Swissy and Aussie Top Performers on Lightened Holiday Trade (Midday Snapshot)

                                                            MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

FX market correlations have gone out the window on Monday with the lightened holiday session of trade most probably factoring into price action. It is not too often where we see Swissy and Aussie as the 1-2 outperformers on the day. The main stories continue to be the ongoing talk of a potential bankruptcy at GM and reports out from the IEA forecasting a significant drop in demand for oil in 2009. This has helped to weigh on equity prices while also driving oil back below the critical $50 level. Also generating some attention, and sourced for some of the USD selling today has been a weekend NY Times article which discussed the reduction in China’s purchases of US bonds. The Bank of Canada business outlook and loan officer surveys have been released this morning, with both showing more reason for concern. This has no doubt helped to weigh on a Loonie which is the second weakest major currency on the day behind the Yen. 

ANALYSIS OF SELECTED RATES


Eur/Aud: The cross continues to trade with a heavy tone since breaking down from a multi-day consolidation in late March. However, with daily studies showing oversold, scope exists for a bounce out from current levels back into the middle of a very familiar range that has defined trade since October 2008. Both daily stochastics and RSI reside well in oversold territory and given the additional divergence from all relevant moving averages, the risks from here are for a significant corrective bounce over the coming days. We attempted a long position several days back and managed to come away unscathed despite the intensity of the downtrend and we will once again look to take a shot at current levels. Position: LONG @1.8655 FOR A 1.9450 OBJECTIVE, STOP @1.8455. Stops to be trailed to cost on a break back above 1.8400. If 1.8400 not broken, position to be closed out at NY close (5pm ET) on Monday.  

Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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