Loonieviews September 12, 2012

September 12, 2012
USD/CAD Open 0.9728-32 Overnight Range 0.9717-0.9736

The Canadian dollar stayed on its firming track overnight and the US dollar came under renewed selling pressure following the favorable German court ruling, allowing German participation in the ESM. The court added a caveat that any participation over EUR 190 billion would need parliamentary approval. Even though the US dollar had been dropping in anticipation of this news, the “sell the rumor-buy the fact” trade did not occur. Perhaps because almost 2/3’s of economists in a Bloomberg survey expect a QE3 announcement tomorrow. Global equity indices including NY equity indice futures are all higher as is WTI oil ($98.02) and gold ($1,746.10)

The USD/CAD technicals are bearish USD following the break of USD support at 0.9730 which suggests further US dollar losses to 0.9640. A break of 0.9640 will extend the US dollar downside to 0.9440. For today, USD support is at 0.9710, 0.8670 and 0.9640. Resistance is at 0.9740, 0.9780 and 0.9810.

Now that the German court case is out of the way, the EU appears well positioned to address the sovereign debt crisis while the US is behind the curve and politicians remain divided and distracted. That may be why, Ben Bernanke is forced to announce some action, tomorrow.

And in other news, many Germans are reportedly outraged over the court decision to support the European Stability Fund, questioning the validity of the ruling. Apparently there is a lot of discussion and some dispute as to when Chevy Chase was name to the German judiciary.

Today’s Range 0.9680-0.9740

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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