Taheri Exchange Daily FX Report
Issue: # 82         www.taheriexchange.com   25th of August 2010
worldfx

"Loonie falls once again...."

"It's a simple reflection of risk aversion..."


Canada’s dollar depreciated for a fifth day versus its U.S. counterpart, the longest string of losses since January 2009, as risk aversion drove global stocks lower, weakening the outlook for currencies tied to growth.

The loonie, as the currency is sometimes known, is down 1.1% this year. A faltering economic recovery means the chances for further Bank of Canada interest-rate increases in 2010 are diminishing, dimming the currency’s appeal.

“It’s a simple reflection of risk aversion,” Shaun Osborne, chief currency strategist in Toronto at Toronto- Dominion Bank’s TD Securities unit, wrote in an instant message. “It feels a little as if the impetus for higher rates in Canada beyond September is perhaps fading a little more.”

The Canadian currency retreated 0.4% to $1.0652 per U.S. dollar at 8:09 a.m. in Toronto, compared with $1.0615 yesterday, when it touched $1.0665, the lowest point since July 6. One Canadian dollar buys 93.88 U.S. cents.

Osborne predicted the loonie will head toward $1.0775 if it breaks through $1.0675.

The MSCI World Index, a gauge of equities in 24 developed nations, also fell a fifth day.

Bank of Canada policy makers next meet on Sept. 8, after raising interest rates by a quarter percentage point to 0.75 percent on July 20, the second increase in two months.


"USD- Durable goods comes out weak for the month of July...

 "Even manufacturing, the one sector consistently making jobs, is showing signs of fatigue..."

bulls-bears

 
Orders for U.S. durable goods increased less than forecast in July, a sign that one of the few remaining bright spots in the economy is cooling. Bookings increased 0.3 percent, compared with the 3 percent median estimate.

Manufacturing is slowing after leading the U.S. out of the worst recession since the 1930s as consumers cut back on spending. The pullback in factory activity will probably contribute to deceleration in growth in the second half of the year.

“Even manufacturing, the one sector consistently making jobs, is showing signs of fatigue,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. “Businesses appear to be buying new equipment simply to replace old gear or boost efficiency rather than expand already- bloated capacity.”


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Currency Commentary
EUR, USD, CAD, GBP & JPY

world currency


EUR:  The Euro upside attempt, favoured by the improvement of German business confidence has been capped at 1.2720, as overall risk aversion prevailed over the impact of positive Eurozone data, sending the pair down to 1.2650.


USD:  Earlier this morning, durable goods data provided another sign that the U.S. economy is not in a true recovery or even getting close to it. Today @ 10am another key piece of data, New Home Sales will most likely come out negative..giving more strength to the USD.

CAD:  Yesterday's minor strength in the equity markets..gave alittle breathing room for the CAD..as the levels were in the mid 1.0600 ..dropping to the mid 1.0500 levels. Currently we are back once again in the 1.0600 range. The question still remains..will the USD/CAD reach the 1.0700 or even the 1.0800 levels later this week? Overall great rates for sellers of the USD.

GBP: The Pound remains trading sideways between 1.5390/00 on the downside, and 1.5460 session high

JPY:  The Dollar sell off witnessed on Tuesday found support at 83.60 a fresh 15-year low, and the pair has picked up on Wednesday's Asian and European sessions, to reach session high at 84.65.


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Technical Ranges
CAD, USD, EUR, JPY & GBP

technical chartsUSD/CAD                                                        

Support: 1.0556   Resistance: 1.0735

CAD/JPY

Support:  78.40   Resistance:  80.02   

 EUR/CAD

 Support: 1.3348  Resistance: 1.3563

 

 EUR/USD

 Support:  1.2557  Resistance: 1.2736

GBP/USD

Support:  1.5350  Resistance: 1.5563

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Main USD/CAD data today:

1. USD-Durable Goods and New Home Sales data.
CAD - No relevant data.

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