MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The much stronger than expected new home sales data this morning has failed to fuel any additional buying of currencies, instead favoring some broad based profit taking. The reading showed the biggest jump in the data series since September 2000 and the lowest inventory in over a decade. If there was some room for concern, it could be found in a breakdown of the regions, with the South still lagging after putting in the second weakest print on record. Dallas Fed manufacturing was also released and showed a much weaker than expected result after coming in more than doubly worse than consensus at -25.5%. Also generating some attention this morning has been the kickoff of the US/China Strategic and Economic meeting. President Obama and Treasury Secretary Geithner have called for the promotion of more savings at home to help with the economic recovery and global balance. Meanwhile, Chinese Vice Premier Wang has said that there are more visible signs of recovery and that China’s efforts have been paying off. US equities are starting to give back in early trade Monday while commodities trade flat. The Canadian Dollar is the strongest major currency on the day against the buck, and the Yen continues to lag.
ANALYSIS OF SELECTED RATES
Usd/Cad: Despite the exit on Friday for a 30 point loss, we are not abandoning the idea of looking to get long the pair with the market oversold on the daily chart and in need of a healthy corrective bounce. While fresh yearly lows were just posted earlier this morning, we look for another drop into the afternoon to set up our long trade. STRATEGY: BUY @1.0740 FOR AN OPEN OBJECTIVE, STOP @1.0490. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON MONDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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