Knightsbridge Foreign Exchange provides its clients complimentary daily market commentary on the Canadian dollar. Our market analysts review forces impacting currencies and summarize their comprehensive research in succinct reports.
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Historical Daily Market Commentary - FX Morning Update
This section will be updated at the end of each month.
November 30, 2010
USD/CAD Open 1.0195-1.0200 Overnight Range 1.0174-1.0234
The Canadian dollar traded within its well established short term range overnight even as Asian equity markets were roiled by a Chinese economist’s call for China to raise interest rates 2% to stem inflation. The reaction was a tad excessive, in part, reflecting both poor liquidity and rate hike fears. On-going contagion fears in Europe, and bearish EUR/USD technicals kept the EUR under pressure. Month-end portfolio rebalancing efforts, Canada GDP (1.4%) and US data releases (Consumer Confidence, expected 52.7) could add to pressure on the loonie today.
The short term Canadian dollar technicals are unchanged and still mixed. USD gains continue to be capped in the 1.0250-60. US dollar losses are contained in the 1.0150 area. For today, the same as yesterday, USD support is at 1.0170 and 1.0140. Resistance is at 1.0230, 1.0260.
The Canadian dollar is vulnerable to a worse than expected print of GDP data and Canadian dollar selling due to month end portfolio rebalancing. However, steady selling of EUR/CAD, plus rising oil prices will stem Canadian dollar losses.
Today’s Range 1.0160-1.0250
November 29, 2010
USD/CAD Open 1.0197-02 Overnight Range 1.0166-1.0230
The Canadian dollar is starting the week near the top end of its recent 1.0082-1.0258 range despite oil prices flirting with $85/bbl. The Irish debt crisis was resolved with an 85 billion promise from the EU, IMF and Irish funds. Unfortunately, EUR gains were short lived as the vultures started circling Portugal and Spain. There are no US data releases today. Canada releases Current Account and IPP. Global equities were mixed to flat.
The short term Canadian dollar technicals are mixed. Canadian dollar Bulls expect USD gains to be capped in the 1.0250-60 area for a retest of 0.9980. Canadian dollar bears see 0.9980 and 1.0070 as strong USD support and an eventual break of 1.0250-60 to lead to 1.0375. For today, USD support is at 1.0170 and 1.0140. Resistance is at 1.0230, 1.0260.
The Korea’s are still exchanging pleasantries with the USA stirring the noodle pot by playing war games with South Korea, helping to keep risk aversion alive. It is also “employment data week” with US non-farm payrolls released on Friday providing traders with an incentive to stay close to home.
Today’s Range 1.0160-1.0250
November 24, 2010
USD/CAD Open 1.0196-01 Overnight Range 1.0179-1.0240
The Canadian dollar recouped most of yesterday’s losses as the resurgence of fiscal uncertainty in Euroland and the periphery countries like Hungary led to a “buy North America” mind-set. The mandarins at S&P, late as usual, downgraded Irish debt by two notches. Asian equity indices were mixed to slightly higher while European indices are all down. NY futures are pointing slightly higher at the moment. It is a data rich day in the US including Durable Goods (forecast (0.2% m/m), Unemployment Claims (434K), Personal Spending (0.5% m/m), revised University of Michigan Consumer Sentiment (69.5), and New Home Sales (311K).
The short term Canadian dollar technicals are bearish while the USD/CAD rate is above 1.0150, looking for a decisive break of 1.0270 to extend gains to 1.0375. A move below 1.0150 suggests more 0.9980-1.0260 range trading. For today, USD support is at 1.0170, 1.0150 and 1.0120 and resistance is at 1.0230 and 1.0260.
There will be a lot of data released today to confuse markets with better than expected durable goods orders and consumer confidence likely to underscore the safe haven status of the US, resulting in a rising USD vs. the majors.
Today’s Range 1.0140-1.0250
November 23, 2010
USD/CAD Open 1.0195-00 Overnight Range 1.0165-1.0212
The loonie got a little lift from the release of the Canadian inflation data this morning, rising to 1.0160 from 1.0190. CPI was higher than expected at 0.4% in October vs. forecasts of a 0.2% rise. In Asia, North Korea took exception to South Korean war drills on a disputed island and launched around 200 artillery shells. The initial reaction was to duck and then to buy US dollars. This shift into risk aversion is moving the US dollar higher with the focus shifting from the debt woes of Ireland to Portugal and Spain. Asian equity indices were mixed, European indices are all down and NY futures are pointing lower.
The short term Canadian dollar technicals are mixed. The Canadian dollar is locked within a 0.9980-1.0250 band and needs to break either side of this range to provide additional direction. For today, USD support is at 1.0140 and 1.0120. Resistance is at 1.0210 and 1.0240.
Today’s Canadian CPI data is unlikely to ignite a CAD$ buying frenzy because the inflation rate is still within the Bank of Canada’s target zone and Canadian interest rates are already well above US rates. Furthermore, European sovereign debt issues and US QEII effects will overshadow Canadian economic data. Today is the last full trading day due to Thursday’s US Thanksgiving holiday and traders will not be inspired to do much of anything.
Today’s Range 1.0160-1.0230
November 22, 2010
USD/CAD Open 1.0135-40 Overnight Range 1.0124-1.0177
The Canadian dollar popped higher overnight on general US dollar weakness due to the announcement that Ireland had excepted an EU bail-out, which rallied EUR/USD. Meanwhile, global equity indices were mixed to flat as are North American futures, while commodity prices were a tad firmer.
The short term Canadian dollar technicals are modestly bullish having broken the short term USD uptrend line at 1.0160, which began at 0.9980. For today, USD support is at 1.0120 and 1.0080. USD resistance is at 1.0180 and 1.0240.
Markets continue to digest how the issues in Europe will be resolved, the long-term effects of QE II, and China's interest rate decisions and its impact on commodities.
Today’s Range 1.0120-1.0220
November 19, 2010
USD/CAD Open 1.0190-95 Overnight Range 1.0165-1.0208
The Canadian dollar drifted higher in Asia and retreated in Europe, all within a narrow band, as global markets remain uncertain as to what is the dominant driver; Ireland/EU bail-out, China raising interest rates, or US QEII. China raised the reserve ration by 50 bp’s effective Nov.29, in an attempt to slow inflation, ensuring China risks stay front and center. Asian equity indices were mostly flat to down slightly, European are all down modestly and NY futures are pointing lower. There are no US data releases of note today.
The short term Canadian dollar technicals are unchanged needing to break either side of 1.0150-1.0270. For today, USD support is at 1.0160 and 1.0130. USD resistance is at 1.0205, 1.0230 and 1.0270.
The EUR/USD has bounced off its lows on anticipation of a positive resolution to the Irish debt crisis. This could lead to selling of the Canadian dollar against EUR and GBP from a technical perspective and on nervousness over potential Chinese rate hikes. In addition, next week’s US Thanksgiving holiday will make for quiet North American markets as market participants bail out as early as possible.
Today’s Range 1.0160-1.0240
November 18, 2010
USD/CAD Open 1.0178-83 Overnight Range 1.0164-1.0244
The Canadian dollar climbed steadily higher overnight, buoyed by a bounce in commodity prices (gold +$13.50 to $1,356.50, oil +$1.36 to $81.80) and a rise in global equity indices, all sparked by optimism that Ireland will accept the EU/IMF bail-out. Today’s data releases in the US include; Jobless Claims (+442K), Philly Fed (+5.1%), Leading Indicators +(0.5%). Canada has Leading Indicators (+0.2%) and Wholesale Trade (+0.1%).
The short term Canadian dollar technicals are mixed. Canadian dollar bulls view the failure of the US dollar to extend gains through both the 100 day moving average at 1.0260 and the double top at 1.0265 as evidence that the Canadian dollar uptrend will resume, confirmed by a breach of 1.0170. Canadian dollar bears see the USD in an uptrend above 1.0130, looking for 1.0270 to give way, to extend USD gains to 1.0375. For today, USD support is at 1.0170 and 1.0130. USD resistance is at 1.0200, 1.0220 and 1.0260.
The commodity markets appear to be ignoring, or at least discounting the earlier rumours of a Chinese rate hike soon and are content to let a rising EUR/USD, on an Irish debt resolution, drive prices higher.
Today’s Range 1.0160-1.0250
November 17, 2010
USD/CAD Open 1.0210-15 Overnight Range 1.0197-1.0255
The Canadian dollar bounced erratically within a fairly narrow range overnight, consolidating yesterday’s losses above 1.0170. Global equity indices staunched the bleeding from yesterday and were all in positive territory including NY futures. The NY futures may be seeing some benefit over the optimism surrounding the GM IPO, which is said to be 7 times oversubscribed. Meanwhile, Irish debt issues may be coming to a resolution with the EU, the IMF and the UK preparing a bail-out package, once again demonstrating the EU’s ability to deal with member nation issues. China is widely rumoured to be raising rates on Friday, undermining commodity prices. Oil is at $81.60 while gold is at $1,335.70. US data releases include CPI and Housing Starts. No data from Canada.
The short term Canadian dollar technicals are bearish. Former 1.0170 resistances is now support on the hourly charts, looking for another attempt to the 1.0250-70 area. A breach of this level would support arguments that a short term base (at 0.9980) is in place and targeting 1.0375. For today, USD support is at 1.0170 and 1.0140. Resistance is at 1.0250, 1.0280, and 1.0340.
Despite a modest recovery in equity markets today, ongoing depressed commodity prices should see the Canadian dollar underperform.
Today’s Range 1.0170-1.0260
November 16, 2010
USD/CAD Open 1.0155-60 Overnight Range 1.0073-1.0164
The Canadian dollar was largely ignored in Asian trading but got knocked for a loop in Europe following the much better than expected released of the German ZEW Index (Investor confidence) which sparked a bout of EUR/CAD buying. Another round of risk aversion appears to be making the rounds with Asian and European Equity indices down, commodities sharply lower and NY futures pointing to an ugly day for North American markets. US data releases today include PPI (forecast 9.7% m/m), Core PPI (Forecast 0.2%m/m), Capacity Utilization, and Industrial Production. Canada has Manufacturing Sales.
The short term Canadian dollar technicals are bearish. The overnight break of the 1.0140 resistance level points to further USD/CAD strength to 1.0200 and 1.0240. Meanwhile USD support comes in at 1.0110 and 1.0080. Resistance is at 1.0160 and 1.0200.
Concerns regarding further rate hikes in China dampening demand and depressing commodity prices in the face of European debt issues and the USA’s QEII program devaluing the US dollar have investors heading for the sidelines. The subsequent drop in liquidity exacerbates moves in all markets.
Today’s Range 1.0110-1.0200
November 15, 2010
USD/CAD Open 1.0111-16 Overnight Range 1.0088-1.0135
The Canadian dollar traded defensively in skittish overnight markets due to concerns surrounding Irish debt. Expectations of a stronger than expected US Retail Sales number (forecast 0.7%) plus rising global equity indices and higher commodity prices may lead to a “buy North America” sentiment, giving the loonie a boost.
The short term Canadian dollar technicals are bearish as long as the USD/CAD rate stays above 1.0080, but needs to break 1.0140 to extend gains. Below 1.0080 argues for a return to 0.9980 and more consolidation. For today, USD support is at 1.0080 and 1.0040. Resistance is at 1.0140, 1.0160 and 1.0200.
The Canadian dollar should benefit from a renewed buy North America theme as improving US economic fundamentals will be viewed as good for Canada as well.
Today’s Range 1.0040-1.0130
November 12, 2010
USD/CAD Open 1.0110-15 Overnight Range 1.0024-1.0142
The Canadian dollar sank on a bout of risk aversion fuelled by fears of a rising risk of default for Irish bonds, rumours and denials of an EU bail-out for Ireland and fears that a Chinese rate hike will impact commodity prices. The G-20 meeting announced a consensus that ‘exchange rate changes are to happen gradually”. Global equity indices are all lower and NY futures are pointing down to start the day. Gold has dropped $15.70 to $1,387.60 while oil is down $1.71 to $86.08. Preliminary University of Michigan Consumer Confidence is released in the US. No releases for Canada.
The short term Canadian dollar technicals are bearish following the break back above 1.0070 and then 1.0120. For today, USD support is at 1.0090 and 1.0060. Resistance is at 1.0140, 1.0160 and 1.0200.
FX Markets are back in profit protection mode; content to pare back positions ahead of the weekend and to see how events in Europe unfold.
Today’s Range 1.0060-1.0160
November 10, 2010
USD/CAD Open 1.0028-33 Overnight Range 1.0013-88
The Canadian dollar clawed back some of yesterday afternoon’s losses in the Asian session with the market awaiting U.S. and Canadian trade data as well as developments from the G-20 meeting which starts tomorrow. China allowed the yuan to move higher in another blatant attempt to deflect G-20 criticism from their “weak yuan” policy. Asian equity indices were mixed to higher while European indices were all down. NY futures are flat to slightly higher.
The short term Canadian dollar technicals are bullish. The rejection of Canadian dollar weakness above 1.0070 leaves the uptrend intact; however USD support in the 0.9980-1.0000 is still quite formidable. For today, USD support is at 1.0010, 1.0000 and 0.9980. Resistance is at 1.0050, 1.0080 and 1.0120. The Remembrance Day bank holidays tomorrow in front of the G-20 meeting where currencies will be the main topic of discussion is a good enough reason to keep FX markets trading within the confines of their recent ranges.
Today’s Range 0.9980-1.0070
November 9, 2010
USD/CAD Open 1.0000-05 Overnight Range 1.0000-68
The Canadian dollar drifted lower in Asia but quickly reversed course in Europe, making another half-hearted attempt to crack through parity. Asian equity indices were down however European indices rose even as renewed concerns over Irish and Greek debt emerged. This sent gold soaring to $1,420.70, up $17.50 while oil prices have risen to $87.41.
The short term Canadian dollar technicals are bullish but needing a decisive move below 0.9950 to open up further upside. Meanwhile, layers of USD/CAD support are stacked from 0.9950 to 1.0000. For Today, USD support is at 0.9990, 0.9970 and 0.9950. USD resistance is at 1.0040, 1.0080 and 1.0120.
Currency traders torn between selling US dollars due to the Fed’s quantitative easing program, or buying US Dollars on the potential debt default of peripheral Euroland countries. Either way the outcome is ugly.
Today’s Range 0.9970-1.0040
November 8, 2010
USD/CAD Open 1.0032-37 Overnight Range 0.9998-1.0048
The Canadian dollar could not get any traction below par and quickly retreated to 1.0040 with European equity markets trading modestly lower along with gold an oil prices. The US dollar has managed to hang on to its gains vs. Europe following Friday’s strong than expected employment report and renewed concern over the default risk of peripheral Euroland sovereign debt. For this go around, a rising US dollar vs. Europe is seen as good for the Canadian dollar as investors buy “North America”.
The short term Canadian technicals are bullish looking for a move below par to 0.9950. However, for today, a USD/CAD move above 1.0160 would argue for further 1.00-1.0140 consolidation, prior to the next Canadian dollar up leg. For Today, USD support is at 1.0000, .9980 and .9950. Resistance is at 1.0050, 1.0090 and 1.0120.
The Canadian dollar direction is being driven by cross activity, particularly EUR/CAD and GBP/CAD. With the focus back on default risk in Europe, the USD may claw out further gains against the EUR, elevating the loonie in the process.
Today’s Range 0.9980-1.0050
November 5, 2010
USD/CAD Open 1.0050-55 Overnight Range 1.0022-1.0080
The Canadian dollar had a quiet overnight session ahead of the Canadian employment report. The 3,000 gain was below expectations of +16.5K and the loonie retreated modestly. US payroll report indicated a gain of +151K, above expectations, and the US dollar gained across the board except against the loonie. The loonie gained strength on the basis that positive US payroll data will impact the Canadian economy positively due to our strong economic ties.
The rest of the FX markets were also quiet overnight awaiting the release of the US payrolls report. Asian equity indices were higher while European indices were down. New York futures are also pointing lower to start the day.
The short term Canadian dollar technicals are bullish, however support in the 1.0010-1.0020 area has held. For today, USD support is at 1.0050 and 1.0010. Resistance is at 1.0080 and 1.0120.
Today’s Range 1.0010-1.0120
November 4, 2010
USD/CAD Open 1.0025-30 Overnight Range 1.0022-1.0108
The Canadian dollar got some lift overnight, benefitting from the U.S. Fed’s announcement of a $600 billion QE program, which green-lighted renewed U.S. dollar selling across the board and lifting both global equity indices, NY futures, and commodity prices. Gold rose $23.90 while oil is up $1.04. The North American focus shifts to Friday’s Canadian and U.S. employment data.
The short term Canadian dollar technicals are bullish. For today, USD support is at 1.0010, 1.0000, and 0.9970. Resistance is at 1.0075 and 1.0110.
The Fed’s QE package came in as expected. The USD is being sold against everything, and equity indices and commodity prices are rising. Yet, the US dollar’s moves against the EUR and to a lesser extend the Canadian dollar are a tad less than aggressive perhaps because the US dollar is near key technical support and resistance levels and perhaps because traders have already anticipated the effects of QEII. The market appears to be long Canadian dollars and could be vulnerable to a correction back to 1.0240.
Today’s Range 1.0010-1.0070
November 3, 2010
USD/CAD Open 1.0072-77 Overnight Range 1.0067-1.0096
The Canadian dollar and the majors were mostly sidelined overnight awaiting today’s FOMC announcement. A number of strategists/economists expect the FED to announce a $500 billion in initial Treasury purchases. This has kept market players nervous with a bias toward selling US dollars. In Canada, all ears await the announcement from Ottawa, blessing the BHP/Potash takeover. Global equity indices, New York futures and commodity prices are all higher.
The short term Canadian dollar technicals are bullish. There is no change to yesterday’s view. The break of 1.0140 should lead to a retest of 0.9980 in the coming days. The USD/CAD rate needs to reclaim 1.0220 to negate the Canadian dollar upward pressure. For today, USD support is at 1.0035 and 1.0010 and 0.9950. USD Resistance is at 1.0110, 1.0140 and 1.0180.
The Canadian dollar could get an added boost from perceived demand due to the blessing of the Potash takeover, regardless of the outcome of the FOMC meeting. A big QEII program and a demand for $20+ billion Canadian dollars by BHP should launch the loonie.
Today’s Range 1.0010-1.0100
November 2, 2010
USD/CAD Open 1.0117-22 Overnight Range 1.0100-1.0161
The Canadian dollar is sneaking higher aided by the surprise 0.75bp rise in Australian rates overnight. The U.S. midterm elections and the start of the FOMC meeting today ahead of BoJ, ECB and the Bank of England meetings on Thursday should see the U.S. dollar mark time vs. the majors. Meanwhile, global equity indices are mostly higher as are NY futures, gold and oil prices.
The short term Canadian dollar technicals are bullish while trading below 1.0220. The break of 1.0140 should lead to a retest of 0.9980 in the coming days. Below 0.9980 points to 0.9910 and 0.9840. The USD/CAD rate needs to reclaim 1.0220 to negate the Canadian dollar upward pressure. For today, USD support is at 1.0090 and 1.0030. USD Resistance is at 1.0150, 1.0180 and 1.0220.
The Canadian dollar may be in its final countdown before being launched into orbit on a potash fuelled rocket ship. The news that the Federal government will approve the BHP/Potash all-cash bid today plus the lack of any competing bids for Potash that could delay a slated closing day of Nov.18 in the face of another massive quantitative easing program in the USA due any day now is a recipe for an explosive rally in the Canadian dollar. “To the moon, Alice”!
Today’s Range 1.0030-1.0130
November 1, 2010
USD/CAD Open 1.0190-1.0195 Overnight Range 1.0159-1.0198
The Canadian dollar started November drifting higher on news of stronger than expected Chinese Manufacturing demand, which gave the AUD/USD a boost and lifted commodity prices. Asian equity indices were mixed to lower. Meanwhile, European traders were a tad less than impressed with the Chinese numbers and the dollar reversed earlier losses, while European indices were flat.
The short term Canadian dollar technicals are bullish while trading below 1.0220, looking for a break of 1.0140 to extend Canadian dollar gains. For today, USD support is at 1.0140 and 1.0110 with resistance at 1.0220 and 1.0240.
This week is rife with event risk forcing prudent traders to the sidelines. Tomorrow's US congressional elections followed by Wednesday’s FOMC meeting, then a rescheduled Bank of Japan meeting along with Thursday’s Bank of England and ECB announcement and followed by Friday’s payrolls data will ensure trading volumes are light.
Today’s Range 1.0140-1.0240
October 29, 2010
USD/CAD Open 1.0225-30 Overnight Range 1.0195-1.0244
The Canadian dollar was on the defensive during the overnight session as October comes to an end. Concerns about the direction of portfolio rebalancing flows in front of a heavy data release day encouraged traders to stay close to home. U.S. data on tap today includes: Advance GDP (forecast 2.1%, q/q), Advance GDP Price Index (forecast 1.9%,q/q), Chicago PMI (58.1), revised University of Michigan Consumer Sentiment (68.2). Canada releases GDP (0.3%, m/m).
The short term Canadian dollar technicals are bearish. Even though secondary support at 1.0240 cratered, primary support at 1.0140 held, leaving the Canadian dollar bear trend intact. In the big picture, The Canadian dollar remains in a strong uptrend while below 1.0520. It is currently consolidating in a 1.0000-1.0350 range. The Canadian dollar enjoyed a brief rally around the 11:00am “fixing” period yesterday which may be a sign of similar trading today.
Today’s Range 1.0140-1.0240
October 28, 2010
USD/CAD Open 1.0247-52 Overnight Range 1.0249-1.0284
The Canadian dollar drifted higher overnight as the US dollar retreated mildly from earlier peaks. Concern and confusion over the size and timing of the Fed’s next round of quantitative easing and event risk surrounding a series of central bank meetings next week is hobbling traders. (FOMC meeting Nov.2-3; UK and ECB, Nov. 4; Bank of Japan policy meeting which was moved up to Nov.4-5).
In keeping with the Halloween theme, Irish and Portuguese 10 year bonds are scaring investors and yields are approaching the levels achieved at the height of the Sovereign Debt Crisis. Meanwhile, Asian equity indices were mixed to slightly higher, European indices all gained and NY futures are looking positive, to start the day.
The short term Canadian dollar technicals are bearish while trading above 1.0230. A move below this level will spark a retest of 1.0150. For today, USD support is at 1.0240, 1.0230 and then 1.0170. USD resistance is at 1.0280 and 1.0330. Next week is rife with event risk and the start of the last full trading month of 2010. Liquidity is likely to be slimmer than normal as market participants stay on the sidelines.
Today’s Range 1.0240-1.0340
October 27, 2010
USD/CAD Open 1.0287-92 Overnight Range 1.0229-1.0308
The Canadian dollar continued to back pedal overnight as expectations for the initial size of round 2 of quantitative easing is managed lower. The WSJ reported that the QE ll programming to be announced next week would be a “measured approach” worth “a couple hundred billion” over a few months. This contrasts sharply with earlier rumors of a massive “trillion dollar plus” program. This has given a lift to the USD vs. the other currencies.
Global equity indices were mixed to flat and NY futures are pointing down to start the day. Commodity prices are also lower. US data releases today include Durable Goods (forecast 0.4% m/m); Housing Starts (forecast 301k). There is no data from Canada.
The short term Canadian dollar technicals are bearish. The failure of the Canadian dollar to extend gains through 1.0140 and then the subsequent USD rally back through 1.0260 has confirmed a new short term USD/CAD uptrend, targeting 1.0375. Above 1.0375 suggests 1.0675 is back in play. The USD/CAD rate needs to move below 1.0220 to negate this view. For today, USD support is at 1.0260 and 1.0220. Resistance is at 1.0320 and then 1.0375.
It would seem that the risk-reward, short term currency trade is to buy US dollars as the prelude to next weeks QE ll program has the US dollar very oversold against the majors. This will serve to keep the Canadian dollar under pressure at a time of reduced liquidity due to the Canadian banks year end.
Today’s Range 1.0260-1.0360
October 26, 2010
USD/CAD Open 1.0211-16 Overnight Range 1.0186-1.0224
The Canadian dollar gave back some of yesterday’s gains due to modest strength in the U.S. dollar vs. the majors in a rather uninspiring overnight session. The loonie remains directionless within a 1.0140-1.0270 band and continues to react to movements in the US dollar. Global equity indices are all lower and NY futures are flat. Commodity prices are also down slightly. The currency market appears solely focused on quantitative easing numbers and that is dictating moves in the market.
The short term Canadian dollar technicals are mixed. Canadian dollar bears see support at 1.0170 holding and a US dollar move through 1.0240 opening up a move to 1.0290 and 1.0330. Canadian dollar bulls view 1.0240 as a buying opportunity, looking for a move back through 1.0140 to 0.9980.
A wishy-washy day in equities suggests that the loonie will trade defensively today. BoC governor Carney is speaking again today, however he is not expected to say anything different that what was released in the Monetary Policy Report.
Today’s Range 1.01800-1.0270
October 25, 2010
USD/CAD Open 1.0177-82 Overnight Range 1.0169-1.0268
The Canadian dollar rose as the US dollar dropped against all the major currencies following the G20 meeting in Korea. The finance ministers pledged to avoid “competitive devaluation”, the markets called them out, and resumed selling the US dollar, lifting commodities, European equity indices and NY futures. There isn’t any economic data of note so the soft dollar should keep equities rising and the loonie firm.
The short term Canadian dollar technicals are mildly bullish. Canadian dollar strength through 1.0220 dipped through support at 1.0170, exposing 1.0140. A move back through 1.0220 suggests ranges between 1.0170 and 1.0320. For today, USD support is at 1.0170 and 1.0140. USD resistance is at 1.0220 and 1.0250.
This is the last week in the Canadian banks, fiscal year. It is also a time when traders at these banks avoid strapping on risk, try to keep positions flat and protect their bonus pool. This can lead to elevated Canadian dollar volatility as liquidity is gets scarce.
Today’s Range 1.0160-1.0240
October 22, 2010
USD/CAD Open 1.0270-75 Overnight Range 1.0239-1.0298
****Canada CPI 1.9% Core CPI 1.5% as expected*********
The Canadian dollar is continuing its roller coaster ride today racing downhill because massive short US dollar positions against the majors, particularly EUR, are being trimmed ahead of the G-20 Finance Ministers meeting in Korea today. Stronger than expected German IFO data (107.6) has failed to provide support to the EUR/USD as the topic of currencies is on the agenda. Asian equity markets were mixed while European indices are all lower as are NY futures.
The short term Canadian dollar technicals are a mess as the loonie bounces erratically between 1.0120 and 1.0375. For today, USD support is at 1.0240 and 1.0205. USD resistance is pegged at 1.0290 and 1.0330. Longer term, the CAD remains in an uptrend while trading below 1.0540. Today's Canadian CPI data came in largely as expected so it can be largely ignored. The spotlight is on the US dollar and the G-20 and what (if anything) they can agree to in order to deflect the risks for a trade/currency war. This uncertainty suggests weaker equity and commodity markets as well as a softer loonie.
Today's Range 1.0240-1.0340
October 21, 2010
USD/CAD Open 1.0170-75 Overnight Range 1.0170-1.0264
The Canadian dollar has recovered most of Tuesday’s losses sparked by the sharp rally in the US dollar on the surprise rate hike in China. The rationale for the irrational FX moves is that the rate hike in China was expected but the timing was a surprise while the next round of QE is a nod to a US weak dollar policy. Asian equities were mixed to flat, European indices are higher as are NY futures. Oil prices are a tad lower at $82.34/bbl while gold has climbed to $1,347.40 US data releases today include: Jobless Claims (expected +454k), Philly Fed (expected 2.3). Canada releases Leading Indicators thought to rise 0.2.
The short term Canadian dollar technicals are mixed. CAD bulls view the failure of the US dollar to extend gains above 1.0360 and its subsequent plunge through 1.0220, pointing to a return to 1.0000 or 0.9980. Meanwhile CAD bears see the break through 1.0170 as evidence that the CAD uptrend from September is over and look to buy US dollars around 1.0130-40.
The Canadian dollar managed to eke out gains yesterday and overnight despite the rather downbeat Monetary Policy Report which downgraded the medium term outlook for the Canadian economy. This should be seen as a warning flag for CAD bulls getting lathered up over expectations of sustainable CAD gains due to QEll.
Today’s Range 1.0140-1.0240
October 20, 2010
USD/CAD Open 1.0290-95 Overnight Range 1.0285-1.0345
The Canadian dollar drifted higher in an uninspiring overnight session as traders resold US dollar’s figuring that yesterday’s rally on the back of the China rate hike was overdone. The IMF warned that “the EUR is approaching overvaluation”, another statement that was largely ignored. Asian equity indices were lower but European indices rose. NY futures are pointing higher to start the day. Commodity prices are also up modestly.
The short term Canadian dollar technicals are bearish. The break of USD resistance at 1.0180 and then 1.0220 puts 1.0475 in play. For today, USD support is at 1.0280 and 1.0230. Resistance is at 1.0340, 1.0370 and 1.0410.
Today’s Range 1.0260-1.0360
October 19, 2010
USD/CAD 7am Open 1.0201-06 Overnight Range 1.0165-1.0210
The BOC leaves rates on hold. The statement indicated growth will slow in 2010 and 2011. There are also concerns about the US recovery. All this is negative for the Canadian dollar. China also increased its interest rate for the first time in almost three years indicating a move towards containing inflation, this definitely caught the market by surprise.
Slower Canadian growth expectations, concerns about the US recovery, China moving towards raising interest rates and slowing growth, is negative news for commodity prices and the Canadian dollar. All positive news was priced in to the Canadian dollar when it was at parity and a little bit of negative news has produced a sharp correction. Continue to expect volatility.
