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16 May 2014
USD/CAD headwinds in risk aversion
FXStreet (Guatemala) - USD/CAD is trading at 1.0878, down -0.05% on the day, having posted a daily high at 1.0890 and low at 1.0864.
USD/CAD has not been subject to a great deal of data at the end of the week, and thus there has been little change. However, Shaun Osbourne, Chief FX Strategist at TD Securities notes that the ongoing risk aversion should be a bit of a headwind for the CAD; typically, since 2008 at least, the CAD has been one of the more tightly (positively) correlated major currencies to equity market swings, alongside the AUD and NZD. However, our correlation studies (measuring rolling 100-day “windows” of correlated daily returns) shows that the CAD’s correlation with equities has dropped steadily over the past year or two to virtually zero today (from a recent peak of +86 in late 2011) - something that our correlation matrix on the front page (measuring shorter term relationships) reflects closely”
USD/CAD technical overview
Osbourne explained, “From a technical point of view, there are few significant pointers to pick up on this morning. The overnight range has been narrow but it has also generated some strong, if only short-term, price signals at both extremes. Broadly though, we think the USD is still consolidating and should continue to derive buying interest on modest weakness. The broader pattern of trade, the bull wedge formation we have referred to frequently in the recent past, still suggests upside risks for USD/CAD while support in the low 1.08 zone holds. The seasonal tendency for USD/CAD to spike in May/June through early July should not be forgotten either."
USD/CAD Levels
With spot trading at 1.0879, we can see next resistance ahead at 1.0885 (Daily Open), 1.0885 (Weekly Low), 1.0886 (Hourly 200 SMA), 1.0890 (Hourly 100 SMA) and 1.0890 (Daily High). Support below can be found at 1.0878 (Hourly 20 EMA), 1.0876 (Daily Classic PP), 1.0864 (Daily Low), 1.0858 (Daily Classic S1) and 1.0849 (Yesterday's Low).
USD/CAD has not been subject to a great deal of data at the end of the week, and thus there has been little change. However, Shaun Osbourne, Chief FX Strategist at TD Securities notes that the ongoing risk aversion should be a bit of a headwind for the CAD; typically, since 2008 at least, the CAD has been one of the more tightly (positively) correlated major currencies to equity market swings, alongside the AUD and NZD. However, our correlation studies (measuring rolling 100-day “windows” of correlated daily returns) shows that the CAD’s correlation with equities has dropped steadily over the past year or two to virtually zero today (from a recent peak of +86 in late 2011) - something that our correlation matrix on the front page (measuring shorter term relationships) reflects closely”
USD/CAD technical overview
Osbourne explained, “From a technical point of view, there are few significant pointers to pick up on this morning. The overnight range has been narrow but it has also generated some strong, if only short-term, price signals at both extremes. Broadly though, we think the USD is still consolidating and should continue to derive buying interest on modest weakness. The broader pattern of trade, the bull wedge formation we have referred to frequently in the recent past, still suggests upside risks for USD/CAD while support in the low 1.08 zone holds. The seasonal tendency for USD/CAD to spike in May/June through early July should not be forgotten either."
USD/CAD Levels
With spot trading at 1.0879, we can see next resistance ahead at 1.0885 (Daily Open), 1.0885 (Weekly Low), 1.0886 (Hourly 200 SMA), 1.0890 (Hourly 100 SMA) and 1.0890 (Daily High). Support below can be found at 1.0878 (Hourly 20 EMA), 1.0876 (Daily Classic PP), 1.0864 (Daily Low), 1.0858 (Daily Classic S1) and 1.0849 (Yesterday's Low).