LoonieViews July 31, 2012


LoonieViews
July 31, 2012
USD/CAD Open 1.0010-15 Overnight Range 1.0005-20

The Canadian dollar probed a tad higher in another unsettled overnight session. FX markets are nervously optimistic ahead of Thursday’s ECB rate decision and press conference, awaiting a credible plan to deal with the sovereign debt crisis. There is also a ton of data releases, an important FOMC meeting (starting today) and employment reports from Canada and the US due Friday. All this, plus the Olympics’ will ensure choppy but narrow ranges. US data releases today include: Personal Income, Personal Spending, PCE, Employment Cost index, Case Schiller home prices, Chicago PMI and Consumer confidence. Global equity indices were all up modestly. WTI oil is $90.11/bbl and gold is $1,625.21

The short term USD/CAD technicals are bearish USD. It is safe to say that the USD/CAD support zone in the 1.0040-60 area has been decisively breached, clearing the way for further CAD$ gains to 0.9800. For Today USD support is at 1.0005, 0.9980 and 0.9960. Resistance is at 1.0030 and 1.0060.

Although the catalyst behind the recent CAD$ strength is the improved outlook for Europe, the 15.1 billion elephant in the room is the all cash offer for Nexxen by CNOOC. This deal will make CAD$ bears nervous until it’s out of the way.

And in other news, London police have arrested a teenager for “malicious communications” in response to tweets he made insulting UK Olympic diver, Tom Daley. Learning that one can be arrested for insulting another forced Queen Elizabeth to ban Prince Phillip from any further public engagements.

Today’s Range 0.9980-1.0030

Michael O’Neill

LoonieViews

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LoonieViews July 30, 2012


LoonieViews
July 30, 2012
USD/CAD Open 1.0035-40 Overnight Range 1.0034-54

The Canadian dollar is starting the week (and ending the month) pretty much where it ended on Friday. Global markets are sceptically optimistic that the ECB’s Draghi can deliver on his promise to “do whatever it takes, to save the Euro” It will be an interesting week with the Bank of England, the ECB and the FOMC all announcing rate decisions and possibly, stimulus plans. Meanwhile, month end rebalancing flows could make for a choppy trading session. Global equity indices are higher yet NY equity indices futures are slightly lower. WTI Oil is at $90.22/bbl and gold is $1,620.44

The short term USD/CAD technicals are bearish USD. The USD plunge through the 200 day and 100 day moving averages at 1.0101 and 1.0085, respectively and the nervous dip through the 1.0040-60 support zone, suggest further US dollar losses to 0.9970 and then 0.9800. For today, USD support is at 1.0030, 1.0010 and 0.9970. Resistance is at 1.0060, 1.0080 and 1.0110.

FX markets are likely to stay close to home ahead of all the central bank action this week. Traders are very cognizant that all of last week’s gains can be erased in a heartbeat if Draghi’s actions don’t live up to his words.

And in other news, the CNOOC bid for Nexxen has many people wondering how much of Canada is for sale to China. Concern mounted during the Olympic opening ceremonies, when the Chinese Olympic team seemed to be chasing the Canadian team into the stadium. Officials in both countries denied rumors that the China bid 40 gold medals for the Canadian team and planned to rename both Olympic teams, Chinada

Today’s Range 1.0010-80

Michael O’Neill

LoonieViews

LoonieViews July 27, 2012


LoonieViews
July 27, 2012
USD/CAD Open 1.0080-85 Overnight Range 1.0072-1.0106

The Canadian dollar dipsey-doodled in a narrow range in a dull Asian session as traders digested yesterday’s ECB inspired USD sell-off and equity rally. In Europe, the EUR stayed bid on anticipation of the ECB buying Spanish and Italian debt. However, the debate still rages as the Bundesbank opposes such actions. Global equity indices including NY equity futures are all up, reflecting a belief that the ECB will prevail. US data releases today include; GDP (forecast 1.4%) and U. of Mich consumer confidence (forecast 72.) WTI oil is $89.53 and gold is $1,625.13

