Dollar remains firm in Asia today after overnight's rally on better than expected existing home sales data. The move is so far mild but after all, markets are still optimistic on recovery in US and expect more improvements to be shown from today's personal spending as well as new home sales data. Gold dropped to 1075 overnight before recovering back above 1080 level and some further weakness in gold would likely provide support to the greenback.
Among major currencies, Canadian remains relatively firm recently. The Loonie is supported by speculation that China and Russia may increase Canadian dollar in their reserve holdings. Canada Finance Minster Flaherty said yesterday that "it does not surprise me that China and Russia would take greater positions in the Canadian dollar than they have previously." Looking at EUR/CAD, the cross extends recent decline as we expect and drops to as low as 1.5027 so far. We'd expect such decline to extend further to 2008 low of 1.4716. Break of 1.5390 resistance is needed to be the first signal of stabilization.
BoE minutes will be a major focus today. MPC adhered to the status quo at its December meeting, leaving interest rates and the size of the quantitative easing program unchanged. However, note that in November, chief economist, Spencer Dale, voted for no increase in QE while committee member David Miles argued for a GBP40b boost. The market will be interested to see whether those divisions still exist.
On the data front, New Zealand Q3 GDP came in at 0.2% qoq, -1.3% yoy, slightly below expectations and kiwi pares some recent gains. German import price is expected to rise 0.3% mom in November. Canada GDP is expected to rise 0.3% in Oct. US Personal income and spending are expected to show 0.5% and 0.7% growth respectively in November. New home sales is expected to rise slightly to 438k in November.
USD/CAD Outlook
USD/CAD's fall from 1.0744 extends further today and at this point, intraday bias remains on the downside as long as 1.0586 minor resistance holds. Fall fro 1.0744 is part of the consolidations that started at 1.0851 and is probably target 1.0405 and below now. Nevertheless, we'd expect downside to be contained above 1.0205 support to conclude the consolidations and bring rise resumption. On the upside, above 1.0586 will turn intraday bias neutral again. Further break of 1.0744/48 resistance zone will indicate that consolidation from 1.0851 has completed and rise from 1.0205 is resuming for 1.0851 resistance and 1.1101 resistance next.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1101 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.
Hourly S3)1.4329 S2)1.4335 S1)1.4344 P)1.4350 R1)1.4359 R2)1.4365 R3) 1.4374
4 Hours S3)1.4307 S2)1.4315 S1)1.4329 P1) 1.4337 R1)1.4351 R2)1.4359 R3) 1.4373
Daily S3)1.4126 S2)1.4179 S1)1.4259 P)1.4312 R1)1.4392 R2)1.4445R3) R3)1.4525
Weekly S3)1.3742 S2) 1.4002 S1)1.4166 P)1.4426 R1)1.4590 R21.4850 R3)1.5014
Monthly S3)1.4186 S2)1.4406 S1)1.4705 P)1.4925 R1)1.5224 R2)1.5444 R3)1.5743
4 Hours Standard Pivots on 10 Mins Chart
Daily Standard Pivots on 30 Mins Chart
Note:
Pivot points are very useful tools that use the previous bars' highs, lows and closings to project support and resistance levels for future bars. Daily pivot points are useful for swing trading; while 4 hour pivot points are useful for intraday trading. Longer term pivot points provide an idea of where key support and resistance levels should be. Place the pivot points on your charts and see how traders appear to give pivot point levels a lot of respect.
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