GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.1080-1.1180

Today's expected range for the Canadian Dollar against the Euro is 1.5320-1.5400

Today's expected range for the Canadian Dollar against Sterling is 1.8560-1.8630

The US Dollar is mixed this morning as a report showing higher than expected inflation in the Euro-Zone helped to push EURO.USD up above 1.3800 this morning, the dollar is unchanged against Sterling and higher against the Yen. With this strong inflation report EU investors are less likely to expect that the ECB will announce further interest rate cuts with inflation on the rise. 

The situation in Ukraine continues to worsen as what appear to be professional troops (possible Russian troops not in uniform) continue to occupy more and more Government buildings in the Crimea. For now the new Ukrainian Government is doing nothing but that could change at any moment. Students of history will know that the Crimea was Russian territory for hundreds of years and was given to the Ukraine in 1954 by Khrushchev, the fact that the population is largely Russian speaking will make this a very dangerous situation.

Of interest in all of this is the value of the Russian Ruble as it continues to fall, with inflation concerns in Russia on the rise the Russian Government may have to increase interest rates to stop the slide of the Ruble. Also in overseas currency news the Chinese Yuan hit a 10 month low as investors there expect the Government band for the currency to be widened in the coming days.

The Canadian Dollar is ‎unchanged against the US Dollar and weaker against the Euro and Sterling. Trading today will be dominated by the US and Canadian GDP reports for December. In the US we are expecting a growth level of 2.9% which is down from the previous period, in Canada we are expecting a growth rate of 2.6% on an annualized basis, the big question is how much effect did the winter weather have on these numbers?

A very poor Canadian number should be able to push USD.CAD up towards the 1.1200 level.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1128			1.1124
CAD/USD		0.8986			0.899
EUR/USD		1.3788			1.3659
EUR/CAD		1.5345			1.5194
STG/CAD		1.8582			1.8508
AUD/CAD		0.9971			0.9942
CAD/JPY		91.52			91.53
CAD/CHF		79.23			0.8013
CAD/HKD		6.9532			6.9541
CAD/CNY		5.5217			5.5051
CAD/MXN		11.92			11.9978
Commodities
Gold		$1,329.00			$1,332.00
OIL		$102.29			$102.40
US DOLLAR INDEX
P.CLOSE		80.28			80.41
OPEN		79.91			80.48
US 10YR YIELD		2.67%			2.64%

 

 

 

 

GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.1100-1.1175

Today's expected range for the Canadian Dollar against the Euro is 1.5170-1.5250

Today's expected range for the Canadian Dollar against Sterling is 1.8480-1.8550

The US Dollar is stronger this morning as fears of Ukrainian unrest is starting to affect the currency markets, we have already started to see investors move out of European equity markets and into the safe have of US Treasury products. EURO.USD is much weaker on the Ukrainian situation and this is in spite of a business confidence survey that showed the Euro-Zone economy performing higher.

The Canadian Dollar lost some ground yesterday afternoon against the US Dollar and it has so far not been able to recover any of that weakness overnight or this morning. The Loonie did make some small gains against the Euro and Sterling but that was more because of the weakness in those currencies not nay strength in the Loonie.

Up today we get the US Durable Good orders report for January and if it comes in below expectation then we could see USD.CAD jump again, we also get Janet Yellen speaking today so the market will be looking for any comments that she makes on the tapering program. We still favour USD.CAD to head back up to 1.1200 so short-term buyers need to protect themselves.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1124			1.1077
CAD/USD		0.899			0.9028
EUR/USD		1.3659			1.3739
EUR/CAD		1.5194			1.522
STG/CAD		1.8508			1.8484
AUD/CAD		0.9942			0.9963
CAD/JPY		91.53			92.38
CAD/CHF		0.8013			0.8013
CAD/HKD		6.9541			6.9856
CAD/CNY		5.5051			5.5295
CAD/MXN		11.9978
Commodities
Gold		$1,332.00			$1,339.00
OIL		$102.40			$102.14
US DOLLAR INDEX
P.CLOSE		80.41			80.09
OPEN		80.48			80.18
US 10YR YIELD		2.64%			2.66%