The short term USD/CAD technicals are bearish USD. However, the loonie continues to be bogged down in the 1.0040-60 area and when this level is overcome, it should rally to 0.9800. For today, USD support is at 1.0060, 1.0040 and 0.9980. Resistance is at 1.0110, 1.0140 and 1.0180

The start of the London Olympics may send UK traders scurrying for the exits early today, reducing liquidity and leaving FX markets vulnerable to a reversal of the recent US dollar sell-off, ahead of the weekend. If so, the CAD$ is unlikely to crack the recent 1.0040-1.0110 range

And in other news, the Olympic police have been fining and harassing UK retailers deemed to be misusing the Olympic logo. As the unofficial, unsanctioned LoonieViews correspondent of the 2012 London Olympics, I wholly support these actions

Today’s Range 1.0040-1.0110

Michael O’Neill

LoonieViews

LoonieViews July 26, 2012


LoonieViews
July 26, 2012
USD/CAD Open 1.0105-10 Overnight Range 1.0075-1.0165

The Canadian dollar and the rest of the majors had a pretty quiet overnight session but activity quickly spiked around 6:05 am when ECB President Draghi’s comments hit the newswires. Headlines like “…the Euro is irreversible”, “…don’t underestimate political capital in Euro” … believe me, it will be enough”, spooked EUR bears, triggering a slide in the US dollar vs the majors. The CAD$ rallied from 1.0150 to 1.0075 within an hour. The US dollar was already wobbly ahead of a ton of data releases, which would underscore the weak economy. The data includes: Durable Goods Orders (June Forecast 0.3%, ex Transportation 0.1%), Initial Jobless Claims (forecast 380K), Pending Home Sales (June 0.3% MoM). Global equity indices including NY equity futures are all positive. WTI oil is $89.44 and gold is up $14.60 to $1,618.65

The short term USD/CAD technicals are bearish USD. The break of hourly support at 1.0140 and the subsequent move through the 200 day moving average at 1.0105 opens up an assault on the solid 1.0040-60 support zone. A decisive move below 1.0040 argues for a test of 0.9940 and then 0.9805. Only a return above 1.0210 will negate the pressure. For today, USD support is at 1.0075, 1.0060, 1.0040 and 0.9980. Resistance is at 1.0110, 1.0140 and 1.0160.

The Canadian dollar is benefitting from the combination of fears of weak US data re-enforcing the US economic slowdown theme and hopes that the ECB and politicians get stop the bleeding in the Euro zone. In addition, the potential $15.1 billion in pending Canadian dollar demand by CNOOC won’t hurt loonie upside.

And in other news, Citibank is assigning a 90% probability that Greece will leave the EUR in 12-18 months. They should know as they were a mere 12-18 hours from leaving the world of corporate entities in 2008. It takes one dead beat to know another.

Michael O’Neill

LoonieViews

LoonieViews July 25, 2012


LoonieViews
July 25, 2012
USD/CAD Open 1.0185-90 Overnight Range 1.0175-1.0230The Canadian dollar stayed soft in Asia and rallied in Europe in line with the trading patterns of the other G-7 currencies. The Asian session continued the negative bias from yesterday however the Euro zone session was the exact opposite. The combination of thin markets and dubious Euro zone headlines led to a round of profit taking as the US dollar was sold. An ECB policy member opined about converting the ESM (European Stability Mechanism) into a bank, leading to traders buying EUR on the perception of the possibility of increased firepower to support troubled sovereigns. ECB President Draghi reportedly said that such a move was illegal on May 24. Meanwhile, European equity indices rose and NY equity futures are in the green. WTI oil is $88.56 and gold is $1,590.53. There isn’t any data of note from Canada or the USA.

The short term USD/CAD technicals are mixed. The medium term USD/CAD trend is bearish as evidenced by the downtrend channel (channel parameters are 1.0020 and 1.0240) on the daily chart below. For today, USD support is at 1.0170 and 1.0140. Resistance is at 1.0200, and 1.0220.

