GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1360-1.1430

Today’s expected range for the Canadian Dollar against the Euro is 1.4220-1.4290

Today’s expected range for the Canadian Dollar against Sterling is 1.7890-1.7960

The US Dollar is stronger as global markets have picked up on the news that there would be no global cuts to oil production by OPEC countries, the biggest overnight boost for the Greenback has of course been against the commodity currencies especially the Canadian Dollar. The low that we saw for the price of oil after the OPEC announcement was $67.75, it is back trading at $69.00 this morning and it should remain very volatile, we have not seen these prices since 2010.

A couple of facts that I learned this morning, for the Canadian economy every 10% drop in the price of oil reflects in a 0.25% drop in our GDP, if you take oil dropping from $85 about a month ago and today it is at $69 that would represent an almost 0.5% hit to our economy. I heard a CBC report this morning that the Province of Newfoundland and Labrador gets a third of its revenue from offshore oil taxes, this year they budgeted $105 for a barrel of oil, they are now looking at a deficit of $1.0B which is massive for a small province. In Europe the central bank has to be worried, deflation was already a concern and now a big drop in oil prices will put further pressure on dropping domestic prices, here at home I think the Feds were budgeting $85 a barrel for their surplus next year, I think the bubble has burst on that one. I am guessing that OPEC understood all of this and wanted to put pressure on oil to get a lot of marginal producers out of the way.

As mention the Canadian Dollar has really weakened off against all currencies and the short-term prognosis does not look good, oil will stabilize over the coming days but the Loonie should remain under pressure, it has now broken out of its recent range and USD.CAD will settle in at higher rates for the rest of the year.

Up today we do get the Canadian GDP report for the third quarter and the month of September, year-over-year we are expecting a growth rate of 2.2% which is unchanged from last month,  currency markets remain thin as half off all currency traders in the US are out getting deals on Black Friday. Only a very strong report for Canada will stop the onslaught of the Loonie.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.138			1.1251
CAD/USD		0.8787			0.8888
EUR/USD		1.2473			1.2482
EUR/CAD		1.4197			1.4048
STG/CAD		1.7865			1.7742
AUD/CAD		0.9696			0.9145
CAD/JPY		103.87			104.34
CAD/CHF		0.8461			0.8554
CAD/HKD		6.7909			6.8682
CAD/CNY		5.3974			5.4541
CAD/MXN		12.1472			12.2051
Commodities
Gold		$1,182.00			$1,196.00
OIL		$68.96			$72.16
US DOLLAR INDEX
P.CLOSE		87.94			87.64
OPEN		88.06			87.79
US 10YR YIELD		2.20%			2.24%