USD/CAD Open: 1.0105-07 Overnight Range: 1.0070-1.0110

The Canadian dollar was quiet overnight. Overnight, Germany industrial production data was largely positive. Yesterday, the Bank of Canada kept rates the same and didn’t really indicate there would be any imminent cut in rates as growth in Canada would be stronger than expected in the second half, positive for the loonie. Oil is at $101.05 and gold is at $1,726. NY futures are slightly positive today. There are no major data releases today.

The short term Canadian dollar technicals are negative while above parity. For today, USD resistance is at 1.0140, 1.0180, 1.0220, 1.0274, and 1.0320. Support is at 1.0110, 1.0080, and 1.0030.

Rumors that no deal may be reached this weekend on a solution to the eurozone issue has crept in to the market. However, the cost of insuring eurozone debt has been declining suggesting things are getting better from a risk sentiment. There are also rumors that another eurozone bailout fund is in the works which would be twice the size of the initial fund. Markets seems to be quiet and looking for direction as we await the eurozone summit outcome on Friday. Look for rangebound trading in the absence of new headlines.

Today’s Range: 1.0060 – 1.0160

Daily Market | Knightsbridge Foreign Exchange

USD/CAD Open: 1.0169-72 Overnight Range: 1.0145-1.0198

The Canadian dollar traded rangebound overnight vs. the USD. Overnight, Australia’s RBA cut rates as widely expected due to lower growth expectations and issues in Europe. Yesterday, S&P put 15 eurozone countries on negative watch (including Germany and France) adding to negative risk sentiment in Asian and European markets overnight. Oil is at $100.82 and gold is at $1,717. NY futures are flat. Today, the Bank of Canada releases its interest rate decision.

The short term Canadian dollar technicals remain negative. For today, USD resistance is at 1.0180, 1.0220, 1.0274, and 1.0320. Support is at 1.0140, 1.0110, and 1.0080.

Markets remain focused on a key meeting from eurozone policymakers at the end of the week to see if any significant progress has been made to contain the eurozone debt crisis. Meanwhile, markets continue to see-saw based on snippets of positive and negative news, trying to anticipate the next bit of news. The Bank of Canada is widely expected not to change rates, but the focus will be on the commentary to see if considerable stimulus is enough or if more is required. A change in tone that even more stimulus may be required would be loonie negative. The loonie remains largely correlated to the S&P 500 and risk sentiment (driven by Europe) and expect this to continue.

Today’s Range: 1.0160 – 1.0260

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USD/CAD Open: 1.0160-64 Overnight Range: 1.0058-1.0198

The Canadian dollar barely budged in overnight trading. Friday’s Canadian jobs report was slightly negative while the US jobs data report was neutral to slightly positive. Overnight, Italy revealed a $40bn plan to cut its deficit. Oil is at $101.64 and gold is at $1,738. NY futures are positive. This week in Canada, building permits and BoC rate decision (Tuesday), Ivey PMI (Thursday), and trade balance (Friday) data are released. Today in the US, ISM non-mfg data is released.

The short term Canadian dollar technicals remain negative while above par. For today, USD resistance is at 1.0180, 1.0220, 1.0274, and 1.0320. Support is at 1.0140, 1.0110, and 1.0080.

Disappointing jobs data for Canada could be a signal of a changing tide in sentiment for the Canadian economy. With global central banks reducing rates, a key question remains if Canada will have to follow with rate cuts, and if so, this will be a big negative for the Canadian dollar and the carry trade positions (short USD and buy CAD). The key focus continues to remain on Europe and the overhang the debt situation is having on the global economic outlook. Spanish and Italian bond yields started to decline last week and sentiment shifted to a risk on trade. Big announcements are expected at the end of the week from Europe and look for snippets of information to move markets in advance.

Today’s Range: 1.0105 – 1.0205

Daily Market | Knightsbridge Foreign Exchange