Monday, 5 Oct 2009 Dollar Drops on Positive Manufacturing Data

Monday, 5 Oct 2009
Dollar Drops on Positive Manufacturing Data
The Dollar dropped against the EUR and the Yen today, as the U.S. ISM Non-Manufacturing Purchasing Managers' Index expanded for the first time in a year. It seems that the emerging recovery of the U.S economy, which was till now mainly noticed in the housing sector, is beginning to impact different economic parameters.
In addition, rising stocks in the U.S have also put downward pressure on the USD. For the time being, investors continue to sell the Dollar following positive data releases from the U.S. The idea behind it is that it spurs them to buy riskier assets at the expense of the Dollar.
Looking ahead to tomorrow, much vital data is expected from the leading economies. Traders are advised to pay special attention to two leading indicators, the British Manufacturing Production report and the Canadian Building Permits. A positive end result of each of these indicators is likely to strengthen the local currency the GBP and CAD.
GBP/CAD Freefall
For the past two months the GBP/CAD pair has dropped over 2,000 pips and looks like it has the potential to drop even further. Point 1: The Slow Stochastic is showing a sequence of bearish crosses, which indicates that the bearish momentum has more stem in it. Point 2: the MACD's downward direction shows no signs of a halt. Point 3: the next significant support level seems to be at the 1.6720 level.