Loonieviews May 31, 2013


USD/CAD Open 1.0338-43 Overnight Range 1.0289-1.0366

The Canadian dollar traded sideways in Asia and then came under pressure in Europe following soft data out of Germany and the Eurozone. Weaker than expected retail sales data in Germany and a slightly higher Eurozone unemployment rate gave the US dollar a boost as the month drew to a close. The North American session may be a tad livelier with the release of a bunch of data that may show further improvement in the US economy. The data includes: Apr. Personal Income (0.1%), April PCE (0.1%, Ch Asian and European equity indices (except the Nikkei) were all down as are NY equity index futures. Gold is $1,410.70 and WTI oil is $93.21.ago PMI (50.0) and May University of Michigan Consumer Confidence (83.7). The data on tap in Canada is: GDP 1Q (2.3% qoq)

The short term USD/CAD technicals are bearish while trading below 1.0360 looking for another test of support at 1.0290. A move above 1.0360 argues for another attempt at 1.0420. For today, USD support is at 1.0330 and 1.0290 with Resistance at 1.0360 and 1.0390

And in other news, there is no truth to the rumour that Stephen Harper is contemplating removing the Maple Leaf from the Canadian flag and replacing it with a banana in an effort to better reflect to the world the political state of affairs in the Great White North. Canada is plagued with financial scandals, from Senators cheating on expense accounts to the former head of the CSIS watchdog and the Montreal Urban Hospital taking bribes.

Michael O’Neill



Loonieviews May 30, 2013

USD/CAD Open 1.0352-57 Overnight Range 1.0326-65

The Canadian dollar dipsy doodled in a lively but fairly narrow range overnight with FX markets rather choppy on the back of position adjustments due to concerns surrounding the end of quantitative easing in the US. Yesterday’s Bank of Canada statement was unchanged from the previous one setting the stage for the incoming BoC governor, Stephen Poloz to make his mark. Asian equity indices closed lower but the European equity indices are all higher as are US equity index futures. Gold is at $1,400.20 and WTI is $92.69. US data on tap today includes: GDP (forecast 2.5%), Jobless claims (forecast 340K) Personal Consumption Expenditures (forecast 0.9%, QoQ, Q1). Canada releases Current Account (forecast -15.5b), April IPP (forecast -0.3%, MoM)

The short term USD/CAD technicals are bullish while trading above 1.0330 looking for another break above 1.0380 to extend gains to 1.0420. A break of the 1.0420-40 area risks further US dollar gains to 1.0660. A move below 1.0330 suggests further US dollar weakness to 1.0260. For today, USD support is at 1.0330 and 1.0310 with Resistance at 1.0380, 1.0400 and 1.0420

And in other news, despite the Liberal government blowing $600 million to cancel power plants to save seats and destroying all email evidence of the decision, Andrea Howarth and the NDP, professing to giving Ontarians what they want, voted to support the Kathleen Wynn budget and by default keep the Liberals in power. This begs the question-Which political leader is really smoking crack?

Today’s Range 1.0330-1.0420

Michael O’Neill


Loonieviews May 29, 2013


USD/CAD Open 1.0370-75 Overnight Range 1.0360-1.0420

The Canadian dollar (like the rest of the majors) sank further in a choppy Asian session devoid of tier 1 market data. The weakness continues to be driven by speculation and anticipation of an end to quantitative easing in the US which is driving up US yields and creating turmoil in global equity indices. The OECD released its semi annual outlook concluding that the global growth will be lower than forecast this year but rebound in 2014 suggesting that Eurozone growth will fall further while the US would gain. Meanwhile, the BoC will leave rates unchanged today but may suggest that rates will be going higher sooner rather than later which would serve to cap USD/CAD strength at 1.0420. Global equity indices were a mixed bag and NY equity index futures are lower. Gold is $1,391.00 and WTI oil is $94.22

The short term USD/CAD technicals are bullish but are regrouping toward 1.0340, following the test of the double top at 1.0420 overnight. A break above the 1.0420-40 zone suggests a moon shot to 1.0660 is likely. A break through the hourly trendline support at 1.0340 suggests a further dip to 1.0280. For today, USD support is at 1.0360, 1.0340 and 1.0280. Resistance is at 1.0390, 1.0400 and 1.0420.

