Better Economic Data, Fed Survey Rumors Fuel Canadian Dollar Rally

Better economic news from the Euro Zone coupled with animproved U.S. Weekly Job Claims report helped drive traders into risky assets,boosting demand for the Canadian Dollar.

Better economic news from the Euro Zone coupled with animproved U.S. Weekly Job Claims report helped drive traders into risky assets,boosting demand for the Canadian Dollar.

Although economic news may have underpinned the marketduring the New Yorktrading session, it was a report circulating regarding the U.S. Federal Reservethat initially fueled the rally.

Rumors began circulating last night that the Fed surveyeddealers about its upcoming quantitative easing plan. Traders were questioningwhether the Fed has any idea as to how much, or how, to apply additionalquantitative easing into the market. This indecision pressured the Dollarbecause it presented the Fed with credibility issues.

Based on a Wall Street Journal article on Wednesdaypredicting the Fed would apply less than $1 trillion of quantitative easing,the Dollar rallied. Today’s story erased all of those gains but also put moreuncertainty back into the market.

Technically, the USD CAD is trading inside of a range of1.0672 to .9979. This range created a retracement zone at 1.0325 to 1.0407.This range has also stopped the last two rallies.

Based on the short-term range of .9972 to 1.0373, 10176 to1.0129 is the next downside target zone.

Gann angle resistance is at 1.0199. Gann angle support is at1.0242.

This current chart set-up suggests that the market iscompressing, leading to lower volatility. The market may sit like this for afew days as traders await the November 3 Federal Open Market Committee meeting.

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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