LoonieViews July 12, 2012

July 12, 2012
USD/CAD Open 1.0225-30 Overnight Range 1.0191-1.0244

The Canadian dollar is a tad wobbly as are all the majors as the JPY and US dollar strengthen on the back of continued risk aversion trading. The FOMC minutes diminished expectations of an imminent bout of quantitative easing, weakening equities in the process. Australian markets were roiled with the release of sharply disappointing employment data (-27K vs flat expectations) while forecasts for a 7.7% GDP number (vs previous 8.1%) for China renewed global slowdown concerns. Global equity indices including NY equity futures are all lower. WTI Oil is $84.69 and gold is $1,563.93.

The short term USD/CAD technicals are bullish US dollars. The break through 1.0230 sets up further USD strength to 1.0270 and then 1.0330. However, a retreat through 1.0190 would suggest that we are back to a 1.0160-1.0240 trading zone. For today, USD support is at 1.0230, 1.0190 and 1.0160. Resistance is at 1.0250, 1.0280 and 1.0320.

The lack of a credible plan for the resolution of the European debt crisis appears to have spooked most analysts so bad that they been avoiding the usual doom and gloom scenario’s that current events in the Middle East would imply. The US has recently moved another fleet into the area and is increasing underwater drones near Iran. At the same time, Russia has decided upon “Naval Exercises” and has moved a fleet to Syria. And Oil prices have plunged! That makes sense.

And in other news, extremely hot weather in Alberta has led to rolling black-outs across the province including Calgary. Many believe that the cause is due to high numbers of oil company executives simultaneously plugging in their energy saving electric cars, while they gallop of to work on their favorite horse, to celebrate Stampede week.

Today’s Range 1.0160-1.0230

Michael O’Neill


Categories Markets

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