MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The USD remains very well bid in the US session, with lower equity prices, a sharp pullback in commodities and weaker durables goods data all seen as the driving forces behind the price action. The Euro and Swissie have been the more offered currencies, with the commodity bloc not as badly hit, despite the heavy selling in oil and gold. Inventory data was released and showed a higher than expected rise in oil inventories to help accelerate the declines in oil prices into the London fix. Some of the relative weakness in the Euro has also been attributed to the much lower provisional German CPI release which produced the weakest annual inflation reading in Germany since 1987. Also, concerns over the German banking sector have not helped which have resulted in some heavy cross related selling in Eur/Gbp. Eur/Chf was well bid overnight following intervention comments from SNB Jordan, but later pulled back after SNB spokesman Haymoz declined to comment on SNB sales. Fed Dudley was on the wires earlier and said that the recession appears to be waning but cautions that there are a number of factors that could make the recovery pace considerably slower than usual. All currencies are tracking lower against the buck, with the Aussie getting hit the hardest and Sterling outperforming.
ANALYSIS OF SELECTED RATES
Eur/Cad: We have been trying to sell the Canadian Dollar this week and haven’t had much luck with our entry orders failing to be met. The cross shows a daily RSI reading below 30 and is currently testing some trend-line support from early 2009. We would expect this to open a much needed and healthy corrective bounce over the coming days with a break back above 1.5400 required to accelerate and confirm short-term basing prospects. Nevertheless, we will look to take advantage of intraday oversold readings on Wednesday in an attempt to capture an ideal risk/reward entry. STRATEGY: BUY @1.5260 FOR AN OPEN OBJECTIVE, STOP @1.5060. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON WEDNESDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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