GFX Morning FX Commentary June 20th, 3013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar 1.0300-1.0375

Today’s expected range for the Canadian Dollar against the Euro is 1.3630-1.3700

Today’s expected range for the Canadian Dollar against Sterling is 1.5970-1.6050

The US Dollar is extremely stronger this morning as the effects of the US Federal Reserve announcement reverberated around the financial world last night. With Bernanke all but saying that the tapering of the Fed’s stimulus program will happen this year equity markets overnight were all hit hard, gold was off by over 5% and the US Dollar soared. Bernanke was very upbeat on the US economy which of course is a good thing but investors fear that the US recovery is being led higher by cheap money put into the system by the Federal Reserve, the fear is that if the taps are turned off too early then the economy will collapse again. Here are a few highlights from the carnage last night;

-Gold fell to trade below $1,300 an ounce, the lowest level in 2 ½ years

-The Australian Dollar was again smashed as the demand for higher yielding currency appears to be diminishing
-European Equity markets were all down between 2 and 3% overnight
-The Dollar is very strong with EURO.USD falling to 1.3190, USD.JPY reached 98.00 before falling back this morning.

There will be more carnage today as the Dow Jones looks like it will be down over 100 points to start the day, investors are fleeing the equity markets at the moment and putting money into US treasuries for safe keeping. Personally I think this move is vastly overdone and should create great buying opportunities for stocks in the coming days, if I am correct then the US Dollar should give back some of this strength

The Canadian Dollar was not spared the carnage last night as USD.CAD broke through the 1.0150/1.0250 trading range very easily and now settles in above 1.0300. This was my fear over the last few weeks, I was not convinced that Canadian Dollar strength could be maintained as there was too much uncertainty in the markets and as we have seen many times in the past, when the Loonie weakens it is usually very quick and violent. US Dollar sellers need to take advantage of this move as you have just made 2% on your US Dollar holdings in a couple of days.

I am thinking that this move is overdone and that if equity markets recover somewhat today then we will see a bit of a pullback in USD.CAD towards 1.0300. For a big move higher USD.CAD will have to break and hold above 1.0400 which it had a very difficult time doing earlier this year.

Have a great day
Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0337			1.0208
CAD/USD		0.9674			0.9796
EUR/USD		1.3201			1.339
EUR/CAD		1.3649			1.3669
STG/CAD		1.5985			1.5951
AUD/CAD		0.9527			0.9702
CAD/JPY		0.9453			93.16
CAD/CHF		0.9015			0.9018
CAD/HKD		7.4777			7.577
CAD/CNY		5.9293			6.0012
CAD/MXN		12.8907			12.6223
Commodities
Gold		$1,303.00			$1,367.00
OIL		$96.69			$98.82
US DOLLAR INDEX
P.CLOSE		81.45			80.81
OPEN		82.09			80.79