The short term Canadian dollar technicals are bearish. The break above 1.0180 takes out the top of a short term USD/CAD downtrend channel and warns of consolidation.
Today's Range 1.0180-1.0350
October 18, 2010
USD/CAD Open 1.0202-07 Overnight Range 1.0117-1.0220
The Canadian dollar retreated overnight, undermined by a broad-based US dollar rally, sparked in part by profit taking as USD resistance/support levels against various currencies held. In addition, the enthusiasm for more QE has diminished somewhat on the view that the FED would keep its powder dry until after the US mid-term elections in November. Meanwhile, the US dollar’s strength has lowered commodity prices across the board. Asian equity indices were flat to down, European indices are mostly flat and NY futures are pointing lower.
The short term Canadian dollar technicals are bearish as USD resistance at both 1.012 and 1.0190 crumbled. For today, USD support is at 1.0180 and 1.0140. Resistance is at 1.0220 and 1.0240.
The Canadian dollar is under pressure due to a modest recovery in the US dollar vs. the majors and on position squaring ahead of the Bank of Canada’s rate decision tomorrow. The Bank of Canada is expected to leave interest rates unchanged.
Today’s Range 1.0120-1.0220
October 15, 2010
USD/CAD Open 1.0058-63 Overnight Range 1.0034-72
The Canadian dollar was relatively quiet overnight in keeping with the muted trading of the US dollar against the majors as all markets await Ben Bernanke’s speech. The market will be closely watching for signs of when the expected round 2 of QE will begin. Asian equity indices were modestly lower, European indices were flat to down and NY futures are pointing lower to start the day. There is also a lot of US economic releases on tap today, including: CPI (expected 0.1% m/m), Retail Sales (0.5% m/m), University of Michigan Consumer Sentiment (68.8). Canadian releases are not meaningful.
The short term Canadian dollar technicals are bullish under 1.0120 looking for USD support at 0.9980 and 0.9950 to collapse, leading to 0.9835. A move through 1.0120 would negate the downward pressure on the US dollar and set up a period of consolidation in the 1.00-1.0250 area. For today, USD support is at 1.0020 and 0.9980. Resistance is at 1.0080 and 1.0120.
The weak US dollar trade looks rather stale in the short term. A delay in QEII, or speculation of a watered down program with stronger than expected US data would lead to a nasty US dollar short squeeze, pummeling the loonie in the process
Today’s Range 1.0020-1.0120
October 14, 2010
USD/CAD Open 1.0002-07 Overnight Range 0.9986-1.0035
The Canadian dollar breached parity overnight as the loonie continues to soar higher. The underlying theme of Canadian dollar strength is driven by broad based USD weaknesses supported by continued expectations of quantitative easing by the Fed - this is the key catalyst. The US dollar was also lower by surprising monetary tightening by Singapore Monetary Authorities signaling the recovery is progressing well in Asia, which is a strong sign for the risk trade, also supported by higher commodity and gold prices.
The Canadian dollar will oscillate near par as USD weakness is expected to continue but watch for volatile swings as news on quantitative easing and Yuan reform create headlines.
The short term Canadian dollars technicals are bullish and aiming for .9935 and then .9850. For Today, USD support is at .9980 and .9935. Resistance is at 1.0030 and 1.0060.
Today’s Range 0.9950-1.0050
October 13, 2010
USD/CAD Open 1.0071-76 Overnight Range 1.0060-1.0104
The Canadian dollar shrugged off news of a record budget deficit ($55.5 billion) and the Finance Ministers concern that a shaky global recovery would make matters worse. Perhaps markets took solace from the promise to balance the budget by 2015. Yesterday’s release of the FOMC minutes and the reference to “before long” in the context of quantitative easing, put renewed pressure on the US dollar and gave equities and commodity prices a lift.
The short term Canadian dollar technicals are bullish targeting .9935 while prices remain below 1.0195. For today, USD support is at 1.0010 and 0.9980. Resistance is at 1.0120 and 1.0140.
The selling pressure on the US dollar is relentless due to expectations of further quantitative easing, lifting equities, commodities and the Canadian dollar in the process. However, we are approaching the Nov/Dec period when the Canadian dollar traditionally comes under pressure due to repatriation flows. If you need USD’s before year end, it could make sense to buy them on any dip below par.
Today’s Range 0.9980-1.0070
October 12, 2010
USD/CAD Open 1.0158-63 Overnight Range 1.0097-1.0179
The Canadian dollar drifted lower throughout the long weekend as global markets retreated from recent highs in thin trading. Global equity markets are all lower as are commodity prices and NY futures ahead of today’s release of the FOMC minutes.
The short term Canadian dollar technicals are mixed. USD support is at 1.0120, 1.0080 and 1.0050. USD resistance is at 1.0180, 1.0210 and 1.01240.
The massive sell-off of the US dollar vs the majors is showing signs of running out of steam which has led to the retreat in equity and commodity markets. The Canadian dollar will likely come under pressure as a result.
Today’s Range 1.0120-1.0220
October 8, 2010
USD/CAD Open 1.0195-00 Overnight Range 1.0154-1.0232
*** Canadian Employment down 6,600 vs. expectations of + 10,000***
The Canadian dollar stayed on the defensive overnight, pressured by the pending Canadian and US employment reports and worries over today’s G-7 meeting. Commodity prices were down as were global equities including NY futures as profits were booked ahead of the weekend.
The short term Canadian dollar technicals are mixed. CAD bears see the bounce off of support at 1.0050 and the subsequent bounce back through both 1.0120 and 1.0150 as evidence of a short term bottom and are looking for 1.0265 to give way, leading to 1.0370. CAD bulls see this retracement as corrective and expect USD resistance between 1.0250-65 to hold. For today USD support is at 1.0180, 1.0150 and 1.0110. USD resistance is at 1.0230 and 1.0265.
The G-7 meeting and its apparent focus on currencies will encourage traders to square positions today. Canadians will be even more motivated in order to get a jump on the Thanksgiving long weekend.
Today’s Range 1.0180-1.0265
October 7, 2010
USD/CAD Open 1.0108-13 Overnight Range 1.0082-1.0123
The Canadian dollar had a quiet overnight session as FX trading was rather subdued ahead of both the Bank of England and the ECB rate decisions. The BoE left rates unchanged and the ECB is likely to follow suit. Global equity markets were flat to higher while gold keeps printing record highs (currently $1,357.30). Oil is testing this year’s high, trading at $83.64, providing some support to the loonie.
The short term Canadian dollar technicals remain bullish. The USD/CAD is consolidating recent gains below 1.0190 in a 1.0050-1.0150 range with a bias for further CAD strength. For today, USD support is at 1.0080, 1.0050 and 1.0010. Resistance is at 1.0130 and 1.0150.
The Canadian dollar rally is likely to pause today ahead of tomorrow’s employment reports in Canada and the US, In addition, recent news reports about a “currency war” and Friday’s G-7 meeting may encourage traders to trim positions ahead of the hen party.
Today’s Range 1.0050-1.0150
October 6, 2010
USD/CAD Open 1.0130-35 Overnight Range 1.0125-65
The Canadian dollar scraped out more gains overnight on the back of ongoing US dollar weakness vs. the majors, particularly against EUR, as the U.S. FED moves closer to round two of quantitative easing. Strong German manufacturing data released this morning also helped the EUR. Global equities are all higher and NY futures are pointing up to start the day. Oil is at $82.59 and gold is at $1,347.20.
The short term Canadian dollar technicals remain bullish. USD/CAD support levels are crumbling in the face of the relentless Canadian dollar demand. A move through 1.0080 will trigger a stampede through par to 0.9935, while a USD rally above 1.0190 will relieve the pressure. For today, USD support is at 1.0120, 1.0110 and 1.0080. Resistance is at 1.0150 and 1.0180.
The IMF has warned that counties that try to cap the strength of their currencies risk derailing the economic recovery, which will ensure lively discussions during Friday’s G-7 meetings. Look for the Canadian dollar to slowly grind higher today, perhaps getting a boost from a stronger than expected IVEY PMI (forecast 63).
Today’s Range 1.0080-1.0160
October 5, 2010
USD/CAD Open 1.0209-14 Overnight Range 1.0205-70
The USD/CAD went for a wee bit of a roller coaster ride overnight, rising from 1.0230 to 1.0270 and then plunging back to 1.0216 in the span of 30 minutes, mostly due to EUR/CAD buying. Most markets were squirrelly beginning with Australia’s mostly surprising decision to leave rates unchanged with sent AUD/USD lower. The Bank of Japan cut its overnight rate from almost nothing to less than almost nothing, (0.1% fixed to a band between 0 and 0.1%) The Euro got another boost from better than expected economic data however the technical picture warns of more EUR/USD consolidation. All this noise translates into further USD/CAD range trading today.
The short term CAD$ technicals remain bullish. The overnight failure to extend gains through 1.0270 combined with the subsequent retracement back through 1.0220 suggests further CAD$ gains to 1.0170. Longer term, strong USD/CAD support between 1.0110 and 1.0170 suggest that gains will be hard to achieve. For today, USD support is at 1.0200, 1.0170 and 1.0135. Resistance is at 1.0230 and 1.0270.
The CAD is getting a lift from rising commodity prices and global equity indices that are flat to higher overnight, however renewed EUR weakness vs. the US dollar will lead to further buying of EUR/CAD.
Today’s Range 1.0170-1.0250
October 4, 2010
USD/CAD Open 1.0217-22 Overnight Range 1.0185-1.0240
The Canadian dollar started the week attempting to overcome US dollar support at 1.0185 during the Asian session and failed dismally. The US dollar rebounded against EUR and GBP as positions were getting stretched and Ireland reminded investors that the sovereign debt crisis was not over. An FT story said Ireland's budget deficit will be higher than forecast. Global equity indices were mostly lower and NY futures are pointing down to start the day. Markets are likely to stay within recent ranges ahead of ECB and Bank of England rate decisions Thursday and Canadian and US employment reports on Friday.
The short term Canadian dollar technicals are bullish below 1.0370 looking for gains through 1.0185 to 1.0110. However gains may be hard to achieve due to tiers of strong support areas below 1.0185 which are seen at 1.016, 1.0135 and 1.0110. To the top, USD resistance is at 1.0240 and 1.0270.
Today’s Range 1.0185-1.0260
October 1, 2010
USD/CAD Open 1.0255-60 Overnight Range 1.0255-1.0312
The Canadian dollar squeezed out some gains during the European session even in the face of a surging EUR/USD due to another bout of US dollar selling for Euros, GBP and AUD, reportedly by Asian Central Banks, for reserve diversification purposes. Strong Chinese PMI data (53.8) and fears of a US QE ll program are keeping selling pressure on the USD. Oil is trading at $80.97, gold is at $1,318.00 and global equity indices, including NY futures are higher.
The short term Canadian dollar technicals are bullish, while the USD/CAD rate is trading below 1.0340, looking for a break of support in the 1.0220-40 area. For today, USD support is at 1.0240, 1.0220 and 1.0180. Resistance is at 1.0310 and 1.0340.
Today’s Range 1.0220-1.0310
September 30, 2010
USD/CAD Open 1.0305-10 Overnight Range 1.0305-1.0344
The Canadian dollar traded quietly and defensively in the overnight session. The widely expected downgrade of Spain by Moody’s, to AA1 from AAA has traders revisiting concern with the entire European Sovereign debt woes, taking note of Irelands efforts to deal with the Allied Irish fallout and Portugal’s planned austerity measures. Meanwhile global equity indices are all lower and NY futures are pointing down. Gold is at $1,315.20 with oil at $76.39. US data releases include Q2 GDP final (1.9%), jobless claims (458K) and Chicago PMI. Canada responds with Q2 GDP, expected to be flat.
The short term CAD$ technicals are bearish above 1.0270 looking for a test and break of 1.0380 to target 1.0490. For today, USD support is at 1.0290 and 1.0250. USD resistance is at 1.0340 and 1.0380. Today is the last day of the month and quarter which may put further selling pressure on the CAD$ due to rebalancing flows.
Today’s Range 1.0270-1.0370
September 29, 2010
USD/CAD Open 1.0271-76 Overnight Range 1.0260-1.0308
The CAD$ eased higher overnight in a dull session, trading within a narrow range even with general US dollar weakness against Europe. Strong data from China in the form of a higher than expected manufacturing PMI provided some much needed momentum for the global recovery camp, and the USD fell. Unfortunately, the loonie is barely participating in this environment due to selling of CAD against the EUR. Asian equity indices were higher, European indices slightly down and NY futures are pointing lower at the moment. Gold is trading at $1,311.80 and oil is higher as well, trading at $76.50.
The short term CAD$ technicals are unchanged as mixed. The USD/CAD has been in a 1.0200-1.0500 range for all of September which should continue. For today, USD support is at 1.0260 and 1.0210. Resistance is at 1.0320 and 1.0360.
The bullish factors which should contribute to a rising loonie: (a) widening interest rate differential between Canada and the US; b) rising commodity prices; c) US Fed wanting a weaker dollar; are being crushed by relentless selling of CAD vs the EUR and GBP, mainly due to technicals, denying the loonie participation in the current global recovery rally.
Today’s Range 1.0230-1.0330
September 28, 2010
USD/CAD Open 1.0315-20 Overnight Range 1.0287-1.0357
The CAD$ continued to slip lower overnight, undermined in part by selling of CAD vs EUR as the EUR/CAD charge is very bearish Canada. Diminished Canadian rate hike expectations and fears that the slowing US economy will hurt Canada contributed to the negative loonie sentiment as did CAD selling pressures from month end and quarter end demand. US data releases today include Case Schiller Housing price index (forecast 3.1% yoy). Consumer confidence (52.5). No data from Canada.
The short term CAD$ technicals are mixed. The USD/CAD has been in a 1.0200-1.0500 range for all of September which should continue. The move above 1.0280 met resistance at 1.0370. A break of this level opens up 1.0475. A move below 1.0270 argues for more 1.02-1.04 consolidation.
The CAD is vulnerable to further selling pressure today stemming from US dollar demand due to month end and quarter end.
Today’s Range 1.0280-1.0370
September 27, 2010
USD/CAD Open 1.0231-36 Overnight Range 1.0233-1.0265
The CAD$ was pretty static overnight due to a lack of North American data releases this morning. The US dollar remains under pressure over fears of another round of QE. Gold is back above $1,300.00 an ounce, oil is modestly higher and global equities are mostly higher including NY futures.
The short term CAD$ technicals are modestly bullish while trading below 1.0270 but need to extend gains through 1.0210 to keep the uptrend alive. A break of 1.0370 will extend to 1.0475. A move below 1.0210 will lead to 1.0110. For today, US dollar support is at 1.0210 and 1.0180. Resistance is at 1.0270 and 1.0330.
The CAD is caught in the crossfire between US dollar weakness vs. the majors, particularly EUR and demand for EUR/CAD. In addition, the next Bank of Canada rate hike may be on hold as BoC Governor Carney stated that “there are limits to the divergence that there can be between Canada and the United States".
Today’s Range 1.0190-1.0270
September 24, 2010
USD/CAD Open 1.0312-17 Overnight Range 1.0304-1.0354
The CAD$ was largely ignored overnight, firming slightly from last night’s close. The excitement in Asia occurred as reports that the Bank of Japan was intervening, which drove USD/JPY higher. Unfortunately, all the gains were erased and there are lingering doubts that the BoJ even intervened. In Euroland, unhappiness over US growth prospects plus a smug feeling that the EU dodged the default bullet is keeping the EUR/USD firmly bid, undermining the loonie in the process.
Gold dealt at $1,300.10, oil is up a tad to $75.41 and NY equity indices are pointing higher. US data includes new home sales and durable goods. No data from Canada.
The short term CAD$ technicals are mixed. A break of 1.0370 will extend to 1.0475. A move below 1.0210 will lead to 1.0110. For today, US dollar support is at 1.0280 and 1.0250. Resistance is at 1.0330 and 1.0370.
Although the CAD/US interest rate differential is widening, mixed to softer than expected economic data has impeded the loonies’ rise. This new round of pressure on the CAD$ is stemming from widespread buying of EUR/CAD on the perception of divergent growth tangents between the USA and Europe. The short term EUR/CAD technicals are bearish which for the time being are overwhelming any lingering bullish CAD sentiment from steady to rising commodity prices, rising interest rates etc.
Today’s Range 1.0250-1.0350
September 23, 2010
USD/CAD Open 1.0325-30 Overnight range 1.0290-1.0355
The CAD$ is starting the day on the defensive following a quiet overnight session despite a generally weak US dollar against the majors. Yesterday’s themes of a slower US growth and fears of another round of quantitative easing leave the loonie at risk on the assumption that a weak US economy is bad for the Canadian dollar. Global equity indices were all lower and NY futures are pointing down as well. US data releases include jobless claims and existing home sales.
The short term CAD$ technicals are negative. Yesterday’s move back through 1.0290 sets up another period of consolidation, likely within the 1.0250-1.0475 range . For today, USD support is at 1.0310 and 1.0270. Resistance is at 1.0370 and 1.0430.
The CAD$ weakness yesterday can be attributed, in part, to weak long CAD$ positions getting squeezed and triggering stops, exacerbating the effects of a rumored large “fixing” order. With oil prices soft and the risk of CAD selling against JPY for repatriation ahead of ½ year end in Japan, suggests the loonie will struggle to make gains below 1.0300.
Today’s Range 1.0340-1.0430
September 22, 2010
USD/CAD Open 1.0197-02 Overnight Range 1.0195-1.0265
The CAD$ climbed higher overnight, spurred on by widespread US dollar weakness against the majors, following yesterday’s rather dovish FOMC statement. The prospect of additional quantitative easing to further stimulate a sluggish US economic recovery piled on to diminished concerns over a European sovereign debt default have knocked the US dollar for a loop. The loonie is benefitting by default. Meanwhile global equity indices are mostly lower and US futures are flat. Gold soared $20.10/ounce to $1,294.40 and oil is a tad higher as well. Canadian retail sales are released at at 8:30am are expected to rise 0.6%, month over month.
The short term CAD$ technicals are bullish. The overnight break of support at 1.0220 opens up a run to 1.0110, although there are many layers of support in front of that level. A move below 1.0110 argues for a test of 0.9935. For today, USD support is at 1.0175, 1.0135 and 1.0110. Resistance is at 1.0220, 1.0240 and 1.0270.
It may be wise to fade this current CAD$ rally, mainly because both the magnitude of the USD losses vs. the majors and the steady equity market rally’s argued for a correction.
Today’s Range 1.0140-1.0240
September 21, 2010
USD/CAD Open 1.0301-06 Overnight Range 1.0280-1.0320
*****Canadian CPI 1.7% yoy, down 0.1%*******
The CAD$ had another quiet overnight session awaiting both the Canadian inflation data and the FOMC meeting. Canada CPI was a tad softer than expected, resulting in a minor bout of CAD$ weakness. Global equity indices are all higher NY futures are bouncing around flat. Gold is trading at $1,279.80 and oil is at $74.33
The short term CAD$ technicals are bullish. The top of the USD/CAD downtrend channel from 1.0675 at the end of August comes in at 1.0330. Above this level argues for a return to 1.0475. For today, USD support is at 1.0270 and 1.0240 with resistance at 1.0330 and 1.0360.
US rates are expected to remain unchanged today however the market is undecided as to whether the FED will embark on another round of quantitative easing especially if they lower their growth forecast again.
Today’s Range 1.0250-1.0330
September 20, 2010
USD/CAD Open 1.0303-08 Overnight Range 1.0293-1.0342
The CAD$ recouped a small portion of Friday’s losses overnight in a quiet session with Tokyo closed for a national holiday, but it is still on the defensive ahead of this morning’s NAHB housing report from the US. Another weak report would lead to risk off trades as the US economic recovery is questioned. Tomorrow’s FOMC report is awaited for additional clarity on the status of the quantitative easing program-either more or less.
The short term CAD$ technicals are modestly bullish while trading below 1.0350. For today, USD support is at 1.0280 and 1.0230. USD Resistance is at 1.0330, 1.0350 and 1.0390.
The CAD$ is trapped between CAD demand from a risk seeking environment, supported by the tedious creep higher of the Chinese yuan, but leading to selling of CAD vs EUR, AUD and GBP.
Today’s Range 1.0270-1.0350
September 17, 2010
USD/CAD Open 1.0270-73 Overnight Range 1.0249-70
The CAD$ is starting today in the same spot as yesterday but the difference is that the loonie has already bounced off US dollar support in the 1.0220 area. Expectations today for a higher US consumer confidence survey plus rising global equity markets, higher commodity prices, the Bank of Japan’s successful (so far) intervention have put the spot light back on a global recovery.
The short term CAD$ technicals are bullish, looking for a move through 1.0210 to set-up the next leg lower and a test of 1.0110. Below 1.0110 argues for 0.9950. For today, USD support is at 1.0210 and 1.0180. Resistance is at 1.0260 and 1.0320.
The CAD$ is starting the day with a bullish bias supported by rising commodity and equity markets. A higher than 70.2 print for the preliminary Michigan Consumer confidence survey would fuel the next leg of the CAD rally.
Today’s Range 1.0180-1.0270
September 16, 2010
USD/CAD Open 1.0245-50 Overnight Range 1.0242-1.0283
The CAD$ is resting on support in the 1.0245-50 area attempting to claw out additional gains in the face weak Asian equity indices, mixed European indices and a NY futures market pointing lower. Even though gold continues to make all time highs (currently $1,275.30), oil prices have slipped to $75.36. US data releases this morning include, PPI (forecast (+0.9), Weekly Claims (463K), and Current Account.
The short term CAD$ technicals are bullish but looking tired. The USD/CAD rate is struggling to make sustainable headway below the 1.0225-40 area which if broken, leads to a series of support zones between 1.0135 and 1.0180. For today, USD support is at 1.0240 and 1.0210. Resistance is 1.0280 and then 1.0320.
The CAD$ will struggle to make additional gains today due to soft equity markets and lower oil prices. In additional, the sharp sell-off of the USD vs. EUR is bumping into resistance at 1.3100 and it could recoup some of yesterday’s losses, dragging the loonie lower in the process.
Today’s Range 1.0240-1.0320
September 15, 2010
USD/CAD Open 1.0285-90 Overnight Range 1.0255-1.0317
The CAD$ gave back all of yesterday’s gains in a lively overnight session. The Bank of Japan intervened to weaken the JPY, buying a reported $17 billion US dollars. USD/JPY soared from 82.90 to 85.50, giving a boost to the Nikkei as well, while tripping up commodity currencies, including the CAD$. Asian equity indices rose, European indices are down slightly and NY futures are pointing lower. Gold is very firm at $1,270.00 while oil is slightly softer at $75.62.
The short term CAD$ technicals are bullish. Yesterday’s push through USD support at 1.0250 led to a rather sluggish and short lived CAD$ rally. Further CAD$ losses back above 1.0350 would suggest further 1.0200-1.0450 consolidation. For today, USD support is at 1.0270 and 1.0240. Resistance is at 1.0320 and 1.0350.
The CAD$ was unable to sustain gains through USD support at 1.0250 in part due to the local currency being overbought. The CAD$ was a victim of collateral damage overnight, by the BoJ’s actions. Expect the loonie to trade defensively today.
Today’s Range 1.0270-1.0350
September 14, 2010
USD/CAD Open 1.0270-75 Overnight Range 1.0267-1.0303
The CAD$ stayed firm overnight, trading in a narrow range as the focus shifted to the JPY, which made a 15 year high. Meanwhile, global equity indices were all modestly lower and US futures are pointing lower as well. Oil prices are firm at $76.62 and gold surged $10.70 to $1,257.30. Canadian data releases include new motor vehicle sales, capacity utilization and labour productivity. Today’s US retail sales data is expected to show a gain of 0.5% m/m.
The short term CAD$ technicals are unchanged and still bullish. The loonie is struggling to breach USD support at 1.0250 but when broken, could lead to a test of 1.0110. However, a move back through 1.0305 would argue for further 1.0250-1.0450 consolidation. For today, USD support is at 1.0250 and 1.0210. Resistance is at 1.0305 and 1.0340.
The release of US retail sales this morning will be the key driver of markets today. A disappointing number could lead to another bout of risk aversion and a weaker CAD$. A larger than expected number would be the impetus needed to break support at 1.0250.
Today’s Range 1.0200-1.0300
September 13, 2010
USD/CAD Open 1.0300-05 Overnight Range 1.0300-1.0354
The CAD$ is starting the week with both wings flapping. Global equity indices are all higher as are prices for gold ($1,247.60) and oil ($77.23). Better than expected Chinese retail sales data put the global recovery theme in better light and up to an 8 year window for global banks to increase capital under Basel lll, gave the EURO a boost at the expense of the USD.
The short term CAD$ technicals are bullish, looking for a test of 1.0250 and then 1.0110, while the USD/CAD rate stays below 1.0380. For today, USD support is at 1.0275 and 1.0250. Resistance is at 1.0330 and 1.0360.
The markets have appositive tone about them this morning which should lead to CAD gains and a move to 1.0250.
Today’s Range 1.0250-1.0330
September 10, 2010
USD/CAD Open 1.0328-33 Overnight Range 1.0313-1.0345
The CAD$ had a quiet overnight session but rallied from 1.0330 to 1.0290 on the stronger than expected Canadian employment report. Overnight markets were a mixed bag. The USD made gains in Asia but lost them in Europe. Asian equity indices were higher, European indices lower and NY futures in positive territory. Oil is up $1.73 to $75.78 and gold is at $1,251.70.
The short term CAD$ technicals are bullish. The move below 1.0322 could argue for a 100% retracement to 1.0110. For today, USD support is at 1.0280 and 1.0250. Resistance is at 1.0340 and 1.0370.
The CAD$ has recovered about 3 cents this week, benefitting from many better than expected data releases, yet it is still trapped in the 1.0250-1.0675 band seen for the past month. A nasty but short-lived bout of risk aversion trading at the start of the week, stemming from concerns over European sovereign debt, reminded traders that September can be a nasty month. Although the loonie is in a short term uptrend, profit taking ahead of the weekend may limit any gains.
Today’s Range 1.0270-1.0340
September 9, 2010
USD/CAD Open 1.0333-38 Overnight Range 1.0333-1.0393
The CAD$ retreated slightly in Asia trading but then recouped those losses in the European session on the back of rising global equity indices. European sovereign debt default concerns diminished on a good bond auction in Portugal yesterday and on news that Norway’s $450 billion Government Pension fund is buying Greek, Italian Spain and Portuguese debt. Today’s data releases from Canada include: Housing Starts (forecast 185k) Trade Balance (-0.8 billion).The US has: Weekly Claims (forecast 470k), Trade Forecast -47.4 billion.
The short term CAD$ technicals are bullish. Yesterday’s break below 1.0440 negated the upside pressure and suggests further CAD gains to 1.0250. For today USD support is at 1.0330 and 1.0290. Resistance is at 1.0360 and 1.0390.
Yesterday’s BoC rate hike and strong IVEY PMI data sparked the loonies rise and an improved European sovereign debt outlook greased the skids. With commodities higher and NY futures pointing up, the loonie is likely to make further gains today.
Today’s Range 1.0270-1.0350
September 8, 2010
USD/CAD Open 1.0470-75 Overnight Range 1.0460-1.0507
The CAD$ spent a quiet overnight session following yesterday’s risk aversion triggered slide and is patiently awaiting the Bank of Canada rate decision. The market is undecided about a rate hike, however in keeping with the bank’s stated goal of normalizing rates, one could expect a 0.25% increase to 1.0%. European sovereign debt woes continue to command center stage. Asian equity indices were all down, Europe is mixed to flat and even NY futures are hovering around flat. Gold is attempting to make a new all time high, currently $1,260.50 while oil sits at $73.85.
The short term CAD$ technicals are bearish The break of the 200 day exponential moving average at 1.0480 overnight and the 1.0475 resistance level target 1.0570 For today, USD support is at 1.0440 and 1.0410. Resistance is at 1.0540 and 1.0575.
Canada also gets the IVEY PMI survey today at 10am (forecast 55.9) which if better than expected and combined with a rate hike, would see the loonie back at 1.0350 in a hurry. Unfortunately, new doom and gloom headlines about the perils of European sovereign debt would trump the” good news” Canada story.
Today’s Range 1.0440-1.0540
September 7, 2010
USD/CAD Open 1.0409-14 Overnight Range 1.0351-1.0424
The CAD$ is down modestly from Friday’s close although global equity indices, oil and gold are all lower to kick off ‘back to school’ week. A Bloomberg story on Saturday warning that European governments, including trouble sovereigns, needed to roll $79 billion in September, reopened the debt default can of worms. To make matters worse, the WSJ reported today that European Bank Stress tests understated the holdings of risky government debt by some lenders.
The short term CAD$ technicals are bullish. The break of the 1.0440 level argues for a move to 1.0250 and then 1.0110. A break above 1.0470 negates the bullish outlook. For today, USD support is at 1.0380 and 1.0350. Resistance is at 1.0440 and 1.0475.
The lack of data from the US or Canada today will keep the focus potential European risks which should keep the loonie on the defensive due to risk aversion trading.
Today’s Range 1.0370-1.0470
September 3, 2010
USD/CAD Open 1.0540-45 Overnight Range 1.0523-55
The Canadian dollar, like the rest of the major currencies, stayed very quiet overnight awaiting this morning's US Non-farm payrolls data, expected to be down 100K. Global equity indices are all modestly higher as are NY equity futures. There are no Canadian data releases.
The short term Canadian dollar technicals are bullish. The break of the 1.0550 level on Tuesday resulted in a test of the next support at 1.0470, which held. For today, a move above 1.0560 should spark another test of 1.0675, while below 1.0470 opens up 1.0420 and then 1.0370.
