110312 - The Week In Pictures (Sendai Tsunami effects)

Continuing strength of CAD and CHF, plus the dramatic events in Japan, were responsible for some interesting happenings this week. It is sometimes easy to take a position, however right or wrong, on the major currency pairs, but the crosses remain a little more inscrutable. Yen for instance, started to fall as soon as the news of the 7 metre high tsunami was broadcast. The market then surprised with a huge rally, which continued for another 8 hours. The initial position is usually negative on bad news, with astute traders knowing that any dip or rally, once overdone, usually retraces. So the question is how do events like this effect, say, AUDJPY, CADJPY or CHFJPY? The fortunes of Australia, being a major trading partner with both Japan and China, are inextricably linked to both number 2 and 3 economies, but what about another commodity currency like CAD, how will that react? Read on ....

AUDCAD showing an initial dip, followed by a strong rally starting at 0700 on the chart (the 8.9 magnitude quake that hit Japan started at 02:46 local time).

AUDCHF exhibiting similar effect, great signals from Swing indicator.



AUDJPY zoomed in to show the multiple take profits executed by Watcher.



AUDUSD chart showing high correlation with AUDCAD.

Tsunami effect on CADCHF shows less of a retracement after an initial fall, indicating the bigger detrimental effect on CAD.

This is backed up by the greater downward swing effect seen here in CADJPY. A 38.2% retracement upwards is then exhibited.

CHFJPY showing an almost, but slightly lower retracement.

USDCAD remains in the doldrums (Google it!) after reaching a new nDay low on Wednesday of 0.9677.

USDCHF similarly bound to the lower end of the allowed grid, after rising significantly off recent lows. For both these latter pairs, the decision has to be made daily as to whether to cut older out of the money trades in order to allow the take profits from new trades to happen. Generally, if there are less than the maximum number of trades, and at least one trade looks like it has a chance of making a profit, then I leave it until the next day. USDCHF has recovered well enough, now I am only watching USDCAD closely each day.