 

 

 

 

GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1045-1.1125

Today’s expected range for the Canadian Dollar against the Euro is 1.5200-1.5270

Today’s expected range for the Canadian Dollar against Sterling is 1.8460-1.8530

The US Dollar for the most part is unchanged this morning from yesterday’s North American close. There is a Bloomberg report this morning that volatility in the EURO.USD currency pair had dropped to its lowest level since 2007 as currency traders are sitting on the sidelines awaiting signals from Central Banks as to what their polices will be going forward. New Federal Reserve Chairperson Janet Yellen will speak tomorrow and investors will be looking to see if the dramatic winter in the US will slow the tapering process by the Fed.

The British Pound held onto its recent gains as the UK GDP report showed the UK economy expanded for the fourth quarter in a row. The GDP increased in the fourth quarter by 0.7% and on a yearly basis it expanded by 2.7%(the most it has expanded in over five years). It certainly looks like the British Pound will stay strong over the short and medium-terms.

A very serious Geo-Political situation is rapidly starting to unfold in Ukraine. The country looks to be on the verge of an all-out civil war and a there is a growing possibility that the new Government will default on its debt obligations coming due at the end of this month. Such a move would be very negative for the Euro and would push both the US Dollar and Japanese Yen higher. We could easily see USD.CAD break above 1.1200 and higher if this occurs.

The Canadian Dollar is right where we left it last night and does not look like it wants to move much at all at the moment, I would expect USD.CAD to move higher at some point but I think we will see it settle in to a narrow range for a little while yet.

With no major economic news out until Friday when we get the GDP reports for the US and Canada I look for normalized trading conditions, with the exception of course that if the situation in Ukraine escalates then we will have increased volatility almost immediately. I still favour US Dollar buyers purchasing forward contracts at current levels as the risk of a dramatic rise for USD.CAD still outweighs a slow recovery for the Loonie.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1077			1.1066
CAD/USD		0.9028			0.9037
EUR/USD		1.3739			1.3744
EUR/CAD		1.522			1.5212
STG/CAD		1.8484			1.8461
AUD/CAD		0.9663			1
CAD/JPY		92.38			92.95
CAD/CHF		0.8013			0.8014
CAD/HKD		6.9856			6.9918
CAD/CNY		5.5295			5.5315
CAD/MXN		11.9362			11.9697
Commodities
Gold		$1,339.80			$1,334.00
OIL		$102.14			$101.95
US DOLLAR INDEX
P.CLOSE		80.18			80.22
OPEN					80.09
US 10YR YIELD		2.71%			2.74%

GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.1040-1.1125

Today's expected range for the Canadian Dollar against the Euro is 1.5200-1.5270

Today's expected range for the Canadian Dollar against Sterling is 1.8470-1.8540

Thanks for all the well wishes on my return for vacation, Mrs. Smith had a great time so all is good.

The US Dollar is marginally weaker in quiet overnight trading markets, the British Pound is slightly stronger for the 2nd day in a row as the mortgage approval rates reached their highest levels in years and also on comments by a Bank of England official that the high value of Sterling has not had a dramatic effect on exporters.

An interesting development while I was away has been the weakness in the Chinese Yuan. The Chinese Government as you know artificially keeps its currency within a 1% band to help keep the price of their exports low, this is a big bone of contention for the US Government. Over the past few months the Yuan had been appreciating in the band but this past week the USD.CNY rate has risen from 6.0650 and is now trading at 6.12 making the Chinese rate the weakest it has been in 3 years, there are rumours that the Chinese Government may be widening the band to 2% to allow the currency to stay weak. It may be worthwhile for clients sending US Dollars to China to look at sending Yuan instead, we have the ability to help with this so let us know if you are interested.

