GFX Morning FX Commentary Nov 7th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9875-.9950

Today’s expected range for the Canadian Dollar against the Euro is 1.2660-1.2760

Today’s expected range for the Canadian Dollar against Sterling is 1.5820-1.5920

The US Dollar is mixed this morning as the Obama victory pushed overseas equity markets higher, initially the reaction was to push the US dollar lower(EURO.USD jumped to trade above 1.2800) but as North America comes in the Greenback is gaining back those losses as equities are pointing lower (EURO.USD is falling to 1.2750). The Euro is being hit on very poor Industrial Production numbers out of Germany and comments from ECB President Draghi on the German economy, if the German economy is slowing what hope does the rest of Europe’s economy have?

The evening unfolded pretty much as I expected, I was surprised that Romney did not do better in some of the so-called “battleground states” but it is a clear electoral college victory for Obama and a narrow popular vote victory.  The expectation is that the stimulus will continue to push the US economy forward and the status quo will remain in place. The first big hurdle which markets will focus on is the imposing “Fiscal Cliff”, in order to pass the 2011 budget a comprise between the President and Congress was reached that called for massive tax increases and spending cuts (about $600 Billion worth) to take place on December 31^st, 2012. All economists would agree that if this program is put in place growth will be cut in the US by upwards of 4% taking the economy back into recession. The big question is how will the Republican Congress and the Democratic President work to stop this from happening? If they do nothing look for equities to get very nervous and the US Dollar to benefit in the coming weeks, if they come up with a credible plan then equities will continue to push forward and the US Dollar should trade with a weak bias.

The Canadian Dollar staged a brief rally last night and looked like it wanted to break through the .9900 level, but the weakness in the Euro and the strength behind the US Dollar but a quick stop to that rally. USD.CAD is back above the .9900 level for now, if we do see a rally in equities today then we may yet see USD.CAD move lower. We will be keeping a close eye on these upcoming fiscal cliff negotiations as they will have an big effect on Canada. If the situation is not resolved then the US will start to move back into a recession and that will drag the Canadian economy along with it, the next few weeks and months are going to be very interesting.

On a personal note I just wanted to thanks to everyone for the kind comments regarding my operation and recovery. I am sad to say that my recovery is almost complete (I am about 80% there) and I will be heading back to the office tomorrow rejoining the rate race, over the last 7 weeks I had a 30 second commute to my home office and worked in my pajamas, that is something I could get used to. On a serious note if anyone is considering a joint replacement I have found it to be an amazing experience, I am pain free and enjoying walking again, don’t wait, you will see a big difference.

Have a great day.

 

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.99			0.9931
CAD/USD		1.01			1.0069
EUR/USD		1.2816			1.2867
EUR/CAD		1.2687			1.2722
STG/CAD		1.5827			1.588
AUD/CAD		1.0324			1.0368
CAD/JPY		81.06			80.7
CAD/CHF		0.9513			0.9427
CAD/HKD		7.8088			7.7808
CAD/CNY		6.3133			6.2966
CAD/MXN		13.0681			13.0797
Commodities
Gold		$1,724			$1,692
OIL		$87.88			$86.29
Option Volatility
Canada
O/N		9.50%			9.45%
1 Week		6.90%			6.99%
1 Month		6.50%			6.55%

 

GFX Morning FX Commentary November 6th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9900-.9975

Today’s expected range for the Canadian Dollar against the Euro is 1.2700-1.2800

Today’s expected range for the Canadian Dollar against Sterling is 1.5850-1.5925

The US Dollar is mixed this morning as it has jumped around during the night. The first move for the USD was to get stronger against the Euro (to an eight week high, EURO.USD traded down to 1.2765) on the back of poor German economic data, later in the morning the Greenback then gave up those gains as the EURO jumped above 1.2800 on a reaction to equity markets all moving higher as the financial markets getting ready for the results of the US election, it was a good night for stocks overall.

The Canadian Dollar is stronger this morning but still trades in narrow ranges in between .9900 and parity. The Loonie was helped last night by the Australian Dollar being a lot stronger, the Reserve Bank of Australia was expected to cut interest rates and they unexpectedly kept rates at current levels, the Aussie  jumped higher by 0.7% and the Loonie and other commodity currencies were able to benefit from this move. With the election upon us USD.CAD should have a quiet day today and with North American equity markets pointing higher we may see USD.CAD test .9900 today but I think it should stay above that level.

