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"CAD to reach parity in 3mths forecasted from UBS "..
"The Canadian dollar has a stronger upside, in our view..."
The
Canadian dollar will hit parity with the U.S. dollar in the next three
months, according to a new forecast from UBS, the Swiss bank. UBS Wealth Management Research projects the loonie will continue to make gains during the nine months after that. “On
the one hand, should the U.S. introduce quantitative easing, Canada
will profit directly without even having to pay for it,” a report from
UBS states. “On the other, it cannot hurt Canada if the U.S. starts to
take off and avoids another dip.” The U.S. Federal Reserve
is currently contemplating trying to boost the U.S. economy by buying
up treasuries and other securities in the open marketplace in an effort
to lower borrowing costs even further, so-called “quantitative easing.” The
loonie was trading at US96.48¢ in early trade on Thursday, down about
US0.60¢ from Wednesday. After hitting par in three months time, UBS
predicts the currency will push on to US1.03¢ in six months time and
US1.05¢ within a year. UBS said that the Canadian dollar,
compared to some of the other currencies of the developed world — such
as Australia’s and New Zealand’s— still has a lot of upside potential
and has the best chance to appreciate against the U.S. dollar. “The
Aussie and the kiwi have rocketed in 2010 and we see limited upside for
both currencies in the coming year,” UBS said in its report. “The
Canadian dollar has a stronger upside, in our view.”
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"USD- Durable orders show some signs of minor economic recovery.."
"We look at the recent data as necessary correction rather than the start of something troublesome.."
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Orders for U.S. capital equipment
rebounded in August, signaling a slowdown in business investment
may be less severe than some economists projected. Bookings for goods like computers and communications gear
climbed 4.1 percent after a 5.3 percent decline in July that was
smaller than previously estimated, figures from the Commerce
Department showed today in Washington. Total orders dropped 1.3
percent, depressed by volatile demand for aircraft, and bookings
excluding transportation equipment rose more than forecast.
Manufacturing, which led the U.S. out of the worst recession
since the 1930s, may hold up as companies use the surge in
profits to replace outdated equipment. The figures may ease
concern at the Federal Reserve, which this week citied a slowdown
in business investment in announcing they were willing to take
additional measures to spur the economy.
“Companies have record cash flow and they still need to
replace depleted capital,” Joe LaVorgna, chief U.S. economist at
Deutsche Bank Securities Inc. in New York, said in a note before
the report. “We look at the recent data as a necessary
correction rather than the start of something troublesome.”
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| Currency Commentary
EUR, USD, CAD, GBP & JPY
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EUR: The Euro is maintaining momentum to the upside triggered by the
strong German IFO data released this morning over Europe. The pair is
up more than 100 pips since that moment, peaking at 1.3434 which is
just under the 5-month high recorded yesterday.
USD: The Dollar reached fresh daily lows across the board after the release of US Durable Goods Orders. The Dollar also tumbled against commodity currencies as stocks in Europe turned positive and Wall Street futures rose further. The US Census Bureau announced that Durable Goods Orders decreased 1.3%
in August; expectations were for a decline of 0.9%. Excluding
transportations new orders increased 2.0%, beating expectation of an
increase of 0.9%.
Will the further decline of the dollar continue once the U.S. equity markets open shortly?
CAD: With commodities performing well today, tin, copper and the possible tropical storm Matthew heading supposedly towards the Gulf of Mexico providing a rise in oil..another good day for buyers of the USD. Today's expected range lower 1.0300 to possible higher 1.0100 levels. If the USD/CAD breaks below 1.0190...we may see the mid 1.0100 levels. The lower 1.0100 levels were last reached back in 6th of August 2010.
GBP: The Pound has jumped to a fresh 6-week high barely under 1.5800 price zone,
following US Durable goods orders, that fell 1.3% in August, a larger
drop than the 1.0% decline expected; however, Durable goods orders
excluding transportation rose 2.0%. both previous months reading were
revised to the upside, pushing stocks strongly higher and triggering
risk appetite rallies across the board.
JPY: With stocks falling across the world, safe haven currencies such as
Japanese Yen, are gaining ground against major rivals, with USD/JPY
breaking under 84.40 previous daily low, and aiming to retest past
Wednesday low around 84.27. Quoting barely above that level, pair has
resumed its bearish trend following FOMC statement past Wednesday,
erasing most of post BOJ intervention gains.
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| Technical Ranges
CAD, USD, EUR, JPY & GBP
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 USD/CAD
Support: 1.0176 Resistance: 1.0307
CAD/JPY
Support: 81.29 Resistance: 83.03
EUR/CAD
Support: 1.3688 Resistance: 1.3819
EUR/USD
Support: 1.3307 Resistance: 1.3516
GBP/USD
Support: 1.5728 Resistance: 1.5850
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| Main USD/CAD data today: |
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1. USD- Durable Goods orders & New Home Sales data.
CAD - No relevant data.
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