January 12, 2010

USD/CAD Open 1.0346-51 Overnight Range 1.0315-1.0365

The CAD drifted lower overnight on the back of slightly lower oil ($81.79 -0.73), gold ($1,147.80 -3.60) and lower New York equity futures. A strategist from China’s sovereign wealth fund proclaimed that the US dollar had it bottom, supporting the US dollar, but the comments were later clarified, saying that they were a personal view and not the view of CIC. US data includes International trade (forecast -34.9 billion). Canadian Merchandise trade is also released with a small surplus projected (Forecast 0.6 bio)

The short term CAD technicals are mixed. CAD bulls view the recent USD strength as corrective and expect USD resistance at 1.0380, 1.0420 and 1.0450 to cap for another move to 1.0250. CAD bears are looking for the US dollar to extend through 1.0450 to 1.0550. For today, USD support is at 1.0310 and 1.0280. USD resistance is at 1.0370 and 1.0410.

Today’s Canadian Merchandise trade data is expected to show a slight surplus apparently mostly due to the higher gold prices. This may provide the loonie with a little support, however, due to the recent gains in equities, commodities and currencies, a day of profit taking is warranted.

Today’s Range 1.0290-1.0380

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