The Canadian Dollar had a very quiet night as it slowly recovers from the bad economic data last week. Readers may recall that before I went on vacation I was urging US buyers to purchase some US Dollars on forward contracts when USD.CAD was below 1.1000, it was this very scenario that I was trying to protect against. Going forward bouts of Canadian Dollar strength will be slow and limited at best while Canadian Dollar weakness will be fast and dramatic, US Dollar buyers need to protect themselves against these types of moves.

Up today we do get US Consumer Confidence data at 10:00 am and I will be looking to see if the bad weather that we have been experiencing will still be having a negative effect on the US recovery.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1066			1.1104
CAD/USD		0.9037			0.9005
EUR/USD		1.3744			1.3736
EUR/CAD		1.5212			1.5256
STG/CAD		1.8461			1.848
AUD/CAD		1			0.998
CAD/JPY		92.95			92.78
CAD/CHF		0.8014			0.7998
CAD/HKD		6.9918			9.9645
CAD/CNY		5.5315			5.4903
CAD/MXN		11.9697			11.9531
Commodities
Gold		$1,334.00			$1,332.00
OIL		$101.95			$102.08
US DOLLAR INDEX
P.CLOSE		80.22			80.27
OPEN		80.09			80.22
US 10YR YIELD		2.74%			2.73%

 

GFX Morninig FX Commentary

Good Morning,

Today’s suggested range for the Canadian dollar against the US Dollar is 1.1100 – 1.1200.

Today’s suggested range for the Canadian dollar against the Euro is 1.5250 – 1.5350

Today’s suggested range for the Canadian dollar against Sterling is 1.8550 – 1.8650

The USD has firmed against the broader market and surged against the Canadian dollar. In the Asian session the US Dollar advance was mostly against the Japanese Yen amid speculation the U.S. Fed will continue tapering stimulus while the Bank of Japan maintains its bond purchase program.

In Europe the British Pound held steady following the release of  U.K. retail sales for January down 1.5% m/m and up 4.3% y/y. The European single currency was confined to narrow ranges with no Euro-zone economic releases due out today.

The USD/CAD surged overnight gaining a half cent but it’s not only demand for US dollars that is weakening the currency, the pressure is coming from the broader market. The CAD is being shorted against most major currencies with GBP/CAD breaking above 1.8600, EUR/CAD above 1.5300 and even the Aussie dollar is above parity against the loonie. This is the third day in a row the CAD has been under pressure since the announcement of the large M&A deal to buy USD/CAD. The years high for USD/CAD is at 1.1224 and for further weakness going forward we would need to see two consecutive closes above this level. For today whether further weakness takes hold will depend on the important inflation data in Canada to be released at 8:30am with CPI y/y expected to rise to 1.3% from 1.2% and on a m/m basis up 0.1% last down 0.4%. Should inflation not exceed expectations the CAD will get hit again. The other economic release in Canada today is retail sales for December which will take on less importance. In the U.S. today at 10:00am we have existing home sales for January which will probably follow the trend and disappoint. Today being Friday and ahead of the weekend thinner market conditions could result in big swings.

Good luck today!

GFX Morning Currency Rates
Friday February 21, 2014
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1157			1.1067
CAD/USD		0.8963			0.9035
EUR/USD		1.3705			1.3692
EUR/CAD		1.5293			1.515
STG/CAD		1.8546			1.842
AUD/CAD		1.0035			0.9943
CAD/JPY		91.79			92.13
CAD/CHF		0.7975			0.8051
CAD/HKD		6.9292			6.9893
CAD/CNY		5.4605			5.4964
CAD/MXN		11.916			12.0477
Commodities
Gold		$1,321.00			$1,313.00
OIL		$102.42			$103.21
US DOLLAR INDEX
P.CLOSE		80.29			80.2
OPEN		80.36			80.3
US 10YR YIELD		2.76%			2.72%