“Who Cut the Cheese”? 15Jan15


"Who Cut the Cheese"?

USDCAD Open 1.1932-36 Overnight Range 1.1932-1.1994

Range from 6:15 am to 8:00am 1.1805-1.1932

FX volatility returned with a vengeance overnight. It started normally enough in Asia. Better than expected Australian employment data (37.4K vs forecast of 4k) sent AUDUSD skyward and Kiwi followed in sympathy. In Europe it went nuts. The Swiss National Bank (SNB) abandoned the 1.2000 EURCHF floor and introduced negative interest rates with a 50 point cut. Before you could say “Who cut the cheese?” EURCHF collapsed from 1.2010 to 0.8500. (It has since bounced back to 1.0250) USDCHF plunged from 1.0215 to 0.7790. The USD sank against the all the majors.

USDCAD was sidelined for most of the CHF fireworks, drifting lower in an orderly manner. That all changed when the early New York/Toronto traders arrived at their desks. USDCAD crashed, shedding .0100 points in minutes for a peak to floor overnight range of 1.1815-1.1994.

The big question is “Why”? My guess is that it is a combination of general US dollar weakness, a bump in WTI to $48.96/bbl, the anticipation of CAD $7.5 billion in M&A demand if Samsung really does buy Blackberry and a way overdue correction. USDCAD had gains had extended far above the short term rising trend line so a profit taking/profit protection wash out shouldn’t have surprised me (It did, though)

The short term USDCAD technicals are bearish with today’s break of support at 1.1940 and again at 1.1880. There is support in the 1.1790-1.1800 guarding the uptrend line from mid-November which comes in at 1.1720.

For today, USD support is at 1.1805, 1.1790 and 1.1760. Resistance is at 1.1860, 1.1890 and 1.1905

Today’s Range 1.1805-1.1880

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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