FX Morning Update October 3, 2011
USD/CAD Open: 1.0474-78 Overnight Range: 1.0463-1.0524
The Canadian dollar remained volatile in overnight trading. Despite, positive GDP inCanadalast week, the loonie didn’t seem to notice. Overnight,Greeceofficials announced that they would miss targeted austerity levels shocking Asian and European markets which tanked. NY futures are mixed today. Oil is at $78.57 and gold is at $1,661. This week,Canadareleases building permits (Thu), Ivey PMI (Thu), and employment data (Fri). In theUS, ISM mfg. (Mon), Bernanke Speech (Tues), ADP employment (Wed), ISM non-mfg. (Wed), Jobless claims (Thu), and employment data (Fri) are released. The short term Canadian dollar technicals remain negative. The USD seems to be attracting buying interest on dips. The rise in the USD has been sharp as a lot of people pile in to the trade, including speculators. For today, USD resistance is at 1.0510, 1.0575, 1.0679, 1.0750, and 1.0850. Support is at 1.0450, 1.0373, 1.0250, 1.0213, and 1.0131. The herd continues to flock towards the safety of the US dollar. Markets remain critically focused on ifGreecewill be bailed out now that they have announced they will miss austerity measure targets, how banks will react to raising capital if required to do so, and the possible contagion that could spread if things get bad quickly. Use of ECB’s lending facility was at its highest on Friday as banks become more afraid to deal with other banks and started using the ECB facility. Oil has dropped by over 15% over the last few months and is now at a yearly low and other commodities have dropped sharply as well. Copper, often considered a signal for economic growth, is now at a 14 month low. The sharp drop in the loonie is a reality check for risk-on bulls on how quick things can change to doom and gloom. That being said, CAD bulls are hoping for a quick policy announcement on a huge bailout fund protecting eurozone banks, which could catapult the loonie higher, while CAD bears argue policymakers haven’t been able to agree on much and the trend of indecisiveness will continue and a double dip recession is on target, which will support a flock to the USD. Look for lots of volatility to continue and employment data released at the end of the week if positive to calm markets, while a significant negative report to cause another big flock towards the USD.
Today’s Range: 1.0440 – 1.0595
Daily Market | Knightsbridge Foreign Exchange
By Admin | October 4, 2011 | Daily Update |
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