Forex Investment and Currency Trading

Unwelcome echoes of SARS fill the news headlines this morning, with the market focused on the “swine flu” public health emergency; the MXN has been hit hard by expectations that the outbreak will hit the tourism sector and the broader economy but with cases noted across North America and in the
EU, many other economies are potentially at risk of a broader “pandemic”. The EU has advised against non-essential travel to infected areas. The financial markets have switched quickly into risk-averse mode this morning, with equity markets dropping sharply early morning and higher risk currencies under performing while the JPY out-performs. The CAD is lower against the USD but is one of the better performing currencies on the day so far and beyond the swine flu issue, traders remain more constructive on the CAD after its recent performance. Domestic data this week will underscore the softness of the economy in Q1 but with the BoC very reluctant to go down the QE path at the moment at least, there is still a window for CAD improvement against the USD. Heavy selling of funds off the highs last week suggest very strong resistance in the short term through the low/mid 1.23s from here; the hourly chart suggests that today’s session may have already seen the highs after overnight gains stalled in the 1.2185/90 area. Intraday support at 1.2145/55 but still look for a short term push towards what is considered key technical support now at 1.1985/90.