LoonieViews July 3, 2012

July 3, 2012
USD/CAD Open 1.0149-54 Range: Friday -Monday 1.0141-1.0198

The Canadian dollar has managed to hang on to the hefty gains made since last Thursday when the USD/CAD rate peaked at 1.0360. The catalyst for the rally was the surprising result from the EU summit where expectations were so low, any positive development would be viewed as a game changing break through. However, the widespread US dollar selling pressure has since abated ahead of this week’s rate decision (forecast 25 bp cut) and US (and Canadian) payroll data Friday. Trading will be lighter than usual due to the July 4 holiday, tomorrow. Australia left rates unchanged, as expected leading to a lower ASX200 indices while the Nikkei, Hang Seng and all European indices rose. NY equity futures are flat to lower to start the day. WTI oil is at $85.14 and gold is $1,609.24

The short term USD/CAD technicals are bearish US dollars following the break of the steep uptrend line at 1.0230 while the breach of strong support at 1.0160 suggests further CAD$ gains to 0.9810 (100% Fibo retracement of Apr.-to July range) However, there is plenty of USD support enroute beginning with the 200 day moving average at 1.0118, the 1.0060 support area and the100 day moving average at 1.0050. For today, USD support is at 1.0130, 1.0118 and 1.0080. Resistance is at 1.0160 and 1.0190

The US holiday tomorrow, the ECB rate decision Thursday and the employment data on Friday will ensure that today is a skinny dull trading session without any deviation from overnight ranges.

And in other news, Ontario has sent 200 Hydro One workers to help restore power to the Baltimore, Virginia and Washington areas. Providing that the Ontario Ministry of Labour and the HUSAR leadership are not involved, there is little risk that the task will be called “dangerous” and the workers recalled.

Today’s Range 1.0120-1.0190

Michael O’Neill


Categories Markets

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