GFX Morning FX Commentary September 25th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0280-1.0350

Today’s expected range for the Canadian Dollar against the Euro is 1.3900-1.3970

Today’s expected range for the Canadian Dollar against Sterling is 1.6520-1.6600

The US Dollar is marginally weaker this morning against the Euro and Pound as the ongoing budget crisis in the USA starts to raise its head once again. Long-time readers will recall that last year we had this same issue, the government is bound by the amount of debt it can sustain, in order to keep the government operating the Congress must pass a higher debt limit, we having been going through this at least once a year for the past few years. It is now front and center once again with the Republicans threatening to shut down the government if the Democrats don’t slash spending and reduce the deficit. This usually gets resolved at the last minute but there is always the risk that the parties don’t reach an agreement and as we get closer to the day (mid-November I think) that the US Government runs out of money markets will get more nervous, in which case I think investors will sell off the stock markets and could start moving into the Euro as for safe haven.

The US Dollar also traded weaker on yesterday’s Consumer Confidence number out of the US, it was the worst number in 4 months and it sends a signal that the US consumer is worried about the recovery. A drop in consumer demand pared with a shutdown of the US Government will certainly hit the US recovery hard but as I said they have always reached a deal at the last minute so I am not expecting much upset from this.

The Canadian Dollar is slightly weaker but nothing to shout about, other commodity currencies continue to hit hard so I am expecting a short-term drop for the Loonie at some point, right now it seems to be able to hold onto these current levels. Longer-term if we do see a break-down in the US Government I think it will be Loonie positive and you could see USD.CAD back at 1.0200 but that is a long-shot right now.

Up today we have some secondary data out of the US and after the poor Consumer Confidence report markets will be watching these Durable Goods and New Home Sales reports a little closer, any signs of a poor number should push equities lower and the US Dollar higher.

I will be out of the office the next few days as I am heading to Dublin to speak at a conference on Irish-Canadian business ties. I will attempt to do the commentary from Ireland so you should see it much earlier in your inbox. If you need to contact the office in my absence just use the email address traders@gfxpartners.ca and you will reach the team.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0312			1.0294
CAD/USD		0.9697			0.9714
EUR/USD		1.3503			1.3477
EUR/CAD		1.3926			1.3877
STG/CAD		1.6535			1.646
AUD/CAD		0.9651			0.9664
CAD/JPY		95.48			95.96
CAD/CHF		0.8829			0.8857
CAD/HKD		7.5139			7.525
CAD/CNY		5.9326			5.9423
CAD/MXN		12.5941			12.5255
Commodities
Gold		$1,322.00			$1,316.00
OIL		$103.78			$103.17
US DOLLAR INDEX
P.CLOSE		80.69			80.59
OPEN		80.55			80.69
US 10YR YIELD		2.64%			2.69%

 

 

 

GFX Morning FX Commentary September 24th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0250-1.0330

Today’s expected range for the Canadian Dollar against the Euro is 1.3850-1.3925

Today’s expected range for the Canadian Dollar against Sterling is 1.6420-1.6500

The US Dollar as marginally stronger this morning in quiet overnight trading conditions. The Dollar is a bit stronger on some of the contradicting comments made yesterday by the different Federal Reserve committee members as they answered questions on when the pullback in stimulus will start. There are another two committee members speaking today so I look for more contradicting comments that will bring some upset to the markets. I think this nervousness from investors about the timing of any stimulus reduction is really weighing on the markets, it is like a runner awaiting the gun at a big race. As soon as the Fed announces stimulus reduction I think you will see the US Dollar take off, but for the time being the markets are hanging on any “official” comments to try and get the jump on when the taps will be turned off.

