Commodity dollars moving in opposite directions

Winner: Australian dollar

The Aussie was the best performer against a stronger US dollar which has continued to pare some of the steep declines seen over the past three sessions. As noted in yesterdays’ USD Trading Today report, the greenback is likely to see a reprieve from the heavy selling pressure seen recently as traders book profits ahead of the weekend. Also supporting the dollar are rising concerns that the measures announced yesterday by European officials may not be enough to prevent further contagion with a “structured” Greek default now in the cards. The Aussie hit its highest level since early May before encountering resistance at 1.0870. This level is expected to hold as risk appetite subsides, noting interim support at the 100% Fibonacci extension taken from the July 12th and 18th troughs at 1.0830. Subsequent floors are eyed at 1.0790 and the 76.4% extension at 1.0770.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.0648

20-Day SMA

1.0698

10-Day SMA

1.0715

2011 AUD High

1.1010

Loser: Canadian dollar

The loonie saw steep declines against the greenback in pre-market trade after a weaker-than-expected print on the June CPI report saw interest rate expectations from the Bank of Canada fall. With the Fed seen holding rates through the end of 2011 and inflation concerns easing on today’s print, the central bank is likely to retain its wait-and-see approach over the coming months. Coupled with the dollar strength seen early in US trade, the loonie fell more than 0.8% against the greenback to test the 76.4% Fibonacci extension taken from the June 27 and July 12 crests at 0.9508. A likely break here sees topside targets at the 0.9540 and the 61.8% extension at 0.9560. Interim support now rests at 0.9480 backed by 0.9460 and the 100% Fib extension at 0.9425.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.9700

20-Day SMA

0.9612

10-Day SMA

0.9558

2011 CAD High

0.9422

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB:
www.fxcm.com

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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