Today’s Range 1.0460-1.0560
September 2, 2010
USD/CAD Open 1.0500-05 Overnight Range 1.0489-1.0544
The CAD$ had a quiet night following yesterday’s impressive rally which was sparked by a shift into risk seeking sparked by better than expected data out of China. The ECB is expected to leave rates unchanged at 1%. The ensuing press conference and the release of the US employment claims report may provide some fireworks but the key data release is tomorrow’s non-farm payrolls report ahead of a long weekend. Meanwhile Asian equity indices were higher, European indices lower and NY futures are modestly lower.
The short term CAD$ technicals are mixed. The CAD$ continues to bounce within a 1.0450-1.0670 band and needs to break either side to provide some direction. For today, USD support is at 1.0480 and 1.0440 with resistance at 1.0530, 1.0570.
The CAD$ is likely to be on the defensive today as positions get trimmed ahead of the payrolls report tomorrow and the long weekend.
Today’s Range 1.0460-1.0540
September 1, 2010
USD/CAD Open 1.0595-00 Overnight Range 1.0590-1.0655
The CAD$ has retreated from key resistance at 1.0670 following a modest resumption of “risk seeking” trades, sparked by strong economic data from Australia and China. Global equity indices are all higher and NY Futures are pointing to a strong start. Oil prices are $72.40/bbl while gold is trading at $1,255.10.
The short term CAD$ technicals are mixed. CAD bulls view the failure to take out key USD resistance at 1.0670 as evidence that the 1.0450-1.0670 trading range remains intact. A break below 1.0540 would confirm this view. CAD bears see the bounce off of 1.0670 as corrective and expect 1.0550 to hold. For today, USD support is at 1.0565 and 1.0550. Resistance is at 1.0630 and 1.0660.
The key release is still Friday’s US payroll data which will need to show strong gains in full-time employment to counteract the steady stream of soft data seen recently. This would serve to alleviate concerns of a double dip recession and due to Canada’s proximity to the US, give the loonie a lift as well.
Today’s Range 1.0565-1.0635
August 31, 2010
USD/CAD Open 1.0603-08 Overnight Range 1.0578-1.0625
The CAD$ is under pressure due to another round of risk aversion trading as weak economic data sparks renewed fears of a double dip global recession. Today’s US data releases which include Case-Schiller home prices, Chicago PMI and consumer confidence are expected to provide further evidence of a slowing economy. Global equity indices are all lower as are US futures. Commodity prices are also down. In addition, month end rebalancing flows will also weigh on the loonie.
The short term CAD$ technicals are bearish. The break of 1.0575 has opened up a test of 1.0675 and if this level is broken, further weakness to 1.0870 cannot be ruled out. For today, USD support is at 1.0570 and 1.0540. USD resistance is at 1.0640 and 1.0680.
The prospect for weak data and month end rebalancing flows in conjunction with weak global equity markets points to a nasty day for the loonie, especially if 1.0675 is taken out.
Today’s Range 1.0590-1.0675
August 30, 2010
USD/CAD Open 1.0495-00 Overnight Range 1.0475-1.0510
The CAD$ had a quiet session to start the week. The Asian focus was on an “Emergency Bank of Japan meeting”, originally thought to include a round of intervention to devalue the JPY. The USD/JPY rallied in front of the news and then quickly reversed itself as the market concluded the BoJ stimulus plan was lacking. The UK Markets were closed. Asian equity indices were higher, European indices mixed, and NY futures pointing down to flat. US data releases include Personal Spending, and Personal Income. Canada has Trade Balance.
The short term CAD$ technicals are still mixed as the currency bounces around in a 1.0460-1.0660 band. A move below 1.0460 suggests a retest of 1.0250 while a break above 1.0550 argues for further CAD weakness to 1.0660. For Today, USD support is at 1.0460 and 1.0410. USD resistance is at 1.0530 and 1.0550.
Month end CAD selling pressures and equity market weakness may combine to push the loonie lower today. In addition, Friday’s US employment report will ensure choppy trading until the data is released.
Today’s Range 1.0460-1.0540
August 27, 2010
USD/CAD Open 1.0585-90 Overnight Range 1.0568-1.0597
The Canadian dollar drifted lower in a quiet overnight session as markets marked time ahead of US GDP (forecast 1.8%, revised Michigan Consumer confidence (69.8) and Bernanke’s speech at 10am. Another source of concern for the loonie is a report that Australia’s Intoll Group is recommending that its shareholders accept CPPIB’s $3.2 billion bid for the company. Canadian dollar selling to buy Australian dollars may result. Further pressures stem from month end demand for US dollars. Global equity indices were mixed to higher with NY futures pointing up to start the day. Oil is at $73.36 while gold is modestly firmer at $1,239.50.
The short term Canadian dollar technicals remain mixed. Canadian dollar trading range is bracketed within a 1.0475-1.0675 range. For today, USD support is at 1.0570 and 1.0520. Resistance is at 1.0610 and 1.0670.
Bernanke’s speech will be closely dissected and if deemed to be pessimistic on US growth prospects, another bout of risk aversion trading will occur. The Canadian dollar will suffer as a result.
Today’s Range 1.0570-1.0670
August 26, 2010
USD/CAD Open 1.0553-58 Overnight Range 1.0546-1.0605
The Canadian dollar clawed back some losses in a robust overnight session highlighted by mostly rising global equity markets and a bit of a bounce in commodity prices. The market shrugged off another round of weak US data yesterday afternoon with equities recovering, perhaps on the thinking that the earlier sell-off was overdone. Last Thursday, US employment claims surprised markets with a print of $500k, triggering the latest bout of risk aversion. Today’s numbers are expected to be around 488K and maybe a print of 435K sparks a risk seeking rally. For now, US equity futures are pointing higher, Oil is at $73.36 and gold is $1,244.30.
The short term Canadian dollar technicals are mixed. CAD bears view the rejection of USD strength above 1.0675 as merely corrective and as long as 1.0470 remains intact, they look for another move to 1.0675 and beyond. CAD bulls view the fact that 1.0675 remain intact as evidence that the recent CAD weakness was merely a correction, allowing traders to reload for another move to 1.0250. For today, USD support is at 1.0540 and 1.0510. Resistance is at 1.0610, 1.0640 and 1.0675.
Despite the recent bout of weakness, the Canadian dollar is far from a basket case. There is a strong likelihood that the Bank of Canada hikes rates on September 8 in an attempt to “normalize rates”, providing additional support to the loonie.
Today’s Range 1.0510-1.0610
August 25, 2010
USD/CAD Open 1.0513-18 Overnight Range 1.0576-1.0620
The Canadian dollar is on the defensive having bounced off US dollar support at 1.0575 overnight and now trading above the overnight high at 1.0620 pointing to a retest of yesterday’s 1.0655-60 high. Meanwhile, the risk aversion theme remains intact supported by the downgrade of Ireland’s long term debt to AA-. The news was offset by stronger than expected German economic data. In Asia, fears of BoJ intervention caused the JPY to retreat. Oil prices are flat to down ($71.58) while gold is up $5.70 to $1,239.10.
The short term Canadian dollar technicals are bearish looking for 1.0675 and then 1.0775. For today, USD support is at 1.0605 and 1.0580. Resistance is at 1.0660 and 1.0720.
Today’s Range 1.0610-1.0670
August 24, 2010
USD/CAD Open 1.0597-02 Overnight Range 1.0514-1.0602
The Canadian dollar is getting crushed on fears of a global double dip recession resulting in a flood of safe haven buying of US dollars and Japanese Yen. A Bank of England official warned of the risk of another British recession, which didn’t help matters. The JPY has hit a 15 year high vs. the US dollar. Global equity indices tumbled, gold fell $49.00 to $1,219.50 and oil is at $72.25.
The short term Canadian dollar technicals are bearish. The USD/CAD rate broke key trend-line and moving average resistance levels setting up a move to 1.0675 and then 1.0750. For today, USD support is at 1.0550 and 1.0520. Resistance is at 1.0630 and 1.0675.
The Canadian dollar may find a bit of relief today if the Retail Sales data is stronger than the expected 0.5% MoM. However, the market is focused on risk aversion and a bit of bullish Canadian economic data may merely serve to provide a better USD/CAD buying level.
Today’s Range 1.0570-1.0670
August 23, 2010
USD/CAD Open 1.0460-65 Overnight Range 1.0447-1.0499
The Canadian dollar had a quiet overnight session to start the week as bottom fishing equity buyers emerge to stem the stampede into risk aversion. Asian equity indices were down but European indices and NY futures are higher as are commodity prices. The AUD/USD rate is lower as Australia is faced with a hung parliament, which to me, sounds like a great idea for Canada.
The short term Canadian dollar technicals are bearish. The break of 1.0420 and 1.0470 suggests further Canadian dollar losses to 1.0530 and then 1.0675. For today, USD support is at 1.0440 and 1.0410 with resistance at 1.0505 and 1.0530.
There is not much in the way of data releases today to give markets direction. With equity futures pointing higher, the Canadian dollar may recoup some of Friday’s losses to 1.0420.
Today’s Range 1.0440-1.0505
August 20, 2010
USD/CAD Open 1.0475-80 Overnight Range 1.0385-1.0485
*CPI Rose 1.8% yoy (expected 1.9%)*
The CAD$ is under serious pressure as yesterday’s week US data re-opened arguments of a double dip recession triggering an equity market sell-off as traders retreated into full risk aversion mode. Overnight, global equity indices were all down as are US futures. Commodities are lower with oil through support at $75/bbl and trading at $73.41. Gold is also lower at $1,231.80. The only solace is that the moves are likely exaggerated due to poor liquidity in “summer markets”.
The short term CAD$ technicals are mixed. CAD bulls view the bounce from 1.0250 as corrective and a USD/CAD selling opportunity while below 1.0505. CAD bulls view the series of higher USD lows, combined with the break back above both 1.0340 and 1.0460 as evidence of a new USD/CAD uptrend, targeting 1.0800. The long term USD/CAD downtrend line resides at 1.0505, defended by the 200 day, exponential moving average at 1.0485. For today, USD support is at 1.0440 and 1.0420. Resistance is at 1.0505 and then 1.0580.
Part of the weakness in the CAD$ yesterday and overnight can be directly attributed to a “short USD squeeze” of positions opened on news of the BHP Billiton/Potash bid. Short term market effects have trounced the longer term supply/demand effects on the CAD$ and stops were triggered on the break of both 1.0360 and 1.0440.
Today’s Range 1.0440-1.0505
August 19, 2010
USD/CAD Open 1.0270-75 Overnight Range 1.0268-1.0315
The CAD$ is a tad higher today following an uneventful overnight session but still basking in the glow of M&A activity. Asian and European equity indices are all slightly higher and North American futures are also pointing up, to start the day. Oil prices are back above $75.00/bbl trading at $75.92 while gold is at $1,230.70. US data releases include weekly claims, Philly Fed and leading indicators. Canada has wholesale trade data.
The short term CAD$ technicals are bullish. The CAD is testing USD support at 1.0250, a break of which will lead to a quick drop to 1.0200 and then 1.0130. A move back through 1.0320 would suggest a brief period of consolidation. For today, USD support is at 1.0250 and 1.0205. Resistance is at 1.0305 and 1.0330.
Markets are enjoying a drift into risk seeking as global equity markets attempt to recoup last week’s losses. Meanwhile Euroland economic data (particularly German) continues to be strong. Greece has met the requirements to receive additional Euroland funds which is another sign that the sovereign debt crisis has abated.
Today’s Range 1.0200-1.0290
August 18, 2010
USD/CAD Open 1.0290-95 Overnight Range 1.0285-1.0342
The CAD$ edged higher in an uninspiring overnight session. It is a rather impressive feat in the face of mixed to lower global equity indices and lower oil prices and can be attributed to the $39 billion hostile bid for Potash by BHP Billiton. The Bank of England left interest rates unchanged as expected. It is a light data day on both sides of the border.
The short term CAD$ technicals are bullish. The USD drop through support at 1.0340 and the breach of the USD uptrend support line at 1.0320 and 1.0295 argue for further CAD gains to 1.0250 and then 1.0110. For today, USD support is at 1.0280 and 1.0255. USD Resistance is at 1.0330 and 1.0370.
The CAD may retreat today on the back of mixed to lower commodity prices and early indications of a down day in equity markets. The euphoria from the BHP/Potash news will also wane as the bid won’t expire until 11:59pm on Oct.19.
Today’s Range 1.0250-1.0340
August 17, 2010
USD/CAD Open 1.0387-92 Overnight Range 1.0375-1.0440
The CAD$ drifted steadily higher overnight helped by a shift back into risk seeking. A positive Irish bond auction and bottom-fishing equity buyers helped turn sentiment. The loonie got a further lift from news that the boys from BHP Billiton were cruising Saskatoon, looking for a piece of potash. Their initial bid of $39.0 billion was rejected, but is only a matter of time and a bit more money before Potash Corp. disappears. The potential FX impact is huge as the bid was all cash. CAD bulls looking for a move through parity would get their wish if this deal ever closes.
The short term CAD$ technicals modestly bullish looking for a break through 1.0370 to extend CAD gains to 1.0340 and then 1.0290. A move back above 1.0435 ensures more 1.0370-1.0490 consolidation.
Today’s Range 1.0310-1.0410
August 16, 2010
USD/CAD Open 1.0423-28 Overnight Range 1.0375-1.0445
The CAD$ is starting the week with a negative tone with another bout of risk aversion pushing global equity indices lower. The USD continues to flirt with key technical support and resistance levels vs. the majors leading to concerns that further USD upside is in the cards which in turn would lead to more CAD$ selling. Oil prices are still above $75.00 at $75.33 while gold has pressed higher to $1,224.70
The short term CAD$ technicals are mixed. The CAD$ continues to chop around within a 1.0350-1.0480 band. In reality the loonie needs to take out either 1.0510 or 1.0290 to generate some near term direction. For today, USD support is at 1.0405 and 1.0370. Resistance is at 1.0450 and 1.0505
There isn’t a whole lot of market moving Canadian data on tap until CPI at the end of the week.
Today’s Range 1.0370-1.0450
August 13, 2010
USD/CAD Open 1.0415-20 Overnight Range 1.0360-1.0430
The Canadian dollar had a lively overnight session, continuing yesterday’s afternoon rally into Asia until it smacked into congested USD/CAD support at 1.0355-60. The EUR recouped losses vs. the US on the back of better than expected economic data including GDP which beat expectations. Unfortunately, these gains were pared back as European equities fell. It is a data rich Friday the 13th in the US. On tap are: Retails Sales (forecast 0.5%/mom), CPI (Forecast (0.2%/mom) Michigan Preliminary Consumer Sentiment (69.4) and Inventories (0.3%). Oil is off the lows, trading at $75.87, while gold sits at $1,215.40.
The short term Canadian dollar technicals are mixed. The loonie is bouncing around between 1.0368 and 1.0471. For today, USD support is seen at 1.0380 and 1.0340. USD resistance is pegged at 1.0430 and 1.0470.
Today’s data releases should make for interesting markets as the major currencies chop around within recent ranges.
Today’s Range 1.0350-1.0440
August 12, 2010
USD/CAD Open 1.0459-64 Overnight Range 1.0451-1.0490
The CAD$’s had a quiet overnight session but it is still trading with a negative bias as another bout of risk aversion has afflicted markets, concerned that global growth is slowing. The JPY gave up some ground vs. The USD on heightened fears that the Bank of Japan would intervene to weaken the JPY. Meanwhile, European currencies traded rather excitedly vs. the US as recent selling pressures were offset by profit taking. Oil is lower at $77.29 while gold is higher at $1,206.80
The short term CAD$ technicals are bearish although USD upside is running into traffic between 1.0470 and 1.0515. For today, USD support is at 1.0440, 1.0410 and 1.0360. Resistance is at 1.0490, 1.0520 and 1.0570.
The summer doldrums have proven to be summer squalls as FX equity and commodity markets experience volatile swings on risk on, risk off sentiment in an environment of reduced liquidity. Once again it seems that the market has over reacted to global growth concerns in currency markets that were overdue for a correction. Getting bearish CAD at current levels may prove to a long term hold.
Today’s Range 1.0420-1.0520
August 11, 2010
USD/CAD Open 1.0377-82 Overnight Range 1.0306-1.0389
The Canadian dollar's post FOMC rally proved short lived and the loonie gave back yesterday afternoons gains overnight. Risk aversion has returned to the markets following a rather dovish FOMC statement, another round of quantitative easing and re-emerging concerns that China’s economy is slowing. A surging JPY, reaching 14 year highs is also weighing on the loonie with sales of CAD/JPY triggered on the break of 82.60. Global equity indices are down as are NY futures. Oil is back below $80.00/bbl trading at $79.45.
The short term Canadian dollar technicals are bearish however the USD/CAD rate is bumping up against strong resistance at 1.0390. A break here, will lead to 1.0470. A move below 1.0280 suggests further consolidation in a 1.0150-1.0400 range.
Today’s Range 1.0310-90
August 10, 2010
USD/CAD Open 1.0327-32 Overnight Range 1.0270-1.0340
The CAD$ stayed under pressure overnight undermined by a rebounding US dollar vs the majors ahead of today’s FOMC meeting. Diminished expectations of a new quantitative easing program being announced today have led to lower Global Equity indices and an unwinding of short USD positions. Oil prices are $80.88 and gold is trading at $1,198.80.
The short term CAD$ technicals are bearish. The break above 1.0305 sets up further CAD$ weakness to 1.0390 and 1.0450. A break below 1.0265 would negate the negative bias. For today, USD support is at 1.0310 and 1.0265. Resistance is at 1.0350, 1.0380 and 1.0410.
Earlier expectations of another round of QE from the FED have diminished somewhat resulting in equity markets retreating and the US dollar recouping earlier losses. The loonie got swamped with the wake from positions being unwound.
Today’s Range 1.0310-90
August 9, 2010
USD/CAD Open 1.0290-95 Overnight Range 1.0261-1.0295
The CAD$ failed to recoup any of Friday’s losses in a dull overnight session. USD/JPY is flirting with lows not seen for 14 years and leery of Bank of Japan intervention. Friday’s lousy US payrolls number has elevated speculation of another quantitative easing program being announced following Tuesday’s FOMC meeting. Meanwhile, Asian equity indices were mostly lower while European indices were higher as are US futures. Oil is trading at $81.74 and gold is at $1,209.50. There are no data releases today.
The short term CAD$ technicals are mixed. CAD bears see a move to 1.0390 following the retracement back above 1.0260. CAD bulls view Friday’s move as corrective and look for another run at 1.0110. In the bigger picture, the CAD$ remains in an uptrend while trading below 1.0490. For today, USD support is at 1.0260 and 1.0230 with resistance at 1.0305 and 1.0350.
Today’s Range 1.0240-1.0320
August 6, 2010
USD/CAD Open 1.0187-92 Overnight Range 1.0148-1.0192
****Canadian Employment -9.3K vs forecast of +12k; UR Rate +.01 to 8%********
The CAD$ dropped from 1.0190 pre-employment release to 1.0240 after the worse than expected employment data was released at 7:00am. Asian trading was sleepy while the Europeans were a tad livelier albeit confined to fairly narrow ranges ahead of the US employment data at 8:30am. Asian equity indices were mixed, European indices were up and NY futures are flat to start the day. Other Canadian data releases today include the IVEY PMI, forecast at 55.9%.
The short term CAD$ technicals are mixed. Failure to break USD/CAD support at 1.0110 and the subsequent USD rally back through 1.0220 warns that 1.0110 may be a short term floor as the USD/CAD consolidates with a 1.0110-1.0280 range. For today, USD support is at 1.0170, 1.0140 and 1.0110. Resistance is at 1.0240 and 1.0280.
The CAD$ got whacked upside the head on today’s employment numbers. The previous three months job gains totaled a stellar 226K jobs so a mere loss of 9300 this month isn’t worth getting excited over. The key driver will be the US data and its implications to igniting another bout of quantitative easing.
Today’s Range 1.0170-1.0270
August 5, 2010
USD/CAD Open 1.0238-43 Overnight Range 1.0230-1.0269
The CAD$ kept all of yesterday’s gains in the Asian session and then shot higher in the European session as stops were triggered on the move below 1.0160 on the back of rising global equity indices, and higher commodity prices. Oil is trading at $82.17 and gold is gleaming at $1,198.00 NY equity futures are also pointing higher.
The short term CAD technicals are bullish. A break below 1.0110 sets up a move through parity to .9935. For today, USD support is at 1.0110 and 1.0060. Resistance is at 1.0170 and 1.0220.
Calls for the demise of the loonie rally yesterday were premature. The loonie easily broke through support at 1.0185 and 1.0160 due to on-going risk seeking trades. However, weak employment numbers out of Canada and the US would erase these gains in a hurry.
Today’s Range 1.0170-1.0270
August 4, 2010
USD/CAD Open 1.0238-43 Overnight Range 1.0230-1.0269
The CAD$ had a quiet session overnight although the USD remained under pressure vs. the majors. The market is fixated on diminished US growth expectations. Asian equity indices were mixed, European down and US equity futures pointing slightly lower to start the day.
The short term CAD technicals are bullish. The loonie rally has stalled at 1.0220 and it faces further hurdles at 1.0180 and 1.0135. A move back above 1.0290 would argue for further 1.0220-1.0370 consolidation. For today, USD support is at 1.0220 and 1.0180. Resistance is at 1.0270 and 1.0290.
The loonie rally is running out of steam supported by the lack of further gains in EUR/USD through the 200 day ema. In addition, Friday’s Canadian and US employment reports are likely to encourage position squaring ahead of the release.
Today’s Range 1.0220-1.0290
August 3, 2010
USD/CAD Open 1.0231-36 Long Weekend Range 1.0211-1.0292
The CAD$ is returning from the long weekend with a bounce in its step, supported by oil prices at $81.72, rising global equity indices and bullish Canadian dollar technicals. In addition, a Wall Street Journal report suggesting that the Fed may tweak their management of their securities portfolio as undermined the USD vs. the majors. The conclusion is that any change in the securities management is a signal that the Fed is increasingly concerned with the economic outlook.
The short term CAD technicals are bullish. The break of USD/CAD support in the 1.0265-75 zone suggests further CAD$ strength through par to .9925. For today, USD support is at 1.0220 and 1.0185. Resistance is at 1.0180 and 1.0210.
A little over a month ago doomsayers were predicting the end of the EURO, an epidemic of European government debt defaults and that the US was rocketing out of recession. Today, the US is back to being a basket case with shrinking growth, high unemployment and a wobbly housing market while the EURO, supported by questionable stress test results, is the flavor of the day. Beware the pending correction!
Today’s Range 1.0220-1.0290
July 30, 2010
USD/CAD Open 1.0313-18 Overnight Range 1.0313-70
The CAD$ enjoyed a lively European session on the back of EUR/CAD and GBP/CAD selling ahead of key data releases today. The US releases GDP (expected +2.5%), and Chicago PMI (56.3) Canada GDP (forecast 0.1%, m/m) is also released. Meanwhile, Global equity indices were all lower and NY futures are pointing lower, to start the day.
The short term CAD technicals are unchanged from yesterday-mixed. CAD bears expect US support between 1.0250-75 to hold, for a bounce back through 1.0380 to 1.0480. CAD bulls view the recent bounce of the 1.0250-75 support area as merely corrective. The bulls are looking for a move through 1.0250 to extend to 1.0135. For today, USD support is at 1.0300, 1.0250 and 1.0210. Resistance is at, 1.0380 and 1.0420.
The blend of important economic data from both sides of the border and the potential for sizable month end rebalancing flows ahead of a Canadian long weekend may result in a rather volatile morning trading session, today.
Today’s Range 1.0270-1.0360
July 29, 2010
USD/CAD Open 1.0304-09 Overnight Range 1.0304-1.0385
The CAD$ traded quietly in Asia and climbed steadily in Europe on the back of a generally weaker USD vs. the majors. Improving sentiment in the Eurozone contrasted with a rather dovish Beige book economic outlook for the US which helped to lift European equity indices as well as NY futures. There isn’t much data on tap today-the US has jobless claims and Canada has IPPI.
The short term CAD technicals are mixed. CAD bears expect US support between 1.0250-75 to hold, for a bounce back through 1.0380 to 1.0480. CAD bulls view the recent bounce of the 1.0250-75 support area as merely corrective. The bulls are looking for a move through 1.0250 to extend to 1.0135 For today, USD support is at 1.0300, 1.0250 and 1.0210. Resistance is at 1.0340, 1.0380 and 1.0420.
On its own, the Canadian dollar looks well positioned to extend its recent gains back through parity. Unfortunately being a second tier currency, the CAD$ is vulnerable to selling pressures, particularly against EUR and GBP. EUR/CAD short term technicals are bullish looking for a move to 1.3700.
Today’s Range 1.0270-1.0360
July 28, 2010
USD/CAD Open 1.0316-21 Overnight Range 1.0301-1.0387
The CAD$ slipped in Asian trading and rallied in European trading as the loonie consolidated its recent gains. The EUR/USD retreat from resistance at 1.3050 combined with soft European equity indices helped to keep the loonie above 1.0270 support.
The short term CAD technicals are bullish while the USD/CAD rate is below 1.0380. USD/CAD support between 1.0250-75 is formidable. If this level breaks the loonie should rally to 1.0130. For today, USD support is at 1.0295 and 1.0270 To the top, USD resistance is at 1.0340, 1.0360 and 1.0390.
The loonie rally slammed into strong support in the 1.0250-75 area yesterday and promptly retreated but the technicals still support another move to 1.0250.
Today’s Range 1.0270-1.0260
July 27, 2010
USD/CAD Open 1.0294-99 Overnight Range 1.0294-1.0330
The CAD$ drifted modestly higher overnight, supported by elevated commodity prices and a general risk seeking environment with equity indices continuing to climb higher. However, trading was subdued with most currency pairs trading in tight ranges as they approach key resistance areas. Gold is currently trading at $1,181.09 and oil is up $0.30 to $79.30.
The short term CAD technicals are bullish while the USD/CAD rate is below 1.0340. However, USD/CAD support between 1.0275-95 is formidable. If this level breaks the loonie should rally to 1.0130. For today, USD support is at 1.0270 and 1.0240. To the top, USD resistance is at 1.0330, 1.0360 and 1.0390.
The CAD$ is benefitting from the combination of rising commodity prices, risk seeking investors and the perception of a better balance of risks between the USA and Euroland. The proximity of strong resistance/support levels in a number of currency pairs could lead to a reversal of recent CAD$ gains on profit taking.
Today’s Range 1.0210-1.0290
July 26, 2010
USD/CAD Open 1.0342-47 Overnight Range 1.0340-1.0387
The CAD$ drifted higher overnight as traders digested the results of the European Bank stress tests and bought EUR/USD, supported by sentiment that Euroland growth prospects are improving while the American growth prospects are diminishing. Asian equity indices were higher while European indices were mixed. Oil is down slightly to $78.31 with Gold also lower at $1,186.40.
The short term CAD technicals are bullish. The CAD$ has squeaked through minor up channel support at 1.0355 and attempting to overcome additional support in the 1.0340-45 range which if successful will lead a charge to 1.0275. For today, USD support is at 1.0340, 1.0310 and 1.0290. Resistance is at 1.0375, 1.0390 and 1.0420.
The European bank stress tests results are positive for the Euro, despite many skeptics suggesting that “stress was more like a “caress” and that the overall shortfall would barely cover the bonus pool at Goldman Sach’s, JPMorgan and the like. Nonetheless, the focus will return to the slowing economic growth prospects in the USA boosting the EUR/USD and lifting the loonie as well
Today’s Range 1.0290-1.0375
July 23, 2010
USD/CAD Open 1.0400-05 Overnight Range 1.0350-1.0422
**** Canada CPI rose 1.0% yoy in June vs 1.4% in May
The CAD$ retreated overnight as FX markets consolidated ahead of today’s release of the European Bank stress tests. Various leaks suggest that most banks have passed raising concerns over the methodology used. Asian equities indices were all higher as were European. NY futures are also pointing to another positive day in equity land. Oil prices are hovering around $78.88, down 0.42. Gold is currently trading at $1,197.10.
The short term CAD technicals are bullish. Once again, USD resistance at 1.0440 should cap CAD$ weakness, enroute to another test of 1.0350. For today, USD support is at 1.0350 and 1.0310 Resistance is at 1.0440 and 1.0480.
Yesterday’s BoC MPR indicated that further rate hikes were in the cards, forecasting gradual hikes to keep inflation near 2%. On the other side of the border, Bernanke appeared ‘unusually uncertain” supporting the view that US rates are going nowhere.
Today’s Range 1.0350-1.0440
July 22, 2010
USD/CAD Open 1.0400-05 Overnight Range 1.0397-02
The CAD$ was on a weak footing in Asia following a subdued FOMC report, lower North American equities and a mixed Asian equity session. The market took a turn for the better following better than expected data from the Eurozone and the UK giving the loonie a lift in the process. Today’s CAD$ focus will be on the Retail Sales data (forecast 0.5% mom) and the Monetary Policy Report at 10:30am. In the US, Bernanke will continue his testimony today.
The short term CAD technicals are bullish following yesterday’s spike above 1.0470 and then the loonies’ sudden rally, suggesting further CAD gains to 1.0350 are likely. For today, USD support is at 1.0370 and 1.0350 and 1.0310. Resistance is at 1.0430, 1.0460 and 1.0500.
The consensus appears to be that Bernanke and the FOMC are rather dovish with rate hikes not in the foreseeable future as the outlook is “unusually uncertain”. It will be interesting to see if Mr. Carney and the Bank of Canada share is view when the MPR is released today.
Today’s Range 1.0360-1.0450
July 21, 2010
USD/CAD Open 1.0383-88 Overnight Range 1.0492-1.0553
The CAD$ added to yesterday’s impressive gains overnight on selling of EUR/CAD as positions get adjusted ahead of Bernanke’s testimony today and the release of the results of the European Stress tests on Friday. Asian equity indices were mixed while European indices and NY futures are higher to start the day. Oil prices are $78.15, +0.15 and gold is trading at $1,197.50.
