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