USD/CAD Open: 0.9922-25 Overnight Range: 0.9873-0.9955
The Canadian dollar jumped around overnight. Equities and the loonie quickly gave up its gains yesterday on a risk-off backdrop about worries in France about solvency issues. Oil is at $81.44 and gold is at $1,784. NY futures are pointing lower today. Today, trade balance data and US jobless claims are released.
The short term Canadian dollar technicals are negative. The long term Canadian dollar techinicals are bullish but could become mixed should it breach parity decisively. For the most part, the loonie has ranged between parity and 0.9400 for most of this year, bouncing up and down. For today, USD resistance is at 0.9955, 0.9974, and 0.9999. Support is at 0.9914, 0.9850, 0.9817 and 0.9750.
Some traders now expect a Bank of Canada rate cut by the end of the year – a quick turnaround from an expected rate hike. The cost of insuring France’s debt has been rising, creating uncertainty that trouble may be brewing. The focus is on the macro picture in Europe and global growth. The ECB has continued bond buying. Governments are being forced to control debt and implement austerity measures, but these cutbacks will impact global growth and consumption. Boosting the economy requires government spending, but this impacts the debt load. A difficult conundrum. One solution is to talk austerity but spend to boost the economy, passing on the problem to future governments. Expect volatile markets and developments in Europe to drive market direction. Market conditions remain illiquid and expect volatility to continue.
Today’s Range: 0.9850 – 0.9999
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