EUR/USD
Greenback Profit Taking: In spite of poor economic data released in the Euro zone, traders boosted the underlying spot price as profit taking ensued. Nearing the top of the technical range that the currency has been trading of late, traders capped gains and flipped short term positions in light of the pessimistic industrial production figures for the month of September. Declining 0.4 percent on the month, productive output fell in comparison to expectations of a 0.5 percent rise. This now places the annualized figure considerably lower than the expected 1.8 percent, at a paltry 1 percent. With the current figure considerably lower than the previously witnessed 2.7 percent rise, some doubts over the widely anticipated interest rate rise may now be surfacing. As a result, further downside may be in store for the single currency as euro sellers resurface with each resurgence.
Technically Speaking: Approaching trendline resistance, the price action is looking to keep in the tight range that has loomed over the single currency for th past two weeks. A confluence with the 23.6 percent fib from the monthly move looks to once again cap the upside momentum. However, a penetration above would lead to a probable test of the 38.2 percent fib at 1.1849. Downside tests remain at the previously tested 1.1642 floor.
USD/CAD
Largest Investment Of The Year: According to Statistics Canada, foreign interests made the largest investment of the year in Canadian securities for the month of September. Bolstered by a rising benchmark equities market and anticipated interest rates hikes, global investments rang to the tune of C$4.9 billion with two thirds going to stocks and C$1.9 billion falling into bonds. Fixed income purchases were overwhelmingly seen in the domestic interests as Canadians invested $3.9 billion in fixed income of their total $5 billion.
Crude Oil Lends No Help: Crude oil took a dip today, falling to the lowest level in more than five months as U.S. stockpiles remain robust ahead of the winter season. Crude supplies in the world's largest economy are now 12 percent higher compared to a year ago as refining capacities are running at 86.2 percent. As a result, contracts settled at $56.34 down $1.54 a barrel at the close. Adding to bullish woes, OPEC member Venezuela suggested that the organization consider cutting back production has refining capabilities have returned to the Gulf Coast.
Technically Speaking: Although a choppy two weeks, the USDCAD currency pair has steadied its previous decline to test resistance at 1.1960/70 on multiple occasions before dropping off today. Finding consolidation at the 38.2 percent fib level, further downside looks to be capped as the current price falls in line with previous dips to the lower trendline. However, penetration would see an immiment test of the 50 fib at 1.1808 with upside ceilings at the 23.6 percent fib and the aforementioned resistance.
USD/CHF
Normalising Rates: Swissie strength on the session looked to be backed by profit taking on recent dollar strength as traders believed the recent run up to be slightly overextended in the currency pair. Furthering the drop off, market participants also took to statements released by Swiss National Bank board member Philipp Hildebrand. Reiterating earlier sentiment by Chairman Jean Pierre Roth, Hildebrand confirmed the central bank's intentions of raising the interest rate at the next quarterly rate setting meeting on December 15th by stating that current monetary policy was "currently too expansive and jeopardizes price stability in the medium term." Although with current consumer price inflation slightly lower than the central bank's forecasted 1.2 percent, traders are still expecting the move as Swiss officials bandwagon the idea of higher interest rates.
Technically Speaking: Rising considerably in the overnight, the currency pair has retraced slightly and found a temporary floor at the 23.6 percent fib level from the two week move. Now establishing a bottomside trendline, the current consolidation leads one to believe that an upside swing may be forming. Comparatively to the downside, penetration of the lower trendline and fib level would be necessary in sparking an imminent test of the 38.2 percent at 1.3064. Probable capping looks to occur at this level as evidenced by the multiple tests.
Richard Lee is a Currency Strategist at FXCM.
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