MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
Although US equities opened lower, they have not performed nearly as poorly as futures were indicating (now up on the day) and we have see some profit taking on USD longs into the London fix. Nevertheless, the flight to safety trade has been the preferred trade on the day with the Yen and USD the top performers. News of a fighter jet escorting a commercial plane over the Hudson River in New York had some traders a little nervous but this was later said to be a routine drill. The IMF’s Strauss-Kahn was on the wires earlier expressing hopes that the worst was over but did not see any signs of recovery in 2009. Meanwhile ECB Hurley noted the improvement in global indicators but also conceded that output would contract further. Hurley did not rule out the possibility for additional cuts. The Mexican peso continues to be the weakest performing currency on the day as fears escalate over the outbreak of the deadly swine flu virus. On the commodity front, oil is the big loser, down some 5.0% while gold is also lower by some 0.5%.
ANALYSIS OF SELECTED RATES
Usd/Cad: Despite the sharp pullbacks seen in recent days, the overall structure still remains quite constructive with the market posting a series of medium-term higher lows over the past several months. A fresh higher low is now sought out by 1.1980 (16Apr low) ahead of the next major upside extension back above 1.3065 over the coming weeks. We had attempted a long trade on Friday by 1.2100 but exited as per instruction on the close. We will once again look to buy, this time on dips towards 1.2000. Strategy: BUY @1.2020 FOR A 1.2500 OBJECTIVE, STOP 1.1880. Stops to be trailed to cost on a break back above 1.2070. If trade triggers and 1.2070 not broken, position to be closed out at NY close (5p NY time) on Monday. Recommendation to be removed if not triggered by NY close on Monday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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