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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Canadian Dollar Mildly Higher after Solid Retail Sales

Wed, Aug 20 2008, 12:43 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Canadian Dollar Mildly Higher after Solid Retail Sales

Canadian dollar is mildly higher in early US session after stronger than expected retail sales report from Canada. Headline sales climbed 0.5% mom in Jun, above expectation of 0.5%. Ex-auto sales growth was even more impressive, jumping 1.4% versus consensus of 0.5%. Leading indicators was unchanged for the second month in Jul. Technically speaking USD/CAD has already made a short term top at 1.0727 and more pull back could be seen to below 1.5 level. Nevertheless, the broader outlook remains unchanged. Medium term rebounded from 0.9056 is still expected to extend further to test 1.8 level at least.

BoE minutes released today showed the Aug's decision to keep rates unchanged at 5.00% was done by the same vote split as in Jul. Seven members voted for keep rates on hold, Tim Besley voted for a "pre-emptive" hike to anchor inflation. David Blanchflower voted for a cut after the bank cut growth forecasts. Sterling has little reaction to the minutes by was softened by worse than expected CBI industrial trend orders which dropped to -13 in Aug, hitting the lowest level since Oct 2006 and provides another piece of evidence that UK economy is heading towards a recession.

Elsewhere, outlook in dollar remains mixed. a short term top is clear in USD/CAD and likely in USD/JPY and USD/CHF. However, sideway trading in AUD/USD and GBP/USD argues that more downside is to be seen in these two pairs. EUR/USD's rebound is so far still unconvincing. The possibility to flip either side is roughly equal. Nevertheless, as mentioned before, momentum in the greenback is seen as diminishing. So Upside potential in near term should be relatively limited for the moment.

More Technical Analysis Reports Here

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0580; (P) 1.0623; (R1) 1.0654; More.

USD/CAD's consolidate from 1.0727 continues today and dips mildly in early US session. Outlook remains unchanged. Further consolidation is still in favor and another fall could be seen to 38.2% retracement of 0.9974 to 1.0727 at 1.0439. But downside should be contained above 1.0273 support and bring rally resumption. On the upside, above 1.0695 minor resistance will suggest that recent rise from 0.9974 has resumed for mentioned 1.0791/98 cluster resistance.

In the bigger picture, medium term rise from 0.9056 is still in progress towards mentioned cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.

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Published on  Wed, Aug 20 2008, 12:53 GMT