Canadian dollar exchange rate: CAD sharply lower vs USD, GBP as "the risk switch has flipped back to the off position"

Last Updated on Friday, 10 February 2012 13:33 Written by Sam Coventry Friday, 10 February 2012 13:29

The pound Canadian dollar exchange rate is 0.6% higher on the day with 1 GBP = 1.5818 CAD, the euro Canadian dollar exchange rate is unchanged with 1 EUR = 1.3215, the US dollar Canadian dollar exchange rate is 0.86% higher with 1 USD = 1.0035.

Today we see the data calendar picks up a little with Canadian merchandise trade (smaller surplus expected), US trade and Michigan confidence (see over for details) but given the focus on Greece, "we suspect that the numbers will come and go this morning without much impact on sentiment," says Shaun Osborne at TD Securities.

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That said, the key driver of the Canadian dollar exchange rate today is underlying risk sentiment.

Osborne notes that:

"The risk switch has flipped back to the “off” position this morning, with a Greek deal still absent (bellicose headlines from some Greek politicians are not helping sentiment out of the gate) and the data flow overnight dominated by more weak Chinese data (possibly due to seasonal effects, see over for details).

The USD is broadly higher, stocks are mostly lower and the commodity space has failed to even respond to broad margin cuts announced last night by the CME. Gold looked a little wobbly on the charts yesterday, we thought, and looks even more vulnerable to a downshift today."

It is the AUD that is the major underperformer in the overnight session as the commodity bloc currencies are facing the brunt of the risk aversion characterising market today.

Meanwhile the USD is seeing broad support, driving AUD/CAD quite sharply of the multi-year highs seen earlier in the week.

"Technically, this market is looking vulnerable to a deeper downshift after seven consecutive weeks of gains," says Osborne.