| ifcmarkets Intraday snapshot |
Corrects higher off the 1.4253 low, but upside risk is limited to the 1.4401 area. The rally is even struggling to meet the minimum upside target at 1.4369, putting the immediate focus back onto Thursday's 1.4253 low. A push below 1.4253 would extend the sharp setback from Wednesday's 1.4537 high, exposing 1.4187 and the July 21 higher low at 1.4138. A recovery above 1.4369 would provide respite, but only above 1.4401 would lift the tone. |
| The recovery off 1.6294 is putting resistance at 1.6364 to the test. Thursday's low at 1.6294 lies a long way shy of expectations, and a break above 1.6364 would bring Wednesday's dark cloud cover candle high at 1.6437 back into the picture. Loss of 1.6294 would attract a fresh wave of GBP weakness, exposing 1.6262 and 1.6192. |
| Extends the powerful downtrend into fresh 19-week lows, and targets at 77.32 and 76.95 are eyed. Support at 77.44 is not expected to hold, and the persistent USD bear trend makes the support cluster between 76.95 and 77.00 as the main downside objective. Projected resistance at 77.72 needs to be broken in order to question the bearish USD outlook, opening 77.90. |
| Downside consolidation is testing support at 1.0938, although there is technical scope for corrective weakness to the 1.0862/1.0884 support cluster. However, this cluster marks the limit for corrective AUD bear pressure. A recovery above 1.1013 is required to lift the tone, and bring the recent 1.1077/1.1083 highs back into the picture. |
| For sadly obvious reasons, a favored pastime among market analystsjust now is spotting likely corollaries of a U.S. credit-rating downgrade. The view that not even an eleventh-hour Congressional deal to raise the debt ceiling could prevent one is widespread, as is the idea that the Canadian dollar stands to get yet another safe-haven boost from its southern neighbor's embarrassment. If the U.S. loses its AAA-status, Canada, with its sound fiscal situation, commodity wealth and solid economic performance, will likely benefit, said Nomura International Friday, as investors seek to replace former U.S. investment with more solid, top-rated assets. Positioned at the more secure end of the triple-A ratings spectrum, Canada has long been an attractive destination for capital and its allure was arguably only enhanced by the financial crisis. "Since the beginning of 2009, inflows to the Canadian bond market have averaged almost $8 billion per month, compared with only $1.5 billion before the crisis," said Nomura. The share of non-resident holdings of Canadian government bonds has increased to 24% from 15% over the same period. Canada is also seen as a safer bet than the large, triple-A rated economies of Europe, Germany, France and the U.K. These three have their own vast debts, contingent euro-zone liabilities, or both, all of which are likely to burnish the Canadian dollar's charms by comparison. At the moment the U.S. dollar buys CAD0.9509, which is admittedly a 'big figure' above the 3.5 year low struck last week, when the loonie was boosted by 30-year records against the U.S. dollar from its fellow commodity currencies in Australia and New Zealand. |
The euro came under renewed pressure in European trading Friday as euro-zone sovereign debt fears resurfaced, shoving the stalled U.S. debt ceiling debate into the background. The single currency slipped briefly below $1.4245 against the dollar after a euro-zone official said the European Financial Stability Facility might not be ready to lend Greece its next loan tranche by mid-September. Spain was also a focus with early elections called for Nov. 20 after Moody's Investors Service Inc. earlier warned that it may cut Spain's Aa2 credit rating, helping to divert attention away from the U.S., where politicians delayed their vote Thursday on a debt proposal by House of Representatives speaker John Boehner. For now, Europe is in the spotlight as uncertainty continues to reign over whether last week's Greek bailout deal has done enough to contain the contagion due to the euro zone's debt problems. "Last week's optimism regarding the summit has completely evaporated and question marks with regards to the outcome and some of the details regarding the European Financial Stability Facility remain," said head of foreign exchange strategy Ian Stannard at Morgan Stanley. |
| The dollar fell in Asia Friday after the U.S. House cancelled a vote on Speaker John Boehner's debt ceiling plan, adding to speculation the risk of a sovereign downgrade is rising even if a last-minute deal is reached by a Tuesday deadline to avoid default. The greenback dropped to a fresh more than four-month low against the yen at Y77.48 after House Majority Whip Kevin McCarthy said the House would not vote as scheduled Thursday evening in D.C., as House Republicans were unable to gain enough support within their ranks to secure passage of the bill. "I'd say 90% or more of people in the market have priced in expectations for the U.S. to avoid a default, but with this now down to the wire, there's a real threat of sovereign downgrades regardless of the outcome," said Mitsuru Sahara, a senior FX dealer at Bank of Tokyo-Mitsubishi UFJ. Dealers said the continued political discord in the U.S. may tarnish the dollar's long-time status as the safest place to park funds in turbulent times. The Swiss franc and the yen, currencies of countries that both have large current account surpluses, have benefited on this trend. But in his most recent bid to talk the yen down to stave off further damage to Japan's key export sector, Finance Minister Yoshihiko Noda reiterated Friday that the currency's recent gains "are not in line with the economy's fundamentals." The Bank of Japan is expected to keep interest rates at near-zero levels for the foreseeable future, which should decrease the appeal of holding the unit. |
| Renewed concerns about Europe's ability to avert financial disaster pressured the euro Thursday in New York, momentarily eclipsing the stormy U.S. debt-ceiling debate as investors mulled whether the euro-zone crisis could take a turn for the worse. Barely a week after a landmark European Union summit struck an accord to rescue financially distressed Greece, investors have yet to be fully mollified. Even in the face of widening pessimism about the U.S.'s ability to overcome the political stalemate and raise its $14.3 trillion debt ceiling by early next week, the euro fell for the second-consecutive session. Analysts have nervously eyed the yields on Italian and Spanish government debt--the euro zone's third- and fourth-largest economies, respectively--as proxies of the market's growing concern that Europe can successfully manage the possibility of Greece's debt woes leapfrogging to Spain and Italy. |
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