Markets sentiments are boosted by another round of solid data from US. Conference Board consumer confidence rose sharply to 54.1 in Aug, just below May's high of 54.8. S&P Case-Shiller home price index for 20 cities dropped -15.4% yoy in June, much better than expectation of -16.4% and was the best reading since April 2008. The data provides another positive sign that the housing markets in the US are stabilizing. US stocks extends recent rally with DOW breaking through 9600 level to as high as 9620 so far. Crude oil also followed stocks and touches 75 level. Dollar and yen, on the other hand, are sharply lower against other major currencies.

Released earlier, German Q2 GDP reading was confirmed at 0.3% qoq. Swiss employment level was slightly lower at 3.95M in Q2. UBS consumer indicator dropped from 0.95 to 0.77 in July. In other news, US President Obama announced he will nominate Fed Chairman Bernanke for a second four year term and praised his calm and wisdom in face of a near financial collapse. SNB launched reference rates for the financial markets based on repo interbank market data provided Eurex Zurich. The Swiss franc yield curve based on Swiss Average Rate Overnight will replace the repo overnight index.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0716; (P) 1.0770; (R1) 1.0815; More.

USD/CAD edges lower to 1.0718 in early US session and at this point, intraday bias in USD/CAD remains on the downside with 1.0826 minor resistance intact. Retest of 1.0631 should be seen and break will bring resumption of whole decline from 1.1723 to next target of 61.8% projection of 1.1723 to 1.0631 from 1.1123 at 1.0448. On the upside, above 1.0826 minor resistance will turn intraday outlook neutral first. But short term risk will remain on the downside as long as 1.1123 resistance holds.

In the bigger picture, recent development suggests that medium term decline from 1.3063 is still in progress. Nevertheless, there is no change in the view that it's a correction to the five wave rally from 0.9056. Also, such correction is expected to conclude inside 1.0297/0819 support zone. Hence, while another low below 1.0631 might be seen, focus will remain on reversal signal on the next fall. On the upside, above 1.1123 will now be an important signal that USD/CAD has bottomed out and break of 1.1723 resistance will confirm that whole fall from 1.3063 has completed.

USD/CAD