LoonieViews June 6, 2012

June 6, 2012
USD/CAD Open 1.0316-21 Overnight Range 1.0311-1.0380

The Canadian dollar continued yesterday’s mini rally overnight, as the heavy fog of risk aversion dissipated, to a degree, aided in part by profit taking. Much better than expected Australian GDP (1.3% qoq vs forecasts of 0.5% qoq ) lifted the Aussie dollar as did a flip to optimism that the G-20 will act with the Eurozone to relieve the debt crisis. A host of hung over UK traders, jubilantly returning to their desk after an extended weekend may have helped improve liquidity as well. The ECB is widely, but not unanimously, expected to leave rates unchanged today. Global equity indices including NY equity futures are all higher and commodity prices rose. (WTI oil at $85.05 gold $1,633.30)

The short term USD/CAD technical’s are still bullish while the US dollar is above 1.0310 however the sharp slope of the USD uptrend line makes it very vulnerable. A break should lead to a quick move to 1.0240 For today; USD support is at 1.0310, 1.0280 and 1.0240. Resistance is pegged at 1.0340, 1.0360 and 1.0380

The fickle markets have adopted a rosier outlook for the euro zone and global growth over the past day or so in sharp contrast to last week’s doom and gloom scenario’s. It is either the result of a prolonged and intense market analysis or perhaps an over serving of Jubilee Gin Cocktails. Take your pick.

And in other news, a US drone has flown into Pakistan and blew up the reported al Qaeda, number 2 guy, raising questions about how much detail Bin Laden kept on his facebook page. The US is loath to attack sovereign nations massacring civilians ( see Syria), but if you are Uncle Sam’s ally like Pakistan is, and suspected of harboring terrorists, death rains from the sky. Canada, you have been warned.

Today’s Range 1.0280-1.0340

Michael O’Neill


Categories Markets

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