FX Headlines: Looking for Stability, Markets Eye G-7 Meetings
• Japan Renews Nuclear Efforts as U.S. Sounds Alarm - WSJ
• Inflation Keeps Edging Up; Jobless Claims Take Dip - CNBC
• Bernanke in Testimony Can Show Paul How QE2 Works - Bloomberg
• U.S. Offers Backing for Libya No-Fly Zone – Financial Times
USDCAD: The USD/CAD pair pared back some of its gains in recent days, as after a broad based carry trade sell off early in the Asian session yesterday marked a clear shift in risk appetite. However, after news emerged that the Bank of Japan would be injecting liquidity into the capital markets, coupled with rumors that G-7 finance ministers would meet to discuss ways to curb the steep rise of the Yen. While the markets are clearly speculating that there will be a concerted effort in unison by the major central banks to further extend liquidity to the markets, carry trades have been continuing to unwind throughout the Asian session and most of the European session, as traders don’t think another Bank of Japan intervention will occur.
Taking a look at price action, key resistance at 0.9907 appears to be a key level of support, coinciding with the 23.6 Fibo on the August 31 to March 9 move. The pair has made three attempts on the daily chart to move above the 100-SMA, at 0.9976. Currently, the pair is finding support above its 50-SMA at 0.9862. Going forward, as risk appetite returns to the market, the pair will likely continue to decline in its descending channel, which it has been trading in dating back to early September. Further losses for the USD/CAD may be on the horizon, given that the pair is near the range top and has yet to break through it on multiple attempts.
Written by Christopher Vecchio, DailyFX Research.
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