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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Markets Steady Despite Poor US Data, Deal on Bailout Plan Close

Thu, Sep 25 2008, 12:46 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Markets Steady Despite Poor US Data, Deal on Bailout Plan Close

Markets remain generally steady in early US session despite poor economic data released from US. All investors and traders are awaiting the conclusion of the $700b bailout plan. It's believed that after two days of congressional testimonies, the lawmakers are close to approving the deal. President Bush will meet Republican and Democratic leaders at 1955 GMT to hammer out the details of the rescue plan. Durable goods orders dropped sharply by -4.5% in Aug, much worse than expectation of -1.6%. Ex-transport orders also dropped -3.0% versus consensus of -0.5%. Jobless claimed surged from revised 461k to 493k. New home sales will be released later in the US session.

Eurozone M3 money supply growth remains ample but slowed sharply from downwardly revised 9.1% yoy to 8.8% yoy in Aug. The money supply growth peaked last Dec at 12.4% and is expected to continue the down trend in the coming months as high borrowing costs makes credit less attract while the renewed credit market turmoil in recent weeks has also made credit conditions even tighter. Germany Gfk consumer sentiments unexpectedly improved from 1.6 to 1.8 in Oct as falling oil prices curbed the downward trend in consumer mood for the moment.

Released from Japan, Corporate Services Price index beat expectation and climbed further form 1.3% to 1.4% in Aug. Trade balance turned deficit to -324b in Aug due to sharp slowdown in exports from 8.l1% yoy to 0.3% yoy. Import grew 17.3%.

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USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0334; (P) 1.0362; (R1) 1.0412; More.

USD/CAD weakens mildly in early US session and is pressing this week's low of 1.0304. The decline from 1.0819 is probably set to resume. Intraday bias is mildly on the downside and below 1.0819 will encourage fall to test trendline support at 1.0282. Break will bring deeper fall towards 0.9974 key near term support. On the upside, though, above 1.0398 again will indicate that a stronger rebound is underway before completing the correction. Nevertheless, another fall is still in favor as long as 1.0568 support turned resistance holds.

In the bigger picture, medium term rise from 0.9056 has met 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), but fails to sustain above so far. Break of 1.410 cluster support (50% retracement of 0.9974 to 1.0819 at 1.0397) firstly indicate that a short term top is at least in place with bearish divergence condition in 4 hours MACD and RSI. Focus now turns to 0.9974 and break will indicate that whole medium term rise from 0.9056 has completed and will have medium term outlook turned bearish again. On the upside, sustained break of 1.0819 is needed to confirm rise from 0.9056 is still in progress, otherwise, short term outlook is neutral at best.

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Published on  Thu, Sep 25 2008, 12:51 GMT