Sterling & Yen Recover in Quiet US Session; Aud/Cad Analysis (Midday Snapshot)

MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

Not a lot to talk about as we head into the final hours of trade for the session, with the market failing to react to the mixed session of US data, in the form of slightly better GDP and weaker jobless numbers. While the Yen and Sterling are still the weaker currencies on the session, the USD has come back under some mild pressure, to open some fresh Yen and Sterling buying into the afternoon. Treasury Sceretary Geithner and Fed Chair Bernanke have been testifying all morning in front of the House Oversight & Government Reform Committee, with no real market moving influence. Bernanke repeated that the Fed acted appropriately on issues of public disclosure in the BofA and Merrill deal, while Geithner has said that the Treasury will submit legislative language in the next few days on the creation of a consumer protection agency for the financial sector. Meanwhile, the Fed has announced changes to its emergency lending programs, while also extending the life of such programs. US equities are very well bid on the day, with all major indices approaching 2% gains. Commodities have also regained their bid tone with oil breaking back above $70.  

ANALYSIS OF SELECTED RATES



Aud/Cad: We suspect the market is approaching a medium-term top with gains extending to the 78.6% fib retracement off of the major 2008-2009 move. Daily studies are also approaching overbought levels and with some consolidation highs approaching from August 2008 just over 0.9300, we view any rallies beyond 0.9300 as unsustainable. The daily ATR (Average True Range) on the cross is 120 points which projects a potential high by 0.9320 on Thursday. As such, we will use any rallies above 0.9300 as a sell opportunity in anticipation of a more significant depreciation back towards the previous resistance, now turned support by 0.9000. All relevant moving averages are also well below the current market price, with even the 10-Day SMA some 150 points below. Strategy: SELL @0.9315 FOR AN OPEN OBJECTIVE, STOP @0.9415.  Recommendation to be removed if not triggered by NY close (5pm ET) on Thursday. 

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