fundamental alert

Currencies Still Content on Sideways Trade; Looking to Sell AUD/CAD (Midday Snapshot)

Friday, 26 June 2009 14:45:15 GMT  |  Joel Kruger, Technical Currency Strategist

MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

A very quiet and uneventful final session of trade thus far with market participants seemingly more focused on heading into the weekend following the up and down directionless week of trade. The US data was on the whole better than expected with personal income and Michigan confidence the highlights of the day. Personal consumption and personal spending were in line with market forecasts. However, as has been the case of late, these economic releases failed to materially factor into price action, with the markets focused on broader global macro drivers and themes. The big story of the day came overnight with the China reserve currency talk, which ultimately weighed on the USD throughout. The Swiss Franc and Sterling are the top performing major currencies on the day, while the Canadian Dollar and Kiwi are the weakest. It has been quite a reversal of fortune for the Loonie after the single currency had initially been outperforming in European trade. But a pullback in oil prices back below $70 proved too much to ignore, and the currency was sold heavily into the US morning. US equities trade marginally lower and gold is unchanged at $941.    

ANALYSIS OF SELECTED RATES



We explored this cross on Thursday and will once again look for an opportunity to sell on Friday.

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 very close to overbought, 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 0.9350 on Friday. As such, we will use any rallies into the mid-0.9300’s 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 170 points below. Strategy: SELL @0.9340 FOR AN OPEN OBJECTIVE, STOP @0.9440.  Recommendation to be removed if not triggered by NY close (4pm ET) on Friday. 

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