Forex Yellow Pages

Canadian Dollar Lower on Weaker Economic Data

by Bob Kozak

Canadian Dollar (CDH8):

The CD opened higher at .9932 against a weaker DX, as higher metals/energy prices increased export revenue potential. Prices hit a morning Hi of .9948, before a decline in Dec.Wholesale Sales and lower core inflation set the tone for at least a 50bp rate cut at the March 4th rate meeting. The CD retraced to a daily Lo of .9824, before bouncing into the close to end the session at .9827, down 77 tics. The s/t trend remains ‘negative’ w/ ‘weak’ momentum indicators. Traders will key on the Fib .618 level of .9818, looking for support and watching the U.S. CPI and Housing Starts data. A lower open may find Support at .9785 and .9742, while an open above .9866 should find Resistance at .9909 and .9990.
Dollar Index (DXH8):

The DX opened lower at 75.98, dipped to a morning Lo of 75.93 and rose to a morning Hi of 76.09. Prices retraced to a mid-day Lo of 75.97, before a better than expected Nat’l Home Builders Asso.report showing another increase in the number of homes sold for the second consectutive month. The DX rose to a daily Hi of 76.10, before sliding into the close of 76.07, down 31 tics. The s/t trend remains ‘negative’ w/ ‘neutral’ momentum indicators. Traders will see if the DX gets support from an anticipated higher CPI report or Housing Starts & Permits data. Minutes from the last FOMC report will be released at 2:00PM. A higher open should find Resistance at 76.445 and 76.820, while an open below 76.020 may find Support at 75.645 and 75.220.

British Pound (BPH8):
The BP opened lower at 1.9483 after the U.K.government announced that it would nationalize Northern Rock Plc.and Barclay’s Plc, the 3rd largest bank would incur further ‘writedowns’ from subprime securities. Prices retraced as traders discounted a 50bp rate cut at the March 6th MPC meeting. As carry-traders took profit/risk off the table, the BP slid to a daily Lo of 1.9448, before ending the session at 1.9456, down 95 tics. The close below the 9-day MA changes the s/t trend to ‘negative’ w/ ‘weak’ momentum indicators. With inflationary concerns on the table, traders are looking for rates to be ‘unchanged’ at the next MPC meeting on March 6th, but have priced in at least 25bp-50bp rate cut by June, which could weigh on prices. A lower open may find Support at 1.9434 and 1.9413, while an open above 1.9470 should find Support at 1.9491 and 1.9527.

Euro Currency (ECH8):
The EC opened higher at 1.4730 and hit a morning Hi of 1.4742 after ‘bullish’ remarks from Bank of France Governor Christian Noyer stating a cause for optimism in the economic growth of the EZ. Prices slid to a daily Lo of 1.4713, before bouncing into the close of 1.4722, up 65 tics. The s/t trend remains ‘positive’ w/ ‘firm’ momentum indicators. Technicians will look for a ‘reaction’ off the .618 Fib level of 14739, after balking at 1.4742. Weaker U.S.economic data could send the EC higher. A lower open may find Support at 1.4709 and 1.4697, while an open above 1.4726 should find Resistance at 1.4738 and 1.4755.

Japanese Yen (JYH8):
The JY opened lower at .9304 and retraced to a morning Lo of .9288 as higher equity prices attracted carry-traders selling JY and buying higher yielding foreign currencies. As equity prices retraced, carry-traders covered short positions, driving the JY to a mid-day Hi of .9330, before drifting into the close of .9312, up 4 tics. The s/t trend remains ‘negative’ w/ ‘neutral’ momentum indicators.With the BoJ leaving rates ‘unchanged’ at 0.5%, carry-traders may follow equity traders and take advantage of higher yields, pressuring the JY. A lower open may find Support at .9290 and .9268, while an open above .9310 should find Resistance at .9332 and .9352.