Loonieviews August 30, 2013


INTRADAY: USDCAD Open 1.0530-35 Overnight Range 1.0520-40

original post on Saxo Bank’s Trading Floor

The USDCAD traded sideways in a narrow range ahead of today’s Canadian June GDP data (forecast -0.5%, m/m change, s.a) which will contrast sharply with yesterday’s US GDP gain consequently putting additional pressure on the Canadian dollar. US data releases include: Personal Income, Personal spending, Chicago PMI and Reuters/Michigan consumer sentiment index. Great Britain voted against joining in any military action in Syria which should help to reduce concerns of an imminent incursion but the US has naval vessels in the area and Obama sounds like he wants his own personal war.

The US and Canada Labour Day holiday on Monday will make for a short trading session although the USDCAD could spike on latent month end demand for dollars on portfolio rebalancing or in reaction to a poor GDP number. As usual, Friday profit taking flows will likely be the norm, suggesting that existing ranges will remain intact.

The short term USDCAD technicals are bearish wile trading below 1.0540 looking for a dip to 1.0490. A break above 1.0540 suggests a move to 1.0580 and then 1.0610. For today, USD support is at 1.0520, 1.0490 and 1.0460. Resistance is at 1.0540, 1.0560 and 1.0580

Today’s Range 1.0490-1.0560


Loonieviews August 29, 2013


USDCAD Open 1.0500-05 Overnight Range 1.0485-1.0505

see original post and more on Saxo Banks’ Trading Floor

The USDCAD is barely off the lows with geopolitical sentiment slightly more positive on Syrian developments even though the US and UN won’t forgive Assad’s perdify. It would be rude for the US to shoot missiles into Syria while the UN inspectors are still in country.

Today’s US GDP and Jobless claims data should underpin the US dollar if they come in as expected and give it a boost on a better than expected result.

The short term USDCAD technicals are bullish above 1.0440 targeting 1.0610. Intraday, they technicals are bullish above 1.0470, for a return to 1.0530

Today’s Range 1.0480-1.0530

Aim! Fire! Why media focus on FX price rigging misses the target

FX Price Rigging-The Fix Ain’t in

Bloomberg posted a story last night ( Currency Spikes at 4pm in London Provide Rigging Clues) alluding to price fixing by foreign exchange traders around the month end 4 pm London close ( in Canada, it is known as the 11:00 am fix) implying that the pattern is similar to the Libor price fixing scandal.  I call “Bogus”!

I have been an active participant from both the sales and execution sides of these transactions while working for leading global banks and I can say from experience that this story is merely an attempt to create a controversy where none exists.

The month end London close (for book keeping purposes, determined to be 4 pm) is when the WM/Reuters rates for 160 currencies are published.  According to the Bloomberg story, the methodology is that the prices for the 21 most active currencies are derived from an average of all transactions for one minute, beginning 30 seconds before the hour.

The reason that this is important is that many fund managers all over the world use these rates to “close their books”  at month, quarter and year end.  Portfolio’s are rebalanced as FX price fluctuations during the period can result in a portfolio manager being under or overweight a currency, necessitating an FX trade to bring the portfolio bank into line with their internal parameters.

What makes it interesting is that there are literally thousands of portfolio managers in this position resulting in some very large, market moving rebalancing trades.  The Bloomberg story begins with what they insinuate is an example of a currency manipulation trade in the Canadian dollar, on the last Friday in June.

I am pretty sure that they are wrong based on over 20 years of executing the fix transactions and working directly with some of the biggest portfolio managers in the business.  The trading around the “fix” is less an example of price fixing but more of an example of profit preservation in what is a pure supply and demand environment.  The following is a simplistic example of a typical fixing trade using USDCAD.

For the rest of the article please go to Saxo Banks’s Trading Floor

Loonieviews August 28, 2013

INTRADAY: USDCAD Overnight Range 1.0501-1.0520)

The USDCAD managed to stem yesterday’s fall above support at 1.0470 as risk aversion waned awaiting new developments from the Middle East. WTI Oil109.52 (and Brent $115.17) remained elevated on supply concerns while gold hovered around $1423.70. Global equity indices were all in the red but NY equity futures indexes are flat. The only data on tap is US Pending home sales, which should create a stir.

The short term USDCAD technicals are bullish while trading above 1.0470 but needing to break resistance at 1.0530 and the 1.0560 to see an extension to 1.0610. Yesterday’s retreat below 1.0500 should have served to wash out weak long dollar positions leaving the scope to renew the uptrend. For today, USD support is at 1.0490, 1.0470 and 1.0460. Resistance is at 1.0530 and 1.0550

Today’s Range 1.0470-1.05730

Loonieviews August 27, 2013:


USDCAD Open 1.0527-32 (Overnight Range 1.0499-1.0537

See original post on Saxo Bank’s Trading Floor

The USDCAD edged higher overnight on the back of some modest demand for safe haven dollars as tensions rise around Syria. WTI oil climbed about $1.50 which probably helped to insulate the loonie from a bigger drop. Global equity indices are all lower as are US equity index futures. WTI oil is $107.21 and gold is $1412.00. There are no Canadian data releases today but the US has Redbook index, Case Schiller Home prices, Consumer confidence and Richmond Fed manuafacturing.

The short term USDCAD technicals are bullish while above 1.0480 but need to break 1.0560 to extend gains to 1.0610. For today, USD suport is seen at 1.0520, 1.0505 and 1.0490. Resistance is at 1.0540, 1.0580 and 1.0580.

Today’s Range 1.0505-60

Loonieviews August 26, 2013


USDCAD Overnight Range 1.0501-1.0520

See original post on Saxo Bank’s Trading Floor

The USDCAD is starting this sweltering August Monday (humidex 29C in Toronto at 6:30 am) with a modestly bid bias, but facing minor resistance at 1.0520. This level is likely to hold until the release of today’s US July Durable Goods report (forecast down 4 percent, ex transportation percent) . A worse than expected number may lead to US dollar selling back to minor support at 1.0490.

Syria is being condemned for a reportedly chemical weapons attack on the rebels which many believe could lead to some sort of US intervention, possibly this week. If so, the US dollar would be in demand as a safe haven and the Canadian dollar would suffer.

The short term USDCAD technicals are bullish. The break of the 1.0440-80 resistance zone suggests a short term bottom is in place around 1.0320 with a test of 1.0660 in the cards. For today, USD support is at 1.0500, 1.0490 and 1.0470, Resistance is at 1.0520, 1.0550 and 1.0610

Today’s Range 1.0480-1.0550

Loonieviews August 23, 2013


USDCAD OPEN 1.0553-58 Overnight Range 1.0506-66

See more on Saxo Bank’s Trading Floor

The USDCAD climbed steadily overnight, never looking back and making those of us looking for a correction, heck, even a minor pullback, look foolish. Demand for CADJPY and bullish USDCAD technicals can be blamed for part of the move although the improving outlook for the US economy and perhaps a successful soft landing in China argue that the loonie should be rising. Canadian CPI data is on tap (forecast 1.4%) but since it is well below the 2% inflation target, it should not be a factor.Global equity indices were mixed and US equity index futures are flat to down. WTI oil is $105.09 and gold is $1,375.65

The short term USDCAD technicals are bullish while trading above 1.0490 targeting 1.0580 and t

hen 1.0660. A move below 1.0510 made lead to further USDCAD weakness targeting 1.0440. For today, USD support is 1.0550, 1.0510 and 1.0480. Resistance is 1.0580, 1.0610 and 1.0660

Todays Range 1.0510-1.0610