Loonieviews April 30, 2012

April 30, 2012
USD/CAD Open 0.9818-23 Overnight Range 0.9804-0.9823

The Canadian dollar is ending the month rather robustly having cracked strong US dollar support in the 0.9860-80 area late last week. Firm WTI oil at $104.93 and speculation of Canadian interest rate hikes combined with a bullish Canadian dollar technical outlook have fueled recent CAD$ gains. FX markets got off to a slow start in Asia and Europe ahead of Thursday’s ECB rate decision and Friday’s US nonfarm employment data. Asian equity indices were mixed but both European indices and NY futures are down. Canadian data releases today include; GDP (forecast 0.2% MoM) and IPP (forecast 0.3% MoM)

The short term CAD$ technical’s are bullish. The break of the 0.9880 level, the 61.8% retracement of the 0.9420-1.0660 June , 2011-29Apr12 range suggests further gains to 0.9420 (100% retracement) The 0.9880 zone should now act as a strong CAD$ support/US dollar resistance level. For today, USD support is pegged at 0.9790 and 0.9740. Resistance is at 0.9830 and 0.9880

A stronger than expected GDP number from Stats Canada today combined with a steady to higher WTI oil price and rising equity market prices will give the loonie further gains below 0.9800. Unfortunately, the release of the US nonfarm payroll data on Friday argue for the CAD$ to consolidate recent gains below 0.9880.

In other news, a circus truck travelling near Quebec City caught fire. Arriving on scene, police discovered a lion, a tiger, but no bear, oh my wandering on the side of the road. No charges were laid but police questioned a tin man, a scarecrow and a farm girl in ruby slippers.

Today’s Range 0.9770-9840

Michael O’Neill



Categories Markets

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