• USD/CHF -0.4%
• USD/CAD +0.6%
• EUR/CAD +0.9%

USD/CHF

Anticipation Keeps Swissie Quiet: European data was nonexistent on the session as traders pared back gains made on yesterday's Euro slide.  Following the break of the technical level at 1.2000, and inflationary conditions in the U.S. economy, the underlying currency hovering between 1.1870 and 1.1890 before breaking higher as parties took profits and shorts look to reestablish selling initiatives.  This comparably kept the Swiss underlying inline at 1.3000 and 1.3150.  However, as seen in the current session, activity may look thin as we approach tomorrow's trade balance figure for the United States.  Aside from the trade balance figures, expected to widen past the record $68 billion gap, traders will be privy to European data including Swiss consumer prices report and German industrial production.  IP in Germany is expected to rebound from the previous decline lending some strength to bulls as consumer prices looked to have increased in the Swiss economy.  Both, purporting further increases in the benchmark rate, both pieces could be trumped should the US event ring narrower than expected.  This should keep the currency pair locked in the current range of 1.2800-1.3150, previously seen back in the month of December.

USD/CAD

Selling Plagues The Canadian Bidder: Momentum continued off of the rather dovish statements released by the Bank of Canada yesterday, following the recent rate hike of another 25 basis points.  Further carry trade initiatives were build on the session as the underlying currency pair rose through resistance at 1.1500, continuing the previous three session advance.  Technically at a top, the Canadian major may find strength on tomorrow's reports including international merchandise trade balance figures and the new housing price index.  Expected to continue gains, the housing price index is estimated to suggest continuing demand for domestic housing as the merchandise trade balance is anticipated to keep the record rate set last month.  With the surplus expanding to C$7.7 billion, consensus is anticipating a continuance of the previous figure, for a rise to C$7.4 billion.  This would indefinitely purport the necessity for further rate hikes as the surplus contributes to the overall growth of the ninth largest economy in the world.  Energy prices and commodity exports are likely to continue their previous positive contributions to the overall total.  Should it be wider, expect bulls to run free.

Rumorville: Sellers look to reinitate positions as the price action reaches the 1.1600 figure with stops accordingly above at 1.1620.  Bids for further buying run thin just 50 pips below at 1.1520/25, keeping the current momentum higher.

EUR/CAD

Euro Bulls Conquer Loonie: Euro bidding on the session translated into buying interest against the Canadian dollar, in similar fashion with the dollar countered major. With continued bearish momentum following yesterday's rate announcement, traders will be looking to merchandise trade to not only reverse the major's fortune but also subsequent crosses as well. However, in the case of the cross, carry rates still remain a factor and should German IP rise better than expected, market participants could very well see the effects more so in the cross as rates of returns become the priority.  Nonetheless, event risk will be the overall deciding factor at week's end with U.S. non farm payrolls creating heightened volatility.

Rumorville: With the Euro looking overextended, further downside may be in line with offers being heavy at 1.1940/50.  Further selling pressure may be translating into the cross higher up at 1.1975/80 with no bids till the 1.1900 figure.  Comparatively, selling pressure on the loonie leg should keep the cross lower as we head into the Asian session.

Richard Lee is a Currency Strategist at FXCM.