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The pressure that the problems of Greece are having on the EUR are well documented, but now it looks like those pressures are drifting across the Atlantic and affecting the Canadian dollar as well.  As with the EUR, the USD/CAD has been traded as a risk-on, risk-off currency and the last few days, the Canadian Dollar has gotten caught in the EUR selling spree.  Adding to the “loonie’s” woes, were a report yesterday that housing starts were less than expected in October. The USD/CAD reached a high of 1.0009, breaching parity for the first time since November 1.  The currency is presently orbiting the 1.0000 area.  Yesterday Bank of Canada Governor stated that he is prepared to act if Canada’s economy is hurt by the possible fiscal cliff problems of the U.S. economy.

As for the EUR, the latest comments out of Europe show that finance ministers are not prepared to release further aid for Greece until they meet on November 12.  Greece has been waiting since June for these funds.  Apparently the finance ministers are waiting for a final report from the Troika before they take action.

As we reach Friday, the EUR is trading very near some serious technical levels and today’s price action will be closely watched as we head to the end of the week. Overnight the EUR reached a low of 1.2727, breaking through support at 1.2735.  A close below 1.2720 this afternoon would set a possible target rate of 1.2480 by year end.  While this is not a new thought, as many analysts expected the EUR to reach 1.2500 by the end of the year, it is important to note it is the first time it has been talked about in a while.

Most traders will focus their attention today on the President.  Now that the election is in our rear view mirror, it will be interesting to see what President Obama plans to do in his second term to avoid the fiscal cliff.  We should get a first glimpse today as the President is scheduled to speak on this subject.  As a White House stated released said,” the President has reiterated his commitment to finding bi-partisan solutions to reduce the deficit in a balanced way, cut taxes for middle class families and small businesses, and create jobs.  After the President speaks we are likely to hear from House Speaker John Boehner.  Earlier this week he called for cooperation and said he was confident that the Republican’s would be willing to accept new government revenues as part of a deal to reduce the federal debt.  Hopefully both parties will be able to come to an agreement ahead of the year end deadline.

Overnight equity markets were broadly lower after yesterday’s DOW finished down 121 points.  The only Asian market to end positively was the Taiwan market, while in Europe all equity markets are in the red at this hour.  DOW Futures are flat at 4:45am.

Look for the EUR to remain under pressure.  There is no news coming out today that would change sentiment.  There is always the chance of a surprise, but I don’t expect that.  I would expect to see a test later today of the 1.2720 area.