FX Morning Update Aug 26
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
Rahim Madhavji | Knightsbridge Foreign Exchange
By Admin | September 11, 2011 | Daily Update |
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