Forex - Canadian Dollar at all time highs on Mexican oil output halt

The talk of the town, at least temporarily, is the appreciation of the Canadian dollar against most currencies. Crude oil rose to over US$93 a barrel on news that twenty percent of Mexico's oil output was halted. One hundred dollar a barrel does not seem so far fetched now. In an interesting twist, even former Fed Chairman Alan Greenspan was quoted as saying that crude oil at this level is not bad at all if it meant the path to lowering the U.S.'s dependence on imported oil. The USDCAD pair hit a fresh low in yesterday's trading at 0.9515.

The broader attention is of course focused on the FOMC rate decision which is due out on Wednesday. The market seemed to factor-in a 25 basis point cut already. Traders believe the Fed will act in the favor of the markets and cut rates 25bp. To not cut would cause increased volatility in an already unstable market. To cut 50 bp would have the Euro and British Pound boost to stratospheric levels.

The Japanese September jobless rate rose to 4% from 3.8% in August however household spending came out at a strong growth of 3.2% versus an expected 1.4%. The Bank of Japan is expected to keep interest rates unchanged at tomorrow's meeting announcement on the basis of slower global growth.

EurUsd is holding very strong above 1.4350 and a break of 1.4450 will expose the psychological 1.4500 and the 100% extension of the previous high-low at 1.4542. On the downside, a close below 1.4400 would be bearish.

GbpUsd the strong uptrend is aiming for 2.0660. A break down below 2.0529 (yesterday's low) opens a return to 2.0300.

UsdJpy must keep below 115.55 to continue a bearish bias. Above 115.55, there is no trouble getting back to 117.89, the 50% Fibonacci retracement of the last intermediate high-low. The pair would be very bearish below 113.50.

UsdChf is trading well below the 1.1800 key level. The pair therefore remains very bearish, especially below the support of 1.1602, the Oct 22nd low. On the upside, bulls will be buying from 1.1800 and up.