THE TIPSTER
THE Canadian dollar continues to look strong on the back of a firmer oil price, especially against the yen, which is a net importer of oil. But having traded in a range of ¥86.40-¥82.00 over the last few weeks, the loonie looks to be testing the top of its recent range. Look to sell Canadian dollar-yen around ¥86.30 and WTI crude oil anywhere close to $81. CMC Markets’ spread on Canadian dollar-yen of ¥85.30-¥83.35 and WTI Crude $79.50-$79.56.
Likewise against the greenback: the loonie has found some strength against its larger cousin in recent weeks but the break below Ca$1.0300 seems to have been a stretch too far, despite the worsening economic data that continues to flow out of Washington with US consumer confidence being the latest metric to disappoint. Falling oil prices have been cited as a key driver behind the reversal of fortunes but assuming the resource economies continue to grow it’s only a matter of time before further rate hikes are seen from Ottawa. The current IG Index price on dollar-Canadian dollar is Ca$1.0325-Ca$1.0328.
And, to come full circle, dollar-yen seems to have bottomed out at the ¥86 level, buoyed up by the recent upbeat European and US earnings data. Dollar-yen has broken its 20-day moving average for the first time since 17 June and a close above ¥88.15 should see a short-term target of ¥89.20. Intraday support lies at ¥87.35 with stop losses below ¥86.80. Decent sell interest has been noted at ¥88.15, ¥88.70 and ¥89.10. Spread Co quotes dollar-yen at ¥87.75–¥87.78.
Sterling has broken new territory against the euro since the release of second quarter GDP growth surprised to the upside. It sank back after breaching the €1.2 level but it is unlikely that confidence in the European bank stress tests will be enough to prompt a euro breakthrough. Capital Spreads quotes a sterling-euro price of €1.1945-€1.1949.