May 30, 2012
|USD/CAD Open 1.0269-74 Overnight Range 1.0218-1.0290
The Canadian dollar reversed yesterday afternoon’s gains and sank like Syria’s Assad’s, chances for a UN humanitarian award. A full scale shift into risk aversion mode drove global equity indices south, lowered oil prices (WTI $89.46) and boosted demand for the so called “safe-haven” currencies, JPY, CHF and USD. The JPY has rallied high enough that the Bank of Japan may be getting ready to intervene. Meanwhile, Spain has hogged center stage in Europe with the ECB reportedly rejecting a Spanish plan to recapitalize banks, and pushing up government borrowing costs as a result. Month end demand for US dollars should see the overnight trend continue throughout today’s session, especially due to a lack of meaningful economic data today.
The short term USD/CAD technicals remain bullish. The US dollar is bumping up against the top of a downtrend channel at 1.0275, intact since October 2011 which if broken could lead to 1.0675. For today, USD support is at 1.0240 and 1.0210. Resistance is at 1.0305, 1.0320 and 1.0350
Month end demand for US dollars should keep the Canadian dollar on the defensive today but I wouldn’t expect the US dollar to extend gains through the overnight high, ahead of Friday’s US employment report.
In other news, on Tuesday, workers at the Conservative Party Headquarters in Ottawa on were horrified when they opened a package and discovered a human foot. Perhaps it was a ploy by a recent graduate, applying for an entry level position, trying to get a foot in the door so to speak.
Today’s Range 1.0230-1.0305