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Risk Appetite Weighs on Swissie– CAD Surges Ahead of Data

Risk Appetite Weighs on Swissie– CAD Surges Ahead of Data

2011-05-19 14:08:00
Michael Boutros, Technical Strategist
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Risk_Appetite_Weighs_on_Swissie_CAD_Surges_Ahead_of_Data_body_Picture_2.png, Risk Appetite Weighs on Swissie– CAD Surges Ahead of DataRisk_Appetite_Weighs_on_Swissie_CAD_Surges_Ahead_of_Data_body_Picture_3.png, Risk Appetite Weighs on Swissie– CAD Surges Ahead of DataRisk_Appetite_Weighs_on_Swissie_CAD_Surges_Ahead_of_Data_body_Picture_4.png, Risk Appetite Weighs on Swissie– CAD Surges Ahead of Data

The Loonie continued its advance against the greenback for a third consecutive session today as returning risk appetite and stronger commodity prices saw traders move back into higher yielding assets. The USDCAD pair continues to trend lower, with the three-day descending channel remaining intact. Interim support rests at the 50% Fibonacci retracement taken from the May 11th advance at 0.9650. A break below the lower bound trendline sees targets at the 61.8% retracement at 0.9620 and the 0.96-handle. Topside resistance is eyed at the 0.97-figure, backed by the 23.6% retracement at 0.9725 and 0.9760. Traders will be eyeing economic data out of Canada tomorrow, with the April CPI and retail sales figures on tap. Inflation is expected to rise to 3.4% y/y, up from a previous print of 3.3% y/y, while retail sales are seen climbing to 0.9% m/m from 0.4% m/m.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.9654

20-Day SMA

0.9598

10-Day SMA

0.9662

2011 Low

0.9443

Upcoming Events

Date

GMT

Importance

Release

Expected

Prior

5/20

11:00

MEDIUM

Consumer Price Index (MoM) (APR)

0.5%

1.1%

5/20

11:00

HIGH

Consumer Price Index (YoY) (APR)

3.4%

3.3%

5/20

11:00

MEDIUM

Bank Canada Consumer Price Index Core (MoM) (APR)

0.2%

0.7%

5/20

11:00

HIGH

Bank Canada Consumer Price Index Core (YoY) (APR)

1.6%

1.7%

5/20

11:00

LOW

Consumer Price Index (APR)

-

119.4

5/20

12:30

MEDIUM

Retail Sales (MoM) (MAR)

0.9%

0.4%

5/20

12:30

MEDIUM

Retail Sales Less Autos (MoM) (MAR)

0.7%

0.7%

Risk_Appetite_Weighs_on_Swissie_CAD_Surges_Ahead_of_Data_body_Picture_5.png, Risk Appetite Weighs on Swissie– CAD Surges Ahead of DataRisk_Appetite_Weighs_on_Swissie_CAD_Surges_Ahead_of_Data_body_Picture_6.png, Risk Appetite Weighs on Swissie– CAD Surges Ahead of Data

The swissie was the worst performer overnight as strength in global equities saw traders jettison Europe’s haven currency in search of yields. The USD/CHF pair broke through interim resistance at the upper bound trendline of the descending wedge formation that has held the pair since the start of the week. Note that we do see bullish divergence in the RSI indicator, with relative strength suggesting the move may be overextended here and may see a pullback before moving higher. Interim support now rests at 0.8840, backed by the 0.88-handle and 0.8780. Topside targets are held at 0.8880 followed by 0.8920 and the 50% Fibonacci extension taken from the May 4th all-time lows and the overnight lows at 0.9845.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8959

20-Day SMA

0.8767

10-Day SMA

0.8822

2011 Low

0.8551

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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