The short term CAD technicals are bullish while the USD/CAD rate is trading below 1.0430. Yesterday, the CAD$ rejected weakness above 1.0580 and the subsequent rally broke support at 1.0470, confirming a short term top is in place. However, the short term USD uptrend from 0.9935 in mid-April remains intact, with the up channel support seen at 1.0295. For today, USD support is at 1.0350 and 1.0295. Resistance is seen at 1.0395 and 1.0430.
Fed Chairman Bernanke’s testimony today is expected to provide near term direction to the US dollar followed by Friday’s European bank stress tests.
Today’s Range 1.0340-1.0420
July 20, 2010
USD/CAD Open 1.0535-40 Overnight Range 1.0492-1.0553
The CAD$ drifted quietly overnight as the market awaits the Bank of Canada rate decision at 9:00am which is widely expected to result in a 25 bp hike to 0.75%. However the loonie still remains vulnerable from sales of CAD against JPY, particularly. The EUR/USD has backed off from recent new highs, stemming EUR/CAD buying. Asian equity indices were mostly down, European indices are down and NY futures are pointing lower to start the day. Oil is at $76.40 while gold is $1,117.60. US data releases include building permits and housing starts.
The short term CAD technicals are mixed. A break above 1.0560 sets up an extension to 1.0650, while below 1.0470 argues for further gains to 1.0420.
The reaction to today's expected Bank of Canada rate hike is likely to be muted due to the Monetary Policy report release on Thursday which may provide further insight as to the direction of Canadian rates and the economy in general.
Today’s Range 1.0420-1.0550
July 19, 2010
USD/CAD Open 1.0516-21 Overnight Range 1.0502-1.0580
The CAD$ remained week in Asia following Friday’s trend but managed to claw back some gains in European trading. Moody’s cut Ireland’s credit rating “citing a significant loss of financial strength”, which resulted in modest EUR/USD selling. The main domestic focus this week is the Bank of Canada’s rate decision tomorrow and the Monetary Policy report on Thursday. The other key focus is Fed chairman, Bernanke testifying before the Senate banking committee in the semi annual monetary policy report, which may provide key US dollar direction.
The short term CAD technicals are bearish. The break of 1.0470 suggests further CAD losses to 1.0750. For today, USD support is at 1.0495 and 1.0470. Resistance is at 1.0575 and 1.0625. Tomorrow’s BoC rate decision, once thought to be a slam dunk for a 0.25bp hike, is now a tad uncertain meaning a rate hike would give the loonie a boost.
Today’s Range 1.0470-1.0570
July 15, 2010
USD/CAD Open 1.0304-09 Overnight Range 1.0297-1.0377
The CAD$ moved lower in Asia, undermined by weak economic data from China which led to a drift into risk aversion as Asian equity indices were lower. The trend was reversed in Europe and EUR/USD a broke key resistance level at 1.2770 suggesting further US dollar weakness. European equity indices are mixed but better than expected earnings from JPMorgan have pushed NY futures higher. Gold is at $1,214.00 and Oil is higher at $77.46.
The short term CAD technicals are bullish. The loonie has been trapped within a 1.0280-1.0380 band, unable to make any headway in either direction. For today, USD support is at 1.0290 and 1.0250. Resistance is seen at 1.0330 and 1.0380.
The FOMC lowered their US growth forecasts in yesterday’s report helping to give the EUR/USD a boost on US economic concerns. Unfortunately, the loonie is being caught in the cross-fire. The loonie is trying to rally in this soft US environment but demand for EUR/CAD has offset bullish CAD sentiment.
Today’s Range 1.0250-1.0340
July 14, 2010
USD/CAD Open 1.0326-31 Overnight Range 1.0296-1.0336
The CAD$ had a quiet overnight session unable to extend gains through 1.0290 despite Intel’s 2nd quarter earnings beating expectations and boosting equities in Asia. European equity indices are lower and NY futures are pointing higher. Oil is trading at $76.69 and gold is $1,212.00. The US releases Retail Sales at 8:30, expected to be down 0.2% m/m with the core at -0.1%. The FOMC minutes are released around 2pm
The short term CAD technicals are mixed. The USD/CAD has built some decent support in the 1.0280-90 area which some view as a short term bottom, confirmed on a break above 1.0350, which should lead to a retest of 1.0470. On the other hand, CAD bulls view the bounce from 1.0280 as corrective and expected USD strength to be capped at 1.0360. For today, USD support is at 1.0285 and 1.0250. Resistance is at 1.0350 and 1.0390.
The CAD rally has been undermined by renewed buying of EUR/CAD, which is recouping recent losses and without any Canadian data today, will likely continue.
Today’s Range 1.0280-1.0360
July 13, 2010
USD/CAD Open 1.0328-33 Overnight Range 1.0325-1.0380
The CAD$ bounced around within the confines of yesterday’s range following the lead of the majors which also spent a directionless trading session. Moody’s downgraded Portugal debt to A1 leading to a short lived bout of EUR selling. Asian equity indices were lower while European indices were all higher. NY futures are also pointing higher to start the day. Oil prices are trading at $75.36 with gold at $1,206.40. US and Canadian trade numbers are released at 8:30. Canada is expected to post a small surplus while the US will post a $439 billion deficit.
The short term CAD technicals are unchanged from yesterday and bullish. For today, USD support is at 1.0290 and 1.0250. Resistance is seen at 1.0375 and 1.0410. The Q2 earnings season kicked off to a good start yesterday with Alcoa beating expectations. If this is the start of the trend, then rising equities will lead to a higher loonie. A move below 1.0290 argues for a rally to 1.0110.
Today’s Range 1.0250-1.0340
July 12, 2010
USD/CAD Open 1.0328-33 Overnight Range 1.0300-1.0345
The CAD$ is still basking in the glow of Friday’s stellar jobs report managing to hang on to most of Friday’s gains even as the US dollar drifts higher vs. the majors. This week’s market theme is centered around “earnings season” for Q2. Positive earnings will help to keep the “risk seeking" trend intact. Having said that, global equity indices are mixed to flat, gold is down modestly to $1,204.60 and oil is at $75.56.
The short term CAD technicals are bullish, while trading below 1.0450 but needing a break below 1.0290 to spark another rally to 1.0110. For today, USD support is at 1.0290 and 1.0250. Resistance is seen at 1.0360 and 1.0390.
The CAD should maintain it’s positive bias due to last Friday’s employment number re-enforcing calls for a bank of Canada rate hike in July.
Today’s Range 1.0290-1.0370
July 9, 2010
USD/CAD Open 1.0420-25 Overnight Range 1.0340-1.0450
The CAD$ started this morning at 1.0420-25 and then exploded higher touching 1.0340 following the stellar Canadian jobs data release. The strong jobs report is further support for an expected Bank of Canada rate hike on July 21. Meanwhile, the risk seeking bias is still intact with Asian and European equity indices higher. JPY remains soft while although EUR/USD has retreated from its overnight highs, it still remains bid. Oil prices are $75.69/bbl and gold is trading at $$1,197.20.
The short term CAD technicals are bullish. The break below 1.0475, which also represents the 38.2% fibo retracement of the recent 1.0115-1.0675 range, achieved its first target at 1.0344. Pull backs should be capped at 1.0410. For today, USD support is at 1.0330, 1.0305 and 1.0250 Resistance is at 1.0410, 1.0440 and 1.0475.
The CAD enjoyed a rather sharp post employment data rally but has found some short term support around 1.0330-35. This week’s 320 point rally in the Canadian dollar is fueled by renewed expectations that the Bank of Canada will hike rates by 25 bps July 21.
Today’s Range 1.0300-1.0390
July 8, 2010
USD/CAD Open 1.0451-56 Overnight Range 1.0440-1.0486
The CAD$ continued to climb overnight, breaking key support in the 1.0450-75 area, driven higher by an improved risk seeking sentiment as evidenced by a weaker JPY, higher global equity indices and rising commodity prices. The IMF raised their European growth forecast to 4.6% which is providing support for the EUR.
The short term CAD technicals are bullish. The break below 1.0475, which also represents the 38.2% fibo retracement of the recent 1.0115-1.0675 range, targets 1.0344 and then 1.0250. For Today, USD support is seen at 1.0440 and 1.0410. Resistance is at 1.0475 and 1.0510.
A number of analysts are forecasting stronger corporate earnings this quarter which have helped to fuel this week’s equity market rebound. In addition, the rosier IMF outlook for Europe combined with a more cautious outlook for US growth prospects introduced an improved risk-reward balance to EUR/USD trading and a better risk seeking environment. The loonie has benefited in this environment and should extend gains today. The risk is a late day CAD sell-off as positions get trimmed ahead of tomorrow’s Canadian jobs data. The forecast is for a gain of 20.3K.
Today’s Range 1.0390-1.0480
July 7, 2010
USD/CAD Open 1.0590-95 Overnight Range 1.0525-1.0603
The CAD$ gave back nearly all of yesterday’s gains overnight and opened up right where we started on Tuesday on the back of softer global equity indices. Asian and Europe indices were all lower on concerns about the sustainability of global economic growth with a dash of profit taking thrown in. NY futures are pointing lower to start the day. There are no US data releases on tap. Canada has the Ivey PMI at 10:00am. A report that Total Energy bought Canada’s UTS energy for $1.5 billion in cash may provide a modicum of support for the loonie over the next few days.
The short term CAD technicals are mixed and unchanged from yesterday. The CAD is bouncing erratically within a 1.0470-1.0675 band and needs to break either side to provide some direction. For today, USD support is at 1.0560 and 1.0515. Resistance is at 1.0610 and 1.0640
Summer markets and a risk on again-off again pattern describes a nervous market with poor liquidity exacerbating moves. With Euroland and the USA both having serious economic issues, the land of the Maple Leaf is a beacon of tranquility. Unfortunately, Canada is also a very small market and generally viewed as a commodity currency, vulnerable to commodity price direction. Expectations are that the bank of Canada will raise rates in July, which should cap the topside during bouts of CAD selling.
Today’s Range 1.0530-1.0620
July 6, 2010
USD/CAD Open 1.0590-95 Overnight Range 1.0585-1.0675
The CAD$ popped higher overnight, once again rejecting weakness above 1.0675, supported by another tepid risk seeking rally as global equity indices moved higher. Commodity prices took their cue from equities and joined the rally with oil at $72.87 and gold trading at $1,210.60.
The short term CAD technicals are mixed. CAD bulls view the failure to break USD resistance at 1.0675 as evidence that this latest bout of CAD$ weakness was merely corrective, confirmed by a move below 1.0580. CAD bears see CAD weakness above 1.0450 as bearish and the retreat from 1.0675 as merely a retracement prior to another CAD sell-off. For today, USD support is at 1.0580 and 1.0520. USD resistance is at 1.0620 and 1.0675.
Today’s Range 1.0520-1.0610
July 5, 2010
USD/CAD Open 1.0650-55 Overnight Range 1.0580-1.0660
The CAD$ and the majors are having a less than sizzling start to July, staying on the defensive following Friday’s US jobs report and mostly directionless due to the US Independence Day holiday today. The ECB president is urging austerity measures to contain budget deficits suggesting an ECB rate hike is not in the foreseeable future which led to a slight retreat in EUR/USD. Global equity indices are mixed to flat. Oil prices are up slightly to $72.36, while gold prices are unchanged at $1,207.00.
The short term CAD technicals remain bearish above 1.0450 looking for a break of 1.0680 to extend USD/CAD to 1.0800. For today, USD/CAD support is at 1.0600 and 1.0550. Resistance is at 1.0680 and then 1.0750.
Holiday thinned FX markets combined with fears of a double dip recession in the US may lead to further CAD weakness as US slowdown is seen as a CAD negative. However, with sovereign debt issues dominating European sentiment and renewed concerns about the monster trade and budget deficits in the US, the CAD may be viewed as safe haven destination for hot money.
Today’s Range 1.0610-1.0680
July 2, 2010
USD/CAD Open 1.0599-1.0605 Overnight Range 1.0558-1.0617
The CAD$ sank to 1.0675 on Canada Day, in a rather unpatriotic move, driven lower by renewed concerns over the health of the US economy and the possibility of a double dip recession. The loonie managed to recoup all of those losses overnight despite the US dollar remaining weak vs. the majors. Today’s US non-farm payrolls report has the market in a lather over the prospect of a real ugly print (forecast -160k), supported by Wednesday’s very weak ADP report. Once this data is out of the way, trading will dry up as the US traders try to get an early start on their July 4 weekend. Global equity indices were all modestly higher as are NY futures while oil is unchanged at $72.98 and gold is $1,210.90, up $4.20.
The short term CAD technicals remain bearish above 1.0450. The USD/CAD uptrend appears to have run out of gas around 1.0675 again, which should be decent resistance today. A move back below 1.0565 suggests further CAD upside to test the USD/CAD uptrend channel at 1.0450. For Today, USD support is at 1.0565 and 1.0510. Resistance is at 1.0620 and 1.0675.
The rash of weak US economic data this week has reintroduced the element of two way risk in US dollar trading. The relentless buying of US dollars as a safe haven due to the European sovereign debt crisis has reverted back to worries over the health of the US economy. The loonie has come under pressure in this environment as a weak US economy is considered bad for Canada. However, the overall strength of the Canadian economy, the strength of the financial industry and a central bank committed to raising interest rates, argues for safe haven buying of CAD$.
Today’s Range 1.0550-1.0650
June 30, 2010
USD/CAD Open 1.0487-92 Overnight Range 1.0344-1.0495
The CAD$ has returned to yesterday’s opening level as earlier fears of a funding crisis for European banks dissipated this morning on news of a lower demand for ECB cash for the eurozone three month tender. This news led to buying widespread US dollar selling as the risk aversion trade was reduced. Asian equity indices were all lower but European indices and NY futures have rebounded into positive territory. Oil prices are up $0.57 to $76.51. All these events occurred in relatively light trading. Today’s focus will be on the US ADP report for a hint about Friday’s US payrolls report. Canada release April GDP, expected to rise 0.1%. It is the month end, quarter end and half year end which may give rise to demand for USD/CAD due to repatriation and rebalancing needs.
The short term CAD technicals remain bearish above 1.0395 for another run to 1.0575. For today, USD support is at 1.0470, 1.0440 and 1.0405. Resistance is 1.0520 and 1.0575. The FX markets remain volatile exacerbated by poor liquidity. Despite the bullish CAD$ story and the prospect for another rate hike in July, the loonie remains vulnerable to selling against EUR, GBP and JPY as these currency pairs approach key resistance levels.
Today’s Range 1.0470-1.0575
June 29, 2010
USD/CAD Open 1.0485-90 Overnight Range 1.0344-1.0495
The loonie is getting whacked following the Conference Board in New York revising China’s leading indicators lower to 0.3% from 1.7% This has triggered a stampede into risk aversion mode, lifting the USD and JPY while crushing Asian and European equity indices. North American futures are also lower. Oil prices are down $1.55 to $76.70 while gold is mostly flat at $1,238.40.
The short term CAD technicals are bearish. The break through resistance at 1.0450 argues for a test of 1.0575 and possibly 1.0830. For today, USD support is at 1.0465 and 1.0430 with Resistance at 1.0530 and 1.0575.
The overnight reaction to the down grade in Chinese leading indicators seems a tad overdone especially for a data series that in Canada and the US is not known for its reliability or accuracy. One has to believe that the China data isn’t any more accurate. In my opinion, the move may be more of a factor of month end, quarter end, and half year end demand for dollars in a skittish market with relatively poor liquidity.
Today’s Range 1.0450-1.0550
June 28, 2010
USD/CAD Open 1.0339-44 Overnight Range 1.0321-1.0370
The CAD$ is starting the week embarrassed, but pretty much where it left off on Friday. The G-8/G-20 meetings ended with global banks escaping a worldwide tax and the leaders agreeing to taking concerted actions to sustain recovery tailored to national circumstances. This was enough to give global equity indices a boost while gold and oil prices are basically flat.
The short term CAD technicals are bullish. The USD/CAD’s inability to extend gains above 1.0450 and it’s subsequent retracement back through 1.0380 points to further CAD gains toward 1.0250 A move above 1.0390 negates this scenario. For today, USD support is at 1.0320 and 1.0280. USD resistance is at 1.0370 and 1.0410.
The recent pattern of one risk off, next week risk on is pointing to a risk on week ahead supported by the rise in global equity indices this morning. However, the monthly release of the US nonfarm payrolls data on Friday may limit movement in either direction.
Today’s Range 1.0275-1.0370
June 25, 2010
USD/CAD Open 1.0433-38 Overnight Range 1.0406-1.0442
The CAD$, like the rest of the majors, had a quiet overnight session ahead of the G-8/G-20 meetings although modest risk aversion appears to be the current theme. Global equity indices are all down and NY futures are pointing lower.
The short term CAD technicals are unchanged remaining bearish. For today, USD support is at 1.0370 and 1.0320. USD resistance is at 1.0460 and 1.0510.
The CAD$ is ending the week under pressure due to the apparent reduction of short GBP/CAD and long CAD/JPY positions as investors reduce risk ahead of the G-8/G20 meetings and because of disappointing US data earlier this week.
Today’s Range 1.0360-1.0440
June 24, 2010
USD/CAD Open 1.0405-10 Overnight Range 1.0376-1.0412
The CAD$ remained on the defensive in a quiet overnight session. Yesterday’s disappointing US housing starts, and a dovish FOMC statement alluding to continued weak economic growth plus today’s musings from George Soros pertaining to the demise of the EUR and bearish comments about the Eurozone from the head of Sovereign ratings at S&P added up to more risk aversion. Global equity market indices are mostly lower and gold and oil prices are down marginally. Today’s US data releases include durable goods (forecast -1.0 and Jobless claims (forecast +455k).
The short term CAD technicals are bearish looking for a test of 1.0580. For today, USD support is at 1.0370 and 1.0320. USD resistance is at 1.0460 and 1.0510.
This latest bout of CAD weakness can be attributed to both risk aversion trading leading to safe haven buying of US dollars and widespread selling of CAD vs EUR, GBP JPY and AUD which may just be corrective moves within existing CAD uptrends. One thing to consider, if the CAD$ is underperforming today with oil at $76.00/bbl, where will it be if oil leaks back to $70./bbl?
Today’s Range 1.0370-1.0470
June 23, 2010
USD/CAD Open 1.0322-27 Overnight Range 1.0272-1.0339
The CAD$ continued yesterday’s slide in overnight trading as Asian and European were mostly lower continuing the previous days trend. Disappointing US housing starts called into question the US recovery, compounded by the downgrade of BNP Paribas which reminded investors about the perils in Europe and it was back to risk aversion. In addition, trading was a more subdued ahead of today’s FOMC announcement. Canada releases Retail Sales expected to be down 0.5%, ex-auto’s down 0.1%. m/m.
The short term CAD technicals are bearish. The bounce off of 1.0145 and the subsequent breach of 1.0260 is evidence of a short term base, looking for further CAD weakness to 1.0465. For today, USD support comes in at 1.0290 and 1.0260. USD resistance is at 1.0350 and 1.0410.
Today’s FOMC announcement is widely expected to be a non-event but still is an excuse for traders to remain sidelined and concentrate on the World Cup.
Today’s Range 1.0250-1.0350
June 22, 2010
USD/CAD Open 1.0226-31 Overnight Range 1.0213-1.0252
The CAD$ is on the defensive following yesterday’s reversal of gains on the Chinese announcement of plans to allow the Yuan to revalue. The initial market optimism that the Chinese move was great for the global economic recovery story quickly faded as traders realized that the plan was very short on details and timing. Overnight, global equity indices retreated and commodity prices slipped in a fairly quiet session ahead of today’s FOMC meeting which itself will be a non-event in front of the G-8/20 meetings later this week. Canadian CPI was 1.4% for May, core 1.0%, more or less as expected.
The short term CAD technicals are mixed. CAD bears view the bounce off of 1.0140 and the subsequent move through 1.0220 as evidence of a short term bottom and look for additional USD/CAD gains to 1.0340. CAD bulls expect 1.0250 to cap any USD strength and expect a move to 1.0110.
The G8/G20 meetings should trump most economic data and the FOMC meeting today. China’s plan to allow the Yuan to appreciate is good for the global recovery story but in the short term, without any details, not much of a factor.
Today’s Range 1.0160-1.0250
June 21, 2010
USD/CAD Open 1.0159-64 Overnight Range 1.0158-1.0215
The CAD$ is stronger to start the week supported by another round of “risk seeking” trades following the announcement by China to “increase currency flexibility”. Global equity indices and commodity prices are all sharply higher with oil trading at $78.34, up $1.16.
The short term CAD technicals are bullish suggesting a move to 1.0110 and then .9935 supported by the break of 1.0220. For today, USD support is seen at 1.0130, 1.0110 and 1.0080. Resistance is at 1.0190 and 1.0220.
The timing of the announcement by China to suggest that they will revalue their currency comes just ahead of the G-8/G-20 meetings where they ran the risk of being called a “currency manipulator” The Chinese move is being moved as a big step in the global recovery process and bullish for commodities and commodity currencies.
Today’s Range 1.0120-1.0220
June 18, 2010
USD/CAD Open 1.0293-98 Overnight Range 1.0262-1.0308
The CAD$ is ending the week roughly in the middle of its intraweek range after another quiet overnight session. Global equity indices were mostly lower suggesting another round of profit taking/position trimming ahead of the weekend. Commodity prices have also followed equity prices lower with gold down a modest $2.30 to $1,246.50 and oil trading at $75.95. There aren’t any US data releases today however Canada has Leading Indicators and International Securities transactions.
The short term CAD technicals are mixed. CAD bears view the loonies’ inability to extend gains through 1.0220-40 as evidence of a short term bottom and are looking for a move above 1.0360 to confirm. Meanwhile CAD bulls view this week’s trading action as consolidative within a CAD$ uptrend while the USD/CAD rate is below 1.0360.
The CAD is likely to remain in its 1.0230-1.0330 range today with domestic fundamentals supporting a move through 1.0230. Unfortunately, CAD$ developments vs. EUR and JPY suggest that further strength in these currencies will lead to CAD selling.
Today’s Range 1.0270-1.0360
June 17, 2010
USD/CAD Open 1.0240-45 Overnight Range 1.0230-1.0292
The CAD$ was fairly quiet overnight but it remained on a firm footing as investors drift into risk seeking trades, supported by a successful Spanish debt auction and rising global equity indices. In addition, there is a slew of economic data from the US today including CPI, (forecast -0.2%mm) Philly Fed, (forecast 21.1) Leading Indicators (forecast 0.4%) and Unemployment Claims (forecast (452K). Canada releases Wholesale Trade.
The short term CAD technicals are bullish The loonie is benefiting from a series of lower highs, which on the hourly charts come in at 1.0285 today. For today, USD support is at 1.0225 and 1.0180. Resistance is at 1.0285 and 1.0320.
The improved but still fragile outlook for European debt combined with rising global equity indices has led to renewed risk seeking trades, lifting the loonie in the process. Unfortunately a rising EUR vs. the USD is leading to sales of CAD in the process, slowing the CAD rally.
Today’s Range 1.0180-1.0280
June 16, 2010
USD/CAD Open 1.0278-83 Overnight Range 1.0275-1.0360
The CAD$ had a very quiet overnight session but dipped in Europe on fall-out from a report that the EU, IMF and USA were preparing a bail-out plan for Spain. An EU spokesman called the report “rubbish”. Meanwhile, oil slipped from its highs above $77/bbl to $76.78 while gold is trading at $1,235.20. US data releases today include; PPI (forecast -0.5%, Core +0.1%) and Housing starts.
The short term CAD technicals are bullish looking for a break of support at 1.0230 to extend to 1.0110. A move back above 1.0300, today would suggest more 1.0250-1.0350 position jockeying. For today, USD support is at 1.0240 and 1.0210 with resistance at 1.030 and 1.0330.
The bullish CAD$ story is well known-improving economic fundamentals, rising interest rates and solid commodity base. Yesterday the deputy Chairman of the Russian central Bank reiterated their plans to add CAD$ to their reserve mix (third largest reserves in the world). Although it doesn’t mean that they will be whacking bids at current levels, it will provide another layer of CAD$ support during bouts of weakness.
Today’s Range 1.0240-1.0330
June 15, 2010
USD/CAD Open 1.0278-83 Overnight Range 1.0275-1.0360
The CAD$ recouped most of yesterday’s losses which occurred when Moody’s suddenly noticed that Greece was having financial difficulty and downgraded Greek bonds to junk. The loonie, in the process of establishing a new rally phase, was stopped short as traders treated the Moody’s story as fresh information rather than the regurgitated tripe that it was. It seems that equity traders came to the same conclusion overnight as global indices are all positive while US futures are pointing higher to start the day. The German ZEW index of investor and analyst economic expectations was surprisingly low at 28.7 (forecast for 42.0).
The short term CAD$ technicals are mixed. CAD bulls are looking for the CAD to break USD support around 1.0240-50 and rally to 1.0110. Meanwhile CAD bears view the US dollar’s inability to make any gains through 1.0240-50 as evidence that the recent CAD uptrend is over, confirmed by USD strength through 1.0360. For today, USD support is at 1.0270 and 1.0240 with resistance at 1.0340 and 1.0360.
The reaction to yesterday’s Moody’s downgrade of Greece is further evidence of the nervousness of global markets as investors bailed on what was essentially “old news”. The rise in commodity prices combined with the strong Canadian fundamental picture and the likelihood of higher rates should limit CAD$ weakness on further European shocks.
Today’s Range 1.0250-1.0340
June 14, 2010
USD/CAD Open 1.0288-93 Overnight Range 1.0284-1.0348
The CAD$ is starting the week on a positive footing as global markets drift tentatively towards risk seeking as evidenced by rising global equity indices and higher commodity prices. EUR/USD prices moved higher taking out resistance around 1.2160 which suggest further short term upside, supporting the loonie in the process.
The short term CAD$ technicals are bullish with a break of 1.0270 opening up further CAD$ gains to 1.0110. However CAD bears see solid support in the 1.0270-80 level as a good level to sell CAD and buy USD’s looking for a move above 1.0370 to confirm the next up leg to 1.0570. For today, USD support is at 1.0270 and 1.0240 with resistance at 1.0320 and 1.0360.
Today’s Range 1.0240-1.0330
June 11, 2010
USD/CAD Open 1.0315-20 Overnight Range 1.0275-1.0348
The CAD$ managed to keep most of yesterday’s gains overnight, in a relatively sane session devoid of nasty headlines or sound bites. Global equity indices continued yesterday’s rally and NY futures are pointing higher to start the day. Commodity prices are firm although Oil is off its highs, trading at $74.95/bbl. The US data releases include Retail Sales (forecast +0.2%, core 0.1%) while Canada releases Capacity Utilization (Forecast 73.4%)
The short term CAD$ technicals are bullish. USD support in the 1.0280-1.0310 level is proving to be sticky but a break below opens up a move to 1.0105. For today, USD support is seen at 1.0250, 1.0230 and 1.0170. To the top, resistance is at 1.0330 and 1.0380
The risk for today is if the US retail sales data disappoints. That could spark another round of risk aversion, and killing the CAD$ rally.
Today’s Range 1.0250-1.0330
June 10, 2010
USD/CAD Open 1.0370-75 Overnight Range 1.0362-1.0454
The CAD$ traded quietly in Asia and rallied in Europe on the back of firmer Oil prices ($74.59/bbl) and mildly improving risk seeking sentiment. Strong economic data from China, Australia, New Zealand, and Japan pushed Asian and European equity indices higher. A Chinese Pension official remarked that China’s FX reserves could suffer losses due to the fiscal health of the USA, which provided some support to EUR/USD. The RBNZ raised rates by 25bps while the Bank of England left rates unchanged as will the ECB. US data releases today include Jobless claims and Trade balance. Canada also releases trade data this morning.
The short term CAD$ technicals are bullish although testing upchannel support in the 1.0360-70 range. A move through 1.0360 should lead to further CAD gains to 1.0225. For today, USD support is at 1.0360, 1.0330 and 1.0285. USD resistance is at 1.0410 and 1.0440
The Canadian dollar is likely to move higher today on improved risk sentiment supported by a higher EUR/USD, firmer Oil prices and strong economic data.
Today’s Range 1.0330-1.0420
June 9, 2010
USD/CAD Open 1.0472-77 Overnight Range 1.0464-1.0515
The CAD$ is starting the day at its overnight peak, supported by firmer oil prices at $72.87 and a positive tone to North American equities with futures pointing to a higher opening this morning. The CAD strength is even more surprising when viewed within the context of EUR/USD, which remains firmly entrenched in a downtrend. In addition, EUR/CAD is barely off the all time low.
The short term CAD$ technicals are bullish following the break of 1.0520 which should set up a test of 1.0380. For today, USD support is at 1.0440, 1.0410 and 1.0380. Resistance is at 1.0490, 1.0520 and 1.0550.
It now appears that Canadian domestic fundamentals, including further rate hike expectations have trumped the on-going concerns over the European sovereign debt crisis and CAD$ trading has decoupled from following EUR/USD tick for tick. In addition, a Bloomberg survey of economists has the majority now looking for the FED to raise rates in 2011, not in late 2010 as earlier forecast, providing the loonie with additional support.
Today’s Range 1.0380-1.0480
June 8, 2010
USD/CAD Open 1.0540-45 Overnight Range 1.0519-1.0616
The CAD$ traded choppily overnight, moving higher in Asia and then up and down during the European session. This time, Fitch, said that Britain’s debt challenge was “formidable” lifting sovereign debt contagion fears again. Yesterday Bernanke seemed to down play the risk of a double dip recession which served to highlight the attractiveness of the US dollar vs the Euro. Overnight, Asian equity indices were mixed to flat, European indices were down and North American futures are pointing higher. Gold prices are up $48.40 to $1,249.10 while oil is down slightly to $71.34
The short term CAD$ technicals are bearish with a USD/CAD uptrend line coming in at 1.0370. Resistance is seen at 1.0770. For today, USD support is 1.0525 and 1.0480. Resistance is 1.0590 and 1.0610.
