is most likely corrective, but it is a bit too early to say it is completed. However, upside remains favored on a short-term basis, minor intra-day resistance emerging at 1.3725 – where a break should stimulate further gains towards 1.38, while on the lower side – below 1.3640 would signal more weakness, hence providing a selling opportunity targeting 1.3550/70. The economic calendar remains lighter today, after the RBA surprised the market by keeping the rate unchanged at 4.5% for the fifth straight month. Full article…

An interesting article that appeared in the LA Times a few days ago talked about the possibility that the FED and the US Government may set out to deliberately reduce the value of the US Dollar in relation to other currencies in an effort to improve the condition of the US economy.

This is something that every Forex trader should take notice of and indeed, the recent devaluation of the Dollar may indicate that some traders are already anticipating such initiatives.

I talked a little about this in a recent post about the value of the USD in which I said that the FED may wish to lower the value of the dollar to increase exports of American products.

Now it seems that the US Congress has joined this trend as one congressional subcommittee has announced a number of steps against China due to its refusal to allow the Chinese currency, the Yuan to rise in value in relation to the dollar.

Let me explain what is happening: the lower a currency is, the cheaper the prices of products made in that country when they are exported.

Full article…