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
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