The strong Canadian economic data in the past few weeks has served to limit CAD$ losses as global investors stampede in a blind panic to US dollars on any negative comment about European sovereign debt. With EU Finance ministers reaching an agreement on the details of the 750 billion EU/IMF rescue package, the EUR may recoup some losses vs the US dollar, lifting the loonie in the process.
Today’s Range 1.0480-1.0580
June 7, 2010
USD/CAD Open 1.0592-97 Overnight Range 1.0582-1.0677
The CAD$ moved lower in Asia and then recouped those losses in Europe mirroring moves in EUR/USD which made another 4 year low. The market remains nervous over the fate of European sovereign debt even after the Hungarian government retracted their previous warnings that Hungary was in the same fiscal shape as Greece, saying it was just so much goulash. Asian equity indices were all lower as were European indices. North American equity futures are higher to start the morning
The short term CAD$ technicals are bearish. Friday’s break of USD resistance at 1.0440 has opened up a test to 1.0780. For today, USD support is at 1.0570, 1.0520 and 1.0490. Resistance is at 1.0645, 1.0680 and 1.0710.
The CAD$ is likely to consolidate its recent losses today especially if equity markets bounce back from Friday’s losses although any recovery will be tepid due to headline concerns from Europe.
Today’s Range 1.0570-1.0670
June 4, 2010
USD/CAD Open 1.0389-94 Overnight Range 1.0370-1.0425
Canadian Employment Data +24.7k, Unemployment rate unchanged at 8.1%
The CAD$ and other currency markets were very quiet overnight awaiting the release of the US employment data. The Canadian data was slightly better than expected but the loonie lost ground falling to 1.0455 from 1.0375. This may have been due to renewed EUR/USD selling on the back of reports that Hungary is adding to the European sovereign debt concerns. Risk-on, risk-off markets. Still to come is the US non farm payrolls report. It is expected to show a whopping 480K gain, skewed by US census hiring.
The short term CAD$ technicals are bullish while the USD/CAD rate remains below 1.0480 looking for a test of support at 1.0290-1.0310. For today, USD support is at 1.0407 and 1.0340. Resistance is at 1.0450 and 1.0470.
Today is already shaping up to be another wild Friday. Headline risk from Europe combined with the volatile non-farm payrolls report in a liquidity poor, skittish market is setting the tone for a wild day. Markets are being driven by global risk aversion headlines as opposed to strong domestic Canadian fundamentals.
Today’s Range 1.0380-1.0480
June 3, 2010
USD/CAD Open 1.0366-71 Overnight Range 1.0341-1.0398
The CAD$ had a fairly quiet overnight session but managed to hang on to most of yesterday’s gains as sentiment shifted back to risk seeking, lifting equity and commodity prices. The resignation of the Japanese Prime Minister earlier this week has led to speculation that his replacement will favor a “weak yen” policy. This led to buying of CAD/JPY, giving the loonie an additional boost.. Global equity indices were all higher and North American equity futures are pointing to a strong opening. US data releases today include: ADP Employment (Forecast 55), Jobless claims (forecast 445k), Non Manufacturing ISM (forecast 55.8)
The short term CAD$ technicals are bullish following the break of 1.0395 targeting 1.0115 although trend line support comes in at 1.0310 . For today, USD support is at 1.0340 and 1.0310, Resistance is 1.0390 and 1.0420
In a risk seeking environment, the domestic fundamentals favor the Canadian dollar, especially since the Bank of Canada is in rate hike mode. However, the CAD$ is vulnerable to position squaring/profit taking this afternoon, ahead of tomorrow’s US and Canadian employment reports
Today’s Range 1.0320-1.0420
June 2, 2010
USD/CAD Open 1.0530-35 Overnight Range 1.0500-1.0570
The CAD$ stayed on the defensive overnight as domestic fundamentals are largely ignored. The focus is still on European sovereign debt issues and increased tensions with North and South Korea, the resignation of the Japanese Prime Minister added to the uncertainty. Asian and European equity indices were all lower, however North American futures are pointing higher. Both gold and oil prices dipped slightly.
The short term CAD$ technicals are muddled but with a modestly negative bias looking for a move to 1.0690 while the USD/CAD rate remains above 1.0505. For today, USD support is seen at 1.0505, 1.0460 and 1.0410. USD resistance is at 1.0575, 1.0640 and 1.0690.
Yesterday’s Bank of Canada rate hike gave the loonie a very short lived boost. Unfortunately, the statement was viewed as “dovish” suggesting that further increases may be on hold due to global growth uncertainty stemming from European developments and the CAD was sold. The Bank of Canada is on record as stating that interest rates are too low and don’t reflect current fundamentals. It’s hard to believe that a mere quarter point hike did anything to change that view.
KnightsbridgeFX was on BNN TV yesterday discussing FX and hedging - you can view the clip here: http://watch.bnn.ca/clip308550#clip308550
Today’s Range 1.0520-1.0620
June 1, 2010
USD/CAD Open 1.0520-25 Overnight Range 1.0422-1.0550
The CAD$ got beaten up overnight. Vague and unsubstantiated rumors that France would lose its AAA rating and a worse than expected PMI reading from China led to renewed safe haven buying of US dollars, undermining the loonie. Global equity indices are all lower, oil prices are softer at $72.04/bbl and gold prices rose to $1,223.80.
The short term CAD$ technicals are mixed. CAD bears view the US dollars inability to extend losses below 1.0410 and its subsequent recovery through 1.0480 as evidence of further weakness to 1.0750. CAD bulls view the bounce from 1.0410 as merely corrective, supported by the US dollars lack of gains through 1.0550, looking for another test and break of 1.0410. For today, USD support is at 1.0470 and 1.0410 with resistance at 1.0550 and 1.0610.
Today's Range: 1.0430-1.0530
May 31, 2010
USD/CAD Open 1.0497-02 Overnight Range 1.0478-1.0551
The CAD$ drifted higher in a quiet overnight session due to holidays in the UK and the USA. Global equity indices were mostly flat as were gold ( $1,215.40) and oil prices ($74.23) Canada releases monthly GDP (forecast 0.5%).
The short term CAD$ technicals are bullish. For today, USD support is at 1.0470 and 1.0430 with Resistance at 1.0520 and 1.0550
The CAD$ may grind out further gains today on a big GDP number as it will provide further justification for the Bank of Canada to hike rates by 25bps tomorrow .
Today’s Range 1.0440-1.0540
May 28, 2010
USD/CAD Open 1.0466-71 Overnight Range 1.0450-1.0526
The CAD held on to yesterday’s gains and even managed to add to them in a subdued overnight session. Recoveries in Asian and European equity indices helped boost commodity prices lifting oil back over $75/bbl trading at $75.32. There is a lot of US data today including Chicago PMI, consumer sentiment, and personal consumption. Canada releases Current account data. Today’s key focus will not be fundamentals, but the risk of large month end flows in a rather illiquid market, exacerbated by Monday’s holidays in the UK and the USA.
The short term CAD$ technicals are mixed. CAD bulls like the fact that the USD/CAD rate is well below former support/resistance at 1.0550 and minor support at 1.0480 looking for further gains to 1.0420 and then 1.0360. CAD bears see the recent CAD strength as merely corrective in the context of an overall US dollar uptrend. They look for support at 1.0440 and 1.0420 to contain CAD gains for a return visit to 1.0750.
The market is ending May a little bit bloodied and for many, a whole bit poorer, which has chased vast pools of liquidity to the sidelines. This may translate into a loopier than usual month-end Friday.
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Today’s Range 1.0440-1.0550
May 27, 2010
USD/CAD Open 1.0530-35 Overnight Range 1.0515-1.0717
The CAD$ soared overnight on the back of renewed risk seeking sentiment sparked by China’s assertion that “ Europe has been and will be one of the major markets for investing China’s exchange reserves”. In addition positive economic data from New Zealand and Australia helped push Asian equity indices higher. European Indices followed suit and commodity prices rose as well, with oil trading at $73.25. US data releases today include Q1 GDP revision and jobless claims.
The short term CAD$ technicals are bullish with the overnight break of the 1.0540-60 support level which should lead to further gains to 1.0410. For today, USD support is at 1.0510, 1.0470, and 1.0440. Resistance is at 1.0580 and 1.0640.
European nations are actively taking steps to reduce budget deficits with both Spain and Italy announcing large cuts in recent days. This should also provide some support to the EUR and by default give the loonie a boost in the process.
Today’s Range 1.0470-1.0580
May 26, 2010
USD/CAD Open 1.0653-58 Overnight Range 1.0646-1.0745
The CAD$ drifted lower in Asia but recovered all its losses in Europe in a rather dull overnight trading session. Global equity indices were all higher as are US equity futures which have helped commodities bounce. Gold prices have gained $15.70 to $1,213.70 while oil prices are up $1.81 to $$70.60. US data releases include Durable Goods and New Home Sales.
The short term CAD$ technicals are modestly bullish following the failure to extend losses through 1.0860 yesterday and the CAD’s subsequent move back through minor support at 1.0740 and 1.0680. Look for additional CAD strength toward 1.0430 on a break of 1.0580. For today, USD support is at 1.0640, and 1.0580 with resistance at 1.0690 and 1.0740.
The CAD has recovered somewhat on the abating of risk aversion which has seen equities and commodity prices bounce higher. This may be just the eye of the hurricane as it is hard to believe that yesterday’s fears of European debt default contagion has disappeared and the world is a happy place again.
Today’s Range 1.0610-1.0710
May 25, 2010
USD/CAD Open: 1.0800-05 Overnight Range: 1.0595-1.0850
The CAD$ plunged overnight, swamped by a tidal wave of risk aversion triggered by news that Spain had to take over a regional bank, CajaSur which led to conclusions that Greece contagion had indeed spread. On top of that, proposed UN sanctions against North Korea for the torpedoing of a South Korean vessel combined with plans to hold joint USA and South Korea war games near the DMZ encouraged a stampede of safe haven US dollar buying. Asian and European equity indices are lower as are US equity futures. Commodity prices are well down, with oil off $2.41 to $67.80 and gold down $5.70 to $1,188.30.
The short term CAD$ technicals are bearish. The decisive break of the 1.0750-80 area argues for further CAD losses to 1.1100. For today, USD support is 1.0775, 1.0740 and 1.0710 with resistance at 1.0840, 1.0880 and 1.0920
The Canadian dollar has been caught up in the stampede to buy safe haven US dollars. The re-ignited Korean tensions plus the European debt crisis have led to conclusions of slowing global growth which have crushed commodity prices, further undermining the loonie.
Today’s Range 1.0740-1.0840
May 21, 2010
USD/CAD Open 1.0672-77 Overnight Range 1.0615-1.0745
The CAD$ dipsy-doodled in a wide range overnight in another session characterized by poor liquidity and risk aversion. EUR/USD was off its recent highs however the fear of intervention is keeping traders on their toes. Asian equity indices closed sharply lower while European indices are all down as well. Lower commodity prices continue to undermine the CAD$. Today’s Canadian CPI release was 1.8% yoy, slightly higher than expected and largely ignored by the market.
The short term CAD$ technicals are bearish looking for a move to 1.1100, confirmed by a break of 1.0830. For today, USD support is 1.0630 and 1.0570 with resistance at 1.0750, 1.0790 and 1.0830
The Canadian dollar has been extremely over bought vs EUR, GBP and JPY however this week’s price action has trimmed those positions. The move above 1.3325 in EUR/CAD, negates the recent uptrend and warns of further EUR/CAD gains to 1.3950., indicating further weakness in the Canadian dollar. Exacerbating the situation today will be the position squaring ahead of the long weekends in many European countries and Canada.
Today’s Range 1.0660-1.0780
May 20, 2010
USD/CAD Open 1.0460-65 Overnight Range 1.0405-1.0630
The CAD$ plummeted overnight as European issues and the mere threat of concerted central bank intervention in EUR led to a frenzy of CAD$ selling vs the EUR. The EUR/CAD cross had fallen by 6.3% from 1.3505 to 1.2645 since May 8 and has given back about 3% since yesterday. The CAD was not alone as the EUR/AUD cross has suffered a similar fate. Yesterday, the Swiss National bank was reportedly intervening to buy EUR/CHF which added credence to the reports that the ECB was also contemplating buying EUR/USD. With EUR/CAD positions rather stretched, it didn’t take much to cause a stampede for the exits which crushed the loonie vs the US dollar. Global equity markets and NY futures are all lower to start the day, as are commodity prices.
The short term CAD$ technicals are bearish. The loony’s inability to extend gains through 1.0410 overnight combined with its subsequent retracement through both 1.0520 and 1.0560 suggests further CAD weakness to 1.0820. For today, USD support is at 1.0520 and 1.0470 with resistance at 1.0635 and 1.0685.
This bout of Canadian dollar weakness is the result of near panic selling of CAD vs. the major crosses as the threat of intervention has led to a stampede to the exits in an environment characterized as “extremely illiquid” However, the panic will pass. The Bank of Canada is still expected to hike rates in June while the Fed is expected to be on hold for the rest of the year. In addition, Canadian economic reports are still robust. Take advantage of the panic and look to sell CAD near 1.0700.
Today’s Range 1.0560-1.0680
May 19, 2010
USD/CAD Open: 1.0505-10 Overnight Range: 1.0381-1.0415
The Canadian dollar sank overnight as Euroland issues once again left the loonie on the defensive. News that Germany banned short selling in some bank shares and government bonds had many investors concluding that this desperate move may have been the first salvo in the demise of the Euro. European leaders are united in their complaint that the "nasty, evil” speculators are responsible for the current European fiscal crisis, conveniently ignoring their role in implementing irresponsible government budgeting practices. Global equity indices and NY futures are all lower as are oil prices ($68.13) and gold prices ($1,206.50). US data releases today include CPI (forecast 2.4%, yoy) and the FOMC minutes.
The short term Canadian dollar technicals are bearish. The break of minor USD resistance at 1.0440 overnight puts 1.0550 firmly in target, a breach of which would lead to 1.0750. For today, USD support is at 1.0470 and 1.0435. Resistance is at 1.0520 and 1.0550.
The Canadian dollar, a second tier currency in the world of foreign exchange, is getting punished, in part due its “commodity currency” role and in part due to the general flight to US dollars. The Canadian dollar downside is limited due to the likelihood of rising interest rates beginning June 1 and improving economic growth prospects in both Canada and the USA.
Today’s Range 1.0440-1.0540
May 18, 2010
USD/CAD Open 1.0293-98 Overnight Range 1.0262-1.0358
The CAD$ squeezed out more gains overnight, trading defensively in Asia but scratching out gains in Europe all on the back of a weaker USD vs Europe. Even a lower than expected German ZEW economic sentiment, failed to dampen USD selling, today as the EUR/USD approaches key support levels. Uncertainty surrounding European sovereign debt concerns has all markets skittish as evidenced by yesterday’s fall and then recovery in the Dow. Oil prices have bounced off of the $70.00 /bbl level, now trading at $71.93 while gold has retreated from its highs, currently at $1,214.30. Asian and European equity indices were all higher as are US futures. Today’s data releases from the US include PPI (0.2%) and Housing starts (2.2%).
The short term CAD$ technicals are bullish The rejection of further CAD weakness through 1.0450 and the subsequent break of USD support at 1.0310 argues for a test of 1.0190. For today, USD support is seen at 1.0270, 1.0230 and 1.0190 with resistance at 1.0330 and 1.0370.
The Canadian dollar direction will continue to be determined by European events and the general direction of the USD vs the majors. Political uncertainty and sovereign credit concerns trump domestic fundamentals for the time being.
Today’s Range 1.0210-1.0310
May 17, 2010
USD/CAD Open 1.0362-67 Overnight Range 1.0335-1.0437
The CAD$ retreated and then rallied overnight in a volatile session characterized by poor liquidity, due to on-going sovereign debt concerns and oil prices which dipped below $70.00/bbl. The USD extracted further gains against European currencies in Asia but pared back the gains in Europe. Asian equity indices were all down while European indices rose. NY futures are modestly positive at the moment.
The short term CAD$ technicals are bearish above 1.0295, aiming for 1.0550. However, for today, USD resistance will be seen at 1.0390 and 1.0420. USD support is at 1.0330 and 1.0295.
The CAD has been caught up in the latest wave of risk aversion which is starting to look overdone. Recent Canadian economic releases have been bullish and the Bank of Canada may begin hiking interest rates in June. In addition, recent US economic data has been rather robust and what’s good for the US economy is usually good for Canada. Buy CAD on weakness near 1.0450.
Today’s Range 1.0310-1.0410
May 14, 2010
USD/CAD Open 1.0249-54 Overnight Range 1.0196-1.0271
The CAD$ slid lower overnight, once again caught up in risk aversion trading as relentless selling of EUR/USD continued on fears that the Euroland debt crisis will undermine economic growth. In addition, EUR/USD technicals played a role as a widely reported EUR/USD barrier at 1.2500 gave way, leading to stop loss EUR/USD selling. Gold surged to $1,249.70, oil dropped to $73.05 and global equity futures were all down. There is a ton of US data releases today including: Retail Sales (Forecast 0.3%, ex auto’s 0.5%), Industrial Production (0.4%), Capacity Utilization (73.6), Michigan Confidence (74.0) and Business Inventories (0.7).
The short term CAD$ technicals are bearish. The failure to extend gains through 1.0110 coupled with the break back through 1.0230 targets 1.0385. For today, USD support is at 1.0230 and 1.0190 with resistance at 1.0320 and 1.0380.
Yesterday’s CAD strength in the face of general USD strength vs. the majors may have been in part due positive sentiment from announced M&A activity and in part due to the reloading of short EUR/CAD positions, which may have been stopped out last Thursday/Friday. However, CAD downside should be limited due to a) prospects of rate increases beginning in June b) generally robust economic fundamentals c) CAD buying as a proxy to US dollars.
Today’s Range 1.0210-1.0310
May 13, 2010
USD/CAD Open: 1.0145-50 Overnight Range: 1.0113-1.0197
The CAD$ moved higher in Asia, benefitting from being an oasis of tranquility in the context of Euroland uncertainty and supported by expectations of Canadian interest rate hikes in June. CAD$ gains were pared in European trading, in part due to oil prices falling to $74.98. Meanwhile, global equity indices continue to be robust with US futures pointing higher as well. US data releases today include jobless claims, expected to be +440k.
The short term CAD$ technicals are bullish looking for a break of 1.0100 to extend to .9935. For today, USD support is at 1.0110 and 1.0060 with resistance at 1.0165 and 1.0210.
The loonie is grinding higher in the face of both lower oil prices and a rising US dollar vs. Europe, suggesting CAD demand as proxy to buying US dollars. The rather robust economic data and expectations of near term Canadian interest rate hikes support this view.
Today’s Range 1.0070-1.0160
May 12, 2010
USD/CAD Open 1.0174-79 Overnight Range 1.0156-1.0245
The CAD$ was very quiet in Asia but got bounced around in Europe in tandem with EUR/USD moves as investors shun the Euro, despite the trillion dollar assistance plan. Global equity indices are all higher as are US equity futures. Gold has risen $20.60 to $1,240.90 while oil is flat, around $76.17/bbl. US trade data, expected -$40 billion and the Canadian trade numbers (+$1.6 billion) are released at 8:30am.
The short term CAD$ technicals are modestly bullish needing further gains through 1.0120 to ignite another CAD$ rally through parity to 0.9750. For today, USD support is seen at 1.0150 and 1.0120 with resistance at 1.0250 and 1.0310.
Last week, a weaker EUR, rising USD, led to CAD selling due to risk aversion and EUR/CAD being oversold. This week, EUR/CAD selling has returned with a vengeance, serving to mitigate CAD weakness during bouts of US dollar strength. Perhaps it’s due to the fact that Canadian economic fundamentals continue to improve supporting the view of Canada as a safe haven.
Today’s Range 1.0120-1.0220
May 11, 2010
USD/CAD: Open 1.0236-41 Overnight Range: 1.0215-1.0287
Risk aversion trading is on as investors are leery over the effects of the 1 trillion dollar bail-out on European growth. These investors feel that the bail-out addresses short term requirements - its just like trying to contain an oil spill by filling the overflowing pipe with golf balls and tire cuttings, will it fix the underlying problem? Concerns remain about the ability to implement fiscal measures. Asian and European equity indices are sharply lower and US equity futures are pointing down as well. Gold prices have popped $17.20 to $1,218.20 while oil is down $1.05 to $75.75.
The short term CAD$ technicals are mixed. CAD bears need a move through 1.0315 to get excited about an extension towards 1.0550. CAD bulls need a move through 1.0190 to argue for a retest of parity. For today, USD support is at 1.0210 and 1.0190. Resistance is at 1.0280 and 1.0310.
What we know for certain is that volatility will continue. The risk-on, risk-off trading mentality will continue due to the uncertainty over developments in Europe, not unlike what occurred in Oct/08 when the market was trying to make sense of FED and Treasury moves to shore up the US economy. It worked for Uncle Sam so no reason to think that the ECB will get it wrong.
Today’s Range 1.0210-1.0310
May 10, 2010
USD/CAD Open 1.0230-35 Overnight Range 1.0205-1.0390
The CAD$ spiked higher in a wild overnight session as news of a nearly trillion dollar loan plan was unveiled by European leaders in a decisive move to shore up financial markets. The EUR recouped around 4% vs the USD, gold plunged $17.60 to $1,193.00, oil rose $2.67 to $77.78 and global equity indices all soared.
The short term CAD$ technicals are muddled. The CAD$ rally back through 1.0250 suggests further consolidation in a 1.0040-1.0315 range. For today, USD/CAD support is at 1.0215 and 1.0175. Resistance is at 1.0270-1.0330.
The ECB and G-7 have likely put an end to the stampede to speculate against PIIG debt while re-introducing the element of two-way risk to FX markets. Liquidity remains a casualty of last week’s market purge, which serves to exaggerate moves. Meanwhile, the loonie will track EUR/USD moves in the near term.
Today’s Range 1.0175-1.0275
May 7, 2010
USD/CAD Open: 1.0445-50 Overnight Range: 1.0442-1.0572
The CAD exploded higher at 7:00am from 1.0450 to 1.0350 in seconds, with the release of the Canadian employment report. Employment increased by 108.7K and the unemployment rate fell to 8.1%, well above the 20K estimates.
Meanwhile, in the overnight session, the CAD managed to claw back more of yesterday afternoon’s stunning losses in a skittish overseas market. Overall, liquidity was described as extremely poor as traders and investors digest the ramifications of the late day North American melt-down in conjunction with the contagion fears over European sovereign debt, a hung parliament in the UK, and speculation over the reported G-7 conference call to chat about Greece. Global equity indices are all lower, gold is up another $5 to $1,202.40 while oil is still leaking dollars, currently trading at $77.76. The US nonfarm payroll report at 8:30 is expected to show a gain of 200K, possibly setting the stage for another wild ride.
The short term CAD technicals are muddled. CAD bulls view the retreat from 1.0735 and the subsequent move through 1.0610 and 1.0460 as evidence that the CAD uptrend is alive and well. They will look to sell USD/CAD between 1.0430 and 1.0510 with a stop above 1.0560. CAD bears view the move through 1.0310 as confirmation that the CAD uptrend is over. They will be looking to buy USD/CAD between 1.0340-80, with a stop below 1.0310.
Today’s Range: 1.0360-1.0510
May 6, 2010
USD/CAD Open: 1.0318-23 Overnight Range: 1.0283-1.0407
The CAD lost more ground overnight as risk aversion trades and contagion fears were in full swing. The USD rose rapidly vs. the majors (except JPY) supported by a Moody’s report warning of contagion fears threatening the health of the banking systems in Spain, Portugal, and Italy. Asian equity indices were down, while European equities rose slightly with US futures pointing to a flat to positive opening. Oil prices are $80.22/bbl while gold has risen 49.30 to $1,184.30.
The short term CAD technicals are bearish. The USD/CAD price has broken through the 100 day exponential moving average at 1.0310 putting the 200 day moving average at 1.0580 in play. For today, USD support is at 1.0310 and 1.0280 with resistance at 1.0370 and 1.0440.
FX traders have been simplemindedly focused on events in Europe with chatter of a potential demise of the EUR getting some attention and appear to have forgotten about tomorrow’s Canadian and US payroll reports. It would make sense to see some US dollar gains unwound by day’s end ahead of this data.
Today’s Range .1.0310-1.0380
May 5, 2010
USD/CAD Open: 1.0257-62 Overnight Range: 1.0233-1.0283
The CAD is starting the day with a negative bias, undermined by the broad based US dollar strength vs. the majors, softer commodity prices and a weaker equity profile. Despite the ECU’s stated objective of bailing out Greece, the civil unrest in that country calls into question whether Greek authorities can implement the new austerity measures demanded by the lenders. Fears of contagion effects and questions about the future viability of the EUR are supporting the US dollar. This time, the loonie isn’t deriving any benefit as a US dollar proxy.
The short term CAD technicals are bearish. The break through the top of the USD/CAD downtrend channel from 1.3026 occurred when 1.0260 was taken out overnight, supporting the view of a near term USD/CAD bottom in place at 0.9950. For today, USD/CAD support is at 1.0230 and 1.0210 with resistance at 1.0290 and 1.0310.
Events in Europe have side-swiped the loonie due to safe haven demand for US dollars at a time when EUR/CAD and CAD/JPY positions appeared to be over-bought. The loonie also gets “spanked” as part of the commodity currency play where weaker commodities results in a weaker CAD$.
Today’s Range: 1.0230-1.0320
May 4, 2010
USD/CAD Open: 1.0160-65 Overnight Range: 1.0103-1.0168
The CAD is lower to start the day undermined by a softer Chinese PMI report indicating that China economic growth is slowing. In addition, weaker than expected retail sales in Germany combined with on-going sovereign debt contagion fears, led the US dollar higher vs Europe, clipping the wings of the loonie in the process. Commodity prices are mixed and global equity indices are down with US futures pointing lower to start the day.
The short term CAD technicals are bearish. The medium term Canadian dollar uptrend is still intact, however the channel top is now at 1.0264. If this level is broken it would suggest a move to 1.0500 is likely. For today, USD support is at 1.0120 and 1.0090. USD resistance is 1.0190, 1.0230 and 1.0250.
Yesterday’s US ISM manufacturing report suggested that US economic growth was starting to gain strength which is a modestly positive development towards the prospect of further CAD gains. Unfortunately, over-extended short EUR/CAD and long CAD/JPY positions will slow CAD gains and the risk remains that the loonie is vulnerable to a profit taking sell-off in these currency pairs.
Today’s Range: 1.0120-1.0220
May 3, 2010
USD/CAD Open: 1.0141-46 Overnight Range: 1.0140-1.0185
The CAD was very quiet overnight due to Golden Week holidays in Japan and May Day holidays in Europe. The EUR 120 billion bail-out package for Greece announced by the EU on the weekend failed to provide a lift to the EUR/USD. In fact, it has fallen from 1.3360 to 1.3235 as speculators ask “who’s next?”. Meanwhile the loonie marks time, trapped in a .9950-1.0250 range. Gold prices are currently $1,183.50 while oil prices are mostly flat at $86.27. US data releases today include Personal Spending, Personal Income, ISM Manufacturing Index and Construction Spending.
The short term CAD technicals are mixed. CAD bulls view the bounce off the .9950 lows as corrective and look to sell USD/CAD in the 1.0180-1.0240 range. CAD bears, view the bounce off of .9950 and the subsequent rally through 1.0070 as evidence that a short term bottom is in place. They look to buy USD/CAD between 1.0080-1.0130 for a test and break of 1.0250.
The highlight for this week will be the US and Canadian payroll data on Friday. The US nonfarm employment change is forecasted at +183K with Canada adding 20K.
Today’s Range 1.0110-1.0180
April 30, 2010
USD/CAD Open: 1.0043-48 Overnight Range: 1.0018-1.0063
The CAD drifted aimlessly overnight ignoring rising commodity prices as oil flirted with $86/bbl and gold climbed nearly $6 to $1,174.60. It appears that today’s plethora of economic data from the US and Canada was enough to keep traders sidelined. US data releases include Q1 GDP (forecast 3.4%), ECI (forecast +0.6), Chicago Purchasing Managers Survey (Forecast 60.0) and Michigan Consumer Sentiment (71.2). Canada releases Feb GDP (forecast 0.5%).
The short term CAD technicals are mixed. The CAD remains locked within a .9940-1.0200 range and today’s GDP data could spark a run to either end. USD support is at 1.0010, .9980 and ,9940 with resistance at 1.0080, 1.0130 and 1.0180.
Today’s Canadian GDP may be the catalyst needed to ignite a CAD$ rally providing the data exceeds expectations. A strong number would kick-start the pace and magnitude of the Canadian rate hike story and we could see a rally to .9950. Unfortunately, a weaker than expected number (which seems to be the prevailing market view) would put pressure on the CAD and we would see another print of 1.0160.
Today’s Range .9970-1.0070
April 29, 2010
USD/CAD Open: 1.0032-37 Overnight Range: 1.0022-1.0122
The CAD has recovered most of the losses incurred from last Friday’s lower than expected inflation report and exacerbated by the Greece, Portugal and Spain downgrades after the FOMC kept the “exceptionally low rates for an extended period” language in yesterday’s statement. After drifting slightly lower in Asia, the loonie got wings in European trading, in part due to a report that Germany wants to speed up the bail-out process. Asian equity indices were mostly lower while European indices rose. NY futures are also in positive territory to start the day.
