GFX Morning Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.2650-1.2730

Today’s expected range for the Canadian Dollar against the Euro is1.4360-1.4430

Today’s expected range for the Canadian Dollar against Sterling is 1.9040-1.9110

The US Dollar is marginally weaker this morning as the currency markets continue to react to the weaker than expected US GDP report and a late surge in the oil price on Friday afternoon. With US GDP coming in slightly weaker than expected at 2.6% currency traders are questioning the ability of the US Federal Reserve’s ability to raise interest rates in the summer and may want to sell off the dollar ahead of Friday’s Employment report.

The oil price jumped Friday afternoon which I thought was just month-end squaring up of positions but that price move continued overnight and we open up above $49.00, needless to say the Canadian Dollar was able to rally on this news and was able to hold onto the gains overnight. I don’t see any fundamental changes to the oil market over the last 24 hours so I am not convinced that this move is the beginning of a sustained recovery in the oil price, I suspect it is nothing more than back and forth trading and we could easily see it trade back below $45 today or later this week.

The USD.CAD rate is back near the lows that we saw on Friday afternoon when oil first started to rally, this move just how volatile the currency will be when oil starts to move around. As mentioned above I see no fundamental economic shift that would indicate to me that both oil and the Loonie were set to go on a big run. As ugly as the rate is for US Dollar buyers anytime you see a dip like this you need to be ready to pick some up. For US Dollar sellers if you have not yet put on any forwards I would suggest doing so at current rates and if you have some forwards on the books then we should see higher rates to benefit your average position.

To start February we have a busy week on the economic front with lots of US and Canadian secondary economic data, followed on Friday by both US and Canadian employment data. I think we are in for another month of volatility, make sure you have it working for your business.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm close Friday
USD/CAD	1.267				1.2655				1.2700
CAD/USD	0.7892				0.7902				0.7874
EUR/USD	1.1324				1.1354				1.1296
EUR/CAD	1.435				1.4377				1.4355
STG/CAD	1.9035				1.9101				1.9133
AUD/CAD	0.9887				0.9829				0.9886
CAD/JPY	92.78				92.94				92.4500
CAD/CHF	0.7346				0.7287				0.7239
CAD/HKD	6.0956				6.1051				6.0820
CAD/CNY	4.9388				4.9392				4.9212
CAD/MXN	11.7961				11.7643				11.8264
Commodities
Gold	$1,276.00				$1,263.00				$1,284.00
OIL	$49.25				$45.10				$47.50
US DOLLAR INDEX
OPEN	94.70				94.79				94.77
US 10YR YIELD	1.67%				1.71%				1.66%