GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0675-1.0750

Today’s expected range for the Canadian Dollar against the Euro is 1.4620-1.4700

Today’s expected range for the Canadian Dollar against Sterling is 1.7510-1.7600

The currency markets have had quite a volatile 24 hours as traders react to the news that the US Federal Reserve has started to cut back on the stimulus they are providing to the economy, they have embarked on the long road that will take years to get them back to a normal interest rate environment. In his last press conference of his tenure as chairman of the US Federal Reserve Ben Bernanke stated that further reductions should come in around the $10B a month level but it is not set in stone and will be adjusted both up and down depending on the status of the economy.

The market pretty much reacted as we thought it would, there were some wild swings in the currency market with the overall effect being a stronger US Dollar. I was a bit surprised that the stock markets did not give up any gains, they in fact had a real strong day with the Dow Jones ending up over 200 points on the day. I think that sends a signal that equity markets are very happy that the Fed is reducing stimulus in a very slow fashion.

USD.CAD pretty much played out as we thought it would, it first took a run at 1.0700, backed off and then took another run overnight, we still cling to our view that the US Dollar will push higher against the Loonie but for now markets should return to normal volatility and we will see USD.CAD range trade around the 1.0700 level for a little while.

Up today we do get some secondary data out of the US so if that data remains positive then we should see continued pressure on USD.CAD to move higher throughout the day.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0705			1.0637
CAD/USD		0.9341			0.9401
EUR/USD		1.3686			1.3748
EUR/CAD		1.4655			1.4626
STG/CAD		1.753			1.7395
AUD/CAD		0.9491			0.947
CAD/JPY		97.2			96.76
CAD/CHF		0.8352			0.8353
CAD/HKD		7.2361			7.2824
CAD/CNY		5.6688			5.7047
CAD/MXN		12.0954			12.1903
Commodities
Gold		$1,204.00			$1,232.00
OIL		$97.73			$97.23
US DOLLAR INDEX
P.CLOSE		80.62			80.21
OPEN		80.65			80.27
US 10YR YIELD		2.89%			2.85%