The short term CAD technicals are bullish. The rejection of CAD weakness above 1.0180 and the subsequent rally back through supports at both 1.0110 and 1.0060 argue for another move to .9940. For today, USD support is at 1.0020 and .9970. Resistance is at 1.0090 and 1.0120.
The FOMC’s decision to leave rates low for an extended period coupled with a more optimistic tweaking of the language in the statement was enough to shore up equity markets and temper the enthusiasm for buying US dollars against the EUR. In turn, the diminished “risk aversion” put the loonie back on the menu as the blue plate special. Although the CAD is likely to grind higher over time, continued choppy trading like we have seen this week will be the norm.
Today’s Range: 0.9980-1.0080
April 28, 2010
USD/CAD Open: 1.0142-47 Overnight Range: 1.0126-1.0196
The CAD behaved reasonably well overnight following yesterday's shellacking after the downgrading of Portugal’s debt by two notches and Greek being downgraded to ‘Junk”. Overnight, the CAD drifted lower, flirted with the 1.0200 area and retreated rapidly, likely due to position trimming ahead of expected comments from ECB President Trichet, IMF Director Straus-Kahn and German Chancellor Merkel. Since these people are unlikely to announce that they are cutting Greece loose, supportive comments may lead a reversal of yesterday’s losses. In addition today’s FOMC announcement will be a non event, unlikely to alter the “extended period” language. Global equity markets were all down but NY futures are modestly higher. Commodity prices are slightly lower with oil at $81.85 and gold at $1,162.80.
The short term CAD technicals are bearish. The move back above 1.0060 yesterday shifted the short term CAD technicals to bearish, supported by the USD/CAD’s subsequent push above 1.0120. This level, (1.0060), will act as support today for another crack at 1.0190 and then the 1.0220-50 level. In the medium term, the CAD remains in an uptrend from March/09 with the top of the downtrend channel residing at 1.0300. A break above here would argue that the CAD uptrend is over.
Today’s Range 1.0080-1.0180
April 27,2010
USD/CAD Open: 1.0021-26 Overnight Range: 1.0001-1.0038
The CAD was largely ignored in a directionless trading session overnight as it would appear that traders are content to stay sidelined due to the Greek tragedy being well into overtime and ahead of the FOMC meetings today and tomorrow. Global equity indices were all down as are NY futures. Gold and oil prices are also a tad lower.
The short term CAD technicals are unchanged from yesterday. USD support is at .9980 and .9940 with resistance at 1.0060, 1.0080 and 1.0120.
The lack of economic data releases and the spectre of the FOMC looming above markets suggests a couple more days of quiet, dull markets The entertainment will come from watching how Goldman Sach’s justifies packing a mortgage securities product with rather toxic mortgages and then flogging them to clients.
Today’s Range 0.9980-1.0060
April 26, 2010
USD/CAD Open: 0.9986-91 Overnight Range: 0.9978-1.0009
The CAD was a snooze fest overnight with Greek events and Goldman Sachs emails leaving traders to scratch their heads looking for direction ahead of Wednesday’s FOMC statement. Asian and European equity indices were higher as are North American futures. Commodity prices are also higher with gold at $1,156.30 (+$2.60) and oil at $85.24 (+$0.20). There are no major economic releases today.
The short term CAD technicals are mixed. CAD bulls view the move back through 1.0110 and then below 1.0030 as an indication that the support in the 0.9930-50 range will be tested and broken. CAD bears view the loony’s inability to make headway below .9930 as evidence of a base for another run at 1.00250. For today, USD support is at .9970 and .9940 with resistance at 1.0030 and 1.0050.
The CAD is getting a little support from the higher commodity prices however Friday’s inflation data diminished speculation for a 50 basis point rate hike in June slowing CAD gains. However, CAD continues to benefit from demand on the crosses with CAD/JPY making a new high overnight.
Today’s Range 0.9930-1.0030
April 23, 2010
USD/CAD Open 0.9997-1.0002 Overnight Range 0.9970-1.0040
The CAD bounced violently within a relatively narrow range in an overnight session dominated by events surrounding Greece. Finally, Greece has formally asked the EU and the IMF for a bail-out, which led to a quick rally in EUR/USD. The jury is still out as to whether the bail-out will restore confidence in shaken European sovereign debt markets or if the spotlight will move to other wobbly countries. Meanwhile, Canadian CPI came in below expectations at 1.4% (expected 1.7%) and the loonie dropped 40 points to 1.0040. Asian equity markets were mixed, European markets were up, and NY futures are pointing higher as well, with commodity prices also slightly higher. To ensure a rather entertaining day, the markets will be watching for Canadian Retail Sales (expected to rise 0.9%m/m) and from the USA, durable goods and new home sales. In addition, sound bites from the G-20 meetings may also provide trading fodder.
The 0.9950-1.0050 trading range remains intact, however the bias is that 0.9950 will give way, leading to 0.9810. For today, USD support is at 0.9960 and 0.9920. Resistance is at 1.0040, 1.0090 and 1.0130.
Yesterday’s Monetary Policy Report was typical bankspeak noting that inflation risks were balanced which poured water on those looking for aggressive rate hikes in June or sooner. A strong retail sales number today, may grease the skids for a stronger CAD$ rally through 0.9950 in conjunction with a weaker USD profile vs the majors. However, after touching 1.0215 last Friday and subsequently recovering all its losses, USD/CAD profit taking may limit any CAD gains today,
Today's Range 0.9970-1.0060
April 22, 2010
USD/CAD Open 1.0005-10 Overnight Range 0.9962-1.0012
The CAD traded quietly and aimlessly in Asia then drifted higher in early European trading before getting swamped by risk reduction trades as Greek debt issues continue to unsettle markets. Global equity indices are all lower as are commodity prices, which added to the softer profile of the loonie. The Bank of Canada releases its quarterly Monetary Policy Report at 10:30 am, followed by a press conference around 11:15am. Prior to this event the US releases Jobless claims (consensus 452K), PPI (consensus 0.4%, Core 0.1) and Home Sales (5.28 million).
Once again, the Canadian dollar is struggling to overcome US dollar support in the 0.9950 area, which when decisively broken, will lead to further CAD gains to 0.9810. Meanwhile, a move above 1.0130 would argue for further CAD weakness to 1.0160. For today, USD support is at 0.9960 and 0.9910 with resistance at 1.0035 and 1.0060.
Canadian dollar traders are awaiting further information about the pace and magnitude of interest rate hikes from today’s MPR and press conference. A 25 bp increase for June is already priced into the current rate. Canadian interest rates are already extremely low, so what does a mere quarter point rate hike accomplish except to indicate a whole bunch more in the offering? There is a possibility, albeit very slim, that the Bank of Canada could raise rates 1% in one fell swoop, which would still have Canadian rates ridiculously low by historical standards and not really impact the economy. Today, all we will get from the MPR is a vague idea of the magnitude of interest rate hikes, which if deemed to be aggressive should see the loonie back at .9950.
Today's Range: 0.9970-1.0060
April 21, 2010
USD/CAD Open 0.9960 Overnight Range 0.9935-0.9990
The CAD closed under par yesterday and stayed below in a lively overnight session. The Bank of Canada has indicated that Canadian interest rates were heading higher, spurring another round of CAD buying. Interestingly, the CAD rally is occurring despite global equity indices and NY futures markets all lower on the day. The Bank of Canada releases its quarterly monetary policy report on Thursday, which will be closely scrutinized and could give the loonie an additional lift.
The short term CAD technicals are bullish: The overnight dip through minor support in the .9950-60 area support further gains to 0.9865. For today, USD resistance is at .9980 and 1.0020. USD support will be found at .9940 and .9900.
The loonie has shrugged off last Friday’s risk aversion sell-off and resumed its rally. The sell-off served to reduce the long CAD exposures which had gotten pretty stretched. Meanwhile, on the crosses, EUR/CAD support lurks around 1.3290 and GBP/CAD is supported at 1.5250 which may limit near term CAD gains vs the US dollar.
Today’s Range 0.9930-.1.0020
April 20, 2010
USD/CAD Open 1.0108-13 Overnight Range 1.0104-1.0164
The CAD clawed back some gains overnight as many markets reverted back to risk seeking. Friday and Monday’s doom and gloom scenarios faded as traders donned rose colored glasses and viewed the Goldman issue as political posturing and likely just bad for Goldman and a few employees. The German ZEW (investor confidence) soared to 53 from 45, lifting EUR/USD in the process. Today’s Bank of Canada rate decision (9:00am) is expected to leave rates unchanged. Global equity indices are higher as are commodities.
The short term CAD technicals are mixed CAD bears view the bounce off of .9860 and the USD/CAD’s subsequent rise through 1.0080 and 1.0120 as indication of further CAD losses to 1.0280 and 1.0380. CAD bulls view the same move as corrective, heartened by the fact that USD resistance at 1.0250 wasn’t even tested. In addition, the quick move back below 1.0130, suggests that another move below parity is in the cards. For today, USD support is at 1.0080 and 1.0040. USD resistance is seen at 1.0130 and 1.0180.
Today’s BofC rate decision is unlikely to provide the loonie with much direction as the Monetary Policy Report is released Thursday. This report will be scrutinized to discern clues as to future BoC direction
Today’s Range 1.0060-1.0130
April 19, 2010
USD/CAD Open 1.0208-13 Overnight Range 1.0138-1.0215
The CAD continued to drop overnight as fallout from news that the SEC has charged Goldman Sachs with fraud spurred risk aversion trading. Asian and European indices are lower and NY equity futures are down as well. Gold prices have dropped $8.40 to $1,128.50 and oil is down $2.39 to $80.94/bbl. China Yuan revaluation rumors dominated Asian markets, GBP/USD is under pressure due to election uncertainty while Greek issues unsettle EUR/USD. All in all, a rather nervous start to the week.
The short term CAD technicals are bearish. The bounce from 0.9960 taking out USD resistance at 1.0060 and 1.0130 has provided a short term based to USD/CAD which may lead to a test of 1.0260. A break of this level should see a run to 1.0350. For today, USD support is at 1.0170 and 1.0130. Resistance is at 1.0230 and 1.0260
The CAD has been caught up in the rush to risk aversion trading which has also led to lower commodity prices. In my opinion, markets were rather bullish and complacent looking for rallies in all markets to continue, supported by what seemed to be a resolution of the Greek debt crisis and needed an excuse to take profits. The SEC gave it to them! The CAD has suffered in this environment, exacerbated by the size of long CAD position, which could lead to further losses this week. However, the CAD uptrend will remain intact as long as the USD/CAD rate is below 1.0465.
Today’s Range 1.0160-1.0230
April 16, 2010
USD/CAD Open 1.0017-22 Overnight Range 1.0004-1.0058
The CAD remained wobbly in a directionless overnight session, losing ground in Asia and recouping all its losses in Europe. There doesn’t seem to be any specific driver preventing the loonie to extend gains through parity, however recurring uncertainty surrounding the EU/IMF bail-out for Greece has led to some mild risk aversion. In addition, commodity prices have dipped with oil below $85.00, trading at $84.77. US data releases today include housing starts (forecast 0.63m), and building permits (forecast .60m). Canada releases manufacturing shipments (forecast 1.0%).
The short term CAD technicals are mixed. CAD bears see that the USD/CAD support between .9980 and .9960 is showing signs of a minor base, supported by the overnight break of USD resistance at 1.0040 which could lead to further US dollar gains to 1.0090. A break of 1.0090 opens up a run to 1.0190. CAD bulls, meanwhile, view this recent bout of CAD weakness as merely corrective in the context of a strong CAD uptrend. For Today, USD support is at 1.0005 and .9980. Resistance is at 1.0040, 1.0090 and 1.0110.
The CAD is bouncing around within a .9950-1.0110 range due to a lack of new catalyst’s to either create a flurry of additional CAD buying or encourage the unwinding of long CAD positions. Today’s US housing data, if disappointing could see US dollar selling vs. the majors as it would question the sustainability of the fragile US recovery.
Today’s Range .9980-1.0080
April 15, 2010
USD/CAD Open 0.9989-94 Overnight Range 0.9965-1.0005
The CAD was very quiet overnight, trading below parity for most of the session despite a modest retreat in commodity prices. Oil is currently $85.69/bbl while gold is $1,153.30. China announced GDP at 11.9% which raises the risk that china would abandon the Yuan/USD peg. EUR/USD was the big mover overnight, under renewed pressure due to the poor response to the Greek bond issue suggesting that Greece would have to tap into the EU/IMF bail-out funds. US economic data releases today include Employment claims (439K), Empire Manufacturing, Industrial Production and Philly Fed.
The short term CAD technicals are bullish. The CAD uptrend remains intact but lots of US dollar bids between .9910-60 have made the rally rather sluggish. For today, USD support is .9960 and .9920 with resistance at 1.0020, 1.0040 and 1.0090
The CAD parity party is in full swing however further CAD gains will be at a much slower pace as the existing long CAD positions get trimmed on profit taking in the absence of new bullish CAD catalysts. Increased expectations for Canadian interest rate hikes would increase the pace of CAD gains.
Today’s Range .9970-1.0020
April 14, 2010
USD/CAD Open 0.9980-85 Overnight Range 0.9965-1.0020
The CAD moved higher in an orderly fashion in overnight trading, bouncing off parity a couple of times before successfully pushing through parity in early North America Trading. Markets are in risk seeking mode and coupled with higher commodity prices and Asian and European equity indices all pointing up, have helped to lift the loonie. Strong results from Intel and JP Morgan have lifted equity markets.
US data releases include CPI (forecast 0.1) and Retail Sales (1.1) .
The short term CAD technicals are bullish. The move below 1.0000 argues for further CAD gains toward .9750. Short term USD support is at .9950 and .9910 with resistance at 1.0020 and 1.0050.
The CAD uptrend appears to have resumed however CAD gains may be a slow grind as the market is very long CAD. Profit taking bids are scattered at various levels below .9950 as the loonie nears many medium term targets.
Today’s Range .9940-.1.0020
April 13, 2010
USD/CAD Open 1.0027-32 Overnight Range 1.0021-55
The CAD had a quiet overnight session but unable to get any legs below par ahead of today’s US and Canadian trade data releases. Global equity indices are lower as are North American futures. Oil prices are softer, trading at $83.88 while gold has slipped $8.70 to $1,153.50.
The short term CAD technicals are unchanged. CAD bulls are happy that the loonie stays below 1.0100 while CAD bears are happy that it is above 1.0000. Longer term the CAD uptrend is intact below 1.0250 looking for .9810. For today, USD support is at 1.0010 and .9980 with resistance at 1.0160 and 1.0190.
The CAD may get a short term boost from CAD demand on the back of the proposed Sinopec purchase of Conoco Phillips' Canadian Oil Sands stake for around $4.7 billion. However, the federal government will review the purchase prior to approving the deal in an effort to look busy.
Today’s Range .9990—1.0070
April 12, 2010
USD/CAD Open 1.0064-69 Overnight Range 1.0010-1.0078
The CAD has slipped a tad lower due to an overnight session dominated by news that the Eurozone and the IMF combined to commit to $45 billion in loans to Greece, a deal akin to Bill Gates co-signing for your car loan. The EUR/USD spiked 200 points higher almost instantly. The loonie meanwhile has struggled to gain traction below par and the unwinding of short EUR/CAD trades may keep pressure on CAD today. Global equity indices were mixed, oil prices are slightly lower at $84.71 but gold prices have gained $2.30 to $1,164.20.
The short term CAD technicals are mixed. The short term CAD uptrend from the 1.0250 level ended when the loonie retreated back through 1.0040, suggesting further consolidation in the days ahead. For today, USD support is seen at 1.0050 and 1.0030. Resistance is at 1.0090, 1.0130 and 1.0180.
Today’s Range 1.0050-1.0130
April 9, 2010
USD/CAD Open 0.9994-99 Overnight Range 0.9993-1.0028
The CAD reversed yesterday’s morning losses by mid-day, closing the day around 1.0015, in part due to rumours that today’s Canadian employment report would show a rise of 35,000 jobs. Anticipating this number, traders pushed the loonie back through parity in a rather quiet overnight session. Unfortunately, the employment report came in much lower than expected, at +17,900 and the unemployment rate was unchanged at 8.2%, The loonie tanked, dropping to 1.0070 from .9998 in minutes as bullish CAD short term traders, got squeezed. Today’s report is not nearly as bad as the selloff in the Canadian dollar would indicate as it reflects the effects of the closing of the Vancouver Olympics. The report was still strong enough to support the view that the Bank of Canada may hike rates sooner rather than later.
Meanwhile, global equity indices are all higher and NY futures are pointing up as well. Commodity prices are firmer with oil at $86.20/bbl while gold is at $1,157.80
The short term CAD technicals are mixed. The inability of the CAD dollar to extend and hold gains through parity, combined with overbought studies warns that the loonie is vulnerable to a deeper correction towards 1.0230. However, there is strong USD/CAD resistance at 1.0090 and 1.0140. For today, USD support is 1.0050 and .9990. Resistance is pegged at 1.0090 and 1.0120.
Today’s Range .9990-1.0080
April 8, 2010
USD/CAD Open 1.0074-79 Overnight Range 1.0045-1.0090
The CAD move below par was short lived and the loonie has been on the defensive ever since, due to a rising US dollar particularly vs. EUR and buying of EUR/CAD on profit taking following the resumption of Greek debt default concerns. Position squaring ahead of Friday’s Canadian employment report also undermined the CAD. Gold prices have slipped lower to $1,147.50 and oil is mostly flat at $85.43. The Bank of England left rates unchanged, as expected.
The short term CAD technicals are mixed. The bounce from .9970 back above 1.0070 suggests further short term CAD weakness toward 1.0160 and maybe 1.0250. A move below 1.0020 would argue for a resumption of the CAD uptrend. Longer term, the CAD is well entrenched in an uptrend as long as the USD/CAD rate is below 1.0500. For today, USD support is at 1.0050 and 1.0020. Resistance is at 1.0105 and 1.0150.
Once again, European events have disrupted the orderly rise of the Canadian dollar as investors worry that Greece’s funding struggle will spread to other countries. Also, many technical analysts are suggesting that the recent equity rallies in Canada and the US are due to pause and consolidate which would encourage profit taking selling of CAD vs. the US dollar and on the crosses. However, a larger than expected increase in Canadian jobs data tomorrow should spark renewed CAD buying.
Today’s Range 1.0040-1.0105
April 7, 2010
USD/CAD Open 0.9994-0.9999 Overnight Range 0.9979-1.0020
The CAD is below par to start the session making the loonie a true “birdie” in a rather uneventful overnight session. CAD traders are awaiting the release of the Ivey Purchasing Managers Index (forecast 55.1) later today and Friday’s employment report ( forecast +25K) to support further CAD gains. In other markets, the Bank of Japan left rates unchanged, GBP/USD is softer, partly due to British election uncertainly and renewed yammering over Greek bailout details is undermining the EUR. Global equity indices are mixed; Asia is higher while Europe is lower. US futures are also pointing down.
The short term CAD technicals are bullish. On the immediate horizon, USD rallies should be capped at 1.0040 with modest resistance seen at 1.0010. USD support is at .9975 and .9950. Longer term, USD resistance is pegged at 1.0080, 1.0160 and 1.0250. USD support is at 0.9950, 0.9840 and 0.9740.
The Canadian dollar's rise to parity is sustainable this time around. Sound economic fundamentals, return to growth, commodity story, low soveriegn risk, are all factors that will support the Canadian dollar.
The CAD is likely to consolidate its recent gains within a 0.9950-1.0020 range today as CAD buyers retreat to the sidelines to await the proverbial “better levels” and CAD sellers leave bids to book profits. In a sense, after all the hype about reaching parity, the market is content to sit back and say “now what?” We think the CAD will continue to appreciate.
Today’s Range 0.9960-1.0020
April 6, 2010
USD/CAD Open 1.0002-07 Overnight Range 1.0002-1.0048
The CAD is staring parity in the face and by the end of the day today, we will very likely be through it. Overnight, foreign exchange trading was dominated by the expected news that the RBA would hike Australian rates by 0.25% to 4.25% and jitters over the proposed IMF/Greece bail-out. Global equity indices were mostly higher however NY futures are lower. Gold prices are down $7.90 to $1,125.90 while oil prices are still well above $85.00, trading at $86.43. There are no data releases from Canada or the US today, however the FOMC minutes come out at 2:00 pm.
The short term CAD technicals are bullish. The CAD is pushing parity but meeting strong USD demand, a break of which should see a move to 0.9960 initially. For today, USD support is at 1.0000 and .9960 with resistance at 1.0020, 1.0040 and 1.0080.
The Canadian dollar is in a well entrenched uptrend and is going to parity and beyond. Strong oil prices and surprisingly positive Canadian and global economic data continue to support the loonie's march higher. Moreover, a positive monetary policy outlook and a stable banking system have put the risk trade back on at full swing as Canada has everything that global investors want. The Canadian dollar will oscillate around par in the near term as long as oil trades between $85-$100. While the Bank of Canada has been fairly quiet on the loonie's strength, this is something to continue watching for as it appreciates.
Today’s Range 0.9960-1.0040
April 5, 2010
USD/CAD Open 1.0060-65 Overnight Range 1.0051-1.0092
The CAD is starting the week at the high end of its recent range following a thin overnight session due to holidays. Rising commodity prices and generally positive sentiment towards the loonie are keeping the uptrend intact. Oil prices are up $0.51 to $85.38, gold prices up $42.60 to $1,128.60 and NY equity futures are also pointing higher to start the week.
The short term CAD technicals are bullish. The CAD is continuing to push towards 1.0000 however numerous bids between 1.000 and 1.0050 will slow gains. USD/CAD support is at 1.0050, 1.0020, 1.00 and .9960. To the top, USD resistance is seen at 1.0090, 1.0120 and 1.0140.
The CAD is rising despite renewed USD strength vs. the majors on the back of steady demand for the loonie vs. EUR, GBP and JPY. The drive through parity will become a self fulfilling prophesy. One may want to consider buying the CAD on weakness near 1.0110.
Today’s Range 1.0010-1.0090
April 1, 2010
USD/CAD Open 1.0108-13 Overnight Range 1.0108-1.0163
The CAD drifted higher in overnight trading in part due to general USD weakness vs. the majors (except yen) following yesterday’s rapidly revised US Nonfarm payroll expectations suggesting that the forecasts of +200k will be on the high side. Meanwhile, global equity indices were all higher as are North American futures. Commodity prices are also firmer with gold at $1,116.90 and oil at $84.45. US data releases include, ISM Manufacturing, and jobless claims.
The short term CAD technicals are unchanged and bullish looking for a re-test of 1.0040, while trading below 1.0220. For today, USD support is at 1.0090, 1.0070 and, 1.0040 with resistance at 1.0140, 1.0160 and 1.0190.
Trading is likely to get quite thin this afternoon as most of the world, except the US try for an early start to the Easter long weekend. Tomorrow's, US employment data release may encourage position squaring. Take advantage of any CAD weakness to sell USD/CAD for an eventual break of 1.0000.
Today’s Range 1.0060-1.0140
March 31, 2010
USD/CAD Open 1.0155-60 Overnight Range 1.0149-1.0202
The CAD managed to recoup yesterday’s small losses in an uneventful overnight session as trading was thin due to the Japanese year end. Rumours abound that month end/quarter end rebalancing flows will be net US dollar selling, which should help the CAD. Global equity indices were mixed with Asia down and Europe higher. NY futures are flat. Oil is higher at $82.92/bbl. Gold prices are up $4.20 to $1,108.70. US data releases include ADP (forecast +40k), Chicago ISM (forecast 61) and Factory orders (Forecast 0.5%). Canada releases GDP, expected to rise 0.5% m/m.
The short term CAD technicals are bullish looking for a re-test of 1.0040, while trading below 1.0220. A move above 1.0220 would suggest further consolidation. For today, USD support is at 1.0140, 1.0110 and 1.0070. Resistance is at 1.0190, and 1.0220.
It is month end and quarter end which normally means large rebalancing flows leaving the loonie vulnerable to large one-off flows. In addition, Friday’s US nonfarm payroll number, forecast around +200K will be released when Canada and European markets are closed for Good Friday.
Today’s Range 1.0110-90
March 30, 2010
USD/CAD Open 1.0180-85 Overnight Range 1.0180-1.0223
The CAD continued to move higher overnight, driven by a soft US dollar vs. the majors ahead of Japanese year end (March 31), quarter end and month end flows. US data releases include Case Schiller home price index (-0.6) and consumer confidence (forecast 50). Canada has Industrial Product Prices (forecast 0.0). Global equity indices were all higher as are US futures and commodities.
The short term CAD technicals are bullish. USD strength failed in the 1.0280 area and has since retreated below 1.0240 setting the stage for a test of 1.0140 and then parity. For today, USD support is at 1.0160, 1.0140 with resistance at 1.0220 and 1.0250.
The FX markets will be a little wonky this week due to the short week in most G-7 nations (except the USA) for Good Friday as well as portfolio rebalancing flows related to month end, quarter end and Japanese year end. In addition, Friday’s US nonfarm payrolls number (forecast in the range of 200K) add another element of uncertainty to the mix.
Today’s Range 1.0150-1.0250
March 29, 2010
USD/CAD Open 1.0210-15 Overnight Range 1.0201-1.0274
The CAD drifted higher overnight, supported by continued EUR/USD buying as the concerns over Greek debt wane. Global equity indices are all higher as are oil prices (+0.57 to $80.76) and gold (+$7.70 to $1,1111.60). There are a lot of data releases this week in the US, the highlight being Non Farm Payrolls on Friday. This release will be interesting as Good Friday is a holiday in Canada. The forecasts for this number are in the 175-200K range.
The short term CAD technicals are bullish. The failure of the USD/CAD to extend gains through 1.0300 and its subsequent retracement back below 1.0240 suggests further CAD gains to 1.0140. Below, 1.0140 argues for another push towards parity and beyond. A move back above 1.0250 would suggest further consolidation is in order. For today, USD/CAD support is at 1.0190 and 1.0140. USD resistance is at 1.0240 and 1.0280.
The CAD still remains vulnerable to month end/quarter end selling however, the longer term CAD uptrend remains intact.
Today’s Range 1.0160-1.0240
March 26, 2010
USD/CAD Open 1.0207-1.0274 Overnight Range 1.0193-1.0274
The CAD had a rather lively overnight session, recouping its late afternoon losses in Asia and then giving them right back in Europe. The drivers for the currency volatility are events in Europe pertaining to Greek debt. Perplexingly, yesterday, the EUR/USD tanked on news of an EU and IMF led bailout which was seen as a huge negative for all of Euroland and the EUR in particular. This morning, the EUR/USD rallied rather strongly, the catalyst being that the Greek issue has been solved. Go figure! In reality the choppy trading is likely no more than profit taking after rather substantial moves. CAD moves in this environment are almost an after-thought.
The short term CAD technicals are mixed. The USD/CAD rate stalled, once again, at 1.0280 with more resistance seen at 1.0310. and 1.0340. A move below 1.0140 will set up another attempt at 1.0000. For today, USD support is at 1.0220 and 1.0180 with resistance at 1.0280 and 1.0310.
The Canadian dollar has performed extremely well during the recent sharply rising US dollar environment. This gives credence to the view that the Canadian dollar uptrend is alive and well as investors seemingly ignored US dollar moves elsewhere, content in their view that the loonie will rise through parity.
Today’s Range 1.0220-80
March 25, 2010
USD/CAD Open 1.0196-1.0201 Overnight Range 1.0193-1.0270
The CAD regained most of yesterday’s losses overnight, in part due to the Bank of Canada Governor Mark Carney’s remarks being interpreted as hinting at interest hikes within a few months rather than in the fall. In addition, the US dollar rally vs. Europe has taken a breather which also supported the loonie. Asian equity indices were mixed while European indices were higher as are US futures.
The short term CAD technicals are mixed. The break of 1.0250 stalled at 1.0280 with more resistance seen at 1.0340. A move below 1.0140 will set up another attempt at 1.0000. For today, USD support is at 1.0170 and 1.0140 with resistance at 1.0230 and 1.0250.
The prognosis for the loonie got a positive boost from renewed expectations of higher Canadian interest rates much sooner than originally thought, following the BoC governor’s speech. Higher rates in Canada combined with the very positive and well known Canadian fundamental story (GDP growth, employment, commodity and global growth story) will help to ensure that the Canadian dollar uptrend remains intact.
Today’s Range 1.0150-1.0250
March 24, 2010
USD/CAD Open 1.0214-19 Overnight Range 1.0158-1.0235
The CAD ended yesterday on a firm footing which proved to be short lived in a lively overnight session. The CAD came under pressure due to European events which led to a much stronger US dollar, particularly vs. the EUR and the JPY. News that the European Union was close to an agreement with the IMF to bail out Greece, triggered a wave of EUR/USD selling as traders concluded that the use of the IMF undermines confidence in the European Union. A rather dubious conclusion but the icing on the cake came when Fitch downgraded Portuguese bonds from AA to AA negative. Commodity prices are lower with oil at $80.67 and gold at $1,096.30. Asian equity indices were mixed, European indices were all down and North American futures are pointing lower as well. US data releases today are New Home sales and Durable goods.
The short term CAD technicals are mixed although the CAD uptrend remains intact while the USD/CAD rate is below 1.0250. CAD bears view the bounce from 1.0050 and the subsequent rally above 1.0160 as evidence of a short term bottom. They expect the USD/CAD to extend gains through 1.0250 to test 1.0370 and then 1.0500. CAD bulls expect that 1.0250 will cap US dollar strength and that a move back through 1.0140 will lead to a move through 1.000. For today, USD support is at 1.0170 and 1.0140 with resistance at 1.0230 and 1.0250.
The CAD remains an afterthought in global currency markets and thus vulnerable to developments from Europe. However, the loonie's saving grace is that Canada’s impressive domestic fundamentals suggest that loonie losses will lag those of other currencies.
