November 9, 2012
USD/CAD 1.0021-26 Overnight Range: 0.9983-1.0026
The Canadian dollar continued yesterday’s swoon overnight with risk aversion rearing its ugly head. In Europe, there were more reports that Greece may not receive the next tranche of bail-out money which led to further speculation about the outlook for Spain Global equity indices followed US equity indices lower with chatter about the ‘Fiscal cliff” and the potential damage to the US economy dominating the headlines. The presence of many stop loss buy orders and option barriers above 1.0020 exacerbated the Canadian dollar’s woes. WTI Oil is $84.29 and Gold is $1,728.60
The USD/CAD technicals are in a well-defined, gently sloping uptrend channel from Sept.14/12 on a daily chart. The current channel bottom is at 0.9890 while the top of the channel currently resides at 1.0068. The 200 day moving average at 0.9993 and double top at 1.0020 should slow the pace of US dollar gains. For today, USD support is at 1.0010 and 0.9980. Resistance is at 1.0040, 1.0060 and 1.0140
The Canadian dollar is caught between a rock and a fiscal cliff. Q4 is generally a period of CAD$ weakness due to US dollar demand for yearend repatriation. This year it is occurring in a risk averse environment due to unresolved European debt issues and the budget impasse in America. Wobbly equity markets ripe for profit taking, soft WTI oil prices and shaky Canadian economic data in an overbought Canadian dollar market could trigger a USD/CAD rally to 1.0440 before year end.
And in other news, the owner of an Ottawa Midas shop received a parking ticket for parking in his own parking lot. An overzealous and obviously mentally challenged meter man (?) wrote the ticket for parking on a sidewalk. The fact that said sidewalk no longer existed due to massive construction did not enter into the tiny thought process of the quota busting city employee.
Today’s Range 1.0010-1.0060
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