FX Morning Update October 31, 2011 – Knightsbridge Foreign Exchange Review
USD/CAD Open: 0.9963-65 Overnight Range: 0.9914-1.0027
The Canadian dollar lost some ground vs. the USD overnight. The Bank of Japan intervened in currency markets and boosted the USD weakening the Yen. Italian bonds fell and yields are nearing 6%. Oil is at $93.49 and gold is at $1,744. NY futures are pointing lower today. The US release Chicago PMI today. Canadian data releases include GDP (Monday) and Employment (Friday) data. G20 meetings occur in Paris at the end of the week.
The short term Canadian dollar technicals are bullish. For today, USD resistance is at 0.9980, 1.0057, 1.0131, and 1.0213. Support is at 0.9920, 0.9881, 0.9812, 0.9780, and 0.9670.
The initial boost from europe’s plan has seem to have tapered off a bit and an element of caution is back in the markets. After having breached parity last week on news that progress was made on the eurozone debt front, the Canadian dollar will be impacted this week on GDP and employment data as global fundamental data will become more of a major driver if European issues go on the backburner (big “if”). Last week, the Bank of Canada indicated they remain quite cautious on the global outlook tempering gains in the loonie as interest rates look to be on hold. This view could change if European issues can remain quiet and if economic data can resume its uptrend along with inflation at the upper end of the BoC boundaries. Oil and commodities have risen sharply and this bodes well for the loonie and is USD negative. A major risk to the loonie’s uptrend is a potential recession in Europe, which could potentially cause further debt issues in Spain or Italy. European policymakers are on a fine line as they cut spending while trying to grow their economies and also have a stable GDP to debt ratio. Look at bank stocks, commodities, and overall equities to guide the direction of the loonie.
Today’s Range: 0.9900 – 1.0010
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By Admin | October 31, 2011 | Daily Update | 0 comments