The Canadian dollar will be vulnerable to month end selling pressures and option barrier risk reportedly lurking in the 1.0450 area. However, any hint by the BoC that Canadian rates are moving higher will ignite a sharp CAD$ rally.

And in other news, Denise Garrido was crowned Miss Universe Canada on Saturday but dethroned the next day after organizers discovered a “voting error” and crowned Riza Santos in her place. When told of the news, Toronto Mayor Rob Ford exclaimed “was the Toronto Star in charge of the facts”

Today’s Range 1.0340-1.0400

Michael O’Neill


Loonieviews May 23, 2013


USD/CAD Open 1.0330-35 Overnight Range 1.0328-1.0395

The Canadian dollar remained under pressure overnight after being booted through the uprights by Ben Bernanke’s befuddling comments on exiting from quantitative easing yesterday afternoon. And to make matters worse, China’s May HSBC flash PMI printed at 49.6 (below 50 means economy is contracting). Asian equity indices tanked and the JPY soared on “risk-off”, safe haven buying. The tone improved slightly during the European session with the release of the composite European PMI at 47.6 vs consensus of 47.0. However it was not enough to keep the European equity indices from big declines. NY equity index futures are also down to start the day. US data releases today include: Jobless claims (+345k), Markitt May Manufacturing PMI (51.8), Housing Price Index (0.8) There isn’t any Canadian releases. Gold is $1,392.00 and WTI Oil is $93.36

The short term USD/CAD technicals are bullish targeting 1.0440 and then 1.0630.The overnight dip back below 1.0360 risks a move to 1.0320 while a move through support at 1.0280 suggests 1.0240-1.0360 consolidation. For today, USD support is at 1.0330, 1.0320 and 1.0280. Resistance is at 1.0360, 1.0380 and 1.0410

And in other news, the Australian Board of Health has released further evidence that early morning jogging can be hazardous to your health. An Australian politician, Shane Rattenbury, was knocked to the ground and mauled by an irate Kangaroo, whose breakfast was disturbed by the jogging Rattenbury. It is nice that, for a change, it wasn’t a politician putting his foot in his mouth, but rather a marsupial doing it for him.

Today’s Range 1.0320-1.0380

Michael O’Neill


Loonieviews May 22, 2013


USD/CAD Open 1.0300-05 Overnight Range 1.0260-1.0310

The Canadian dollar stayed under pressure over night, continuing to be undermined by concerns that Bernanke may discuss an end to quantitative easing in his testimony today. Another drop in consumer confidence in Australia plus the Bernanke fears drove the AUD/USD lower. USD/JPY stayed bid following no surprises from the BoJ meeting. Asian equity indices were mixed with the Nikkei up while the Hang Seng and the ASX200 were lower. European equity indices were flat to down while NY equity index futures are up modestly. Gold is$1,387.00 and WTI oil is $95.75. US data today includes: FOMC minutes, Bernanke Testimony, April Existing Home Sales (1.5% MoM). Canada releases March Retail Sales (forecast 0.1%, ex-autos 0.2% MoM)

The USD/CAD had a peak at resistance in the 1.0320-40 area yesterday and quickly reversed course in part due to fears that the dollar rally was overdone. In addition, if Canadian retail sales data surprises to the upside and Bernanke fails to address an end to QE, the CAD$ will rally back to 1.0160. Sell USD/CAD between 1.0305-20, with a stop above 1.0340 for a return to 1.0180.

