Daily FX Commentary, February 28, 2011
Monday, February 28, 2011 at 12:17PM
By Warren Hayhoe,
Columnist, Canadian Money Magazine
USD/CAD 0.9780
GBP/CAD 1.5875
EUR/USD 1.3840
GBP/USD 1.6240
EUR/CAD 1.3530
USD/JPY 81.80
Oil opened at $97.88, currently $98.13Gold opened at $1409.30, currently $1414.20
Morning Observations:
The Loonie finds itself in growing demand this morning as Canadian based companies continue to be scooped up by international buyers. Lundin Mining Corp. if it goes through will be the most recent victim in a deal estimated to be worth 4.9bio. Over the past couple months the deals in the pipeline start to add up: Taget -> Zellers (1.9bio), PetroChina -> 50% stake in an EnCana Nat. Gas deposit (5.4bio), Cliffs Natural Resources -> Consolidated Thompson (4bio), etc. The recent infatuation with Canada has our currency reaching and surpassing 35 month highs against our American counterpart as the trade has been only one way for over 6 months now. Although technically the trade is nearing oversold territory until we see a break above the trend line depicted below the market will look to remain long CAD. Based on the most recent IMM open interest data the market is currently long over 68K CAD contracts. Historically that figure doesn’t get much beyond 50K contracts with the exception of March 2010 (70K) and October 07 (83K).
Datawise today Canadian GDP, Chicago PMI, and US pending home sales will accompany month end flows. We have not heard of any notable month end repositioning so expect USDCAD to remain somewhat confined ahead of the BoC rate decision tomorrow (0.9750-0.9825). Offers begin to fill in over Thursday’s 0.9830/35 high and should help to stifle any move higher, the risk may be on the bottom side where stops loom under 0.9750.
Thought of the Day
“All generalizations are false, including this one.” -- Mark Twain
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