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%