The short term USD/CAD technicals are bullish but need a break through 1.0340 to extend gains to 1.0440. A move below 1.0260 will negate the upside pressure and lead to further USD/CAD losses to 1.0180. For today, USD support is at 1.0270 and 1.0230. Resistance is at 1.0320 and 1.0340

And in other news, a Toronto Police staff inspector, Steve Izzet , described as “the boss from hell” will find out today if he will be fired after being found guilty of sexual harassment and destruction of evidence. He has been on paid suspension for years at $120+k per annum while dragging out his case for 4 years in order to get the full 30 year pension pop. The inability of the city to claw back these payments could make even a Mayor want to smoke crack.

Today’s Range 1.0260-1.0320

Michael O’Neill


Loonieviews May 15, 2013


May 15, 2013

USD/CAD Open 1.0205-10 Overnight Range 1.0171-1.0210

The Loonie stayed under duress in an uneventful overnight session, undermined by renewed chatter about an economic slowdown in China and soft Eurozone data which generated a bid tone to the US dollar vs. the majors. US data releases today include: April PPI (forecast -0.2, core -0.1) Empire State Manufacturing and April Capacity utilization. Canada releases April Existing Home Sales and March Manufacturing Sales. Asian equity indices were basically flat while European equity indices rose. NY equity index futures are also flat to start the day. Gold is $1,409.60 and WTI Oil is $93.24

The short term USD/CAD technicals are bullish. The crumbling of resistance at 1.0180 is putting 1.0220 under pressure, a break of which will quickly lead to 1.0240. Above here, suggests a return to 1.0310. The longer term technicals are also bullish USD/CAD showing the currency pair trading in the middle of a rising channel bound by 1.0020 on the bottom and 1.0420 on the top. For today, USD support is at 1.0190 and 1.0160. Resistance is at 1.0220, 1.0240 and 1.0310

The Canadian dollar is under pressure because market sentiment has decided that the recent drop in commodity prices on the perception of a Chinese economic slowdown is bad for the loonie, ignoring evidence of an improving US economy. These forces will ensure that the USD/CAD rate will continue to bounce around within the existing channel.

And in other news, a left wing Toronto city councillor is attempting to thwart the building of two field hockey pitches on the University of Toronto campus by having the grass designated as a “Cultural Heritage Landscape.” During his submission, he was apparently heard to be muttering “Acapulco gold is some bad-ass weed”

Today’s Range 1.0190-1.0240

Michael O’Neill


Loonieviews May 13, 2013

May 13, 2013
USD/CAD Open 1.0109-1.0114 Overnight Range 1.0106-1.0132

The Loonie may have suffered whip-lash on Thursday when the uptrend failed around the 1.0010 area and retraced through what ended up being non-existent resistance in the 1.0040-80 zone. It is starting the week, still on the defensive on the back of a resurgent US dollar vs. the majors. Soft commodity prices and an Australian budget tonight contributed to on-going AUD/USD weakness. The G-7 tacitly endorsed Japan’s devaluation of the yen (again) while the Italian Central Bank governor called for the ECB to post negative interest rates keeping the US dollar bid. The Nikkei and ASX200 were up, while the Hang Seng, the European equity indices and NY equity index futures are all down. Gold is $1,428.10 and WTI oil is $95.11 Today’s US data includes US Retail Sales (April -0.3%)

The short term USD/CAD technicals are bullish while trading above 1.0106 (overnight low) with a break above 1.0140 suggesting a move to 1.0180 and 1.0240. Only a dip back below 1.0080 negates the uptrend and argues for 1.0040-1.0140 consolidation

And in other news, an American Airlines flight from LA to New York was diverted to Kansas City to eject a woman who refused to stop singing a Whitney Houston song. The woman was cuffed and subdued by an onboard air marshal which makes the diversion a tad unnecessary and upon landing, she was released without charges. The Airline said that the woman was being “disruptive and interfering with the flight crews” a rather dubious accusation unless she was sitting on the pilot’s lap in the cockpit. It was also disclosed that taking a picture on an aircraft is illegal.

Today’s Range 1.0080-1.0140

Michael O’Neill