August 22, 2012
|USD/CAD Open 0.9907-12 Overnight Range 0.9888-0.9925
The Canadian recovered somewhat, following the release of the FOMC minutes suggesting that a 3rd round of quantitative easing was in the cards, which continued during the Asian session but retreated during the European session, as did both the Aussie and Kiwi. Both suffered slightly on a lower HSBC China PMI. European PMI’s are pointing to another Eurozone recession as well.
The US, QE3 theme elevated European equity indices and NY Equity indice futures as well as gold ($1,664.90) and oil (WTI $97.90). Today’s US data releases include; Jobless claims (forecast 365k), Markkit Manufacturing PMI (51.5) and new home sales (July 0.3%)
The short term USD/CAD technicals are bearish. The USD is struggling to maintain gains above 0.9900 and a dip below this level should see a return to 0.9850. However, a move through 0.9925 would argue for further USD strength to test 0.9940 and perhaps 0.9980. For today, USD support is at 0.9900, 0.9880 and 0.9840. Resistance is at 0.9920 and 0.9940
The Canadian dollar appears to be under performing in the face of rising commodity prices and anticipation of another stimulus package from the Fed. One possible explanation for this could be that long CAD$ positions got over extended and needed to be trimmed, especially in light of some selling of CAD vs. EUR and JPY. This is unlikely to last ahead of further QE3 US dollar selling.
And in other news, Britain’s Prince Harry is in hot water for having his royal jewels displayed after photos from a Vegas party he hosted, were posted on line. The bevy of naked beauties attending the British royal ensured that the blue blood didn’t suffer from blue balls
Today’s Range 0.980-0.9920