The EUR is lower and we will get to that in a moment, but first we look at the Canadian Dollar which has weakened overnight after comments by Finance Minister Jim Flaherty.  He stated that while Canada is “still on trackâ€, economists anticipate “moderate growth†and because of that, economic forecasts may be revised downwards.  Add these comments to those made earlier this week by Bank of Canada Governor Carney and the USD/CAD moved higher.  Next week’s Bank of Canada meeting will probably include a post meeting statement that sees the BOC move from a mildly hawkish stance to a neutral one.  USD/CAD is trading around the .9875 overnight high.  The strong resistance point remains .9925 and while it isn’t expected to get there today, that will be a target for next week.
As for the EUR, the late afternoon North American selloff yesterday, triggered by the selloff in US equities continued overnight. Â EUR dipped briefly below the support area of 1.3050 before bouncing back and presently is trading slightly above that level. European leaders are moving forward with their goal of establishing a Euro bank supervisor the the end of the year. Â This may what Spain has been looking for as they may look at this as a way for Spanish banks to receive aid directly.
The EU is hoping to have the bank supervisor in place by January 1, 2013.  It is expected that all 6,000 Euro banks will be covered by January 1, 2014.  And of course, there were the usual comments from EU leaders.  EU President Van Rompuy wants the supervisor operational as soon as possible, while German Chancellor Merkel endorsed a “go-slow†approach and said before direct aid is possible, the oversight system needs reach “practical completionâ€.  She added that the goal is to create something that is better than what presently exists.
The banking union was the main discussion of the EU summit. Â According to EU Economic and Monetary Affairs Commissioner Rehn, as the 6,000 banks come under ECB supervision, day to day oversight would be delegated to national authorities while ECB would be responsible for supervision of the important banks only. Â They would oversee other banks only when necessary. Â The question now appears to be when the ESM could start recapitalizing troubled banks. Â Greece and Spain took a backseat to this topic. Â According to French President Hollande, Spanish assistance was not discussed at the summit.
Technically, the failure to maintain the rally above 1.3100 has turned sentiment neutral for the moment.  The main points remain 1.3050, then 1.3030 on the downside and 1.3080 and 1.3110 on top.  Basically today’s close will set the stage for next week’s target.  If we close below 1.3050, the near term support at 1.2825 will once again become a target.  However, if the EUR gets back above 1.3100, the target once again will be 1.3170, with further momentum taking the EUR towards 1.3260.
I expect an inside trading day, with the EUR remaining with the range achieved overnight. Â If anything, we may see some poking towards the downside as the North American markets open this morning. Â This could happen if the US equity markets fall early in the trading day.
Further reading: Canadian Dollar – Reached its Peak?
