The dollar has moved higher on the large explosion news out of Dontsk. The explosion is reported to be a car bomb. It may be the false flag that kicks off a bigger offensive by Russian troops, but the market is taking comfort it wasn’t mortar. Nevertheless, the uncertainty increases
The move higher in the greenback has seen the dollar move to new highs vs the EUR, GBP, CAD, and AUD. The greenback tested highs vs the
CHF
CHF
The Swiss franc or Confoederatio Helvetica (CHF) is the official currency of Switzerland and Liechtenstein. The CHF is currently the seventh most-traded currency in the world and is treated as a significant reserve currency.Unlike other currencies in the world’s leading economies, the CHF was notable for its currency peg with the euro (EUR). Started in 2011, the Swiss National Bank (SNB) pegged the CHF to the EUR at a minimum exchange of 1.2.At the time, the peg was justified due to the strong CHF in tandem with a weak EUR due to Eurozone debt.Switzerland was interested in lowering its currency value in what was already one of Europe’s most expensive countries. SNB Abolishes CHF Currency PegThis paved the way for the eventual removal of the EUR/CHF currency peg, which convulsed foreign exchange markets on January 15, 2015.At the time, the SNB’s unexpected decision caused the CHF to abruptly rise by almost 30 percent in value against most major currencies. This lasted for nearly 45 minutes during which there was virtually no liquidity in the currency.Consequently, this made it impossible to exit trades or for most brokerages to reconcile their exposures. As a result, stops were not honored and most traders saw their accounts totally wiped out. This also led to enhanced losses in the absence of negative balance protection, a particular vulnerability at this time for retail traders, which resulted in massive losses.Since the SNB Crisis, the demand for negative balance protection has skyrocketed and become nearly ubiquitous.Moreover, there has also been a push for greater awareness of the levels of risk when trading currencies that are the object of a stated peg to another currency by its central bank.
The Swiss franc or Confoederatio Helvetica (CHF) is the official currency of Switzerland and Liechtenstein. The CHF is currently the seventh most-traded currency in the world and is treated as a significant reserve currency.Unlike other currencies in the world’s leading economies, the CHF was notable for its currency peg with the euro (EUR). Started in 2011, the Swiss National Bank (SNB) pegged the CHF to the EUR at a minimum exchange of 1.2.At the time, the peg was justified due to the strong CHF in tandem with a weak EUR due to Eurozone debt.Switzerland was interested in lowering its currency value in what was already one of Europe’s most expensive countries. SNB Abolishes CHF Currency PegThis paved the way for the eventual removal of the EUR/CHF currency peg, which convulsed foreign exchange markets on January 15, 2015.At the time, the SNB’s unexpected decision caused the CHF to abruptly rise by almost 30 percent in value against most major currencies. This lasted for nearly 45 minutes during which there was virtually no liquidity in the currency.Consequently, this made it impossible to exit trades or for most brokerages to reconcile their exposures. As a result, stops were not honored and most traders saw their accounts totally wiped out. This also led to enhanced losses in the absence of negative balance protection, a particular vulnerability at this time for retail traders, which resulted in massive losses.Since the SNB Crisis, the demand for negative balance protection has skyrocketed and become nearly ubiquitous.Moreover, there has also been a push for greater awareness of the levels of risk when trading currencies that are the object of a stated peg to another currency by its central bank.
Read this Term and
NZD
NZD
The New Zealand Dollar (NZD) is the official currency of New Zealand and the tenth most traded currency in the world. Also referred to as the Kiwi, the currency is also utilized in several Pacific islands, including Tokelau, the Cook Islands, Pitcairn islands, and Niue.The NZD’s history is long, extending back to 1934 with the creation of the Reserve Bank of New Zealand. While far from the most traded currency in the global forex market, the NZD has a key role nonetheless.The NZD is considered as a carry trade currency given it is a relatively high yielding currency. Traders typically buy the NZD and fund it with a lower yielding currency such as the Japanese yen (JPY) or the Swiss franc (CHF).What Factors Affect the NZD?Relative to the US dollar or British pound, the NZD can be much more volatile and dependent on external economic stress or turmoil.Investors with risk appetite often buy the currency, while market fears and crises place negative pressure on the NZD.There are also several factors that can specifically drive the NZD in the forex market. This includes dairy prices as New Zealand is the largest exporter of whole milk powder in the world. A rise in milk prices can lead to spikes in the NZD. By extension, tourism numbers are also important to the NZD.This is due to New Zealand being dependent on tourism as a sizable proportion of its economy. Growing tourism would indicate a higher NZD, and vice versa.
The New Zealand Dollar (NZD) is the official currency of New Zealand and the tenth most traded currency in the world. Also referred to as the Kiwi, the currency is also utilized in several Pacific islands, including Tokelau, the Cook Islands, Pitcairn islands, and Niue.The NZD’s history is long, extending back to 1934 with the creation of the Reserve Bank of New Zealand. While far from the most traded currency in the global forex market, the NZD has a key role nonetheless.The NZD is considered as a carry trade currency given it is a relatively high yielding currency. Traders typically buy the NZD and fund it with a lower yielding currency such as the Japanese yen (JPY) or the Swiss franc (CHF).What Factors Affect the NZD?Relative to the US dollar or British pound, the NZD can be much more volatile and dependent on external economic stress or turmoil.Investors with risk appetite often buy the currency, while market fears and crises place negative pressure on the NZD.There are also several factors that can specifically drive the NZD in the forex market. This includes dairy prices as New Zealand is the largest exporter of whole milk powder in the world. A rise in milk prices can lead to spikes in the NZD. By extension, tourism numbers are also important to the NZD.This is due to New Zealand being dependent on tourism as a sizable proportion of its economy. Growing tourism would indicate a higher NZD, and vice versa.
Read this Term but remained just below the highs vs those currencies so far.
Some technical highlights:
- GBPUSD. The GBPUSD moved down to test the 100 hour MA at 1.35705. The 200 hour MA is at 1.35615. The low reached 1.35721 and bounced against the MA support level. It currently trades at 1.3587.
- EURUSD. The EURUSD moved below the lower swing area between 1.13189 to 1.13298, but has bounced back higher and trades at 1.1332. The low stalled ahead of the 50% midpoint of the move up from the Jan 28 low at 1.13075 (low reached 1.1314).
- USDCAD: The USDCAD spiked higher over the last hour or so of trading. That move was helped by getting out of the first mud pit above 1.2733 (see post here). The pair has moved up to test a swing area between 1.2747 to 1.27524 and found sellers in that area. The pair trades at 1.2743 currently. Move back below 1.2733 and there could be disappointment on the break out of the 3 day mud.
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