GFX Morning FX Commentary March 28th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0125-1.0200

Today’s expected range for the Canadian Dollar against the Euro is 1.2980-1.3035

Today’s expected range for the Canadian Dollar against Sterling  is 1.5350-1.5425

The US Dollar is unchanged from our close yesterday as some calm returns to the Euro market now that the Cypriot banks have reopened and people have access to their money as limited as that it is. EURO.USD did jump a little as German Retail Sales for February came in better than expected but it was not able to hold the strength for long as German unemployment grew, Italian bond yields rose showing that investors want more return to hold Italian bonds and Moody’s reaffirmed Portuguese and Irish bonds as junk citing the uncertain future in Europe is hurting these economies. Further pain ahead for the Euro I think.

The Loonie is holding onto its recent gains as it hovers near the 1.0150 level, most of the action still continues around the Euro as EURO.CAD tries to break below the 1.3000 level. Up today we may get some additional volatility before the Easter long weekend, we get the release of the Canadian GDP report for January and the US 4^th quarter GDP report this morning. For the Canadian number we are expecting a rise of 0.1% and in the US we are looking for a revised number of

0.5%, not numbers that are going to set the world on fire but at least they are not negative.

Just a heads up that our office will be closed tomorrow but a lot of the world will be open so the Loonie will continue to trade on international currency markets, with a lot of banks closed if something happens in the markets you can get a lot of volatility so make sure you have your orders in early today, the Loonie might not move at all but we often see enhanced volatility on Canadian holidays and you want to take advantage of that. There won’t be a commentary on Monday as I am going to take an extended weekend and with most of Europe closed I don’t expect much of a trading range. I will be back online on Tuesday, have a great weekend.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0158			1.0182
CAD/USD		0.9844			0.9821
EUR/USD		1.2798			1.2786
EUR/CAD		1.304			1.302
STG/CAD		1.5386			1.5395
AUD/CAD		1.0595			1.0624
CAD/JPY		92.76			92.67
CAD/CHF		0.9373			0.9352
CAD/HKD		7.6428			7.6053
CAD/CNY		6.1195			6.1021
CAD/MXN		12.1321			12.1642
Commodities
Gold		$1,603.40			$1,591
OIL		$96.72			$95.78
US DOLLAR INDEX
P.CLOSE		83.43			83.04
OPEN		83.26			83.33

 

GFX Morning FX Commentary March 27th, 2013

Good Morning

Today's expected range for the Canadian Dollar against the US Dollar is 1.0150-1.0230

Today's expected range for the Canadian Dollar against the Euro is 1.2980-1.3050

Today's expected range for the Canadian Dollar against Sterling is 1.5370-1.5450

The US Dollar is stronger this morning as Cyprus worries and the political stalemate in Italy continue to weigh on the Euro. Cyprus has announced that they will place restrictions on what people can take out of their bank accounts when banking resumes tomorrow. Trading volume was light but EURO.USD did reached a four-month low trading at 1.2817 overnight, and this morning it continued lower trading down to 1.2770, clearly investors are worried about this Cyprus mess expanding further into Europe.

The Canadian Dollar had a strong afternoon yesterday as it broke below the 1.0200 level, in overnight trading it has given back a lot of that gain as US Dollar strength overnight and this morning has pushed USD.CAD back up towards 1.0200.  This goes back to my point yesterday where I said US Dollar buyers need to be ready to jump anytime we see weakness in the US Dollar, the trend I think is still for US Dollar strength so we could easily see USD.CAD back towards 1.0200 today. The Loonie has maintained its strength against the Euro with EURO.USD set to break below 1.3000 today, Euro buyers should look to take advantage of this move.

Up today we get the release of the Canadian CPI report for February, we are expecting a year-over-year inflation rate of 1.0% so given that this will be well below the Bank of Canada’s target for inflation this number will not have any real effect on the Loonie. Currency traders will continue to focus on the Euro market today, if EURO.USD continues to slide look for USD.CAD to move higher.

