Euro Cross Pick 05.30.2011
Keeping up with the long EUR/CAD trade taken from 1.3762, I added to my position as the 1Q GDP report for Canada missed market expectations. I bought the pair again at 1.3954 following the release and we may see the Canadian dollar face increased selling pressures over the next 24 hours of trading as the Bank of Canada is widely expected to keep the benchmark interest rate at 1.00% in May. In light of the recent comments from the BoC, it appears as though the central bank will carry its wait-and-see approach into the second-half of the year, and Governor Mark Carney is likely to retain his pledge to ‘carefully consider’ future rate hikes as the expansion in economic activity cools. In turn, the Canadian dollar remains at risk of facing additional headwinds over the near-term, and I will maintain a soft target at 1.4102, the 4/28 high, with the stop at 1.3641.
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