The Canadian dollar will continue to be supported by expectations of demand from the CNOOC/Nexxen deal. If you have any doubt about the possible impact of a conversion of this magnitude, look back to Oct.-Nov.07 and review the result of the ALCOA/Alcan deal. History does repeat itself.

And in other news, Premier McGuinty denied additional funds for Toronto to combat guns and gangs because he spent the money to buy votes in troubled Liberal ridings.

Today’s Range 1.0160-1.0210

Michael O’NeillLoonieViews

Loonieviews July 24, 2012


LoonieViews
July 24, 2012
USD/CAD Open 1.0190-95 Overnight Range 1.0177-99

The Canadian dollar was on hold overnight in a rather subdued session. The JPY eked out some early gains on safe haven demand, but gave back most of them in Europe. The AUD/USD suffered the same fate-gaining ground on improved Chinese data but retreating in Europe. Risk aversion is still the dominant theme in Europe, exacerbated by Moody’s lowering the credit ratings of Germany, Luxembourg and the Netherlands to a negative outlook. In addition the Holy Trinity (EC, ECB and IMF) are in Greece to monitor budget cutting measures. Bloomberg reports that hedge fund wizard John Paulson ascribes a 50% chance the EUR-Bloc unravels in 3 months to 2 years. WTI Oil is $88.25 and gold is $1,574.55. Canadian Retail sales data released today (forecast May 0.5%, MoM, ex autos (0.1%) Global equity indices were mostly lower overnight and NY futures are pointing south to start the day.

The short term USD/CAD technicals are bullish US dollars, but contained by resistance at 1.0205. A move back through support at 1.0160 will see a return to 1.0120. USD strength through 1.0205 will meet resistance at 1.0240 and 1.0290. For today, USD support is at 1.0160 and 1.0120. Resistance is at 1.0205 and 1.0240

The $15.8 billion offer for Nexxen by CNOOC is believed by many to be a “done deal” with China already in receipt of the Canadian government’s blessing. In that case, potential CAD$ weakness from European woes will be sharply reduced as CNOOC accumulates loonie’s to pay for the transaction.

And in other news, in what seems to be a rather bizarre move, the NCAA plans to punish Penn State for protecting a pedophile by pretending that 14 years of football wins didn’t occur. Penn State will probably pretend to pay the $60 million fine and the NCAA will pretend that they can rewrite history.

Today’s Range 1.0160-1.0210

Michael O’Neill

LoonieViews

LoonieViews July 23, 2012


LoonieViews
July 23, 2012
USD/CAD Open 1.0161-66 Overnight Range 1.0130-70

The Canadian dollar continued to slide overnight on safe-haven demand for US dollars, driven by the perception that Spain is going the way of Greece and heightened tensions in the Middle East. The EUR/USD is touching levels not seen for 10 years and forecasts are for more weakness to come. Global equity indices including NY equity futures are lower. Commodity prices have retreated; WTI Oil is $89.18 (down $2.60) and Gold is $1,572.15 (down $12.26) There is not much in the way of data today.

The short term USD/CAD technicals are bullish US dollars, looking for a break through 1.0170 to extend gains to 1.0205 and then 1.0240. However, a move back through 1.0125 will negate the USD uptrend a see a return to 1.0060-1.0160 consolidation. For today, USD support is at 1.0145, 1.0120 and 1.0080. Resistance is at 1.0070, 1.0205 and 1.0240.

CNOOC has announced an all cash bid of CAD $15.1 billion for Calgary’s Nexxen Energy, a 61% premium over Friday’s price, according to Bloomberg. This news is enough to put a cap on US$ strength in the 1.0200-40 area while the details get finalized. The loonie will even grind out some gains in anticipation of demand if traders start to believe that the Canadian government will approve the transaction.

And in other news, Americans are shocked and devastated over the Colorado Massacre at a Batman movie. In the USA, Fireworks availability is strictly controlled, but military grade assault rifles and ammunition are available 24 hours a day.

Today’s Range 1.0110-1.0210

Michael O’Neill

LoonieViews