Today’s Range 1.0170-1.0250
March 23, 2010
USD/CAD Open 1.0199-04 Overnight Range 1.0168-1.0213
The CAD had another quiet overnight session trading with a negative bias on general US dollar strength vs the majors. Global equity indices are all higher as are commodities. US data releases today include: Existing Home Sales (forecast 5.0 million). Canada releases Leading Indicators (forecast +0.9%).
The short term CAD technicals are mixed. The failure of the CAD to extend gains below 1.0070 and 1.0050 is providing a short term base for the USD/CAD to probe higher and check out USD resistance in the 1.0220-50 level. For today, USD support is at 1.0170 and 1.0130 with resistance at 1.0230 and 1.0250.
In the big picture, the market is still focused on developments (or lack thereof) in Greece and on a report by Deutschemark predicting that the ECB will be much slower than the US in raising rates. This is providing a bit of support to the USD vs the EUR and undermining the loonie in the process .
Today’s Range 1.0170-1.0240
March 22, 2010
USD/CAD Open 1.0167-72 Overnight Range 1.0147-1.0182
The CAD is starting the week with a softer tone, following Friday’s failure to extend gains through 1.0060. Trading was extra quiet overnight, hampered by a holiday in Japan, and a lack of meaningful data releases today. Both Asian and European equity indices are down with NY futures following suit. Oil prices have slipped to $79.84 and Gold is down to $1,104.60.
The short term CAD technicals are bullish while the USD/CAD rate is below 1.0250 For today, US dollar support is at 1.0140, 1.0010 and 1.0060. USD resistance is at 1.0210 and 1.0250. Above 1.0250 would argue for a period of consolidation with 1.0060 as the floor and maybe, 1.0350 as the ceiling. There is not a lot of data being released in Canada this week leaving the loonie devoid of new domestic influences to provide direction.
In other news, Knightsbridge Foreign Exchange was featured on BNN on Friday. View the interview here: http://watch.bnn.ca/the-close/march-2010/the-close-march-19-2010/#clip278659
Today’s Range 1.0140-1.0240
March 19, 2010
USD/CAD Open 1.0178-83 Overnight Range 1.0134-1.0189
***Canadian CPI 1.6% y/y in Feb. Ex-energy CPI +1.3% y/y***
The CAD retreated steadily overnight reaching 1.0189 around 6 am, as positions were trimmed ahead of today’s CPI data. Immediately following the release, the USD/CAD dropped like a rock, from 1.0170 to 1.0115. The rationale for this move is that higher inflation means the Bank of Canada may be forced to hike rates, sooner rather than later. However, many economists point out that a rising currency is a form of tightening as well, reducing the need for higher interest rates. In other markets, the USD vs. the majors, moved higher in thin trading due to unhappiness arising from the lack of information pertaining to EU response to the Greek crisis. In addition, persistent rumours that the US FED may hike the discount rate very soon are also giving the dollar a boost. Global equity indices are all slightly higher however the rising US dollar has pushed commodity prices lower.
The short term CAD technicals are bullish. The fact that the USD/CAD rate was unable to crack above the 1.0190 resistance level and its subsequent spike back through 1.0150 argues for further CAD strength to 1.0050 and then .9750. For today, USD support is at 1.0070 and 1.0050. Resistance is pegged at 1.0150 and 1.0190.
Today’s Range 1.0050-1.0150
March 18, 2010
USD/CAD Open 1.0101-06 Overnight Range 1.0092-1.0140
The CAD retreated steadily in a quiet Asian session but USD/CAD resistance at 1.0140 held and the loonie recouped all of its losses during the European session coinciding with concern over the status of the Greece rescue plan. There were reports that the Greek bail-out was meeting dissension arguing that the IMF was the appropriate vehicle to resolve the crisis. Whatever occurs, it appears obvious that someone will be bailing out Greece. There are several data releases from the US today, including CPI (forecast +0.1% m/m, core +0.1%m/m), current account (forecast -$120.0 billion), jobless claims (forecast 450K), leading indicators (0.1) and philly fed (17.6). Global equity indices were modestly lower. Commodity prices were mixed, oil is slightly lower while gold managed to squeak out some gains.
The short term CAD technicals are unchanged and still bullish. For today, USD support is seen at 1.0090 and 1.0050 with resistance at 1.0120 and 1.0150. Longer term, the target for the Canadian dollar rally is 0.9750 while the USD/CAD trades below 1.0310.
There is a lot of chatter about “good sized” USD/CAD buy orders lurking at 1.0050 and citing a rather dubious 75% FIBO retracement number as rationale for support. The more worrying level would be in the 0.9980-90 level where sizable “barrier options” are rumoured to be located. If true, the triggering of these barriers could lead to another sharp spike in the loonie.
Today’s Range 1.0040-1.0120
March 17, 2010
USD/CAD Open 1.0112-17 Overnight Range 1.0112-1.0145
The CAD climbed further overnight, buoyed by a weaker US Dollar vs. the majors (except JPY). The US Federal Reserve and the Bank of Japan have both stated that they will keep rates lows, bolstering equity markets and undermining the US dollar. The CAD also got a lift from rising commodity prices (oil $82.35, gold $1,131.60). Today’s US data releases include producer prices (forecast -0.2, core +0.1), Canada releases wholesale trade (forecast 0.8).
The short term CAD technicals remains bullish Minor USD support seen at 1.0150 has given way, which will revert to modest USD resistance. For today, USD support is seen at 1.0080 and 1.0050. Resistance is at 1.0150 and 1.0190.
Today’s Range 1.0070-1.0150
March 16, 2010
USD/CAD Open 1.0177-82 Overnight Range 1.0164-1.0202
The CAD remains vulnerable to the directional whims of the US dollar vs. the majors but lately appears to be able to weather US dollar strength much better due to strong economic fundamentals and bullish technicals. The EUR/USD recouped yesterday’s losses as the European finance ministers announced that they have a strategy to deal with emergency funding for Greece, if required. This announcement and bullish German data led the EUR/USD higher. Asian equity indices were mixed but European indices were all up. Oil prices are $80.26/bbl (Apr.) and gold is $1,114.80, a gain of $9.40. US data releases include housing starts, building permits and the FOMC announcement. Canada has manufacturing survey and labor productivity.
The short term CAD technical remains bullish For today, USD resistance is seen at 1.0190, and 1.0230. USD support is at 1.0150 and 1.0110. Longer term, the break of support in the 1.0215-40 level argues for further CAD strength to 0.9850. Above 1.0280 suggests a period of 1.0150-1.0420 consolidation.
Today’s FOMC announcement is going to be scrutinized for any change in the wording suggesting that the Fed will be less accommodative.
Today’s Range 1.0110-90
March 15, 2010
USD/CAD Open 1.0187-92 Overnight Range 1.0165-1.0194
The CAD has pared back Friday’s gains on the back of lower crude prices giving a modest boost to the US dollar vs. the majors. Tomorrow’s FOMC rate announcement is widely expected to be unchanged however the statement may be interpreted as less accommodative, providing support to the US dollar. Global equity indices are all down slightly to start the week. China’s Premier, Wen Jiabao said “I don’t think the renminbi is undervalued” which reaffirms China’s plan to grow their economy at the expense of almost everyone else. All in all, a slow start to the week.
The short term CAD technical picture is bullish. The break of strong USD support levels between 1.0210-50 opens the door for further CAD gains to 0.9750. In the short term, USD/CAD support is at 1.0140 and 1.0110 with resistance at 1.0200 and 1.0220.
The loonie is still the blue plate special and according to the technicals, further gains are likely. In addition, the combination of rising commodity prices, stable economic growth and the expectation of interest rate hikes, provide solid fundamental support.
Today’s Range 1.0110-90
March 12, 2010
USD/CAD Open 1.0220-25 Overnight Range 1.0214-1.0250
The CAD smashed through expected support in the 1.0210-20 level just after 7:00 am this morning on the release of the better than expected Canadian employment report, trading at 1.0168 currently. In addition, diminished default fears around Greece led to further unwinding of short EUR/USD trades and led to a softer USD vs. the majors. Commodity prices are firmer as well with oil trading at $82.63 and gold at $1,118.20. US data releases today include retail sales (forecast -0.1%), Univ of Mich Consumer Sentiment (74.0) as well as business inventories.
The short term CAD technical picture is bullish! The break of strong USD support levels between 1.0210-50 opens the door for further CAD gains to 0.9750. You are likely to see a bit of support at 1.00, mostly because it is a round number. For today, USD support is (hard to find) but likely around 1.0140 and then 1.0080. To the top, USD resistance will be seen at 1.0200, 1.0220 and 1.0250.
The USD is vulnerable to further short term weakness vs. the EUR as reportedly large short EUR positions get reduced on diminished default risks from Greece, providing support to the loonie in the process. Canada is enjoying a combination of improving economic fundamentals and bullish technicals which will lead to 0.9750 in the next month or so.
Today’s Range 1.0110-90
March 11, 2010
USD/CAD Open 1.0266-61 Overnight Range 1.0244-74
The CAD had an extremely dull overnight session after trying and failing to break support in the key 1.0210 area yesterday. The majors also stayed within narrow ranges. Gold is at $1,105.60 and oil is at $82.14. Today’s data releases from the US include jobless claims (forecast 460K) and trade balance (forecast -40.9 billion). Canada has capacity utilization (forecast 70.0%) and trade balance (forecast +0.3 billion).
The short term CAD technicals are muddled. On one hand, yesterday’s failure to extend gains through 1.0210 and the subsequent recovery through 1.0250 suggests further CAD weakness to 1.0325 and then 1.0385. On the other hand, the bounce off of 1.0210 may be viewed as consolidating recent gains with the loonie regrouping to launch another assault. If so, the loonie needs to stay below 1.0290. Longer term, the CAD remains in a solid uptrend while below 1.0625.
Traders are awaiting two pieces of Canadian data, today’s trade data and tomorrow’s employment report. Positive surprises to these releases may be the catalyst to propel the loonie through 1.0200.
Today’s Range 1.0210-90
March 10, 2010
USD/CAD Open 1.0257-62 Overnight Range 1.0253-90
The CAD left North America on a positive note, gave back ground in Asia and then climbed steadily in Europe, starting today’s session right near strong support at 1.0250. The AUD/USD jumped over 100 points overnight on strong trade data from China, which may provide some additional support to the loonie today. Global equities were flat to up slightly and both gold and oil showed small gains. The only US data today is Wholesale trade, expected to rise 0.2%. There are no Canadian data releases.
The short term CAD technicals are bullish. The inability of the USD dollar to scrape out any meaningful gains against the Canadian dollar suggests that USD support between 1.0225-50 will collapse, leading to 0.9750. USD support is between 1.0225-1.0250 with resistance at 1.0290, 1.0310 and 1.0330.
The CAD appears positioned to jump onto the next risk seeking wave. The recent pattern of lower highs combined with rising commodity and equity markets in what is perceived as a “stable G-7 environment” continues to attract CAD buyers.
Today’s Range 1.0210-90
March 9, 2010
USD/CAD Open 1.0302-07 Overnight Range 1.0269-1.0312
The CAD lost ground overnight pressured by lower commodity prices (oil is down $1.48 to $80.39, gold is down $6.50 to $1,117.50), lower global equity indices and in part due to CAD selling vs. JPY as Japanese repatriate funds for year end.
The short term CAD technicals are mixed. CAD bulls view the pullback from 1.0250 as merely corrective ahead of further strength as the loonie consolidates its recent gains. CAD bears, view the loonie’s inability to extend gains through strong support between 1.0210-40 as evidence that another bottom is in place. They are looking for a break of 1.0370 for confirmation which would lead to another push higher to 1.0470 and perhaps 1.0650. For today USD support is at 1.0290 and 1.0270, with resistance at 1.0320, 1.0340 and 1.0360.
The CAD pressure, in part due to Japanese repatriation flows for year end (Mar.31) and as oil bounces off resistance in the $82.00/bbl area, should lead to a softer CAD this week-at least until Friday’s employment data. CAD bulls should take advantage of CAD weakness to buy CAD around 1.0450, for further CAD gains toward parity.
Today’s Range 1.0230-90
March 8, 2010
USD/CAD Open 1.0280-85 Overnight Range 1.0263-1.0289
The CAD is starting the week with a bullish bias after maintaining the positive tone from last week in what was a relatively quiet overnight session. The EUR/USD popped higher on chatter from France about supporting Greece but Dubai is rumored to be seeking to delay repayment of $26 billion in debt that comes due this month. Global equity indices were all positive, gold is at $1,136.10 and oil is at $81.84.
Not much change to the CAD technical view: The short term CAD technicals are bullish however further gains will face strong US dollar support between 1.0210-50. A break through 1.0200 suggests further CAD gains through parity to 0.9750. To the top, USD resistance comes in at 1.0330, 1.0370 and 1.0410.
The CAD should make a decent effort at breaking through the 1.0210-25 support levels this week. If successful, the loonie will begin a new phase of its uptrend to 0.9750 with 1.0250 capping any weakness.
Today’s Range 1.0230-90
March 5, 2010
USD/CAD Open 1.0316-21 Overnight Range 1.0301-30
The CAD was quiet overnight as were the major FX markets with traders awaiting the release of the US Nonfarm payrolls report which is expected show a decrease of between 50-100k, mainly due to weather. Last night’s Canadian budget release did not have any impact on the loonie. Gold prices are $1,135.30, Oil is at $80.79 and equity indices are slightly higher.
No change to the CAD Technical picture: The short term CAD technicals are bullish however further gains will face strong US dollar support between 1.0210-50. A break through 1.0200 suggests further CAD gains through parity to 0.9750. To the top, USD resistance comes in at 1.0330, 1.0370 and 1.0410.
The week is ending without any new direction. The Greek debt issue has diminished but has exposed the short comings of Euroland which would suggest a lower EUR/USD but since the market is already well short of EUR/USD, further EUR losses will be slower. The CAD rally is also running out of steam in the 1.02’s, setting up further 1.02-1.0550 consolidation.
Today’s Range 1.0250-1.0350
March 4, 2010
USD/CAD Open 1.0280-85 Overnight Range 1.0280-1.0338
The CAD had another quiet night but still managed to squeeze out a modest gain. Trading was extra quiet overnight ahead of both the ECB and Bank of England rate announcements (as expected BoE left rates unchanged) The EUR/USD is off its highs, but still looking bullish on diminished Greek default risks and position squaring ahead of tomorrow’s US nonfarm payrolls data (forecast down -40k). Global equity indices were flat to mixed and NY futures are mostly flat. Oil prices are $80.04/bbl while gold is $1,136.40.
The short term CAD technicals are bullish however further gains will face strong US dollar support between 1.0210-50. A break through 1.0200 suggests further CAD gains through parity to 0.9750. To the top, USD resistance comes in at 1.0330, 1.0370 and 1.0410.
The risk of a Greek bond default has diminished after further austerity measures were announced and a Greek 10 year bond sale today. This has underpinned the EUR/USD, squeezing EUR short positions, and elevating the loonie in the process. The move may have been exacerbated by position trimming ahead of tomorrow’s US jobs data. The Canadian budget is tabled today at 4:pm, but unlikely to have any effect on the loonie.
Today’s Range 1.0250-1.0330
March 3, 2010
USD/CAD Open 1.0331-36 Overnight Range 1.0328-1.0365
The CAD had a very quiet overnight session and the jury is still out as to whether the recent CAD rally has ended or if it is just a pit stop. Positive Greek developments on the budget front have helped to lift the EUR/USD which could lead to the unwinding of recent EUR/CAD buying. Global equity indices were mostly flat, and oil and gold are up modestly. US data releases include ADP employment (forecast -20) and ISM nonmanufacturing (51). No data from Canada.
The short term CAD technicals are bullish looking for a move to test support at 1.0225. However, minor USD support at 1.0310 is proving to be rather sticky. The USD/CAD rate needs to stay below 1.0430 to keep the CAD uptrend intact. Above this level argues for further consolidation, likely 1.0310-1.0570. For today, USD support is at 1.0320, 1.0310 and 1.0280. Resistance is at 1.0380 and 1.0420.
The Federal government puts on its annual smoke and mirrors show when the Finance Minister delivers his annual budget on Thursday. This should not have any impact on the loonie as the government has already leaked most of their initiatives.
Today’s Range 1.0310-80
March 2, 2010
USD/CAD Open 1.0353-58 Overnight Range 1.0350-1.0444
The CAD drifted lower in Asia and then rallied strongly in Europe, triggers stop losses on the break of 1.0380, leading to further gains to 1.0350. The Bank of Canada rate announcement is at 9:00am today, widely expected to remain unchanged. Traders will be closely watching the following BOC statement for signs that the Bank may opt to hike rates sooner rather than later, especially in light of yesterday’s stronger than expected Q4 GDP report. There are no other data releases in Canada or the US. Meanwhile, in other markets, Australia hiked rates by 0.25%, as expected, and GBP/USD remains under pressure due to politics and M&A flows. Asian equity indices were mixed, European all up tiny and NY equity futures pointing higher as well. Oil prices are $79.10 and gold is $1,121.80.
The short term CAD technicals are bullish. The break below support levels at 1.0380 and 1.0420 suggest further CAD gains to the 1.0225-50 area. If support at this level fails, the CAD will rally to 0.9750. For today, USD resistance is at 1.0380 and 1.0420 with support here at 1.0340 and then not much until 1.0280. The top should be capped at 1.0380 and 1.0420.
The CAD is benefitting from safe haven flows stemming from uncertainty over European sovereign debt. In addition, the combination of higher commodity prices and improving economic fundamentals plus bullish Canadian technicals are all contributing to the loonie’s resurgence
Today’s Range 1.0290-1.0390
March 1, 2010
USD/CAD Open 1.0535-40 Overnight Range 1.0495-1.0548
The CAD was fairly quiet overnight, softening in early North American trading. The big mover was GBP/USD already under pressure tanked on a combination of political uncertainty over parliament and the announcement that Prudential PLC was buying AIG’s Asian assets for US $35 billion. Meanwhile, it is a data rich week, with today’s US releases including; personal income, personal spending, ISM manufacturing and construction spending. Canada releases Q4 GDP (forecast 4.5%). Oil prices are $79.73 and gold is $1,114.40. US Equity futures are pointing higher.
The short term CAD technicals are mixed. If USD/CAD stays below 1.0580, a test of 1.0460 is likely. Above 1.0580 opens door for move to 1.0680. In the medium term, as long as the USD/CAD is below 1.0800, the CAD remains in an uptrend, targeting 1.0225. For today, USD support is at 1.0520 and 1.0480. resistance is at 1.0580 and 1.0620.
Weekend chatter in Europe that Germany may buy Greek bonds gave the EUR a boost, and the CAD firmed by default. With a lot of US data releases this week including the jobless report on Friday, combined with sound bites from Europe on sovereign debt issues, ensures a choppy trading week ahead.
Today’s Range 1.0480-1.0580
February 26, 2010
USD/CAD Open 1.0576-81 Overnight Range 1.0563-1.0618
The CAD managed to hang on to yesterday’s late afternoon gains and squeezed out some more overnight with most markets waffling between risk seeking and risk aversion. It may be an unusually skittish Friday session today due to the combination of US data releases, Fed officials yammering, month end rebalancing and a blizzard in NYC. Global equity indices were all up slightly and US futures are pointing that way as well. US data releases include: Prelim. GDP ( q/q 5.6%), Chicago PMI (59.6), Existing home sales (5.51 million). Canada reports Current Account data (forecast -8.7 billion).
The short term CAD technicals remain bearish. The retreat from 1.0680 appears to be consolidation, especially since the price action stayed above the 1.0540-60 area. If so, then expect another CAD sell-off to 1.0680 and perhaps 1.0750. However, if we get below 1.0540, then we have merely returned to the choppy range trading environment defined by 1.0250-1.0750. For today, USD support is at 1.0560, 1.0540, and 1.0510 with resistance at 1.0620 and 1.0680.
The choppy FX trading this week is evidence of a conflicted market in most asset classes. Do the European sovereign debt issues trump a US with widening budget deficits, and a tepid economic recovery? Unfortunately, some days the answer is “Yes” other days its “No". The loonie gets chopped up in this environment however the prospect of rising commodity prices, expectations of BoC rate hikes sooner, rather than later and safe haven demand for CAD point to a currency with limited downside.
Today’s Range 1.0540-1.0640
February 25, 2010
USD/CAD Open 1.0565-70 Overnight Range 1.0515-1.0582
The CAD bounced around in a lively overnight session. Renewed risk aversion was the overnight theme as both Moody’s and S&P warn of possible future downgrades to Greece if deficits don’t improve. This led to “safe haven” buying of US dollars and the loonie was caught in the down draft. Asian and European equity indices were all modestly lower and US futures point to a softer opening at the moment. Oil prices are $79.58, down $0.42, while gold prices are down $1.90 to $1,095.40. US data releases today include durable goods (forecast 1.6%) and Jobless claims ($461k)
The short term CAD technicals remain bearish. The USD/CAD retreated from the 1.0590 area but found decent support in the 1.0520 level. As long as the price stays above 1.0440, the risk is for further gains through 1.0620 to 1.0750. For today, USD support is at 1.0520 and 1.0480 with resistance at 1.0590 and 1.0620.
The market has determined that European debt woes and the fear of contagion into Spain, Portugal etc, trump concerns over the ever expanding US deficit, lack of employment growth and soft economic data. This has led to buying of US dollars vs. the majors and for the time being, the loon is stirred into this casserole. CAD buyers should be patient and use USD strength above 1.0700 to buy CAD.
Today’s Range1.0530-1.0620
February, 24, 2010
USD/CAD Open 1.0573-78 Overnight Range 1.0530-1.0595
The CAD licked its wounds in a fairly quiet session overnight following yesterday’s sharp reversal. However, with the Fed Chairman, Bernanke, testifying before Congress, today’s session will likely be dull, awaiting the sermon from the mount and comforting words that aggressive Fed rate hikes are not on the horizon. Meanwhile, Asian and European equity indices were mostly flat while gold dropped $11.00 to $1,092.20. Oil is currently at $78.41.
The short term CAD technicals are bearish. The inability of the CAD to extend gains through 1.0400 and the US dollar’s subsequent rally through 1.0520 confirms that a short term bottom (1.0400) is in place, targeting the 100 day ema ( exponential moving average) at 1.0603 and then the 200 day ema at 1.0863, For today, USD support is at 1.0540 and 1.0510 with resistance at 1.0590 and 1.0640.
Yesterday’s strong USD rally vs the majors (except JPY) was reportedly due to disappointing US consumer confidence numbers which came in much lower than expected at 46.0 (forecast 55.0). Personally, I believe that the data is suspect as most of the US was experiencing outlandish weather events. How confident can you be shoveling two feet of snow with a garden spade if you lived in Texas, Baltimore or Washington DC? In addition, the timing of the release coincided with option expiry time. The USD rally really gained legs around the 11:00am fixing as well. This leads me to believe that this entire move was really due to fixing flows and not economic data and therefore not sustainable.
Today’s Range 1.0490-1.0590
February, 23, 2010
USD/CAD Open 1.0448-53 Overnight Range 1.0384-1.0465
The CAD enjoyed another quiet Asian session but was rather choppy in Europe. The loonie managed to break intraday support at 1.0425 and quickly rose to 1.0385. Unfortunately, worse than expected IFO data from Germany, sparked widespread USD buying, sinking the loonie in the process. The main US data release today is consumer confidence, expected to show an increase to 55.0. Oil and gold prices are mostly unchanged.
The short term CAD technicals are mixed. CAD bulls view the bounce from 1.0385 as corrective and expect the USD rally to be capped at in the 1.0460-1.0520 area. Above 1.0580 risks a return to 1.0750. CAD bears view the recent support at 1.0380 and the USD’s rise through 1.0440 as evidence of a short term bottom and are looking for 1.0520 and as high as 1.0750. For today, USD support is 1.0420 and 1.0390. Resistance is at 1.0460, 1.0480 and 1.0520.
The most recent commitment of traders report shows a very large jump in long CAD positions as of Feb.12, 2010, which will act as a drag on further CAD gains in the short term, barring any market shocks. The IMM position and the potential for US dollar demand at month end may ensure a 1.04-1.0520 range for the balance of the week
Today’s Range 1.0420-1.0480
February, 22, 2010
USD/CAD Open 1.0384-89 Overnight Range 1.0372-1.0405
The CAD is starting the week on a firm footing, although the overnight action was very quiet. Friday’s lower than expected US CPI report has alleviated fears of more aggressive monetary moves in the US, allowing the EUR and JPY to recover somewhat. Asian and European equity markets are all higher as is oil and gold prices are mostly flat.
The short term CAD technicals are bullish. The move below 1.0440 has increased the likelihood of further CAD gains to 1.0225 in the near term. For today, USD support is at 1.0350 and 1.0320 with resistance at 1.0440 and 1.0480.
There is a lack of economic releases today which suggests that the market will be driven by technicals. The worries over a Greece default haven’t gone away which should cap EUR rallies and keep CAD in demand on the crosses.
Today’s Range 1.0350-1.0430
February 19, 2010
USD/CAD Open 1.0517-22 Overnight Range 1.0463-1.0523
The CAD got smacked overnight, following the surprise FED announcement at 4:30pm, hiking the discount rate 0.25%. to 0.75%. The USD/CAD rose from 1.0430 to 1.0520 almost instantly. The USD screamed higher vs the majors despite Fed officials saying “it does not signal a change in the outlook for the economy or for monetary policy”. Traders obviously shouted “Horse Patooie” to these comments. In addition, mixed European data and weak UK data help support the US dollar. Commodity prices also pared back gains on the Fed news with oil down 0.89 to $78.19 and gold down $10.21 to $1,108.40. Today’s data releases from the US is CPI (forecast +0.3, core +0.1) with Canada releasing retail sales (forecast +0.3).
The short term CAD technicals are mixed. The sharp jump from the triple bottom at 1.0410 could be the start of another CAD downtrend, but only if 1.0570 is taken out. Otherwise we may see a few days of 1.0410-1.0570 consolidation. On the day, USD support is 1.0490, 1.0460 and 1.0410. USD resistance is at 1.0530, 1.0560 and 1.0570.
Recent economic data from the US has been for the most part, positive while European economic data has been rather negative. In addition, the Greek led sovereign debt issues argue that the US will continue to move higher. The loonie may also move higher on a combination of safe haven buying, improved economic fundamentals and the perception that US growth is good for Canada.
Today’s Range 1.0430-1.0530
February 18, 2010
USD/CAD Open 1.0455-60 Overnight Range 1.0449-1.0495
The CAD had another quiet overnight session and is starting the North American session looking a wee bit vulnerable as commodity prices are down. Oil prices are lower ($76.62 down $0.71) and gold prices are down ($1,105.80, down $14.30). However, global equity markets were mixed, with Asian Indices mostly lower while European markets were all up. Overnight, a German official was quoted as saying “Not a single EURO should be given to Greece”, which helped keep EUR/USD on a soft footing. Canadian CPI came out, slightly higher than expectations (1.9% yoy vs. expectations of 1.8%).
The short term CAD technicals are mixed. The lack of CAD upside through the double bottom at 1.0410 has CAD bears looking for further USD strength through 1.0540 to lead back to 1.0750. On the other hand, CAD bulls view the bounce off of 1.0410 as merely corrective prior to further CAD gains to 1.0225. On the day, USD support is at 1.0440 and 1.0410 with resistance at 1.0490 and 1.0520.
The Canadian Finance Minister announced new regulations for first time mortgages and one Canadian Bank analyst (CIBC) makes a pretty decent case that the new rules is a form of tightening, allowing the BoC more leeway when it comes to hiking rates. This suggests that CAD bulls looking for a quick rally in Canada due to higher interest rates may be disappointed.
Today’s Range 1.0410-1.0510
February 17, 2010
USD/CAD Open 1.0427-32 Overnight Range 1.0425-1.0458
The CAD traded quietly in a narrow range overnight as investors temper their enthusiasm for risk seeking trades ahead of the release of the FOMC minutes today. Global equity indices were all higher, oil is currently $77.34/bbl, and gold is slightly lower, currently $1,118.20. There is a lot of data from the US today, including housing starts (forecast 580K from previous 537K), building permits (forecast down to 620K from previous 653K) US capacity utilization (72.8). Canada releases wholesale sales (0.8%).
The short term CAD technicals are bullish. So far, US dollar support at 1.0410 has held but the US retracements from this level have been shallow and capped at 1.0460. A move below 1.0410 will see a quick move to 1.0350 and then 1.0250. Above 1.0460 argues for more consolidation in a 1.0410-1.0510 range. For today, USD support is at 1.0410, 1.0390 and 1.0350. USD resistance is at 1.0460, 1.0490 and 1.0510.
The CAD is enjoying a resurgence, partly due to the recovery in oil prices although the jury is still out as to whether this is just a correction in a bear market or the start of a new uptrend.
Today’s Range 1.0370-1.0460
February 16, 2010
USD/CAD Open 1.0457-62 Overnight Range 1.0448-1.0499
The CAD ended last week around the 1.0500 level and managed to extend gains in a holiday thinned session, supported by a combination of USD sales vs. the EUR, oil prices popping higher by $1.22 to $75.35, a $23.20 spike in gold prices to $1,113.20 and rising global equity markets including US futures pointing higher. The Greek financial issue is still in play although markets were somewhat appeased by reports that the EU will provide support, albeit details are vague at best. Only second tier US and Canada data is released today.
The short term CAD technicals are bullish. There is minor USD/CAD support at 1.0440 ahead of strong support at 1.0410. To the top, 1.0490 is resistance, followed by 1.0540. Longer term, the break below 1.0550 argues for a retest of the 1.0225 lows. A move back through 1.0550 argues for further 1.0440-1.0680 consolidation.
