Short CADJPY; Pending Short GBPCHF, GBPAUD

The CADJPY has broken below its hourly rising channel subsequent to the Bank of Canada interest rate decision. As widely expected, the central bank held its key overnight lending rate at 1.00 percent for the month of January. Policy makers said that the strong Canadian dollar is hurting the recovery in exports, and went onto add that they see growth in 2011 and 2012 at 2.4 and 2.8 percent respectively. More importantly, according to the bank's predicitions, the economy has reached full employment and tightening is unlikely to occur in the near term. I will stay short from 83.50 with an open target (for now) and a stop at 84.20 which is slightly above the 200-day SMA. A break and a close above this moving average warrants concern.

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The GBPCHF has extended its 6 day advance to reach an intraday high of 1.5403, while the GBPAUD pared yesterday’s decline to test the 100-day moving average. Indeed, the British pound rallied against most of its major currencies during Tuesday’s trade as U.K. consumer prices rose an annualized 3.7 percent in December after climbing 3.3 percent the month prior amid economists’ expectations of 3.4 percent. Indeed, today’s report marks the highest level since April. Looking ahead, inflation in the U.K. is expected to remain at its elevated levels amid the increase in the value added tax measures. Indeed, any thoughts about further asset purchases will likely be placed on holds as the region continues to battle elevated consumer prices. As both the GBPCHF and the GBPAUD have shown an incredible rally as of late, market participants should not rule a slight correction in either pair. Going forward, traders should keep a close eye on the GBPAUD hourly rising channel which has remained intact since January 3rd. At the same time, the GBPCHF 4 hour ascending channel should not be overlooked. Good luck trading