01:36 GMT - [USD/CAD] pushes up steadily in early Asia session with dip
buyers from specs and Tokyo names. A quick scoop to 1.2498 high but soft
USD/JPY, forced it to reverse to mid-1.2400 handle. Choppy trades return
with cautious two-way flows and activities. Bids are found around 1.2430-
20 area with more decent buying orders stationed at 1.2400. Solid offers
are rumored to be above 1.2500 handle.
03:26 GMT - [USD/CAD] traps at 1.2475 axis with narrow ranges bound
between 1.2440 to 1.2500. US names and hedge funds were prime bidders at
intermittent levels from 1.2450 to 1.2470. This saw a rapid nudge to 1.2498
although talk of corporate offers cap at/above 1.2500 handle. With the recent
price action, a clear break of 1.2525 will attract specs and medium prop
players to buy the Usd for next 1.2600 target. With the BOC budget
released yesterday, relaxing laws on pension funds to invest abroad.
This indicates more outflow of Cad funds by pension and fund
managers. A test of a firmer Usd is not surprise for the aforementioned
target. No mkt-moving economic data today, focus on US durable goods and
initial claims. Speaker-wise, Fed Pres Poole and Fed Gov Bernanke are
scheduled to give speech today.
[IFR Forex Watch]
[19:33 GMT February 23]
USD/CAD led the USD rebound today, breaking back
aboveresistance in the 1.2355/60 area after US CPI
quelled fears of a rapid uptick in US inflation and
rumors circulated of a CAD bearish component to the
Canadian budget which will be announced this
afternoon. Rumors swept the market this morning
that the budget would contain a measure to allow
Canadian pension plans to increase their maximum
foreign investment percentage to 35% from the
present 30%. USD/CAD rallied as high as 1.2450 on
the speculation before stalling.
US/Canadian interest rate differentials corrected
modestly today but remain USD-supportive overall.
2-year US notes out-yield CGBs by 54 bp this
down from 57 bp yesterday, but still about 14 bp
wider over the last 10 days.
10s trade at par, down from a 4 bp premium in favor
of the USD. The FOMC minutes
contained few surprises. The real fed funds rate is
still too low but the pace
of future hikes is subject to incoming data. Some
FOMC members were concerned
that a significant further fall in the USD could
spur inflation. 1.2375 is
supporting USD/CAD now on dips. Stops are eyed