FX Morning Update October 5, 2011
USD/CAD Open: 1.0504-07 Overnight Range: 1.0499-1.0574
The Canadian dollar was volatile in overnight trading. Yesterday, just before equity markets closed, the Canadian dollar rallied sharply along with equities and oil prices reversing losses throughout the day on rumors the eurozone policy makers have a plan to backstop banks, which boosted risk sentiment. Overnight, Moody’s cut Italy’s rating but it was deemed uneventful by the market. NY futures are pointing higher. Oil is at $77.67 and gold is at $1,615. Today, the US releases ADP jobs data and ISM non-mfg data.
The short term Canadian dollar technicals remain negative. 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.
A sniff of news that the eurozone has a plan to backstop the banks and the risk on rally was underway. However, no concrete data has been presented. Worries about the eurozone continue to dominate the overall market sentiment and theme. The risk that Greece will default and banks that own Greece debt will take a haircut causing a rush for additional capital all at the same time will cause a collapse in eurozone banks is the main threat dominating markets. CAD bulls are waiting for a major policy announcement of stimulus or a plan to recapitalize eurozone banks, which could boost equities, oil prices, and the loonie. CAD bears argue that the downward spiral has begun and the economy is entering a difficult phase and risks that an unorderly Greece default will rattle markets further and you can’t get out of debt with more spending and debt. Look for eurozone headlines to continue to dominate market sentiment while jobs data to also play in the mix.
Today’s Range: 1.0450 – 1.0575
Daily Market | Knightsbridge Foreign Exchange
By Admin | October 5, 2011 | Daily Update |
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