A few comments on the US Election and how it effect on the Loonie. As a Canadian I am not really a fan of either candidate, but my gut tells me that Obama will win and it won’t be as close as the pundits are calling for. Over the immediate short-term (two or three days after the election) if Obama wins I think it will be positive for equity markets as economic stimulus will continue, the economy will continue to grow at current rates, jobs will continue to be created and investors will know what they are getting. Longer term I think  the bond rating agencies are going to have real issues with the US deficit, and unless the Obama administration takes aim at cutting spending I think you will see equities get hit and the US Dollar will jump higher.

If Romney wins then I think immediately the equity markets get hit on the uncertainty factor and USD.CAD will rush towards parity. Longer term the bond rating agencies will love Romney’s planned slash and burn programs and his plan to get the deficit under control, Canadians will love Romney as he will build all the pipelines and not give a crap about the environment, he will I think be good for Canadian business overall.  I think the world becomes a much more dangerous place with his shoot first and talk later Republican approach, and has he moves further into his term and reduces the deficit,  stimulus will be removed from the economy  and equities will have trouble moving forward, it will take him a number of years to get spending under control before we will see real growth in the US economy.

Whatever happens tonight I think the currency markets will see enhanced volatility (more so if Romney wins) so make sure you have your orders in. If we do get a lot of exit polls during the day indicating which way the so called “Swing States” are  going then we could see enhanced volatility during the day. If you are watching the results tonight keep any eye on Ohio and Pennsylvania I think they could give Obama the electoral votes that he needs. 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9931			0.9969
CAD/USD		1.0069			1.0031
EUR/USD		1.2867			1.2787
EUR/CAD		1.2722			1.2748
STG/CAD		1.588			1.5924
AUD/CAD		1.0368			1.0315
CAD/JPY		80.7			80.22
CAD/CHF		0.9427			0.946
CAD/HKD		7.7808			7.7524
CAD/CNY		6.2966			7.7524
CAD/MXN		13.0797			13.1021
Commodities
Gold		$1,692			$1,680
OIL		$86.29			$84.89
Option Volatility
Canada
O/N		9.45%			9.35%
1 Week		6.99%			6.94%
1 Month		6.55%			6.54%

GFX Morning FX Commentary Nov 5th, 2012

Good Morning

Today’s expected range for the Canadian Dollar against the US Dollar is .9930-1.0000

Today’s expected range for the Canadian Dollar against the Euro is 1.2720-1.2800

Today’s expected range for the Canadian Dollar against Sterling is 1.5900-1.5980

The US Dollar is stronger to start the trading week as currency traders around the world start to position themselves ahead of the US Presidential election and the risks of Greece leaving the Euro look to be increasing. This week the Greek parliament votes on new austerity packages and it is not completely certain that they will pass, Prime Minister Samara pledged that this round oc cuts to wages and pensions will be the last as “Greek society won’t tolerate any more austerity measures” It certainly looks like the Greek situation is coming to a head, I am sure that these measures will pass but any future demands by the EU will be met indifference by Greek law makers and could push Greece into default. Either way the Euro is trading with a weak tone at the moment and will continue to do so for a few days.

The Canadian Dollar is marginally weaker as it continues  to trade within the .9900 to 1.000 trading range in quiet trading conditions, waiting for a breakout on either side. UP today we have some manufacturing data out of the US and housing data out of Canada but these numbers will most likely be ignored as equity markets and currency markets use the next two days for the results of the US Presidential election tomorrow night. I will put some thoughts on possible ramifications for the Loonie in tomorrow’s commentary but for now the election results seems to hinge on a couple of swing states where the candidates are campaigning hard.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9969			0.9974
CAD/USD		1.0031			1.0026
EUR/USD		1.2787			1.2878
EUR/CAD		1.2748			1.2848
STG/CAD		1.5924			1.6059
AUD/CAD		1.0315			1.0347
CAD/JPY		80.22			80.46
CAD/CHF		0.946			0.9388
CAD/HKD		7.7524			7.7476
CAD/CNY		7.7524			6.2525
CAD/MXN		13.1021			13.0562
Commodities
Gold		$1,680			$1,709
OIL		$84.89			$86.39
Option Volatility
Canada
O/N		9.35%			7.29%
1 Week		6.94%			7.45%
1 Month		6.54%			6.49%

