GFX Mormning Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0770-1.0840

Today’s expected range for the Canadian Dollar against the Euro is 1.4660-1.4740

Today’s expected range for the Canadian Dollar against Sterling is 1.7720-1.7800

The US Dollar is stronger this morning against the Euro and Sterling and has hit a 5 year high against the Japanese Yen.  Expectation in the currency markets is for further reductions in the Federal Reserve stimulus plan and with the release of the minutes from the last Fed meeting they will be looking for any hints as to what will happen down the road, when the Fed was adding stimulus that tended to weaken the Greenback so now the opposite is happening and the US Dollar is on a big run at the moment.

The Canadian Dollar is unfolding much like we thought it would over the past few weeks but I have to admit it is happening much faster than I thought it would. The Loonie is now at its weakest point in almost 4 years against the US Dollar and with the Government and Central Bank hinting that it is looking for an even weaker Loonie the 1.1000 target is becoming more realistic. Yesterday Bank of Canada Governor Poloz hinted that they may change their bias to lowering interest rates at the January 22^ndmeeting, Canadian officials are really trying to talk the Canadian Dollar down at the moment.

Readers need to be concerned that volatility has returned to the currency markets, for the past year many companies have not had to be too concerned with their currency exposure as the Loonie was very stable. Since Dec 26 we have seen USD.CAD jump from 1.0630 to near 1.0800, a huge move in a very short-period of time, which is definitely going to hurt the bottom line of US Dollar buyers. If my view is right, over the rest of the quarter then rates in the 1.0700’s will look very attractive. US Dollar sellers should not be waiting until the 1.100’s to be locking in some profit, you should always be looking to sell part of your US Dollar holdings whenever you see USD.CAD jump and build a good overall average.

Up today the currency market will be dominated by the release of the Federal Reserve minutes and by the private ADP jobs report where we are expecting some 200K new private job to have been created last month in the US so volatility should remain high.

I wish to thank everyone for their best wishes on been selected as one of the goalies to the Canadian Olympic team, I promise that I will do my best to help bring home the Gold medal. I have to say I was a bit surprised when they announced my name yesterday but I am up to the challenge.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.08			1.0692
CAD/USD		0.9259			0.9353
EUR/USD		1.3582			1.3641
EUR/CAD		1.4672			1.4592
STG/CAD		1.7745			1.7555
AUD/CAD		0.964			0.9546
CAD/JPY		97.02			97.61
CAD/CHF		0.843			0.8477
CAD/HKD		7.1745			7.2458
CAD/CNY		5.6			5.6559
CAD/MXN		12.0751			12.2421
Commodities
Gold		$1,225.00			$1,239.00
OIL		$93.88			$94.00
US DOLLAR INDEX
P.CLOSE		80.86			80.66
OPEN		81.02			80.67
US 10YR YIELD		2.94%			2.96%