Forex Investment and Currency Trading

There is not much evidence of a strengthening in risk appetite in the markets this morning and the CAD is suffering as a consequence; risk on or off remains a big driver of currency movement in the majors it seems, even if there is evidence to suggest that the correlation between the USD’s broader performance and (equity market-driven) risk appetite has weakened in recent weeks. Oil prices have slipped a little further overnight but on the whole, news so far this week has been more CAD-supportive than anything else, some tend to think – June’s GDP printed positive for the first time in 11 months and the recession appears to be abating; meanwhile, the Canadian resource sector remains attractive to foreign investors (considering Petrochina’s reported interest in Athabasca Oil Sands). Overall, traders still like the CAD and think that levels around 1.11 represent a good entry point for CAD longs; in the short term, though, the charts are looking a bit of a dog’s dinner. There is clearly good supply in the high 1.10s/low 1.11s (and this area represents strong daily and weekly technical resistance) but the market has also found solid support below 1.09 so far today and, if anything, looks poised to test higher again. Friday and Monday’s sessions saw the big figure change five times in USD/CAD with little overall change in the closing price over two days, suggesting that the market is indeed as conflicted as it looks at the moment.