FX Morning Update December 5, 2011

USD/CAD Open: 1.0160-64 Overnight Range: 1.0058-1.0198

The Canadian dollar barely budged in overnight trading. Friday’s Canadian jobs report was slightly negative while the US jobs data report was neutral to slightly positive. Overnight, Italy revealed a $40bn plan to cut its deficit. Oil is at $101.64 and gold is at $1,738. NY futures are positive. This week in Canada, building permits and BoC rate decision (Tuesday), Ivey PMI (Thursday), and trade balance (Friday) data are released. Today in the US, ISM non-mfg data is released.

The short term Canadian dollar technicals remain negative while above par. For today, USD resistance is at 1.0180, 1.0220, 1.0274, and 1.0320. Support is at 1.0140, 1.0110, and 1.0080.

Disappointing jobs data for Canada could be a signal of a changing tide in sentiment for the Canadian economy. With global central banks reducing rates, a key question remains if Canada will have to follow with rate cuts, and if so, this will be a big negative for the Canadian dollar and the carry trade positions (short USD and buy CAD). The key focus continues to remain on Europe and the overhang the debt situation is having on the global economic outlook. Spanish and Italian bond yields started to decline last week and sentiment shifted to a risk on trade. Big announcements are expected at the end of the week from Europe and look for snippets of information to move markets in advance.

Today’s Range: 1.0105 – 1.0205

Daily Market | Knightsbridge Foreign Exchange

By Admin | December 7, 2011 | Daily Update | 0 comments