GFX Morning FX Commentary Oct 24th, 2012

Good Morning

Today’s expected range for the Canadian Dollar against the US Dollar is .9870-.9950

Today’s expected range for the Canadian Dollar against the Euro is 1.2800-1.2875

Today’s expected range for the Canadian Dollar against Sterling is 1.5840-1.5925

The US Dollar is marginally stronger this morning as weaker than expected numbers out of Europe have driven the Euro back below 1.2950 against the US Dollar. This morning the EU Zone reported that services and manufacturing indexes contracted in the first half of October, a clear indication that the debt crisis is hurting growth in the EU. The German Finance Ministry also reported that German business confidence dropped to its lowest level in more than two years. the ugly picture that is the EU economy continues. These poor numbers were offset somewhat by better than expected manufacturing numbers out of China, yesterday saw the Bank of Canada mention in their report that the slowdown in China was greater than expectation so hopefully these types (if they can be believed) of reportrs will help keep the Canadian export market strong.

The Canadian Dollar is marginally stronger and does look set to have USD.CAD break back below the .9900 level. After the surprise from the Bank of Canada yesterday I thought we would see the Loonie strengthen more but it looks like any strength will be gradual and over a longer period of time.

Trading today will be dominated by the Bank of Canada Monetary Policy report and the US Federal Reserve announcement on interest rates. The BOC Monetary Policy report is basically an expansion in greater detail of what the Bank said yesterday, every once in a while there are a few golden nuggets of information that grab the attention of currency traders and add volatility to the market. In the US we have the Fed’s interest rate announcement and for the most part we are not expecting any surprises, I think the currency market is looking towards Bernanke’s comments on the QE program and to see how long it will be in place for. We also get some US housing data so today could be a busy day on the equity and currency markets.

I am considering switching email services for this newsletter, it appears that 2-5 reader new emails are being rejected every day, if you find that all of a sudden you have stopped receiving the commentary drop me a direct line to msmith@gfxpartners.ca and  I will see about restoring your email address.

 

Have a great day
Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9906			0.9962
CAD/USD		1.0095			1.0038
EUR/USD		1.2943			1.3
EUR/CAD		1.2825			1.2953
STG/CAD		1.5864			1.5925
AUD/CAD		1.0229			1.0235
CAD/JPY		80.5			80.16
CAD/CHF		0.9431			0.933
CAD/HKD		7.8012			7.7571
CAD/CNY		6.3006			6.2747
CAD/MXN		13.1412			13.4952
Commodities
Gold		$1,710			$1,708
OIL		$86.81			$87.62
Option Volatility
Canada
O/N		10.00%			1.41%
1 Week		7.55%			7.54%
1 Month		7.10%			7.00%

 

GFX Morning FX Commentary October 23,2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9875-1.0025

Today’s expected range for the Canadian Dollar against the Euro is 1.2650-1.3050

Today’s expected range for the Canadian Dollar against Sterling is 1.59-1.6000

The US Dollar is marginally stronger this morning as the Euro has fallen off its overnight highs. The Euro is weaker this morning on a Moody’s downgrade of Spanish regional debt, a very discouraging French business confidence report and a newspaper report that Spain has told the EU that they will not hit their deficit reduction target this year. Once again we see any Euro strength slowed by bad news that ultimately seems to always pop up, this will probably still be the case moving forward until at the very least the Spanish Government seeks a bailout.

The Canadian Dollar is a bit weaker this morning on the back of the stronger US dollar, USD.CAD is so far maintaining it strength above the .9900 level. Currency activity will of course depend on the Bank of Canada announcement today where we are not expecting any change in interest rates, but we are expecting a little more cautious statement by the Bank and quite possibly indicating that interest rate hikes have been put on hold for a while. If this is the case then I think you will see USD.CAD jump towards parity but I honestly don’t think it will be able to hold this strength on the first go, a lot of the reason USD.CAD has jumped above .9900 in recent days is because the market is expecting this tone from the Bank so a lot of the move has already been built in.

I will report back on the Bank’s decision and its effects on the currency later this  morning

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9962			0.9925
CAD/USD		1.0038			1.0076
EUR/USD		1.3			1.3068
EUR/CAD		1.2953			1.2977
STG/CAD		1.5925			1.5926
AUD/CAD		1.0235			1.025
CAD/JPY		80.12			80.3
CAD/CHF		0.933			0.932
CAD/HKD		7.778			7.7828
CAD/CNY		6.2747			6.2987
CAD/MXN		13.4952			12.9572
Commodities
Gold		$1,708.58			$1,725
OIL		$87.62			$90.66
Option Volatility
Canada
O/N		9.79%			9.79%
1 Week		7.55%			7.55%
1 Month		6.97%			6.97%

