GFX Morning FX Commentary October 1st, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0270-1.0340

Today’s expected range for the Canadian Dollar against the Euro is 1.3920-1.4000

Today’s expected range for the Canadian Dollar against Sterling is 1.6700-1.6775

My apologies for the lack of commentary over the past few days, I thought I would be able to get one or two out from the conference in Dublin but it was such a busy time it became difficult. I am happy to report that there is a much improved growing sense of optimism about the Irish economy, there is definite signs of growth and was there certainly a buzz in the room during the conference. My worry is that problems with other Euro nations will somehow derail the Irish economy, I do hope that does not happen.

The US Dollar is marginally weaker this morning as it is weaker against both the Euro and Sterling. In the UK the Pound is again higher on earlier comments from Bank of England Governor that the next move in UK interest rates will be higher and in Germany the unemployment report came in better than expected so the Euro is a bit higher.

The big news of course is the shutdown of the Federal Government due to the lack of a budget being passed, this is the first time since the late 90’s and from what CBC said this morning the 15^th time since the 1970’s. This in itself is not a big deal for financial markets, they have seen all the political posturing before, it will how ever become a bigger issue if it drags on for a prolonged period of time. The last shutdown lasted just over a month and if we start running into November then a bigger issue will come to the forefront and that is the US debt ceiling, the US Government will hit this number in early November. This number once again needs to be increased or everything will shut down, The US Government will legally not be able to borrow any more money at that point. That date (early November) will put more pressure on financial markets the closer it gets.

The Canadian Dollar is right where I left it before going to Ireland on Thursday, if certainly seems devoid of any kind of volatility at the moment against the US Dollar, which is very surprising to me given the volatility in the Aussie and New Zealand Dollars. Given that not even a US government shut down could move the Loonie it may be a while yet before we break out of this range. If the US shut down drags on for a few weeks and stock markets start to turn negative then I look for the US Dollar to rally and USD.CAD should move higher, if it ends quickly then the Loonie should do better but it looks like volatility will be subdued.

Have a great week
Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0301			1.0309
CAD/USD		0.9708			0.97
EUR/USD		1.3544			1.3496
EUR/CAD		1.3955			1.3915
STG/CAD		1.6725			1.6658
AUD/CAD		0.9712			0.9616
CAD/JPY		94.87			94.81
CAD/CHF		0.8771			0.8778
CAD/HKD		7.5221			7.5156
CAD/CNY		5.9398			5.9357
CAD/MXN		12.757			12.8283
Commodities
Gold		$1,331.00			$1,336.00
OIL		$102.40			$101.46
US DOLLAR INDEX
P.CLOSE		80.33			80.36
OPEN		80.13			80.38
US 10YR YIELD		2.65%			2.60%