Top Market Movers: AUDCAD; EURCAD; NZDUSD
Today’s Largest Percentage Movers:
| Currency | Daily Percentage Change (%) | Intraday High | Intraday Low | Day’s Range (pips) |
| AUDCAD | +1.5% | 0.8544 | 0.8382 | 162 |
| EURCAD | +1.0% | 1.4476 | 1.4295 | 181 |
NZDUSD | +1.0% | 0.6173 | 0.6098 | 75 |
AUDCAD
Leveraging Up On Aussie Strength
While it was no secret that the BoC’s dovish turn was well documented in the media and well traded in the currency market, the AUDCAD was able to push its way to the top of the market mover because of the quality of the economic data coming out of Australia. With this pair, loonie weakness was merely a leveraging tool. On the docket for the island nation were a pair of lending indicators and one measuring business confidence. Firm sentiment reportedly held steady in June according to National Australia Bank Ltd.’s survey at a read of 9. Still above the pessimistic/optimistic neutral 0 level, encouragement to consumers’ spending habits from a A$36.7 billion tax cut was soundly offset by higher lending rates and soaring petrol prices. However, the more encouraging report for the session was the acceleration in home loan approvals in May. Permits grew at the fastest pace in 8 months for the period to a record 62,768 approvals, suggesting consumer spending will underpin inflationary levels that will lead to another interest rate hike before the year is out. Another newsworthy event for Australia was a truce hammered out between PM John Howard and Treasurer Peter Costello who have been embroiled in a spat over whether Howard had agreed 12 years ago to relinquish his position to Costello in the second term for his support in unseating the then party leader.
Technically Speaking
After demolishing the 0.8425 barrier, the AUDCAD rallied to test the confluence of its 200-day SMA and its 11-month upper channel at the 0.8530 level. The significance of this resistance suggests that a retracement of the past week’s gains is likely. Such a move would need to contend with yesterday’s resistance at 0.8425 and the 100-day SMA at 0.8380. Conversely, an improbable rally above 0.8530 would come under fire at 0.8600?the 61.8 fibo of its 0.8830-0.8230 wave.
EURCAD
The Hawks And The Doves
Making for one of the best pairs to trade on the opposing sentiments of central banks, the EURCAD was made bid in today’s session when the Bank of Canada, not only said that they would skip a rate hike at this past meeting, but also that they saw little need to do so in the immediate future. The central bank’s official statement following the pass ended with an ominous, “risks? remain roughly balanced, with a small tilt to the downside?†This puts the Canadian’s position in stark contrast to the European Central Bank, whose president, Jean-Claude Trichet said, “?the Governing Council will exercise strong vigilance so as to ensure that risks to price stability do not materialise?†after their pass on a rate shift last week. While the rate differential is still skewed in favor of the Canadian currency with a 1.50% advantage. More optimism will back this pair’s ascent should European officials continue singing the praises of a hawkish move to counter inflation, and therein solidifying the possibility of the third quarterly rate hike since December. From the loonie’s side, upward momentum will depend on the BoC’s Monetary Policy Report due Thursday. Should dovish rhetoric support those comments issued today, speculation behind a rate hike before the end of the year will drop off and the pair will respond accordingly.
Technically Speaking
Despite a long upper wick upon attempting to close above 1.4300 in yesterday’s trade, the EURCAD resumed its rally to end almost exactly at its 10-month high of 1.4455. On moving 150 points to 1.4460 on the New York close, it also filled the downward gap seen in 09/2005. Given that it stands at a highly significant resistance line, tomorrow’s action will likely determine the short-term direction of the currency pair. Judging by its impressive 300-point run in the past four trading days, the pair may retrace its gains to test support at 1.4400 and further to 1.4300. Any rallies above current levels may likewise be short-lived, with stiff resistance of the 61.8 fibo of its 1.5130-1.3500 wave at 1.4500.
NZDUSD
A Clean Commodity Play
While the commodity bloc likely benefit from a positive run in commodity prices today, this relationship was probably most clearly represented in the NZDUSD. With both the AUDUSD and USDCAD pairs responding to economic releases from their respective anti-dollar currency, the effects of gains in the spot market of some key raw materials was only measurable in the exchange between the news barren US and New Zealand. The Kiwi Isle is well known for its rather large dependency on exports. Though the majority of its necessary goods destined for sale abroad are softs, such as wool, meat and milk fat, its position as a firm member of those nations dependant on general commodity fluctuations and the reasoning that its largest trade partner is Australia, makes the kiwi sensitive to goods like gold and crude oil. Crude oil prices advanced 0.75 percent in the NYMEX session as Iran – EU talks ended and continued demand for gasoline forced bidding. Responding to this rise in energy prices, and to terrorist attacks on trains in Bombay, gold made a 2.7 percent rally to $643.10 per ounce.
Technically Speaking
The Kiwi successfully topped its 20-day SMA and the upper wick of yesterday’s hanging man candle to close near resistance at 0.6180. As the 50.0 Fibonacci retracement line of its 0.6430-0.5930 move, the barrier stands as heady resistance to further advances. If it indeed heads lower, the next support can be found very nearby at the bottom line of its two-week channel at 0.6150. In the likelihood that it retraces, a further bottom can be found at its previously stiff resistance of 0.6120?the 38.2% retracement of the aforementioned downtrend. A further rally, on the other hand, would likely have difficulty clearing the confluence of its 50-day SMA and the psychologically significant 0.6200 price level.