GFX Morning FX Commentary May 29th, 2013

Good Morning,

 

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0350-1.0450

 

Today’s expected range for the Canadian Dollar against the Euro is 1.3420-1.3520

 

Today’s expected range for the Canadian Dollar against Sterling is 1.5625-1.5757

 

The US Dollar is weaker to start the day in very active currency markets. Getting the ball rolling was the Governor of the Bank of Japan who stated that a “stable financial system is very important”, he says this at a time when his institution is adding unprecedented stimulus to the economy. Investors got very nervous on this statement and USD.JPY dropped over 150 points in a matter of minutes, the Euro was also able to benefit on this statement as EURO.USD rose to trade at 1.2960,  A very busy night with investors increasingly concerned with global growth.

 

Of an interesting note is that the Australian Dollar continues to get hammered on the world’s currency markets, AUD.USD traded to a low of .9540 last night, just a month ago AUD.USD was trading at 1.0300. The move last night was caused by the IMF downgrading growth expectation in China, you can see just how closely they two economies are tied. When you consider how far the Aussie has fallen the Loonie looks like a star as it continue to hold in above parity.

 

The Canadian Dollar is slightly stronger from our close last night and has not been able to break higher so far. The Loonie has not been faring as well against the Euro as EURO.CAD is now up above 1.3400 for the first time in  a while, the Euro has been the clear overnight winner with nervous markets and a weak US Dollar.

 

A quick note on yesterday, we saw the US housing prices jump over 10% year over year and that is the biggest jump in the US housing market since 2006, I have always maintained that you won’t see a recovery take hold in the US until you see a recovery in the housing market and we are now starting to see that. Over the next few weeks we will see more pressure mounting for the US Federal Reserve to start pulling back on their stimulus program but investors again were made nervous last night when the OECD (Organization for Economic Development) caution governments not to end stimulus too early. I think we will see choppy markets for some time yet.

 

Up today we get the latest release on interest rates from the Bank of Canada and this will be Mark Carney last announcement as the Governor of the Bank, he heads off to London to take over the Bank of England July 1^st. There is no added significance to this being is last announcement, it is expected to be status quo, no interest rate changes and a very similar forward looking economic statement. If we do get any surprises then the currency markets could see extreme volatility as they are already nervous from the overnight session.

 

I will send out a currency alert shortly after the Bank announcement.

 

Have a great day

Mike

 

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.039			1.0336
CAD/USD		0.9625			0.9671
EUR/USD		1.2924			1.2928
EUR/CAD		1.3428			1.3365
STG/CAD		1.5638			1.5617
AUD/CAD		0.9985			1.0005
CAD/JPY		97.6			98.64
CAD/CHF		0.93			0.9362
CAD/HKD		7.4553			7.4892
CAD/CNY		5.894			5.9265
CAD/MXN		12.206			12.0646
Commodities
Gold		$1,386.00			$1,379.00
OIL		$94.45			$94.71
US DOLLAR INDEX
P.CLOSE		84.3			83.74
OPEN		83.65			83.85