February 10, 2012
USD/CAD Open 1.0005-10 Overnight Range 0.9945-1.0035
|The Canadian dollar dropped steadily overnight as positions when the Greeks failed to come to an agreement on budget cuts, delaying an EU aid package. The USD climbed across the board as short dollar positions were squeezed. The AUD was already under pressure from an RBA report forecasting a slower economy. The Chinese Yuan was higher ahead of an official China visit to the USA. Global equity indices and NY equity futures were all lower. WTI Oil is $98.29/bbl and gold is at $1,715.33. US data releases today include University of Michigan confidence and Trade Balance. Canada releases trade data as well.
The short term CAD$ technical’s are bearish following the break above short term US dollar down channel resistance at 0.9980 (see chart)
The first target for this break is 1.0040 and then 1.0080. USD support is back at 0.9980 and 0.9940. Longer term, the USD/CAD is still in a strong downtrend channel between 0.9880 and 1.0190.
It would appear that the market got caught a tad over optimistic on expectations that the interim leadership of Greece would be able to satisfy the demands of both the EU and their constituents. The subsequent stampede into risk aversion merely brings the opposing views closer to equilibrium.
And in other news, last week a large number of cannons and artillery along England’s Channel coast fired salvo’s as the British military honoured the Queen’s Diamond Jubilee. Upon hearing the guns, France immediately surrendered.
Forecast Range for Today 0.9980-1.0060