North American Indices: Indices Maintain Gains After Fed Decision

MarketTrends: November 4, 2009

Issued by Colin Cieszynski, CFA, CMT, Market Analyst, CMC Markets Canada

While equity indices have pared some of today’s gains in a bit of profit-taking after the US Fed maintained interest rates at 0.25% and indicated they expect to keep rates low for some time, overall sentiment still appears to be positive. Earlier today, the Dow Industrials (US30 CFD) broke out of their 9,700-9,800 trading range and have been testing the 9,900 level with key resistance in place near 10,000. Similarly, the S&P 500 (SPX500 CFD) has turned higher with next resistance near 1,100. Canadian markets also have picked up today with the S&P/TMX 60 (Toronto60 CFD) holding above 650 with next key resistance near 670.

Commodities Update:

It has been a mixed day for commodities ahead of the FOMC rate decision. Precious metals have been climbing, apparently on USD weakness with gold nearly testing $1,100/oz before slipping back toward $1,090/oz. Next key potential resistance remains in the $1,125-$1,140 area. Silver has been hanging around the $17.50/oz area after popping overnight. Copper has also been picking up, testing $3.00/lb resistance once again.

Energy commodities have been heading in different directions following today’s inventory report. Crude oil has been heading higher after a better than expected report (-3.9 mmbbls vs street +1.5mmbbls). Crude has cleared the $80.00/bbl level with next resistance in the $82.00-$82.50 area. Natural gas, on the other hand, has been dropping again, this time falling toward a test of $4.75/mmbtu support ahead of tomorrow’s storage report.

Canadian Dollar Today:

It has been a mixed day for the loonie today with CAD posting relative gains against USD, JPY and AUD, and correcting against GBP and EUR. This suggests that sentiment may be primarily off of USD weakness and somewhat off of improving commodity prices and what appears to be easing in interest toward the previously red hot AUD.

CADUSD Notes

CADUSD has been building on yesterday’s break through its 50-day average near $0.9350. Today, CADUSD has been trading between $0.9380 and $0.9430 with next major resistance closer to $0.9500.

USDCAD Notes

USDCAD has continued to decline following on from yesterday’s break through its 50-day average near $1.0700. Today, USDCAD has been trading between $1.0600 and $1.0650 with next major support closer to $1.0550.

Other CAD Pairs Notes

GBPCAD has bounced a bit after $1.7500 support held for now. The pair has run into some resistance near $1.7675. We could see increased volatility tomorrow following the Bank of England’s interest rate and quantitative easing decisions.

EURCAD has rebounded a bit today but appears to be settling near $1.5800, a key support/resistance level, ahead of tomorrow’s ECB interest rate decision.

AUDCAD continues to steadily retreat, primarily trading in the $0.9600 to $0.9700 range today with next support near $0.9500 and key resistance near $0.9800.

CADJPY has been climbing toward a retest of resistance at the 86.00 level having held above support at 83.00 recently.

Asia Pacific Market Preview

With US indices holding up after the Fed rate decision, Asia Pacific indices may look to maintain last night’s upward momentum. Having poked back above 21,500, the Hang Seng (HongKong33 CFD) may look to retest 21,900 resistance. Similarly, having regained 4,500, the S&P/ASX200 (Aussie200CFD) may start to trend toward a retest of 4,750 resistance. As has often been the case of late, the Nikkei (Japan225 CFD) has been lagging behind, but could test 10,000 tonight with next resistance near 10,350.