Commodity Currency Update


This has been a volatile pair to watch because it is trading in between the major moving averages. However, for the near term the CAD has now finally retaken the 100 day moving average. Additionally, the 50 MA is about set to cross back below the 200 MA which will provide a little added support for the CAD’s move. The CAD will need to break below the next Resistance level at 1.0150 before going after Dollar Parity in a serious capacity. Yet, if the CAD should close back above the 200 day MA at 1.04, CAD bulls will once again be sidelined. Typically we would place support near the closest major MA, but given the volatility, that levels needs to be widened.


The AUD, similar to the CAD and Oil for that matter, just traded back up through it’s major moving averages. Unlike the CAD though, there are better defined trend lines. Last week the AUD broke above the 200 day MA and has managed to stay above that level thus far. The 50 day MA is now sloped up but quite aways from crossing above the 100 MA which now acts as AUD Support at .8850. A close below Support would generate a bearish bias for the AUD. What concerns many technical analysts is the very strong level of Resistance near .9350, which caps an AUD bull run over the short term. Therefore it is very likely that we will see the AUD trade horizontally for a period of time before either taking out strong Resistance or falling back through Support.


The NZD looks the most similar in appearance to the AUD , (as we have noted many times in the past the AUD to NZD relationship) though still highly correlated to the CAD and obviously Crude Oil. The NZD looks in the best shape to make the most immediate gains versus the Greenback. The reason behind this is that the 100 MA and 50 MA are both upwards sloping and the 50 MA is in target range to overtake the 100 MA. Additionally, the NZD in the course of its rally took out the most recent prior high at .7300, but still have another 300 pips before encountering major Resistance near .7600. The trend lines are more identifiable then that of the CAD and the Step pattern (a series of higher highs and higher lows or vice versa) is also more pronounced. All of the signals point to a potentially higher NZD in the near to mid term.

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