USD CAD - Daily Candle Chart 20th March 2009

USD CAD - Daily Candle Chart 20th March 2009

Today’s fundamental news relevant to the usd to cad pair starts in Canada later today with the release of core retail sales figures which are expected to show a reversal from the negative figure last time around of -3.2% to a move back into positive territory at +0.4%.  Core sales tends to be a better indicator of consumer demand since it excludes car sales which, under normal circumstances, would account for 20% of all purchases .  The Royal Bank of Canada pay close attention to this data which forms part of their decision making process for economic policy and therefore the effect on the market on release can sometimes be dramatic.  At the same time the retail sales figures are also released but these have a less of an impact. At 4.30 we have Ben Bernanke delivering a speech entitled “The Financial Crisis and Community Banking”.

On the technical front the usd to cad continued its bearish tone and whilst the candle ended the session on a down bar the lower shadow is significant suggesting that we could see a short term reversal in the next few days, particularly as we are deep in the heavy congestion zone of the past few months.   My suggestion for today is to take a wait and see approach and see if this signal is confirmed early next week.  If it is not confirmed we can ignore it and assume that the bearish fall in prices will continue with a move towards the strong support just above 1.2150.  If this is penetrated we could see a move lower, perhaps as far as 1.185.  With all three averages pointing lower we would need to be extremely cautious trading on a hammer signal before it is confirmed in any serious way.  The short term trend is bearish and the medium to long term outlook is sideways. Check out the new support and resistance video on the latest currency news.