The Canadian Dollar is unchanged from our close last night, it is surprising that the Loonie did not give up any strength as both the Aussie and new Zealand Dollars were quite weak, this leads me to think that the Loonie could be quite vulnerable this morning. Up today we do get the Canadian Retail Sales report for July and we are expecting an increase of 0.5%, If this number disappoints then you could see the Loonie really weaken off with USD.CAD moving back towards 1.0325/.1.0350 level.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0294			1.03
CAD/USD		0.9714			0.9708
EUR/USD		1.3477			1.3508
EUR/CAD		1.3877			1.3916
STG/CAD		1.646			1.6528
AUD/CAD		0.9664			0.9703
CAD/JPY		95.96			96.24
CAD/CHF		0.8857			0.8858
CAD/HKD		7.525			7.5217
CAD/CNY		5.9423			6.09
CAD/MXN		12.5255			12.4948
Commodities
Gold		$1,316.00			$1,322.00
OIL		$103.17			$104.90
US DOLLAR INDEX
P.CLOSE		80.59			80.54
OPEN		80.69			80.51
US 10YR YIELD		2.69%			2.75%

 

 

 

 

GFX Morning FX Commentary September 23rd, 2013

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0275-1.0340

Today's expected range for the Canadian Dollar against the Euro is 1.3900-1.3970

Today's expected range for the Canadian Dollar against Sterling is 1.6510-1.6580               

The US Dollar is marginally weaker to start the new North American trading week, with more strong data out of Europe helping to push the Euro higher. A Euro-Zone measure of manufacturing came in much better than expected but the big news of course was the election victory by Angela Merkel’s Christian Democrats party that captured almost 42% of the vote but fell 5 seats short of a majority. She will now be forced to find a new coalition partner as her preferred pro-business partner the Free Democratic Party was all but wiped out. The result of this election has to be seen by Euro investors as a confirmation by the German people on the way she has handled the German economy and the Euro debt crisis,  I look for the Euro to continue to trade stronger over the short-term.

The Pound rose for the first time in three days against the US Dollar as optimism continues to grow in the UK. This week the market is expecting a strong UK GDP report as we well as a growing Consumer Confidence report, Sterling should continue to remain strong for the remainder of the week if the numbers are positive.

The Canadian Dollar is unchanged against the US as it is back to levels that we saw just ahead of last week's Federal Reserve announcement, as I said at the time those types of moves are rarely sustainable and this was certainly the case this time as well. I would now expect USD.CAD to settle in around this 1.0300 level ahead any further economic developments

Later this week the big economic news will be the US GDP report for the 2nd quarter, financial markets will want confirmation that the US economy is still gaining momentum. Up today the market is void of economic news but we do get three different Federal Reserve committee members speaking to various groups and if recent activity is any indication then we may see some choppy USD.CAD price action while they are speaking, these guys each seem to have their own agenda when it comes to what the Fed should be doing on the economy and whenever they talk in public they seem to contradict one and other. Right now financial markets are looking for any insight as to when the Fed will turn the taps off on stimulus and they are hanging on every word these guys are saying.

have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.03			1.0288
CAD/USD		0.9708			0.972
EUR/USD		1.3508			1.3541
EUR/CAD		1.3916			1.3933
STG/CAD		1.6528			1.6491
AUD/CAD		0.9703			0.9698
CAD/JPY		96.24			96.6
CAD/CHF		0.8858			0.8836
CAD/HKD		7.5217			7.5383
CAD/CNY		6.09			5.9497
CAD/MXN		12.4948
Commodities
Gold		$1,322.00			$1,358.00
OIL		$104.90			$108.01
US DOLLAR INDEX
P.CLOSE		80.54			80.48
OPEN		80.51			80.44
US 10YR YIELD		2.75%			2.74%

 

 

 

 

GFX Morning FX Commentary September 20th, 2013

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0250-1.0325

Today's expected range for the Canadian Dollar against the Euro is 1.3880-1.3950

Today's expected range for the Canadian Dollar against Sterling is 1.6460-1.6520

The US Dollar is marginally weaker against the Euro and Sterling this morning. In Europe the Euro is stronger as the upcoming Consumer Report is expected to show that confidence in the Euro-Zone is picking which should translate into better consumer demand.. The Euro is also benefitting from recent polls that show Chancellor Merkels party ahead of her nearest rival in Sunday’s general election, the lead will not be enough to claim a majority but she will be able to form a new coalition government. If we get this result the Euro should push a little higher,  if we get a surprise result and she loses power the Euro will get hammered.

