LoonieViews Sept. 27, 2012


LoonieViews
September 27, 2012
USD/CAD Open 0.9824-29 Overnight Range 0.9822-0.9852

The Canadian dollar remains wobbly on the cusp of month and quarter end as rebalancing flows combined with uncertainty surrounding Spain have traders drifting toward US dollars. US data releases today include; Jobless claims (forecast 378K), GDP (forecast 1.7% Q2) and Durable Goods (-5.0). Global equity indices including NY equity futures indices are all higher.

The short term USD/CAD technicals are bullish but have hit a wall at 0.9855-60. If broken, it should lead to 0.9940. If the USD/CAD rate moves back through 0.9780, the counter trend bullish USD move will be negated. For today, USD support is at 0.9810 and 0.9780. Resistance is at 0.9860, 0.9890 and 0.9940

The massive $15.1 billion all cash offer by CNOOC for NEXXEN is approaching its closing date. It needs to receive Canadian government approval to close. Equity traders aren’t sure that the approval is forthcoming and NEXXEN is trading below the takeover price. In the face of this uncertainty, it is not unreasonable to assume that CNOOC hasn’t accumulated more than 1/3 of their CAD$ requirements. leaving them to scramble if (when) they get the go-ahead

According to a BIS survey on currency trading volumes in 2010, EUR/USD trading volumes are roughly 6 times the volumes of USD/CAD. Therefore a big “one-off” order in a “small currency can have a major impact. The first chart below shows the effect of the ALCOA/ALCAN $19 billion deal in the Sep-Oct 2007. (WTI oil spiking to $140, didn’t hurt, either) The next chart projects the effect of the CNOOC demand for CAD$. BUY CAD$-WEAR DIAMONDS!!

CHART 1

CHART 2 –DÉJÀ VU ALL OVER AGAIN?

And in other news, a Branford area man is the proud winner of $725,274 on a perfect 15 for 15 Pro-line NFL ticket. It is not known if he is any relation to the refereeing crew of the Seattle/Green Bay packer game

Today’s Range 0.9810-0.9890

Michael O’Neill

LoonieViews

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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