MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
With the exception of the Yen, the USD continues to extend gains in the New York session, benefitting from the sharp pullback in equity prices and elevated risk aversion. The Australian Dollar continues to be the across the board underperformer on the day now down nearly 3% against the greenback, with the severe drop in oil prices also impacting the higher yielding commodity currency. This despite the relative gains in gold prices which track nearly 2% higher. All safe haven and lower yielding FX have benefited greatly thus far, with the Yen crosses and Eur/Chf selling off hard in New York as a result of the market uncertainty. Contributing to the risk aversion has been the latest leading indicatordata out this morning which has come in weaker than expected. The Euro has been well offered on the day but is nowhere near the weakest currency, with comments from ECB Nowotny perhaps propping the currency somewhat after the official said that he would only support a small rate cut. Earlier rumors that the bank stress tests were completed have been denied with the much anticipated results not to be disclosed until early May. This is a big week on the US earnings calendar and investors will be focused on the corporate results all week to better gauge the health of the US economy. IBM is slated to report after the bell today. In Canada, international securities transactions for February were released showing a drop from the previous months $C10.44B down to $C6.11B. On the Fed circuit, Fed Evans and Bernanke are scheduled to give brief remarks at conferences today while Fed Kohn is scheduled to give a more formal talk on the US economy this evening.
ANALYSIS OF SELECTED RATES
Eur/Cad: The market has been in the process of correcting since reaching 1.6975 back on March 20 with setbacks extending to 1.5775 thus far ahead of the latest minor bounce. However, with daily studies now showing oversold and the cross stalling just ahead of key medium-term range support by the 2009 lows at 1.5645 (2Feb low), scope exists for a reversal from current levels and significant gains over the coming days. Monday’s very constructive bullish outside day price action has resulted in a break of 4 consecutive daily lower highs and could open the door for a push back towards next resistance by 1.6135 into Tuesday. A break back above 1.6135 will then accelerate gains to 1.6355 further up. Only back under 1.5775 delays.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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