June 1, 2012
|USD/CAD Open 1.0380-85 Overnight Range 1.0313-1.0399
The Canadian dollar continued yesterdays downtrend in another risk adverse overnight session highlighted by incessant demand for safe haven US dollars, Japanese yen and Swiss francs. Signs of a worsening slowdown in China as evidenced by a falling Chinese PMI index (50.2 vs. forecasts of 52.0) drove oil prices lower (WTI $85.09) as did increasing crude supplies, a development not viewed as commodity currency positive. European woes were underscored by an 11% Euro zone unemployment rate, doom and gloom comments from Spain and nervousness as the Irish referendum ballots on the EU Fiscal treaty get counted. Global equity indices and NY equity futures are all down ahead of another heavy data US data release day in the US which includes: Jobless claims (150k) PCE Deflator (1.9% YoY) ISM Manufacturing (53.8) Canada releases GDP data (9.3%MoM; 1.9% Yoy)
The short term USD/CAD technicals are bullish. The break of a “triple top” at 1.0310 and the subsequent rally above 1.0340 (61.8% fibo retracement of the 0.9820-1.0675 range) argues that 1.0675 is in the cards. For today, USD support is at 1.0330, 1.0310 and 1.0280. Resistance is at 1.0400 (overnight high) 1.0430 and 1.0470.
The Canadian dollar is unlikely to garner any support from today’s GDP data and will remain vulnerable to further weakness due to the on-going European woes and fears of a global economic slowdown.
In other news, Toronto city council is contemplating naming a new ferry terminal for the late NDP leader, Jack Layton. It would be a fitting tribute to the man because it is politically self-serving, it would support a constituency that is mostly “at sea”and it would be home to expensive platforms that go nowhere. The alternative would be to name a ‘massage parlour” for Jack, who was known to frequent these homes of the “happy ending” strictly for therapy.
Today’s Range 1.0340-1.0440