Daily Analysis

The dollar continued to gain strength on Friday on the major pairs, despite hurricane Gustav’s influence on the markets. While one would expect commodity currencies to increase due to oil production disruption after previous experienced hurricanes like Katrina, the currency markets seem to be pricing in the unpredicted - the dollar gapped up after this week’s open. Despite recent price action, traders should continue to be cautious as a category hurricane 4 could still surprise the markets. Friday was also characterized by high volatility as a wave of economic data hit the boards, showing that personal consumption in the U.S advanced by 1.7%. In addition, the University of Michigan’s Consumer sentiment report beat analysts’ expectations, showing a reading of 63. The USD/CAD rallied after finding support around the 61.8% Fibonacci retracement of the 1.0435 – 1.0537 move. The rally was caused by the release of a Canadian GDP (qq) reading of 0.1%, a reading which was already baked into the markets price. The euro continues to remain in focus as the ECB adheres to its monetary policy - keeping high interest rates despite a deteriorating economy. To date, the EUR/USD currency pair is trading between monthly trend line support and resistance. The major indices continued on their consolidating path, giving back Thursday’s gains to close the session down by an average of 1.5%. Crude oil closed the session down by 0.11%. Gold continues to linger around resistance, closing Friday’s session at $829.70 per ounce. Even though volatility should be relatively low today, as both the Canadian and U.S markets are closed, traders should continue to eye European data, especially as currency pairs are trading around critical levels.

Euro
EUR/USD- Pivot Points Daily EUR/USD High 1.4769 Low 1.4638 Close 1.4670 R3 1.4877 R2 1.4823 R1 1.4746 Pivot 1.4692 S1 1.4615 S2 1.4561 S3 1.4484

Japanese Yen
USD/JPY- Pivot Points Daily USD/JPY High 109.59 Low 108.41 Close 108.79 R3 110.63 R2 110.11 R1 109.45 Pivot 108.93 S1 108.27 S2 107.75 S3 107.09

British Pound
GBP/USD- Pivot Points Daily GBP/USD High 1.8346 Low 1.8171 Close 1.8214 R3 1.8492 R2 1.8419 R1 1.8317 Pivot 1.8244 S1 1.8142 S2 1.8069 S3 1.7967