The CAD got a lift from the reduction of “risk averse” trades as EUR/USD had a decent rally, in part due to the EUR’s greatly oversold status. This was also accomplished with a lot of Asia, the US and Canada celebrating various holidays.
Today’s Range 1.0420-1.0510
February 12, 2010
USD/CAD Open 1.0548-53 Overnight Range 1.0489-1.0578
The CAD drifted aimlessly in Asia, started rising in early European trading and then quickly erased those gains. Skepticism surrounding the Greek bail-out and its effect on other EU nations encouraged traders to sell EUR/USD as details are sketchy. Meanwhile, China’s decision to raise bank reserves for the second time in a month raised fears of slowing global growth led to a drop in oil of $1.35 to $71.93. Gold followed suit, dropping $13.90 to $1,081.30. Data releases from the US include the storm delayed release of retail sales (forecast to be up 0.3%).
The short term CAD technicals are bullish. Yesterday’s break of the 100 day moving average at 1.0550 and other support areas now has 1.0440 firmly in sight. A break of this level will result in a move to the 1.0225 lows. A move back through the 1.0580-1.0620 area would lead to a 1.0480-1.0680 consolidation phase. For today, USD support is at 1.0520, 1.0480 and 1.0440. USD resistance is at 1.0580, 1.0620.
The Europeans have “agreed in principle of support to Greece” a statement meant to appease markets and end the relentless selling pressure on the EUR. It hasn’t worked, so far. Euroland uncertainty has led to demand for CAD in part as a safe-haven due to the proximity to the US. If so, this so called hot money can flee just as readily, leaving the CAD vulnerable to a nasty bout of weakness. Not likely yet, but something to think about.
Today’s Range 1.0480-1.0550
February 11, 2010
USD/CAD Open 1.0575-80 Overnight Range 1.0572-77
The CAD rally continued overnight on the back of a weaker USD vs. Europe as news of a pending bailout of Greece was rumored to be imminent. In addition, a stronger than expected Australian jobs report lifted AUD/US, in a quieter than normal market, with Japan closed for a public holiday. Improving sentiment towards the Greek issue led Asian equities higher, however European equities are mixed. US futures are slightly higher. Oil prices are up $0.75 to $75.25 on a report from the IEA forecasting higher world demand for oil. US data includes Retail Sales (forecast 0.3%) and Jobless claims (forecast 465K).
The short term CAD technicals are bullish looking for a break of the 100 day moving average at 1.0553 to extend gains to 1.0220. CAD bears expect the 1.0550 level to hold and for the CAD to resume its down trend. For today, USD support is at 1.0550 and 1.0510. USD resistance is pegged at 1.0595 and 1.0625.
FX trading is likely to be choppy today with traders watching for Greek bail-out sound bites and US retail sales. The latest report was that there was some sort of deal for Greece but it may not be announced until next Tuesday.
Today’s Range 1.0550-1.0630
February 10, 2010
USD/CAD Open 1.0636-41 Overnight Range 1.0628-1.0695
The CAD had a quiet Asian session but popped higher in Europe on expectations of a soon to be announced EU rescue package for Greece. This expectation has led to a tepid move into risk seeking as renewed USD weakness vs. the majors has led to modest gains in global equity markets and helped commodity prices tick up, gold is up $3.80 to $1,081.60. Canada releases trade data this morning, expected to be flat while the US trade deficit is likely to print -$35.8 billion. Trading in most markets is likely to be subdued today due to a major snowstorm in New York.
The short term CAD technicals are bullish. Yesterday’s two attempts to take out US dollar resistance at 1.0750 failed miserably and the overnight breach of 1.0650 suggests further CAD gains to 1.0550. For today, USD support is seen at 1.0610 and 1.0570 with resistance at 1.0660, 1.0690 and 1.0720. The prospect of an EU driven solution to the Greek debt crisis should see pressure on Spain and Portugal ease, which triggers a sharp EUR/USD rally, which would also elevate the loonie to 1.0550.
Today’s Range 1.0610-1.0690
February 9, 2010
USD/CAD Open 1.0708-13 Overnight Range 1.0680-1.0780
The CAD dropped steadily yesterday in late afternoon trading but managed to completely reverse itself in overnight markets. A rather vague rumour that ECB President Trichett was leaving some central bank meetings in Australia early, to return home to attend an ECB meeting led to spurious conclusions about a bailout for Greece. This caused selling of US dollars vs. Europe and elevated the loonie in the process. Global equity markets are up a bit as are NY equity futures. Oil is trading at $72.28 and gold is at $1068.00.
The short term CAD technicals are undecided. The inability of the USD/CAD to extend gains above 1.0780 is suggesting that a short term US dollar top is in place. The top would be confirmed if the USD/CAD moves below 1.0640. which would argue for more 1.0560-1.0780 consolidation. Below 1.0560, negates the USD/CAD uptrend completely and argues for a retest of the 1.0240 lows. For today, USD support is at 1.0660 and 1.0620. Resistance is at 1.0730 and 1.0760
The CAD has started today with a positive tone mostly because the US dollar is retreating against the majors, particularly the EUR. There is increasing chatter that perhaps the Greece debt situation has been overblown and in view of the massive US dollar short positions built up in the past month or so, it was prudent to book some profits.
Today’s Range 1.0650-1.0730
February 8, 2010
USD/CAD Open 1.0697-02 Overnight Range 1.0658-1.0728
The CAD strengthened slightly in a tepid overnight market due to an abatement of last week’s risk aversion trading. The G-7 did not provide much of anything but made some nice sounds on the Greek debt issue which was enough to stem the EUR selling vs. the US, providing the catalyst to temper risk aversion selling. Gold prices rose to $1,068.50 (+$15.70) and oil to $71.34. Global equity markets are mixed to flat.
The short term CAD technicals are undecided. The CAD has been unable to make any gains through 1.0650 while at the same time appears vigorously opposed to weakness above 1.0780. In the medium term, the USD/CAD is in an uptrend following the break of 1.0565 suggesting a move to 1.0855, the 200 day moving average. For today, USD support is at 1.0650 and 1.0610 with resistance at 1.0730 and 1.0780.
Last week’s relentless USD buying has tapered off suggesting we may see some consolidation today. Sentiment appears biased towards risk aversion so any CAD upside will be limited.
Today’s Range 1.0650-1.0730
February 5, 2010
USD/CAD Open 1.0723-28 Overnight Range 1.0722-1.0778
The CAD got a modest and short lived boost this morning at 7am with the release of the Canadian Employment report. The release was better than forecast showing a rise of 43K jobs and a lowering of the unemployment rate to 8.3%. The devil was in the details, as all the new jobs were part-time, so definitely not a report that should provide the loonie with any support. Meanwhile, European currencies are still on the skids due to expanding sovereign debt concerns in Portugal, Ireland, Greece, and Spain. Global equities were all lower as investors embrace risk aversion on diminished global growth outlooks. Gold is down $7.10 to $1,055.90 while oil is up slightly to $73.41.
The short term CAD technicals are bearish, awaiting validation of the break above 1.0750, which should lead to a test of 1.0875, the 200 day moving average. On the day, USD support is at 1.0710, 1.0680 and 1.0640. USD resistance is at 1.0780, 1.0830 and 1.0875.
The Canadian dollar appears to have entered into a medium term decline phase following the sustained breach of the top of the Canadian dollar uptrend channel at 1.0550 on Jan.21, 2010. This may lead to a test of 1.1130 which represents the 61.8% Fibonacci retracement level of July/09 peak of 1.1703 and the Oct. /09 low of 1.0220. Of course, it won’t be a one way street. The US dollar will run into stiff technical resistance at 1.0780 and again at the 200 day exponential moving average, currently 1.0875.
The USD has rallied rather aggressively this week with investors reacting to every item of bad news in a somewhat panicked fashion. Friday’s are notorious for “nasty corrections” and with the US NFP report at 8:30, it isn’t out of the realm of possibility to see a sharp move one way and an even sharper move the other.
Today’s Range 1.0680-1.0780
February 4, 2010
USD/CAD Open 1.0633-38 Overnight Range 1.0598-1.0645
The CAD traded sluggishly in Asia and then drifted lower in Europe as the USD gained ground vs. the European majors ahead of the interest rate decisions from the Bank of England and the European Central bank. The BoE left rates unchanged and the ECB is expected to follow suit. Meanwhile, just as soon as the European Union said that they would support the Greek deficit plan, investors shifted their gaze to Portugal and Spain and the EUR/USD traded lower. Asian and European equity indices are all down as are US equity futures. Gold prices have retreated $8.50 to $1,102.90 and oil has slipped $0.76 to $76.21. US data releases include: Jobless Claims (+461K) and Factory Orders (+0.7%). Canada has Ivey PMI (52.3).
The short term CAD technicals remain mixed, needing a break below 1.0525 or above 1.0750 to provide direction. For today, USD/CAD support is at 1.0610 and 1.0570 with resistance at 1.0650, 1.0680 and 1.0720.
The market is likely to spend the day positioning themselves for tomorrow’s release of Canadian and US employment data. Canada is expected to post a 15.2k gain, with the US expected to post +10K. The concerns over expanding sovereign woes in Europe and the risk of stronger US employment numbers should keep the US dollar on a firm footing today, although this week’s range should remain intact
Today’s Range 1.0590-1.0650
February 3, 2010
USD/CAD Open 1.0568-73 Overnight Range 1.0548-1.0588
The CAD remained relatively firm overnight with the US dollar under pressure vs. the majors. The EUR/USD took out stops above 1.4000 in Europe and then received additional support on news that the European Union would back the Greek deficit plan. Risk seeking came back in vogue pushing global equity markets higher. Oil is higher at $77.76/bbl as is gold, trading at $1,120.50. US data releases today include: ADP employment change (expected -30k) and ISM non-manufacturing (expected +51.0)
The short term CAD technicals are mixed. CAD bulls view the rejection of weakness above 1.0700 and the subsequent CAD rally through 1.0620 as evidence that the USD move higher was merely corrective. A move lower, through 1.0525 would argue for further CAD strength to 1.0310. CAD bears, on the other hand, expect USD support between 1.0525-55 to hold, expecting renewed CAD weakness to test 1.0750. For today, USD support is at 1.0560, 1.0545 and 1.0520. USD resistance is at 1.0590 and 1.0630.
The rest of the week is filled with enough Central Bank meetings, statements and economic releases (the key one being US nonfarm payrolls on Friday) making markets vulnerable to ever changing risk sentiment.
Today’s Range 1.0550-1.0630
February 2, 2010
USD/CAD Open 1.0568-73 Overnight Range 1.0565-1.0640
The CAD abruptly reversed last week’s losses yesterday after rejecting further weakness through key US dollar resistance at 1.0720 on sharply rising equity and commodity prices. Overnight, after an initial move lower in Asia to retest 1.0640, the loonie climbed steadily, supported by global equity markets and bullish technicals. Currently, gold is trading at $1,114.10 and oil is at $75.39 supported by yesterday’s ISM report.
The short term CAD technicals have flipped back to bullish. The rejection of further US dollar strength above the 1.0720-40 level combined with the subsequent US dollar drop through support at 1.0620 supports the view that a “double top” is in place (at 1.0720) arguing for a retest of 1.0292. For today, USD support is at 1.0558 (100 day moving average), 1.0510 and 1.0460. To the top, USD resistance is at 1.0590 and 1.0620
The CAD is being bounced around by the ever changing view of the direction of the US dollar vs. the majors. The USD has given back ground vs. EUR as concerns over sovereign debt woes abate (however slightly) which has led to CAD gains.
Today’s Range 1.0520-1.0620
February 1, 2010
USD/CAD Open 1.0708-13 Overnight Range 1.0669-1.0720
The CAD slid steadily lower in an uneventful overnight session as the key themes of risk aversion and European sovereign credit issues chase investors to the sidelines. Gold is at $1082.90 and oil is at $73.21/bbl. Today’s US data releases include: ISM Manufacturing (forecast 63.0)), Personal Income Forecast (0.4) and Construction Spending (-0.4%). No releases from Canada.
The short term CAD technicals are bearish. The USD/CAD is approaching strong resistance at 1.0750. If broken, it should lead to a test of the 200 day moving average at 1.0880. For today, USD support is a 1.0690, 1.0670 and 1.0630. Resistance is at 1.0750 and 1.0790.
The CAD is being bashed on the combination of risk aversion, perplexingly leading to USD buying despite Obama’s deficit of $1.53 trillion, and fears of Greek debt problems expanding to Spain and Portugal, leading to EUR selling. With Canadian and US employment data on tap for Friday, look for choppy trading within the confines of the current ranges. For USD/CAD, 1.0610-1.0750 should cover it.
Today’s Range 1.0670-1.0740
January 29, 2010
USD/CAD Open 1.0645-50 Overnight Range 1.0625-1.0695
The CAD had a very quiet overnight session remaining surprisingly resilient in the face of USD strength vs. the majors. European sovereign debt concerns, particularly, those of Greece are providing some USD support due to risk aversion. Global equities were mixed, with Asian equities down while European equities are slightly higher. US futures are also in the green. Oil prices are trading at $73.79, up marginally, while gold is trading at $1084.90. There are a lot of data releases in the US, including Advance Q4 GDP (forecast +4.7%), Chicago PMI (forecast 57.3) and Univ of Mich. Consumer Sentiment (forecast 73.1). Canada also releases GDP data (forecast 0.3% m/m) and IPPI (forecast 0.5%).
The short term CAD technicals are bearish while above 1.0560, looking for a test of 1.0750, however US dollars upside momentum appears to be waning. For today, USD resistance is at 1.0690 and 1.0750 with USD support at 1.0620, 1.0580 and 1.0560.
There are a lot of economic data releases as well as numerous pronouncements from various forums to confuse markets. Bernanke’s confirmation, Geitner still being grilled, Obama demonstrating a knack for spending tax dollars and the rich, elite hanging out in Davos, are all contributing to the muddled messages, keeping investors sidelined.
Today’s Range 1.0590-1.0690
January 28, 2010
USD/CAD Open 1.0625-30 Overnight Range 1.0617-77
The CAD was fairly quiet overnight and the USD vs. the majors were range-bound ahead of today’s FOMC meeting and 2:15 pm rate decision. Gold and oil prices are both off their lows at $1095.70 and $74.70/bbl, respectively. Global equity markets were mostly flat.
The short term CAD technicals are bearish. The CAD appears well on its way to 1.0750 and then 1.0910 (200 day moving average) as long as support at 1.0565 holds. Below 1.0565 suggests 1.0460-1.0660 consolidation. For today, USD support will be seen at 1.0610 and 1.0570 with resistance at 1.0650 and 1.0680.
The loonie remains at the mercy of investor sentiment whether risk averse or risk seeking. Today’s environment is one of risk aversion as investors digest the ramifications of China tightening, Obama’s war on banks and emerging Europe credit woes. However, the CAD has already dropped about .0400 points in the past week and the move is looking tired. In addition further EUR/USD weakness through 1.4000 may also see EUR/CAD selling.
Today’s Range 1.0570-1.0650
January 27, 2010
USD/CAD Open 1.0625-30 Overnight Range 1.0617-77
The CAD was fairly quiet overnight and the USD vs. the majors were range-bound ahead of today’s FOMC meeting and 2:15 pm rate decision. Gold and oil prices are both off their lows at $1095.70 and $74.70/bbl, respectively. Global equity markets were mostly flat.
The short term CAD technicals are bearish. The CAD appears well on its way to 1.0750 and then 1.0910 (200 day moving average) as long as support at 1.0565 holds. Below 1.0565 suggests 1.0460-1.0660 consolidation. For today, USD support will be seen at 1.0610 and 1.0570 with resistance at 1.0650 and 1.0680.
The loonie remains at the mercy of investor sentiment whether risk averse or risk seeking. Today’s environment is one of risk aversion as investors digest the ramifications of China tightening, Obama’s war on banks and emerging Europe credit woes. However, the CAD has already dropped about .0400 points in the past week and the move is looking tired. In addition further EUR/USD weakness through 1.4000 may also see EUR/CAD selling.
Today’s Range 1.0570-1.0650
January 26, 2010
USD/CAD Open 1.0641-46 Overnight Range 1.0549-1.0648
The CAD weakness seen last week showed some signs of running out of steam yesterday but that proved to be just the pause that refreshes, rather than a momentum change. The loonie drifted lower throughout the Asian session on renewed fears of further Chinese rate tightening which led to enhanced risk aversion, driving the USD higher vs. everything, except JPY. Overnight, the S&P lowered Japan’s ‘Outlook” while the UK crawled out of recession with a GDP rise of 0.1%. Global equity indices are all lower. NY futures are also in the red. Oil prices are $74.53/bbl and gold is down $5.30 to $1090.40
The short term CAD technicals are bearish. The break of the 100 day moving average, now at 1.0565, will revert to USD support as the CAD slides toward the key 1.0750 level. On the day, USD support is seen at 1.0620, 1.0580 and 1.0550 with resistance at 1.0680, 1.0720 and 1.0750
The CAD is caught in the down draft created by uncertainty over the global recovery. China’s attempts to slow their economic growth through rate hikes has led to global equity market weakness, sharply lower commodity prices and a flight back to US dollars, smacking the loonie in the process.
Today’s Range 1.0620-1.0710
January 25, 2010
USD/CAD Open 1.0551-56 Overnight Range 1.0534-1.0582
The CAD is starting the week near last week’s USD/CAD high. The market continues to mull over concerns about China, Obama’s war on banks, and Bernanke’s confirmation worries. Global equity prices are a tad higher as are gold prices. Oil prices are up a smidgen, but still below $75/bbl.
The short term CAD technicals are bearish. USD resistance in the 1.0575-85 area is proving sticky and a break will lead to 1.0620 and then 1.0680. The downside is supported at 1.0540, 1.0520 and 1.0480.
The FOMC meeting and rate announcement on Wednesday may be sufficient incentive for market players to stay close to home and markets should consolidate within their recent ranges. We will also see a lot of US data releases this week starting with existing home sales today, consumer confidence on Tuesday, durable goods and Jobless claims on Thursday, and finally GDP, Chicago PMI and consumer sentiment on Friday.
Today’s Range 1.0530-1.0620
January 22, 2010
USD/CAD Open 1.0505-10 Overnight Range 1.0465-1.0520
The CAD drifted higher in overnight trading but has since retreated, getting ready to test the recent short term top at 1.0525, which is proving to be rather sticky. Meanwhile, the USD has given back some of its recent gains as traders digest the effects of further Chinese rate tightening, President Obama’s plan to curtail bank trading and a lack of US data releases to give renewed direction. Gold prices are down $12.50 to $1,090.70 and oil prices are lower as well, currently $$75.81. Asian, European and North American equity futures are all lower on fears that Obama’s plan will curtail risk seeking.
The short term CAD technicals are bullish looking for a move through 1.0525 to test 1.0570 on the day. Above 1.0570 targets 1.0750. USD support is at 1.0470, 10430 and 1.0410 with resistance at 1.0530, 1.0570 and 1.0630
The CAD came under pressure this week in part due to the resurgent USD vs. the majors, which, at the moment is giving back some of its gains. If the US dollar continues to retreat, 1.0525 is likely to cap CAD weakness today, although an uglier than expected Canadian Retail Sales number (Forecast -0.2%) will blow this theory out of the water.
Today’s Range 1.0440-1.0525
January 21, 2010
USD/CAD Open 1.0505-10 Overnight Range 1.0440-1.0520
The CAD stayed under pressure overnight, drifting aimlessly in Asia and then sinking in the European session, undermined by the resurgent USD vs. the EUR and continuing concerns over European emerging market debt, particularly Greece. China reported robust to mixed economic data supporting recent decisions to raise interest rates there which added to the positive US dollar sentiment. Today’s data releases from the US include jobless claims (forecast +440K), Philly Fed Index (Forecast 18.0) and Dec. Leading Indicators (forecast 0.7). Canada releases wholesale trade and the bank of Canada Monetary Policy Report.
The short term CAD technicals are bearish. The move through 1.0370 followed by the subsequent push above 1.0440 suggests that the USD/CAD has put in a short term low at 1.0250. The first objective is for a run at the 100 day moving average at 1.0570 which, if broken, puts 1.0750 into play. For Today, USD support is at 1.0460, 1.0430 and 1.0410. Resistance is at 1.0530, 1.0570 and 1.0610.
Yesterday’s Canadian CPI report is being credited for causing the loonies sell-off. Although it is a modest CAD$ negative on the assumption that it would force the BoC to delay raising Canadian interest rates, it is a rather bogus assumption. To believe it would mean you would have to believe that it also caused the EUR to tank vs. the US dollar. The US dollar was extremely oversold vs. the majors (and the CAD) on expectations that a weak US economy and rising deficits would keep the US downtrend intact. Unfortunately, Dubai’s credit woes around Thanksgiving started investors looking at problem areas in Euroland with Greece rising to the top of the charts. The USD started to climb and when it took out a key EUR support level at 1.4225, US dollar bears had to re-evaluate and they started to bail. The loonie was caught in the cross-fire and speculative bullish CAD positions have started to get trimmed.
Today’s Range 1.0460-1.0560
January 20, 2010
USD/CAD Open 1.0381-86 Overnight Range 1.0303-1.0395
The CAD got knocked for a loop first this morning on release of the Canadian CPI report. CPI rose 1.3% in the 12 months ended in December vs. market expectations of a 1.6% rise. The loonie dropped from 1.0380 to 1.0435 almost immediately. After spending the past few sessions attempting to rally through USD support at the 1.0210-.50 area, the loonie started retreating yesterday. Overnight, the combination of the Republican win in Massachusetts, China announcing further credit restrictions and weaker than expected data from Germany led the US dollar higher vs. the EURO crushing EUR/USD support at 1.4225 in the process. This opens the door for further US dollar strength vs. Europe and will serve to put further downward pressure on oil (currently $77.65 down $1.67) and gold (currently $1,126.90 down $10.90). Asian and European equity markets were all down and US equity futures are also pointing lower. US data releases today include PPI and Housing starts.
The short term CAD technicals are bearish following the USD move through 1.0360, currently testing USD resistance at 1.0440, A break here points to the 100 day moving average at 1.0577. For today, USD support is at 1.0390 and 1.0360 with resistance at 1.0440, and 1.0530.
The CAD has been caught up in the USD updraft created when the EUR/USD fell through key technical support levels. Suggesting that the Massachusetts senate election results is a catalyst for a stronger US dollar may be a stretch, however the credit risks in Greece and other emerging Europe economies have managed to highlight the risks to Europe as a whole offsetting, to a degree, the negativism towards the US dollar. This means that the loonie is likely to probe the top end of its recent 1.0250-1.0620 range.
Today’s Range 1.0380-1.0470
January 19, 2010
USD/CAD Open 1.0294-99 Overnight Range 1.0250-1.0299
The CAD traded sideways in a quiet market, unable to make any gains ahead of this morning’s Bank of Canada rate announcement which is almost unanimously expected to leave rates unchanged. The EUR/USD was moderately lower after German investor confidence came in worse than expected. GBP/USD got a bit of a boost from news that Kraft won its Cadbury takeover bid and better than expected UK data. Oil prices are still well below the $80/bbl support level at $78.15 while gold is a tad higher at $1,132.40, and Unobtainium is well, unobtainable.
The short term CAD technical’s remain bullish however the loonie is consolidating in a 1.0210-1.0330 range which could translate into additional CAD weakness to 1.0420, prior to the loonie resuming its uptrend. For today, USD/CAD support is at 1.0250 and 1.0210 with resistance parked at 1.0330, 1.0360 and 1.0410.
The CAD may be on the defensive today as the combination of softer commodity prices and strong technical support between 1.0210-50 stymie CAD bulls.
Today’s Range 1.0270-1.0340
January 18, 2010
USD/CAD Open 1.0273-78 Overnight Range 1.0264-1.0315
The CAD had a quiet overnight session, bouncing around within the confines of the recent 1.0240-1.0340 range as FX markets got off to a lethargic start this week. Trading was light due to the fact that US markets are closed today for the Martin Luther King holiday. The Bank of Canada rate announcement is tomorrow and rates are expected to be left unchanged. Oil prices are $78.38 and gold is trading at $1,136.80.
The short term CAD technicals are bullish but need a break of strong support at 1.0210 to accelerate. A series of lower high’s serve to keep the focus on CAD gains. For today, USD support is at 1.0240 and 1.0210. USD resistance is at 1.0310 and 1.0340.
The CAD is likely to continue to probe USD support at the 1.0210 level. Concerns about the health of the Euro in light of the deficit struggles impacting Greece and other Euro members are offsetting the already well documented (and arguably priced in) American economic woes. This leaves the loonie looking rather attractive (a three dressed up as a nine) by default.
Today’s Range 1.0240-1.0320
January 15, 2010
USD/CAD Open 1.0261-66 Overnight Range 1.0234-1.0280
The CAD failed to extend yesterday’s gains overnight as the US dollar managed to shrug off yesterday’s disappointing US data inspired selling, recouping losses vs the majors, particularly the EURO. Renewed concerns over economic issues in Greece in addition to similar issues in Spain, Portugal and other emerging Europe nations led to USD buying. Adding fuel to the fire was a report (since denied) that Germany’s Chancellor Merkell would resign over outrage about her tax proposals. The rising USD dollar also helped push oil and gold prices lower. Equity markets were mixed in Asia, and mostly flat in Europe. The vastly better than expected numbers released by JPMorgan today should keep North American markets positive. US data releases include CPI, Capacity Utilization, and Michigan sentiment.
The short term CAD technicals are bullish. The bounce off yesterday’s USD low at 1.0225 failed to crack USD resistance at 1.0290-1.0310, suggests that the move is merely corrective and another CAD rally is likely. For today, USD support is at 1.0230 and 1.0210. USD resistance is at 1.0290, 1.0320 and 1.0340.
The loonie appears poised to blow through USD support at 1.0210 which could occur today with more soft data from the US. Furthermore, there are increasingly more projections that the Bank of Canada is likely to hike rates sooner rather than later giving the loonie an added nudge.
Today’s Range 1.0190-1.0290
January 14, 2010
USD/CAD Open 1.0308-13 Overnight Range 1.0290-1.0322
The CAD stayed in a very narrow range overnight following the pattern of most major currency pairs, themselves confined into rather tight bands. The AUD/USD was the exception, with surprisingly strong employment data giving it a boost. Traders are awaiting the results of the ECB meeting expected to be a non event. Oil prices are modestly higher, flirting with $80/bbl, now at $79.77 and gold is basically flat at $1,137.60. US data releases include: retail sales (forecast +0.4%), jobless claims (forecast +437K) and business inventories (0.2%). Global equity markets are all higher however North American equity futures are slightly lower.
The short term CAD technicals are bearish CAD. USD support is seen at 1.0300 and 1.0291 with an intraday target of 1.0366. For today, USD support is seen at 1.0290 and 1.0250 with resistance at 1.0340 and 1.0360 and 1.0410. In reality, the USD/CAD is locked in a 1.0250-1.0520 range with no clear direction.
The market is in risk seeking mode supported by the S&P index holding above 1130 and commodity prices drifting higher. News of debt troubles in European emerging markets, particularly Greece, Venezuela’s currency devaluation, and anger over China’s reluctance to play fair and revalue the yuan may temper the enthusiasm of market bulls, but so far not cause them to change their view.
Today’s Range 1.0290-1.0370
January 13, 2010
The CAD recouped some of yesterday’s losses in a relatively light trading session as markets digested China’s efforts to cool off their economy. Oil prices dipped below $80.00/bbl, but have since recovered to $80.03, while gold prices have gained $4.10 to $1,134.20. Asian and European equity markets were all down while North American equity futures are flat to up small. The key economic data release today is the Beige Book from the US.
The short term CAD technicals are mixed. CAD bulls breathed a sigh of relief as US dollar resistance at 1.0420 held and are now looking for a move below 1.0340 to argue for further gains to 1.0250. CAD bears view the bounce of 1.0250 and the USD’s subsequent rally through resistance at 1.0340 as evidence of a stronger rally ahead. For today USD support is at 1.0340 and 1.0310 with resistance at 1.0420, and 1.0450.
There isn’t much data being released today which suggests that we will see subdued trading within the well known ranges. However, the proximity of tops in a variety of markets, gold, oil, S&P index, various currency pairs, and the FOMC meeting next week suggests we could see another bout of profit taking in the days ahead. Buy USD/CAD on dips, with a stop below 1.0190 for a move to 1.0600
In other news, Knightsbridge Foreign Exchange’s Rob Wittmann, was on BNN yesterday, giving his USD/CAD views. Click this link to watch the video: http://watch.bnn.ca/clip254560#clip254560
Today’s Range 1.0310-1.0390
January 12, 2010
USD/CAD Open 1.0346-51 Overnight Range 1.0315-1.0365
The CAD drifted lower overnight on the back of slightly lower oil ($81.79 -0.73), gold ($1,147.80 -3.60) and lower New York equity futures. A strategist from China’s sovereign wealth fund proclaimed that the US dollar had it bottom, supporting the US dollar, but the comments were later clarified, saying that they were a personal view and not the view of CIC. US data includes International trade (forecast -34.9 billion). Canadian Merchandise trade is also released with a small surplus projected (Forecast 0.6 bio)
The short term CAD technicals are mixed. CAD bulls view the recent USD strength as corrective and expect USD resistance at 1.0380, 1.0420 and 1.0450 to cap for another move to 1.0250. CAD bears are looking for the US dollar to extend through 1.0450 to 1.0550. For today, USD support is at 1.0310 and 1.0280. USD resistance is at 1.0370 and 1.0410.
Today’s Canadian Merchandise trade data is expected to show a slight surplus apparently mostly due to the higher gold prices. This may provide the loonie with a little support, however, due to the recent gains in equities, commodities and currencies, a day of profit taking is warranted.
Today’s Range 1.0290-1.0380
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