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

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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