GFX FX Morning Commentary Nov 2nd, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9950-1.0050

Today’s expected range for the Canadian Dollar against the Euro is 1.2820-1.2920

Today’s expected range for the Canadian Dollar against Sterling is 1.6020-1.6120

The US Dollar is marginally higher this morning as positions are squared up ahead of the all-important US jobs report this morning, EURO.USD again dropped last night and is trading below 1.2900 as the US dollar is at its strongest level in days. The currency markets are expecting another 125,000 new jobs to have been created in the US (following the increase of 114,000 last month) with a slight jump in the unemployment rate to 7.9%. A big increase in the employment picture should be equity positive and would push the US Dollar lower today and if the number disappoints then I think you will see nervous equity markets give up some strength and the US Dollar will jump.

 

The Canadian Dollar had a very quiet night and is basically at the same point when we went home last night, it is holding onto the strength is grabbed yesterday. In addition to the US number which will dominate the currency markets we have the Canadian employment report being released today and we are expecting 10k jobs to have been created (52.1K created last month) and an unemployment rate of 7.4% (unchanged).  When you tie this number in with the poor GDP report from earlier in the week we can easily see the Canadian economy is slowing and not creating many jobs, a poor number may give USD.CAD the necessary push above parity this morning, a strong report should push us back below .9950.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9974			1.0002
CAD/USD		1.0026			0.9998
EUR/USD		1.2878			1.2943
EUR/CAD		1.2848			1.2948
STG/CAD		1.6059			1.6174
AUD/CAD		1.0347			1.0354
CAD/JPY		80.46			79.95
CAD/CHF		0.9388			0.932
CAD/HKD		7.7476			7.7247
CAD/CNY		6.2525			6.2416
CAD/MXN		13.0562			13.0916
Commodities
Gold		$1,709			$1,723
OIL		$86.39			$86.42
Option Volatility
Canada
O/N		7.29%			10.02%
1 Week		7.45%			7.54%
1 Month		6.49%			6.59%

 

GFX Morning FX Commentary Nov 1st, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9960-.1.0040

Today’s expected range for the Canadian Dollar against the Euro is 1.2930-1.3030

Today’s expected range for the Canadian Dollar against Sterling is 1.6140-1.6220

The US Dollar is marginally stronger overnight in quiet FX markets. EURO.USD has slipped back below 1.3000 as poor economic growth numbers released from Norway and Sweden have increased investor concern that the overall Europe economy is slowing as a result of the financial crisis. In the US the accountants will be hard at work to determine the cost to the US Gross Domestic Product report of Hurricane Sandy, early reports put the damage at 20-50 Billion dollars, initially the economy will take a hit but once rebuilding starts then the economy will get a boost, nothing like a war or natural disaster to boost your economy.

Canadian Dollar movement continues to be a non-event as USD.CAD hovers near parity and does not want to break out to either side. Up today we do get a load of US economic reports and the expectation is that we could start to see a slowdown in manufacturing in the US which would be equity negative and US Dollar positive, if the numbers are well below expectation then we could see USD.CAD try and break above 1.0050 today.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0002			0.9967
CAD/USD		0.9998			1.0033
EUR/USD		1.2943			1.3005
EUR/CAD		1.2948			1.2964
STG/CAD		1.6174			1.6062
AUD/CAD		1.0354			1.0334
CAD/JPY		79.95			79.83
CAD/CHF		0.932			0.9314
CAD/HKD		7.7247			7.753
CAD/CNY		6.2416			6.2574
CAD/MXN		13.0916			13.0826
Commodities
Gold		$1,723			$1,719
OIL		$86.42			$86.32
Option Volatility
Canada
O/N		10.02%			9.27%
1 Week		7.54%			7.19%
1 Month		6.59%			6.65%