MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
Economic releases in the US this morning have been mixed, with initial jobless claims and Chicago PMI coming in better than expected while personal income and spending were weaker. In Canada, the key data release was GDP which came in slightly better at -0.1% after analysts had been looking for a -0.2% drop. Any concerns over the upgrade of the swine flu virus, and Chapter 11 proceedings at Chrysler have failed to weigh on sentiment thus far, with US equities still well bid on the day, as all major indices are up over well over 1.0%. President Obama is scheduled to speak at 16:00GMT on the topic of the auto industry and market participants will be sure to pay close attention to any insights the President offers on the broader economy. The markets have been more upbeat following yesterday’s cautiously optimistic tone from the Fed and will be looking for a strong close in this impressive month of equity trade. Currencies are all over the place today, with the Canadian Dollar the strongest and the Yen the weakest. The USD has managed to find some bids thus far in the NY session but there is some good interest on dips in the Euro with a semi-official and US investment house reported on the bid by 1.3200. In other flows, a UK clearer has been scooping up Eur/Gbp off the lows.
ANALYSIS OF SELECTED RATES
Aud/Nzd: The cross rate has done a good job of standing out today with the market going parabolic intraday to surge back above figure resistance at 1.2900, putting it up nearly 2%. While we can not rule out the possibility for additional gains from here, rallies are now seen limited over the short-term to the 1.3000 area, with daily studies fast approaching overbought. There is some key resistance in the 1.2935-65 area, which represents the current 2009 and 2008 highs respectively, and we would suspect that these levels will indeed be cleared. However, any moves beyond in the days ahead will likely be more heavily influenced by stop-loss buying to 1.3000 rather than on legitimate flow. As such we recommend looking to sell rallies to 1.3000 in anticipation of a significant short-term corrective pullback.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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