Forex Analysis - 15/10/08: USD/CAD suffering
The USD had a uneventful day of mostly technical trade with only the USD/JPY stretching outside established overnight ranges to the downside and USD/CAD suffering a rally to the upside. Most pairs made early highs or lows on the news of additional government-sponsored bailout options provided by the US and other G-7 nations as the prop of the financial system continues to remain center-stage. With additional economic news due tomorrow expected to be USD bearish, it is likely that traders will see a bit of long-liquidation in the USD but the fact is most sentiment remains supportive of the USD near-term. Traders are expecting more two-way action similar to today’s trade at least through the end of the week. Aggressive traders will likely have the more short-term opportunity as the majors are likely to cover the same ground twice the next few days. Although initial reaction to the G-7 support was USD bearish the majors have not seen an increase in volumes and order-flow has been patchy some desks report. In my view, the majors will continue grinding sideways in a broader range the next few days as details begin to emerge that might break the Greenback one way or the other. GBP fell back from an early high at 1.7634 to trade back under the 1.7500 handle into the close. Traders note a lack of fresh buying after a round of short-covering lifted the rate in early trade. Cross-spreaders for Yen appear active again and a dip into the 1.7300 handle might be a buying opportunity near-term. EURO dipped a bit in sympathy as traders saw solid offers appear on the move to the 1.3700 handle; most desks are looking for a pullback to the 1.3500 area soon although good bids were seen around the 1.3620/30 area and above today. USD/JPY held near the 103.00 handle for most of the morning then began to slide off as equities retreated from their early gains. Most desks report that the volumes were light on the rally suggesting a “dead cat bounce’ may be developing in the rate. Low prints in late New York at 101.49 no doubt left the late longs stinging. USD/CHF failed to extend gains past the recent highs around the 1.1400 area; high prints at 1.1388 were turned back to close around the 1.1320 area. USD/CAD bounced higher after the 8-figure slide from Friday’s highs to trade the 1.1600 handle into the close; again traders have no reason to support such a move other than continued panic buying of USD by someone. Look for the rate to remain volatile. In my view, the whippy nature of the majors underscores the current lack of confidence traders continue to operate under. With a rally in equities fizzling into the close it underscores the lack of real progress made despite the promises of help from the powers that be. Look for the USD to remain two-way again overnight with a slightly higher bias into tomorrow’s news.
Analysis Provided by: Forexpros.com - Written by Jason Alan Jankovsky
Last edited by ForexAnalysis : 10-15-2008 at 12:22 AM.
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10-15-2008, 12:02 AM
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