Loonie climbs as US dollar eases ahead of FOMC

The Canadian dollar is the top performing currency against a weaker greenback in pre-market trade. The dollar has relinquished some of the gains seen over the past two sessions as heightened risk aversion flows lifted demand for the reserve currency. The USD/CAD pair encountered strong resistance at the 38.2% Fibonacci extension taken from the September 16th and October 27th troughs at 1.0220 before moving lower throughout the European session. Interim support now rests at the 23.6% extension at 1.0095 backed by 1.0050 and parity. Topside resistance holds at 1.0220 with subsequent ceilings seen at 1.0260 and the 50% Fibonacci extension at 1.0320. Price action is likely to hold this range ahead of major event risk in North American trade with the FOMC rate decision and subsequent press conference on tap. Investors will be lending a keen ear to remarks made by Fed Chairman Ben Bernanke for insight as to the central bank’s economic outlook. Traders will be especially looking for any remarks regarding the possibility of further quantitative easing with signal for more easing likely to weigh heavily on the greenback.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.9887

50-Day SMA

1.0079

20-Day SMA

1.0149

2011 AUD High

0.9406

The New Zealand dollar lagged the majors coming into the US open with the NZD/USD pair virtually unchanged in overnight trade. The pair continues to sit trade just above interim support at 0.7915 with topside targets eyed at the 0.7980, 0.8030 and the 23.6% Fibonacci extension taken from the October 4th and 26th troughs at 0.8065. A break below the 0.79-figure risks substantial losses for the kiwi with subsequent floors seen at 0.7860, the 78-handle, and 0.7780. Again we emphasize the impact today’s FOMC press conferences could have on the greenback with trader’s also closely eyeing data out of New Zealand tonight. Jobs data is expected to improve with the consensus estimates calling for the unemployment rate to ease to 6.4% from 6.5% despite a slight decline in the year on year employment change from 2.0% to 1.6% y/y.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8203

50-Day SMA

0.8050

20-Day SMA

0.7959

2011 NZD High

0.8841

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:
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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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