Yesterday saw the Office of the Superintendent of Financial Institutions Canada (OFSI- the Federal body that regulates the banks) release the results of their study that determined which of the Canadian banks are “too big to fail”. After much study (and loads of taxpayer dollars) it was determined that all of the big 6 Canadian banks were deemed too big to fail, boy I never would have thought that it a million years. Because they were able to come up with such a stunning decision they have come up with a plan to charge the banks a 1% capital surcharge to make them more secure, there goes our banking fees again so the banks can raise more money, so much for competition.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0182			1.0201
CAD/USD		0.9821			0.9803
EUR/USD		1.2786			1.287
EUR/CAD		1.302			1.3133
STG/CAD		1.5395			1.5488
AUD/CAD		1.0624			1.0686
CAD/JPY		92.67			92.39
CAD/CHF		0.9352			0.9293
CAD/HKD		7.6053			7.585
CAD/CNY		6.1021			6.087
CAD/MXN		12.1642			12.0937
Commodities
Gold		$1,591			$1,598
OIL		$95.78			$95.30
US DOLLAR INDEX
P.CLOSE		83.04			83.06
OPEN		83.33			82.98

 

 

GFX Morning Commentary March 26th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0175-1.0250

Today’s expected range for the Canadian Dollar against the Euro is 1.3100-1.3175

Today’s expected range for the Canadian Dollar against Sterling is 1.5440-1.5520

The US Dollar is marginally weaker this morning as the currency markets take a breather after the Cyprus bail-out was announced on the weekend. The Euro has pulled back a little higher off it low’s yesterday but it is still relatively weak compared to where it was before the bailout was announced, yesterday saw lots of confusion surrounding the bail-out, the Dutch Finance minister said that this bail-out will be the template for all future bank bail-outs (depositors paying for part of it) and this morning an ECB executive said the ECB will do everything it can to preserve the common currency and stated this is not a model for the rest of Europe, once again Europe’s lack of leadership in a crisis shines through and this mess will continue for the foreseeable future. If you are looking for a growth industry in Europe I think home security companies and home safe builders will be a good investment, just think how many people in Spain and Italy are going to be pulling cash out of their accounts and keeping it at home to avoid losing it. It will be interesting to see if there is a rise in break-ins and home invasions throughout Europe in the coming months.

The Canadian Dollar is a little stronger against the Greenback but still nothing to get excited about, USD.CAD continues to trade in tight ranges and is being ignored by the world’s currency markets. The Loonie however has really jumped against the Euro as EURO.CAD looks set to break below 1.3100 in the coming days. Up today we do get some secondary US data and it should continue to confirm the recovery in the US, unless we get some very different numbers than expectation I doubt they will bring any volatility to the Loonie market today. Given recent trading ranges I still think these levels represent good opportunity for US Dollar buyers and they should be looking at forward contracts going out a few months on any moves below 1.0200.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0201			1.019
CAD/USD		0.9803			0.9813
EUR/USD		1.287			1.3001
EUR/CAD		1.3133			1.3248
STG/CAD		1.5488			1.5497
AUD/CAD		1.0686			1.069
CAD/JPY		92.39			92.96
CAD/CHF		0.9293			0.9225
CAD/HKD		7.585			7.596
CAD/CNY		6.087			6.0931
CAD/MXN		12.0937			12.1056
Commodities
Gold		$1,598			$1,601
OIL		$95.30			$94.22
US DOLLAR INDEX
P.CLOSE		83.06			82.53
OPEN		82.98			82.48

 

GFX Morning FX Commentary March 25th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0160-1.0240

Today’s expected range for the Canadian Dollar against the Euro is 1.3220-1.1.3300

Today’s expected range for the Canadian Dollar against Sterling is 1.5500-1.5570

The US Dollar is weaker this morning as the effects of the Cypriot bailout emerge. The details of the bailout are a bit sketchy yet but it looks like that the Troika (EU, ECB and the IMF) will provide funding to Cypriot banks, Cyprus remains in the EU, one of the Cypriot banks will be closed with deposits moving to another bank and a tax on all deposits accounts over 100K Euro in the failed Bank Popular will be implemented, I have read the tax could be as much as 40% but that is still yet to be confirmed. This deals saves the Cypriot banking system but will immediately plunge the island economy into recession, one report that I read said that by 2017 Cypriot GDP will fall by 20%. The rest of Europe seems to like the deal with equities all higher this morning and the Euro had an initial boost but has fallen back a bit to where it closed on Friday.

