Appetite for Risk Drives USD CAD Lower

Renewed appetite for higher risk assets helped drive the USD CAD loweron Tuesday. This pair is now rapidly approaching a major retracementzone at 1.1059 to 1.0586. Watch for profit-taking or at the least atechnical bounce once this level is penetrated.

Renewed appetite for higher risk assets helped drive the USD CAD lower on Tuesday. This pair is now rapidly approaching a major retracement zone at 1.1059 to 1.0586. Watch for profit-taking or at the least a technical bounce once this level is penetrated.

The catalyst for the break was the news that U.S. Consumer Confidence soared to an eight month high. Rising U.S. Consumer Confidence is a sign that consumers may start to spend money which would help the economy dig out of the recession.

Traders sold the USD CAD as investors became more comfortable with the prospect of a recovery in the U.S. economy. News that crude oil demand had picked up also helped fuel the weakness in the USD CAD. Bullish Canadian Dollar traders are hoping the improved outlook for crude oil prices will help drive up the value of Canadian exports.

Look for the USD CAD to continue to trend lower. As the U.S. economy shows signs of improvement, pressure will mount on the safe-haven status of the U.S. Dollar.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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