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Risk Currencies Outperform as Dollar Holds- Loonie Strength Persists

Risk Currencies Outperform as Dollar Holds- Loonie Strength Persists

2011-12-22 16:59:00
Michael Boutros, Technical Strategist
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Daily Winners and Losers

Risk_Currencies_Outperform_as_Dollar_Holds-_Loonie_Strength_Persists_body_Picture_2.png, Risk Currencies Outperform as Dollar Holds- Loonie Strength PersistsRisk_Currencies_Outperform_as_Dollar_Holds-_Loonie_Strength_Persists_body_Picture_3.png, Risk Currencies Outperform as Dollar Holds- Loonie Strength PersistsRisk_Currencies_Outperform_as_Dollar_Holds-_Loonie_Strength_Persists_body_Picture_4.png, Risk Currencies Outperform as Dollar Holds- Loonie Strength Persists

The loonie is the top performing currency against the dollar for a second consecutive day with an advance of 0.46% at noon in New York. Markets continued to rally today with European equities higher by 1% across the board and risk currencies continuing to outperform against the greenback. The loonie is likely to remain well supported here as crude prices advance and risk appetite improves.

The USD/CAD continues to hold within the confines of a descending channel formation with interim support seen at the 23.6% Fibonacci extension taken from the October 27th and December 8th troughs at the 1.02-handle. Subsequent floors are eyed at 1.0160, 1.0125, and 1.0080. A break above channel resistance eyes topside targets at the 38.2% extension at 1.0295, 1.0335, and the 50% extension at 1.0365. Tomorrow traders will be eyeing data out of Canada with consensus estimates calling for the October GDP print to come in flat after a read of 0.2% a month earlier. A weaker than expected print here could slow the loonie’s advance, with a break above the 38.2% extension at 1.0290 likely to fuel further dollar gains.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.0111

50-Day SMA

1.0209

20-Day SMA

1.0263

2011 CAD High

0.9406

Upcoming Events

Date

GMT

Release

Expected

Previous

12/23

13:30

Gross Domestic Product (MoM) (OCT)

0.0%

0.2%

12/22

13:30

Gross Domestic Product (YoY) (OCT)

-

3.0%

Risk_Currencies_Outperform_as_Dollar_Holds-_Loonie_Strength_Persists_body_Picture_5.png, Risk Currencies Outperform as Dollar Holds- Loonie Strength PersistsRisk_Currencies_Outperform_as_Dollar_Holds-_Loonie_Strength_Persists_body_Picture_6.png, Risk Currencies Outperform as Dollar Holds- Loonie Strength Persists

The Swiss franc is the weakest performing currency for a second consecutive day against the greenback with a modest loss of 0.17% on the session. The USD/CHF broke back above the 38.2% Fibonacci extension taken from the October 27th and November 30thtroughs at 0.9355 before encountering resistance at the 0.94-figure. A break above this level eyes subsequent topside targets at the 50% extension at 0.9445, 0.9470, and the 0.95-handle with stronger resistance seen at the 61.8% extension at 0.9535. Support rest at 0.9350 backed by 0.9320, 0.9270, and the 23.6% extension at 0.9245. We remain neutral on this pair at these levels noting that a break above the 50% extension likely to shift our bias to the topside.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8731

50-Day SMA

0.9084

20-Day SMA

0.9273

2011 CHF High

0.7079

---Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

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