My problem with this type of bailout is now the Genie is out of the bottle, if you are sitting in Italy and Spain this morning and you have 100k Euro in your account what are you going to do, I would certainly be looking at  getting my savings out of the country, I would not feel very comfortable leaving my savings in Europe at the moment. If we see this starting to happen Canada will see a net inflow of money coming into the country.

The Loonie was able to garner some strength out of all this against the USD but is basically flat against the Euro, given that the Loonie is stronger because of the Cyprus situation I would not be convinced that this move will continue in the short-term, it may present a good opportunity for US Dollar buyers.

With no economic releases today I look for a muted USD.CAD trading range, if US Dollar buyers see the rate below 1.0200 I think they should look at buying some USD as we may not be here long.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.019			1.0249
CAD/USD		0.9813			0.9757
EUR/USD		1.3001			1.2939
EUR/CAD		1.3248			1.3264
STG/CAD		1.5497			1.5582
AUD/CAD		1.069			1.0694
CAD/JPY		92.96			92.17
CAD/CHF		0.9225			0.9271
CAD/HKD		7.596			7.5518
CAD/CNY		6.0931			6.0558
CAD/MXN		12.1056			12.1089
Commodities
Gold		$1,601			$1,610
OIL		$94.22			$92.67
US DOLLAR INDEX
P.CLOSE		82.53			83
OPEN		82.48			82.79

 

 

 

GFX Morning Commentary March 22nd, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0200-1.0280

Today’s expected range for the Canadian Dollar against the Euro is 1.3255-1.3330

Today’s expected range for the Canadian Dollar against Sterling is 1.5550-1.5625

The Us Dollar is weaker this morning as both Euro and Sterling are surprisingly higher. In Europe the Euro is surprisingly higher as European equities are lower on the ongoing problems in Cyprus, it looks almost certain now that if Cyprus does not find alternative funding over the weekend the European Central Bank will removed funding for the Cypriot banks and they will be forced into bankruptcy. The deal with the Russian’s has fallen apart and with the Parliament voting down the tax on deposit accounts it looks almost certain that Cyprus will default and be forced out of the EU. This will provide uncharted waters for Europe and even though Cyprus is very small it will create a road map for any other possible withdrawals from the EU. Germany was also hit by a poor Business Confidence report so I am very surprised that the Euro is a bit stronger this morning, it may be a good time to sell Euro.

The Canadian dollar is unchanged this morning from yesterday’s Toronto close against the USD but with the overnight strength in the Euro and Sterling the Loonie did lose some ground to those currency pairs. The Federal budget had no impact on the Loonie as it was really a neutral budget with no surprises, Flaherty reported that they still anticipate that they will be in surplus by 2015/2016 which as most skeptics would say there is little or no chance of him hitting those targets, he is building in a much higher growth rate next year and higher prices for Alberta oil, after a higher deficit this year I don’t think that he has any chance of achieving his goal. He should do what the Liberals did when Martin was finance minister, he used to low ball his budget predictions so badly that when the actual numbers came in he looked like a hero.

With the lack of economic data today I think the Canadian market and overall currency markets will be slow as traders await further developments out of Cyprus. If Cyprus declares their banks bankrupt then I don’t think there will be much of a contagion effect to the rest of the world’s banks, Russian banks will take a hit but I don’t expect Canadian banks to have much exposure, it will be interesting to see just how the EU orchestrates Cyprus leaving the EU.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0249			1.0228
CAD/USD		0.9757			0.9777
EUR/USD		1.2939			1.2918
EUR/CAD		1.3264			1.3213
STG/CAD		1.5582			1.553
AUD/CAD		1.0694			1.063
CAD/JPY		92.17			93.38
CAD/CHF		0.9271			0.924
CAD/HKD		7.5518			7.5683
CAD/CNY		6.0558			6.0725
CAD/MXN		12.1089			12.0716
Commodities
Gold		$1,610			$1,607
OIL		$92.67			$93.11
US DOLLAR INDEX
P.CLOSE		83
OPEN		82.79