USD/CAD (1.0550) is up overnight and appears to have taken up residence in a broad 1.00 to 1.10 range.
Technicals:
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Trend: Daily lower; weekly lower.
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Overbought/Oversold (stochastics): Daily overbought; weekly neutral.
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Support/Resistance Levels: Resistance lies at 1.0673 (Aug31 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0108 (Aug5 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).
Positioning:
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The risk reversal (3m, 25delta) rose overnight along with spot. It looks as if it might be bottoming in the bottom half of the six-month range, which would be consistent with a bottoming in spot.
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Implied Vol (3m) rose overnight and is continuing the uptrend in place throughout Aug.
Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).
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