GFX Morning Currency Rates
Tuesday October 23, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9962			0.9925
CAD/USD		1.0038			1.0076
EUR/USD		1.3			1.3068
EUR/CAD		1.2953			1.2977
STG/CAD		1.5925			1.5926
AUD/CAD		1.0235			1.025
CAD/JPY		80.12			80.3
CAD/CHF		0.933			0.932
CAD/HKD		7.778			7.7828
CAD/CNY		6.2747			6.2987
CAD/MXN		13.4952			12.9572
Commodities
Gold		$1,708.58			$1,725
OIL		$87.62			$90.66
Option Volatility
Canada
O/N		9.79%			9.79%
1 Week		7.55%			7.55%
1 Month		6.97%			6.97%

GFX Morning FX Commentary October 22nd, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9880-.9970

Today’s expected range for the Canadian Dollar against the Euro is 1.2960-1.3050

Today’s expected range for the Canadian Dollar against Sterling is 1.5900-1.5975

The US Dollar is marginally stronger this morning, the Euro is stronger as Spanish Prime Minister Rajoy’s party won a regional election in his home province, this is viewed as buying the Prime Minister some time as he decides on a bail-out or not. Most of the overnight currency trading seemed to focused around the Japanese Yen as that country struggles with growth in its economy. The Yen dropped for the seventh straight day (the longest streak in over 7 years) as exports have fallen the most since the tsunami and earthquakes of 2011. The Prime Minister of Japan is urging the Central Bank of Japan to take action but with interest rates at 0.1% for a very long time I am not sure the BOJ can make much of a difference, look for lots of intervention from the BOJ in the currency markets to start buying the yen.

The Canadian Dollar is marginally stronger and USD.CAD is off of its overnight highs. The market is still digesting both Finance Minister Flaherty’s and Bank of Canada Carney’s comments that the economy may not be growing as fast as expected. USD.CAD opens the week above the .9900 level and I think will remain there ahead of the Bank of Canada interest rate announcement tomorrow.

For today with Equities pointing higher after a disastrous day on Friday (the 19^th of October,1987 was the 25^th anniversary of Black Monday and funny enough my 2^nd wedding anniversary, I am not sure if there is any correlation there) USD.CAD should pullback a little today but once again I am not expecting a large trading range. The Canadian Dollar trading community will setup to see what the Bank of Canada has to say about the economy tomorrow morning and then we will get a better gauge of what will happen in the coming weeks.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9925			0.9868
CAD/USD		1.0076			1.0134
EUR/USD		1.3068			1.3046
EUR/CAD		1.2977			1.2879
STG/CAD		1.5926			1.5848
AUD/CAD		1.025			1.0223
CAD/JPY		80.3			80.24
CAD/CHF		0.932			0.938
CAD/HKD		7.7828			7.8312
CAD/CNY		6.2987			6.3342
CAD/MXN		12.9572			13.0545
Commodities
Gold		$1,725			$1,735
OIL		$90.66			$92.18
Option Volatility
Canada
O/N		9.79%			6.50%
1 Week		7.55%			7.25%
1 Month		6.97%			7.25%

GFX Morning FX Commentary Oct 19th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9830-.9930

Today’s expected range for the Canadian Dollar against the Euro is 1.2860-1.2960

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

The US Dollar is marginally stronger this morning as the EU Summit has really failed to produce any meaningful results to keep investors happy. The biggest news was that they want the European Central Bank to be the main regulator of all European banks, this would take some of the sovereignty away from the individual countries and put the ECB up front for any future bank bailouts. In addition the Finance Ministers congratulated the Greek Prime minister for all his efforts in trying to reach the countries austerity goals, they needed a big meeting costing millions of dollars just to congratulate the Greek Prime Minister, they did not offer him an extension to pay back the loans just congratulated him, and we wonder why Europe is a mess.

Yesterday saw the Canadian Dollar give back all its gains from Wednesday and it was primarily on the media statement made by Finance Minister Flaherty  that the Canadian recovery may not be as robust as first thought, I could just see his deficit reduction targets flying off into the wind. The expectation is now building that next Tuesday when the Bank of Canada release its interest rate policy it may become a little more dovish on the economy and put off any interest rate hikes until 2014, it will be an interesting statement. Overnight USD.CAD continues to push a little higher but for the most part all the damage was done yesterday afternoon.

Up today we get the Canadian CPI report for September and with inflation in check I would not expect it to have much of an effect on the currency market, we do also get US existing home sales and again I would think we will continue  to see strong numbers from the US which will help to keep equity markets moving higher. I still favour a stronger Canadian Dollar but if the Canadian economy is going to slow down dramatically as Flaherty is hinting at, then I may be forced to change that view. For now I think these levels reflect a good opportunity for US Dollar sellers.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9868			0.9773
CAD/USD		1.0134			1.0232
EUR/USD		1.3046			1.3108
EUR/CAD		1.2879			1.2813
STG/CAD		1.5848			1.5785
AUD/CAD		1.0223			1.0157
CAD/JPY		80.24			81.05
CAD/CHF		0.938			0.9432
CAD/HKD		7.8312			7.9069
CAD/CNY		6.3342			6.3928
CAD/MXN		13.0545			13.1032
Commodities
Gold		$1,735			$1,747
OIL		$92.18			$92.02
Option Volatility
Canada
O/N		6.50%			9.23%
1 Week		7.25%			6.74%
1 Month		7.25%			6.47%