| Technical Ranges
CAD, USD, EUR, GBP & JPY
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USD/CAD
Support: 0.9773
Resistance: 0.9885
CAD/JPY
Support: 81.47
Resistance: 82.82
EUR/CAD
Support: 1.3819 Resistance: 1.3942
EUR/USD
Support: 1.4067 Resistance: 1.4168
GBP/USD
Support: 1.6112 Resistance: 1.6269
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Currency Commentary
EUR, USD, CAD, GBP , JPY
EUR:
The Euro retreat from yesterday's high at 1.4250 was contained at 1.4150 area on Asian session and the pair picked up on European session aiming to resume the longer-term uptrend although it failed to confirm above 1.4200.
USD: Later this morning due is New Home Sales data, if positive..maybe the only information that will cause slight weakness in the USD/CAD...otherwise..the bullish trend continues due to uncertainty in the Middle East, Africa and Japan. The U.S. equity markets will set the trend for the pair today....and the 0.9900 range is around the corner...
CAD: Equity markets have fallen...commodity markets are on a slight rise..overall..continual weakness for the "Loonie". No further CAD data due this week...if the USD/CAD can break the higher 0.9800 lvls today..we may see 0.9900 either today or the next 2 days.
Yesterday's budget announcement and talks of a possible election in Canada...all positive for exporters ...as the CAD will weaken. The USD/CAD needs to remain in the 1.0200 range to keep export productivity flowing for the Canadian economy. Will this level be reached in the 3rd quarter or later this year?
We have orders from our clients to sell @ 0.9850 or higher...for our buyers orders are in for higher 0.9700 levels...
Expected range ..
possible higher 0.9700 to higher 0.9800
GBP: The Cable extends further to the downside in afternoon trading over Europe, as the British Treasury announces its 2011 budget. The pair is off around 130 pips from yesterday´s closing price, sliding under 1.6300 in the last few hours and registering a daily low near 1.6250.
JPY: The recent Yen weakens is starting to subside on Wednesday as risk appetite falters and enthusiasm about the advances in Fukushima nuclear plant wane, on news about high radioactivity levels in sea waters near the plant and in the food chain.
USD/JPY has pulled lower from 81.30 high on Monday and Tuesday, to test the floor of the current week's trading range, at 80.70, which, so far, remains unbroken.
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" Economists view on CAD direction if there is an election "....
" political uncertainty will be a looming question ".....
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If Canada in fact heads into an election, economists believe there could be some headwinds for the Canadian dollar , which didn’t react much yesterday after NDP leader Jack Layton said he wouldn’t support the budget, and uncertainty surrounding the fiscal outlook. Most likely is that a campaign would stop any talk of the Bank of Canada hiking its benchmark overnight rate in April.
“First, the uncertainty over the near-term fiscal policy environment just went up in that it is less clear whether fiscal policy will act as a drag on growth if election goodies are dangled about,” said economists Derek Holt and Gorica Djeric of Scotia Capital.
“Second, over roughly the past 20 years, the [Bank of Canada] has generally avoided starting a tightening campaign in an election. It only did so in 1997, and that was because the economy was rapidly healing after the disaster of the first two thirds of the 1990s via over 734,000 jobs having been created in the back to back years of 1997-98. Now, if a May or June vote is in the cards, that adds to a long list of reasons why most analysts have abandoned much of any notion of a spring hike.”
Avery Shenfeld, the chief economist at CIBC World Markets, agreed, moving back his forecast for a rate hike to July, from his initial projection of May. He cited three reasons:
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The loonie will probably stay firm given high oil prices.
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Bank of Canada Governor Mark Carney may be "reluctant" to even signal a May rate hike at his next meeting in April.
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Softer core inflation amid 7.8-per cent unemployment could prompt Mr. Carney to raise his estimate of "potential" economic growth.
Overall, economists believe that Canada's fiscal standing will trump anyuncertainty surrounding an election, which should leave the loonie in a strong position.
"Political uncertainty will be a looming question, however the global market has become quite comfortable with Canadian elections, the differences (or lack of) in our parties and a minority government," said Scotia Capital currency strategist Camilla Sutton. "Accordingly, we think in the medium term the focus should reside more with the strong sovereign position in Canada and less with political uncertainty."
Carl Weinberg, the chief economist at High Frequency Economics in Valhalla, N.Y., told his clients today that there wouldn't be a "sea change in power" if an election is called, and deficit-reduction will still be on the table regardless of what happens.
"Anything can happen at the polls, and the resulting budget is likely to differ in some respects from the plan outlined yesterday," he said. "However, fiscal austerity will be a key part of the platform of any party that wants to form a government Up North. So we see an election as neutral for the loonie and the bond market."
" USD- New home sales projecting increase in February "..
" this is the bouncing-a-long-the bottom scenario " ...
A projected February increase in sales of U.S. new homes probably failed to make up for the ground lost the prior month, adding to evidence the industry is floundering, economists said before a report today.
Purchases, tabulated when contracts are signed, climbed 2.1 percent to a 290,000 annual pace after slumping 13 percent in January, even with the gain, sales are close to the record-low 274,000 pace reached in August.
Builders are struggling to compete with existing homes as foreclosures add to the overhang of unsold properties and drive down prices. The figures underscore the Federal Reserve's view that the housing market “continues to be depressed” even as the rest of the economy improves.
“This is the bouncing-a-long-the-bottom scenario,” Julia Coronado, chief economist for North America at BNP Paribas in New York. “We’re seeing the flood of existing homes coming onto the market, really sapping demand for new homes. The new-home and the whole construction picture looks very vulnerable.”
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| Main USD/CAD data today: |
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1. USD - New home sales data.
2. CAD - No relevant data.
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