GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.2380-1.2450

Today’s expected range for the Canadian Dollar against the Euro is 1.4100-1.4170

Today’s expected range for the Canadian Dollar against Sterling is 1.9240-1.9310

The US Dollar is for the most part unchanged against the majors but continues to give up ground to the Canadian Dollar after the comments yesterday from Yellen and Poloz. In her address to the Senate, Yellen once again said the Fed is not in a hurry to increase interest rates and she once again indicated that any rate hike this year will come in the 2^nd half of the year, the Fed will give lots of guidance as to when they are going to increase interest rates beforehand. Yellen Said “unlikely that economic conditions would warrant an interest rate increase for at least the next couple of FOMC meetings”. The equity markets loved this news as the Dow Jones reached a new record level, stocks should stay strong for a few months yet. The US Dollar traded marginally lower on the report, the Fed’s position may start to stem the rapid appreciation of the Greenback for the moment.

In Europe, the Euro was not really able to make significant gains as both the IMF and European Central bank said Greece’s reform plans were not detailed enough and Athens will need to do more to secure further bailout funds. It looks once again that all Europe has done is kick the can down the road and not really solved any problems.

The Canadian Dollar continues to benefit from Bank of Canada Governor’s speech yesterday. Highlights of that speech include the effects of a plunge in oil prices on the economy remains uncertain, the cut in interest rates buys the Bank time to see what that effect will be,  the drop in oil will mean lower Canadian income and the debt-to –income ratio of Canadian households will increase. The Loonie is rallying as what markets thought was a 100% chance of a further rate cut in March is now considerably less, most economists think they will wait until April so the Bank can have a look at the next Monetary Policy Report and garner more information on the economy. If this is going to be a sustained rally for the Loonie we need to see a clean break of 1.2300 and we are a long way from that at the moment.

This morning it was RBC’s turn to report 1^st quarter income and they hit a new record of $2.4B, so much for Canadian banks falling on hard times. The majority of this profit came from Canadian banking operations, if you are an RBC customer take comfort in that you are supporting this fine institution with high banking fees.

Up today Canadian Dollar trading will focus on the oil inventory numbers out of the US, right now the oil price cannot get back above $50, if the oil price drops further today we will see the Loonie stem its advances.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm Tuesday close
USD/CAD		1.2422			1.2632			1.2484
CAD/USD		0.805			0.7916			0.801
EUR/USD		1.1341			1.1319			1.1341
EUR/CAD		1.4089			1.4301			1.416
STG/CAD		1.9255			1.9508			1.4304
AUD/CAD		0.9785			0.9796			0.9777
CAD/JPY		95.59			94.59			95.2
CAD/CHF		0.7643			0.7512			0.7609
CAD/HKD		6.22			6.1172			6.1896
CAD/CNY		5.0361			4.9512			5.0087
CAD/MXN		12.0314			11.9839			11.9664
Commodities
Gold		$1,208			$1,198			$1,200
OIL		$49.48			$49.75			$49.07
US DOLLAR INDEX
OPEN		94.37			95.82			94.51
US 10YR YIELD		1.97%			2.09%			1.99%