USD vs CAD 6 May 2010

Thursday, May 6th, 2010

USD CAD Chart Range 6 May 2010

Having duly achieved parity in the last few weeks and tested 0.95 as a result, the dollar to cad pair appears to  have reached the end of this particular cycle as it now attempts a longer term recovery and move higher.  Technically the rounded bottom of April and May suggests a solid platform of support and in the last 2 days we have seen the dollar cad break through an initial level of resistance between 1.02 and 1.028 as it continues its path higher marginally touching 1.04 in early trading this morning.  The short term moving averages are now beginning to turn and the 9 day in particular is providing strong support to the rally higher which is further emphasised by the crossing of the 14 day average above the 40 providing a bull cross signal.  For this rally to be maintained we need to see an initial break and hold above the 200 day moving average which currently sits in the 1.05 price area and once this has been achieved then 1.068 becomes the next logical target where the upper level of recent resistance now resides.  Should this level be achieved then we can expect to see a possible re-test of 1.1 in due course largely fuelled by a further surge in the US dollar which continues to reclaim lost ground on the dollar index.

Important items of fundamental news for the US and Canadian dollar include yesterday’s ADP figures which came in better than expected at 32k against a forecast of 29k which tends to suggest that tomorrow’s non farm payroll figures for the US are likely to come in better than expected (the current forecast 197k).  For Canada today we have Building Permits which are due to be positive at 0.6%, improving on last month’s figure of -0.5% whilst in the US we have the unemployment claims forecast at 441k, marginally lower than last week’s 448k.  Later in the day we have the IVEY PMI data, a sentiment indicator, forecast to come in flat at 57.7 – virtually unchanged from last month.  Finally on Friday we have the unemployment data for Canada which is expected to be positive at 20300 – adding a further 2400 jobs since last month, with the unemployment rate remaining flat at 8.2%.

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USD to CAD – Daily Chart 18th March 2010

Thursday, March 18th, 2010
USD to CAD Daily chart

The usd to cad continued to grind lower yesterday once again, ending the currency trading session with a narrow spread down candle, closing below all three moving averages and with a small wick to the lower body. The bearish move lower has been remorseless in the last few weeks as the usd to cad has slid ever lower in a series of small steps, with the break below the 1.02 region of particular significance as we represented the last area of potential support to any further fall. Indeed this area had previously triggered a rally higher, but on this occasion failed to provide any brake to the heavily bearish picture, which now indicates a period of further pressure on the pair as we approach 1.00 once again. With all four moving averages now pointing firmly lower, and with the deep and sustained price congestion now above, there is only one way to trade the usd to cad pair at present, and that is to the short side. However, as word of caution before we all build increasingly heavy trading positions, there is a substantial area of price support awaiting in the 1.0 price area and this could provide the much needed platform for the pair to re base and bounce higher in the medium term. Any breach of this area however, will suggest a much deeper move is in prospect possibly even as far as 0.94 in the longer term. However, in the meantime, enjoy riding the down escalator, and continue to lock in profits with trailing stops as we go.

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USD to CAD – Daily Chart 9th February 2010

Tuesday, February 9th, 2010
usd to cad daily chart

USD to CAD - Daily Forex Chart 9th February 2010

The usd to cad forex pair continued to lurch higher again yesterday, closing with a narrow spread up candle with a deep lower wick which once again seemed to find some support from the 9 day moving average, a positive signal in the short term that the recent rally looks set to continue. With the lower level of the price channel of the last few weeks now firmly established at the 1.02 price level, the likelihood of the usd to cad sinking to parity seems to have receded once again, as the short term recovery continues supported by the short term moving averages. However, we are now approaching two key technical levels which could provide a barrier to any further progress in the short term, the first of which is the 200 day moving average. which now sits immediately above. In addition the 1.08 price level heralds the start of an area of deep price congestion, which will require sustained momentum if the move is to continue, and as a result we could see the recent rally falter at this level. Technically therefore the daily usd to cad chart, whilst remaining mildly bullish, could now be running into some serious resistance in the next few days, which could see the move falter in the short term. Only a clear break and hold above 1.09 coupled with a breach of the 200 day average will signal that the move is likely to continue.

Today is another day of thin fundamental news, with the forex markets once again trading on rumour and speculation, and for the usd to cad pair we are now waiting for the Canadian and US Trade Balance figures due out tomorrow. For the US the forecast is for -35.7 against a previous of -36.4 and for Canada -0.1B against a previous of -0.3B, and with both sets of figures released simultaneously this could result in little movement in the pair, unless one or other is well above or below forecast. Later in the day we have FED Chairman providing testimony to the House Financial Services Committee, and as usual this comes in tow parts. The first is a prepared statement (a text version is made available on the Fed’s website at the start), which is then followed by a question and answer session from committee members. Since the questions are not known beforehand they can cause heavy market volatility as a result as the forex markets ( and others ) listen to his unscripted replies for clues to future FED policy. In addition tomorrow, we also have crude oil inventories, which as always will have a greater impact on the Canadian dollar, rather than it’s US neighbour, given Canada’s standing in the energy complex. Last week’s numbers saw a big build in reserves which surprised the markets.

In summary, what is curious at present for the Lonnie is the lack of upwards momentum given the recent surge in the US dollar of the last few weeks which has seen other major currency pairs trending strongly as a result. Clearly for the usd to cad this has not been the case, and part of the reason for this is the huge influx of capital into the country, with Canada seen as one of the few countries to avoid the worst of the banking crisis and economic slowdown, coupled with its preeminence as a leading player in the energy complex. As a result we could see a further period of sideways consolidation in the medium term, unless the technical breakout outlined above occurs in the short term.

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