July 2, 2010
USD/CAD Open 1.0599-1.0605 Overnight Range 1.0558-1.0617
The CAD$ sank to 1.0675 on Canada Day, in a rather unpatriotic move, driven lower by renewed concerns over the health of the US economy and the possibility of a double dip recession. The loonie managed to recoup all of those losses overnight despite the US dollar remaining weak vs. the majors. Today’s US non-farm payrolls report has the market in a lather over the prospect of a real ugly print (forecast -160k), supported by Wednesday’s very weak ADP report. Once this data is out of the way, trading will dry up as the US traders try to get an early start on their July 4 weekend. Global equity indices were all modestly higher as are NY futures while oil is unchanged at $72.98 and gold is $1,210.90, up $4.20.
The short term CAD technicals remain bearish above 1.0450. The USD/CAD uptrend appears to have run out of gas around 1.0675 again, which should be decent resistance today. A move back below 1.0565 suggests further CAD upside to test the USD/CAD uptrend channel at 1.0450. For Today, USD support is at 1.0565 and 1.0510. Resistance is at 1.0620 and 1.0675.
The rash of weak US economic data this week has reintroduced the element of two way risk in US dollar trading. The relentless buying of US dollars as a safe haven due to the European sovereign debt crisis has reverted back to worries over the health of the US economy. The loonie has come under pressure in this environment as a weak US economy is considered bad for Canada. However, the overall strength of the Canadian economy, the strength of the financial industry and a central bank committed to raising interest rates, argues for safe haven buying of CAD$.
Today’s Range 1.0550-1.0650
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By Admin | July 27, 2010 | Daily Update | 0 comments