CROSS COUNTRY: MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The currency markets continue to consolidate as we head into the mid-day with all of the majors trading within their previous day’s ranges thus far. US equities and commodities are also relatively quiet. The big data release this morning came out of Canada, with retail sales much better than expected at 1.9% after analysts had been looking for a 1.0% print. This was the first rise for the data series in 4 months and follows an alarming December print. As a result, Cad is one of the top performers on the day against the buck. Fed Duke was on the wires this morning saying that housing triggered the collapse in the global credit market. Elsewhere, a number of ECB officials have been talking dovish including Weber who indicates that the European Central Bank will again need to lower interest rates. In cross related action, Eur/Jpy has been getting some attention with the market breaking above 130.00 barriers and looking to take out more significant topside resistance by 131.00. Commercial offers have been met with good demand from model and momentum type accounts. Looking ahead, Fed Bernanke is slated to speak in Phoenix at 16:00GMT.
ANALYSIS OF SELECTED RATES
Nzd/Usd – upside moves while impressive are still classed as corrective, and with the broader USD sell-off now looking stretched across the board, we are compelled to look for opportunities to sell back into the overriding downtrend. The daily RSI is now above the critical 70 level and stochastics are well above 80 at 95. The market is also testing the 61.8% fib retrace off of the 18Dec-4Mar move and we feel any gains beyond this are will be hard to come by. The daily ATR on Kiwi comes in at 135 pips and based off of a current low by 0.5530, the projected high comes in at 0.5665. As such, we will use this level as an entry point for our short trade. Strategy: SELL @0.5665 FOR A 0.5400 OBJECTIVE, STOP @0.5765. Stops to be trailed to cost (break-even) on a break back below 0.5600. If trade triggers and 0.5600 not broken, position to be closed out at NY close (5pm EST) on Friday. Recommendation to be removed if not triggered by NY close on Friday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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