GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1225-1.1300

Today’s expected range for the Canadian Dollar against the Euro is 1.3990-1.4150

Today’s expected range for the Canadian Dollar against Sterling is 1.7660-1.7720

The US Dollar is stronger against the major currency pairs but also weaker against the commodity currencies this morning. The big news overnight was the announcement of an interest rate cut in China, the first interest rate in that country since 2012, China had been reporting some very bad loan loss numbers so the move is expected to aid the property market. The announcement came out after the Asian markets had closed but the European stock markets all jumped around 2.0% higher on the news and we saw a jump in the US Dollar. This announcement also helped push the price of oil up from $75 a barrel to $77 a barrel.

In Europe the Euro dropped the most it has in 11-weeks as ECB President Draghi stated last night that policy makers will increase their stimulus plans if the inflation outlook for the region continues to decline. This statement just highlights how important inflation data is becoming when deciding economic policy.

The Canadian Dollar has a strong night as the Chinese interest rate cut and the jump in the price of oil has helped give the Loonie an overnight boost. The Loonie is especially strong against the Euro and Sterling as weakness in those currencies has helped push the Loonie higher. I will caution that in the past few weeks every time we try and break below the 1.1300 level USD.CAD bounces right back,  I will say that I am starting to see some signs that could give some encouragement to the Loonie, strong payroll data two months in a row, rising price of oil and inflation data that has been steady, if we get a high inflation reading today that may give the Loonie the push it needs to rally further.

We are expecting a year-over-year inflation rate of 2.0% (in line with the BOC policy) the monthly rate to drop 0.2% after a 0.1% increase last month, as mentioned a strong reading should push USD.CAD much lower.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1277			1.1335
CAD/USD		0.8868			0.8822
EUR/USD		1.2432			1.2535
EUR/CAD		1.4023			1.4208
STG/CAD		1.767			1.7768
AUD/CAD		0.9818			0.9765
CAD/JPY		104.32			104.08
CAD/CHF		0.8571			0.845
CAD/HKD		6.8564			6.8225
CAD/CNY		5.4298			5.4022
CAD/MXN		12.0888			12.0153
Commodities
Gold		$1,195.00			$1,193.00
OIL		$77.23			$74.46
US DOLLAR INDEX
P.CLOSE		87.62			87.63
OPEN		88.17			87.73
US 10YR YIELD		2.35%			2.32%