Higher Crude Oil and Equities Support Canadian Dollar

The USD CAD is under pressure as the strong surge in equities and crude oil are fueling a rally in the Canadian Dollar.

The USD CAD is under pressure as the strong surge in equities and crude oil are fueling a rally in the Canadian Dollar. Without any comments from the Bank of Canada to dampen gains, continue to look for the Canadian Dollar to drive higher. Gains will only be limited if the BoC expresses concerns that the rise in the currency is hurting exports.

Demand for more risk is helping to boost the EUR USD at the midsession. The initial rise in this market was triggered by a recovery in Asia overnight and bullish news regarding European telecom earnings. The rally was sustained early this morning by the news that European confidence in an economic recovery was building. Gains may be limited, however, as European unemployment continues to rise.

The strong rise in U.S. equities is putting pressure on the Japanese Yen. Traders are aggressively borrowing in Yen and investing in the U.S. markets to capture the higher yield.

The Australian Dollar has erased all of yesterday’s loss and is now in a position to challenge the high for the year at .8337. The new high for the year in the U.S. equity markets should drag the Aussie higher. If the Aussie does not take out .8337, then look for the possibility of a divergence top. This would be a sign that a major top is forming.

A similar situation is developing in the NZD USD. Although this currency pair is reacting to the strong equity markets today, the rally is only regaining yesterday’s loss. If this market fails to follow the equity markets to a new high, then look for the start of a decline over the short-term.

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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