LoonieViews May 25, 2012

May 24, 2012
USD/CAD Open 1.0255-60 Overnight Range 1.0250-1.0285

The Canadian dollar flirted with disaster overnight, bumping up against strong USD resistance at 1.0285, but end of week profit taking and a wee dash of optimism in the Euro zone saw the US dollar retreat vs. the majors. Reports that Germany’s Merkel may comprise and agree to a constitutionally committed debt sharing program to support sovereign debt and a statement by Italy’s Monti that Greece will stay in the Euro encouraged US dollar selling across the board. Global equity indices are slightly lower to flat. WTI oil is $91.13 and gold is $1,563.90 The only data from the US is the Univ. Of Michigan Confidence survey, expected to be unchanged at 78.8

The short term USD/CAD technical’s are bullish while trading above 1.0170, but need a decisive move above 1.0280 to extend gains. However, strong USD resistance in a US dollar over-bought environment should see the CAD$ grind higher and test 1.0170 For today, USD support is at 1.0230 and 1.0170. Resistance is at 1.0280 and 1.0320

The doom and gloom scenario surrounding the Euro zone for the past week has dissipated slightly with the Merkel compromise report and Mondi’s optimistic statement on Greece. This has encouraged a round of profit taking in long dollar positions which should spill over into the loonie. Buy CAD$ here at 1.0260, stop at 1.0295, looking for 1.0180.

In other news, Bloomberg is reporting that the three directors who oversaw JPMorgan’s risk committee were a museum head (sat on AIG’s governance committee in 2008) the son of a billionaire and the CEO of a company that makes flight controls and boots. In JPM’s defence, they are probably better qualified in these jobs that 95% of the free world’s politicians in their jobs.

Today’s Range 1.0180-1.0280

Michael O’Neill


Categories Markets

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