As we expected the Loonie gave back some of its recent gains it made after the Fed announcement on Wednesday, those type of knee-jerk reactionary moves can rarely be sustained over the long haul. I won't be surprised now if USD.CAD settles in around the 1.0300 level for a while. The Loonie is also very weak against the Euro and Sterling, both of those currencies have held onto their gains after the Fed announcement while Canada has all but given back it gains. EURO.CAD has jumped to 1.3900 again and GBP.CAD was up over 1.6500 during the overnight session.

Up today we get the Canadian CPI report for August but unless it shows inflation is on the rise I doubt it will have any significant effect on the Loonie. US Dollar buyers need to look at 1.0275/1.0250 as good levels to buy some cheap US and US Dollar sellers needs to revise their short-term expectations and look at anything close to 1.0325 as a good level to sell at.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0288			1.0196
CAD/USD		0.972			0.9807
EUR/USD		1.3541			1.3554
EUR/CAD		1.3933			1.3822
STG/CAD		1.6491			1.6392
AUD/CAD		0.9698			0.9652
CAD/JPY		96.6			96.98
CAD/CHF		0.8836			0.892
CAD/HKD		7.5383			7.602
CAD/CNY		5.9497			6.0023
CAD/MXN
Commodities
Gold		$1,358.00			$1,365.00
OIL		$108.01			$108.66
US DOLLAR INDEX
P.CLOSE		80.48			80.47
OPEN		80.44			80.23
US 10YR YIELD		2.74%			2.74%

 

 

 

 

 

GFX Morning FX Commentary September 19th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0160-1.0250

Today’s expected range for the Canadian Dollar against the Euro is 1.3800-1.3870

Today’s expected range for the Canadian Dollar against Sterling is 1.6380-1.6450

The US Dollar is significantly weaker as the overnight markets continue to react to the surprising news that the US Federal Reserve was not going to cut back on their Stimulus program, EURO.USD has jumped to trade at 1.3570 and GBP.USD continues to march upward trading to 1.6140 overnight. Sterling did give up some gains after the August Retail Sales report was very disappointing and it dropped the most it has in the last four weeks.

Much like North America, the Far East and European stock markets loved the fact that the Fed was not reducing the stimulus program and they all jumped much higher. I am not sure how long this euphoria will last, at some point the Fed will have to act and I think that day is coming soon. I will continue to watch the US unemployment rate, as it drops the likelihood of the Fed acting will increase.

The Canadian Dollar is much stronger this morning against the Greenback as it was able to extend its gains from yesterday, but I would caution US Dollar buyers that continue to wait for better levels, this move was solely a reaction to the unexpected move by the Federal Reserve and has nothing to do with the Loonie or the Canadian economy. I have seen these types of moves over the years and they rarely can be sustained over the long-term, I will keep watching the developments with the UD Dollar but I think we will see some kind of a pull-back higher over the next few sessions. Short-term US Dollar sellers unfortunately need to revise their expectations, sellers have had a good run over the last couple of months and while I think we will see higher rates a few months out for now if you need to do something in the next few weeks you should be looking at 1.0250 to 1.0300 as possible pullbacks for the US Dollar.

Up today we get some secondary data out of the US so we may see some volatility surrounding their release, if we continue to get strong data out of the US I think that will point to a better recovery and higher chances that the Fed will cut back on stimulus at some point.

Some good news for the Canadian economy this morning, Ford has announced a $700m investment in the Oakville assembly factory which will create some 2500 jobs, nice to see that kind of investment in an important industry.

Have a great day.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0196			1.0298
CAD/USD		0.9808			0.971
EUR/USD		1.3554			1.3352
EUR/CAD		1.3822			1.3752
STG/CAD		1.6392			1.6447
AUD/CAD		0.9697			0.9633
CAD/JPY		96.98			96.02
CAD/CHF		0.892			0.8991
CAD/HKD		7.602			7.5229
CAD/CNY		7.6026			3.9985
CAD/MXN		12.3164			12.569
Commodities
Gold		$1,365.63			$1,302.00
OIL		$108.66			$106.20
US DOLLAR INDEX
P.CLOSE					81.3
OPEN		80.23			81.26
US 10YR YIELD		2.71%			2.84%