FX Morning Update September 30, 2011

USD/CAD Open: 1.0447-49              Overnight Range: 1.0357-1.0455


The Canadian dollar tanked in overnight volatile trading.  Yesterday’s better than expected jobless claims and Q2 GDP provided only a very short boost to the loonie as eurozone fears dominated markets and flows flocked to the safety of the USD.  Overnight, risk appetite was negative, the overseas equity markets, the euro, and commodity currencies were lower vs. the USD.  Also Chinese PMI data showed a contraction for the third straight month.  NY futures are pointing lower.  Oil is at $81.37 and gold is at $1,622.  Today, Canada releases GDP data while the US releases ISM data, consumer confidence, and personal spending and income data.


The short term Canadian dollar technicals remain negative.  The USD seems to be attracting buying interest on dips.  For today, USD resistance is at 1.0450, 1.0510, 1.0575, and 1.0679.  Support is at 1.0350, 1.0250, 1.0213, and 1.0131.

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Risk-off in a major way is the theme.  The loonie continues to fall lower primarily driven by negative risk appetite and the safety of the US dollar.  Despite the strong labor market, decent fiscal situation, and resource rich Canada, the dominating theme impacting the value of the loonie continues to remain the risk-off trade lead by sovereign debt concerns in Europe.  Quarter end and month end flows may also be helping the rise in the USD today.  Canada’s GDP data if positive may have little lasting effect on the loonie as global concerns are dominating markets.  A catalyst for the loonie’s rise could presumably come from a decisive policy or implementation of a larger bailout fund for the eurozone, but continued inaction and indecisiveness by eurozone policymakers continue to support the risk-off trade and USD rally.


Today’s Range: 1.0350 – 1.0510


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By Admin | September 30, 2011 | Daily Update | 0 comments