January 26 2012
USD/CAD Open 1.0010-15 Overnight Range 0.9995-1.0047
|The Canadian dollar rallied against the backdrop of a sharply weaker US dollar vs the majors following yesterday’s FOMC meeting. Bernanke and Co.’s decision to push back any rate hikes until 2014 and a slight downgrading of economic expectations sparked a “risk-on ” rally. The AUD/USD got an extra kick on a report that Russia may start buying AUD for reserve purposes.. The Greek drama is still unfolding, which should (but isn’t) give EUR/USD bulls some concern. Global equity indices are all sharply higher and NY equity futures are in the “green” as well. Oil jumped on the weaker USD, trading at $100.25/bbl and gold is also higher at $1,716.72. There is a lot of data from the US today including Durable Goods (forecast 2.0%, mom-ex Transportation +0.2%) and Jobless claims (forecast +370K)
The short term CAD$ technical’s are bullish following the decisive break of the USD/CAD support area between 1.0030-1.0060 and now target a test of the 61.8% fibo retracement of the 0.9407-1.0650 range since mid-July, which is currently 0.9880. For today, USD support is at 0.9980, 0.9960 and 0.9920. Resistance is at 1.0030 and 1.0060
The Canadian dollar is benefiting from the current risk seeking mentality of investors that has seen Global equity indices jump higher on anticipation of low US rates and the risk of QE III. The major debt issues surrounding Greece, Italy, Portugal and Spain haven’t gone away and Iran remains a wild card. In addition, the EUR/USD is going to bump into strong resistance in the 1.3225 area, which could see another nasty correction occur.
And in other news, a California woman is claiming that reflected light from energy efficient windows at her condo, is melting her Toyota Prius. And Cinderella thought she had it bad when she had to deal with a pumpkin.
Forecast Range of the Day 0.9970-1.0030