Monday, January 3, 2011
Daily DXY Roundup - 1/03
The US Dollar Index (DXY) opened the New Year relatively unchanged. The recovery off last Friday’s low continued into the Asian open, highlighting platform support just below the 79 handle. However, Dollar bears maintain control while price-action remains capped by trendline resistance near 79.80. Weakness below 78.820 exposes the next downside target at 78.538, the 50% retracement. Meanwhile, the Proshares US Dollar Index ETF (UUP) has tracked below the 23 figure and is at risk of re-testing critical support at 22.
The Canadian Dollar was one of the outperforming currencies on the day, following robust global risk appetite and solid gains in commodity prices. The trade-weighted index was up 0.25% as the USD/CAD made fresh 2 ½ year lows. The Canadian currency (Bloomberg: CEERCN) is now poised to re-test the 114 region, where the trade-weighted index peaked last April.
The British Pound was once again the broad loser, losing 0.74% vs. a trade-weighted basket of currencies. The GBP/AUD reached a new cyclical low and the GBP/CHF retraced the majority of gains off last week’s fresh lifetime low. The GBP/USD, GBP/JPY & GBP/CHF formed inside day patterns while the GBP/SEK was the overall weakest pair, trading down more than 1% on the day. The immediate focus now shifts to UK borrowing activity and manufacturing data on Tuesday as the bulk of traders return from holiday.