Forex Investment and Currency Trading

USD
Event risk: Mixed messages from the chain-store data but broad recessionary conditions and 4 consecutive falls in retail jobs suggest downside risk to consensus calling for a 0.2% rise in core retail sales (Mon). The ECRI leading index hints at still more potential downside for the Empire survey (Tue) and Philly (Thur). A 7%+ fall in Feb permits warns March housing starts (Wed) could fall sharply too. The Fed’s Beige Book (Wed) is likely to be peppered with anecdotes of yet more slowing in activity while the core CPI (Wed) should bounce back from an aberrant flat outturn to [...]

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FX Bottom-line: A thought provoking asymmetrical relationship between CAD and commodity prices has developed since December 07. Traders are reluctant to buy CAD as commodity prices rally citing Canada’s close ties with the US, but are eager to sell CAD on commodity sell-offs as part of a broader risk aversion trade. This relationship is expected to continue until more evidence of a bottoming in the US economy emerges.
Unfamiliar Commodity Relationship for CAD
The emergence of China and a synchronized global growth cycle favoured commodity prices and CAD given Canada’s healthy mining sector and 173 billion barrels of proven crude oil reserves [...]

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Sellers of USD/CAD should focus on resistance at 1.0343, 1.0468 and 1.0591 as part of the active “layered” hedging strategy.
Buyers of USD/CAD should focus on support at 1.0038, 0.9922 and 0.9724 as part of a disciplined “layered” hedging strategy.

A potential base-building process is underway in USD/CAD – with the daily and monthly resistance level at 1.0343 serving as a crucial pivot point.
Daily and monthly closes above 1.0343 are now required in order resolve the current consolidative phase and to reaffirm the bullish thesis for USD/CAD.
This outcome would argue for greater gains for USD/CAD – and provide manufacturers and exporters with a [...]

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FX Update
Initial Jobless Claims (Survey: 366, Actual: 407)
Continuing Claims (Survey: 2860, Actual: 2937)
ISM Non-Manf. Composite (Survey: 48.5)
Upcoming Data releases: Nonfarm Payrolls, Unemployment
USD
The broad USD has staged a recovery over the course of the past few trading sessions. The DXY USD index has climbed 1.7% since the beginning of trading on Monday. Today’s jobless claims print came in well above consensus but only had a muted effect on FX markets. The market will remain keenly focused on tomorrow’s nonfarm payroll report as a better indication of the stat of the US labor market.
EUR/USD
The Euro has come off significantly this morning [...]

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