FX Morning Update October 4, 2011
USD/CAD Open: 1.0550-53 Overnight Range: 1.0511-1.0577
The Canadian dollar continued to lose value overnight. Eurozone fears continued to dominate European and Asian markets overnight. Better than expected US ISM data yesterday wasn’t enough to support the loonie. NY futures are pointing lower today. Oil is lower at $75.20 and gold is at $1,650. Today, US factory order data is released and Bernanke has a speaking engagement in the US, and European leaders are meeting throughout the day.
The short term Canadian dollar technicals remain negative. The USD seems to be attracting buying interest on dips. The rise in the USD seems to be pushing through resistance levels quite easily and with decisiveness as a herd of USD buyers have come in to the market. For today, USD resistance is at 1.0575, 1.0679, 1.0750, and 1.0850. Support is at 1.0510, 1.0450, 1.0373, 1.0250, 1.0213, and 1.0131.
Risk-off continues to be the theme led by eurozone worries. Nobody seems to want to come in and buy risk and try to catch a falling knife with the threat of bank defaults lingering in the eurozone. Commodity currencies have been hit hard as commodity prices continue to decline on reduced growth expectations globally. The markets are focused on Europe. There is still lots of uncertainty with respect to Greece and if they will receive their next aid payment. Belgium and France have agreed to guarantee the debt of a bank (Dexia), highlighting the issues that exist in the region. The main issue remains the health of the banks in the eurozone if Greece defaults and less about Greece itself. The cloud of uncertainty continues to fly over the region causing storms in financial markets. In the background, quarrels between the US and China on China’s currency could spark a trade war. CAD bulls are waiting for a policy announcement to protect global banks and support the risk-on trade. The loonie will directionally follow oil and equity markets today, but Bernanke’s speech if extremely dovish on the economy could cause a further flight to the USD, while any new hope or snippets of information on policy could boost the loonie.
Today’s Range: 1.0510 – 1.0679
Daily Market | Knightsbridge Foreign Exchange
By Admin | October 4, 2011 | Daily Update |
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