GFX Morning Commentary August 22nd,2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0450-1.0525

Today’s expected range for the Canadian Dollar against the Euro is 1.3930-1.4020

Today’s expected range for the Canadian Dollar against Sterling is 1.6320-1.6400

The US Dollar is stronger this morning as the world’s currency markets react to the US Federal Reserve minutes released yesterday afternoon. Basically the minutes indicated that all members of Fed’s committee were in sync with Bernanke’s plan to start tapering the stimulus program later this year. I am a bit surprised that the Greenback is so strong on this announcement as my feeling is that this is positive for the US economy and stocks should start to bounce back from recent weakness and the US Dollar should give back some of its recent strength. We may be starting to see this happening as overnight equity markets seem to be recovering and the Dow Jones futures is pointing higher for the day. I think we will need to see a few days of strong equity markets and a bit of a pullback in US interest rates and then I think we will see the US Dollar start to give up some gains. For the immediate future I think currency rates will stabilize around current levels.

USD.CAD starts the day with the feeling that it wants to break above the 1.0500 level but I think it has come a long way from the 1.0250 level a few weeks back, I won’t be surprised if USD.CAD starts to run into some resistance at the moment. I think these current levels represent great opportunities for US Dollar sellers to put on some forward contracts, we may yet go back at some point and test our recent highs near 1.0600 but at the very least you will be protecting yourself if the US Dollar rally fizzles and USD.CAD drops back lower.

Up today we should have some enhanced volatility surrounding the US Leading indicators and the Canadian Retail Sales reports being released,  we are expecting a drop in Retail Sales for June of 0.5%, economists continue to expect poor economic data out of Canada which is also weighing on the value of the Loonie. If the Retail Sales number falls below expectation look for USD.CAD to spike above the 1.0500 level and if it is better than expectation the that might be enough to start a push back towards 1.0450.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0493			1.0427
CAD/USD		0.953			0.959
EUR/USD		1.3309			1.3384
EUR/CAD		1.3964			1.3956
STG/CAD		1.6341			1.6334
AUD/CAD		0.9435			0.9418
CAD/JPY		94			93.46
CAD/CHF		0.8837			0.8823
CAD/HKD		7.3685			7.4151
CAD/CNY		5.8298			5.8715
CAD/MXN		12.6241			12.5571
Commodities
Gold		$1,368.00			$1,364.00
OIL		$104.41			$105.07
US DOLLAR INDEX
P.CLOSE		81.35			80.94
OPEN		81.68			81.16
US 10YR YIELD		2.85%			2.81%