Based on the trading action Tuesday, it looks as if traders are betting on another interest rate cut. Continue to look for support to erode and for this pair to trade under 1.9200.

Are the Japanese Yen and Swiss Franc Ready to Decouple from the Stock Market?

Despite the selloff in the U.S. stock market on Tuesday, the Dollar remained firm against the Japanese Yen and the Swiss Franc. This is the second time in a week that this occurred which may be a signal that these pairs are getting ready to decouple from the stock market. Although more evidence is needed to see if the trend is beginning to turn, it does not seem like traders are automatically willing to sell Yen and buy Dollars on bullish days or buy Yen and sell Dollars on bearish days.

Small speculators should watch for trading traps and not automatically assume a carry trade is going to take place.

Strengthening Economy and Firm Energy Prices Support Rally in Canadian Dollar

The USDCAD traded lower on Tuesday as traders continue to focus on the surging crude oil market and the strengthening Canadian economy.

Back-to-back strong economic reports in employment and housing have provided support for the Canadian Dollar and have sent signals to the Canadian financial markets that another interest rate cut may not be necessary.

For several months the pair has been trading inside of a tight range. An improving economy coupled with higher crude oil could prove to be bearish for the USDCAD.

Slowing Economy Provides Support for Aussie and Kiwi

The AUDUSD and NZDUSD have been under pressure lately as government reports are indicating that the series of interest rate hikes earlier in the year have finally led to a slowdown in the economy.