Friday October 29, 2010 - 01:11:39 GMT
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Forex Hound - www.forexhound.com
Better Economic Data, Fed Survey Rumors Fuel Canadian Dollar Rally
Better economic news from the Euro Zone coupled with an
improved U.S. Weekly Job Claims report helped drive traders into risky assets,
boosting demand for the Canadian Dollar.
Although economic news may have underpinned the market
during the New York
trading session, it was a report circulating regarding the U.S. Federal Reserve
that initially fueled the rally.
Rumors began circulating last night that the Fed surveyed
dealers about its upcoming quantitative easing plan. Traders were questioning
whether the Fed has any idea as to how much, or how, to apply additional
quantitative easing into the market. This indecision pressured the Dollar
because it presented the Fed with credibility issues.
Based on a Wall Street Journal article on Wednesday
predicting the Fed would apply less than $1 trillion of quantitative easing,
the Dollar rallied. Today‚Äôs story erased all of those gains but also put more
uncertainty back into the market.
Technically, the USD CAD is trading inside of a range of
1.0672 to .9979. This range created a retracement zone at 1.0325 to 1.0407.
This range has also stopped the last two rallies.
Based on the short-term range of .9972 to 1.0373, 10176 to
1.0129 is the next downside target zone.
Gann angle resistance is at 1.0199. Gann angle support is at
This current chart set-up suggests that the market is
compressing, leading to lower volatility. The market may sit like this for a
few days as traders await the November 3 Federal Open Market Committee meeting.
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