GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1750-1.1820

Today’s expected range for the Canadian Dollar against the Euro is 1.4030-1.4100

Today’s expected range for the Canadian Dollar against Sterling is 1.7930-1.8000

On behalf of everyone here at GFX I wish all our readers a very Prosperous and Healthy New Year, I hope that 2015 is good to all of us. I want to extend to all readers my thanks for their kind words of encouragement on the commentary, I do enjoy writing it and hopefully will be able to continue to do it for many years to come.

It has been a very active holiday end to the holiday period for the currency markets but the story that was 2014 continues into early 2105. The US Dollar continues to remain king of the hill and the price of oil continues to drop with now $50 dollars a barrel fully in sight.

The Euro continues to suffer and has broken firmly below the 1.2000 (now trading at 1.1900)  level against the Greenback and it looks like it will go a lot lower. Not only do you have the ECB ready to introduce massive stimulus measures but now we have new Greek elections that looked poised to elect a new government that may want to take the country out of the EU, it is almost 10 years since the Euro has been this low. I read an article over the weekend that German Chancellor Merkle will not fight it any longer if Greece decides to exit the union, the problem is there is no mechanism to leave the union so this will create a lot of uncertainty in the financial markets, if Greece walks away from their obligations then who is to say other countries like Italy, Portugal or Ireland will not do the same. Look for the Euro to remain weak against the US Dollar but unfortunately with the weakness in the Loonie against the US as well the Canadian Dollar is  not able to make an significant gains against the Euro.

Sterling is also very weak against the US Dollar as it gets tied in with the Euro. The Pound is also getting hit on lower oil prices and the prospect of a general election in April, the rhetoric out of the UK will ramp up over the next few weeks and Sterling should trade on the weak side for a while yet. Once again as long as the Loonie remains weak against the Greenback it won’t make that many gains against Sterling.

The Canadian Dollar held fairly steady during the holiday period, then on January 2^nd the flood gates opened and it was hammered. On the 31^st the interbank rate closed at 1.1600 where it had been most of the holidays but on January 2^nd it closed at 1.1750 and overnight it has traded at 1.1840 before recovering a little this morning. It is more of the same for the Loonie, low oil prices and a very strong US Dollar continue to hammer the currency and right now there is no end in sight.

Up today we get US Factory Orders and some secondary Canadian inflation data, the week will be highlighted by both the US and Canadian Employment data. Everything today should focus on the price of oil and the strong US Dollar trend, on a personal note I think this move is greatly overdone and the Canadian Dollar is trading below fair value but a wise man told me once, never stand in front of a runaway freight train and this US Dollar momentum has a lot of track ahead of it just yet.

 

Have a tremendous year

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm close January 02, 2015
USD/CAD	1.1788				1.1664				1.176
CAD/USD	0.8483				0.8957				0.8503
EUR/USD	1.1908				1.2049				1.2002
EUR/CAD	1.4035				1.4056				1.4117
STG/CAD	1.5245				1.7996				1.8034
AUD/CAD	0.9508				0.947				0.9519
CAD/JPY	101.93				103.31				102.41
CAD/CHF	0.8556				0.855				0.851
CAD/HKD	6.5584				6.6272				6.5745
CAD/CNY	5.2739				5.3175				5.2765
CAD/MXN	12.6449				11.7458				12.655
Commodities
Gold	$1,189				$1,182				$1,188.00
OIL	$51.37				$53.32				$52.61
US DOLLAR INDEX
OPEN	91.59				90.78
US 10YR YIELD	2.12%				2.20%