GFX Morning FX Commentary, August 31st, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9850-.9950

Today's expected range for the Canadian Dollar against the Euro is 1.2440-1.2550

Today's expected range for the Canadian Dollar against Sterling is 1.5660-1.5800

The US Dollar is weaker overnight as the currency markets position themselves for Fed Chairman Bernanke’s monetary policy speech this morning at 10:00 am from Jackson Hole. Overnight Asian and European equity markets all jumped higher and EURO.USD traded back above 1.2500, it is quite clear that investors (as am I) are expecting some signs in the speech that the Fed will introduce another round of Quantitative Easing in September.

The Canadian Dollar continues to trade close to the .9900 level but I expect it will get quite volatile as today's speech is released, a pro-stimulus speech should push equities higher and USD.CAD lower towards our low last week around .9850 and a wait and see style speech will push equities lower and USD.CAD higher towards parity.

Also today we get some more secondary US data which should not have much effect on the market, we also have the release of the Canadian GDP report for the 2nd Quarter and the June monthly numbers, for the 2^nd Quarter we are looking for a year over year number of 2.2% (1.6% for the actual number) so we are growing a little faster than the US economy. If this number disappoints the Loonie could see some enhanced volatility around the release.

Just a reminder that our office is closed Monday for the Labour Day Holiday but the Canadian Dollar will still be trading on the international currency markets. Make sure you place your orders before you go home today as we have seen in the past the Loonie can become quite violent in thin trading markets.

Have a great holiday weekend

Mike

GFX Morning Currency Rates
Friday August 30, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.991			0.9913
CAD/USD		1.009			1.0087
EUR/USD		1.2577			1.254
EUR/CAD		1.2466			1.2432
STG/CAD		1.567			1.5697
AUD/CAD		1.0237			1.0242
CAD/JPY		79.28			79.27
CAD/CHF		0.9631			0.9653
CAD/HKD		7.8063			7.8016
CAD/CNY		6.407			6.4017
CAD/MXN		13.4628			13.4767
Commodities
Gold		$1,661			$1,658
OIL		$95.20			$95.33
Option Volatility
Canada
O/N		4.50%			7.53%
1 Week		6.20%			6.18%
1 Month		6.45%			6.43%

GFX Morning FX Commentary, August 30th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9860-.9950

Today's expected range for the Canadian Dollar against the Euro is 1.2410-1.2500

Today's expected range for the Canadian Dollar against Sterling is 1.5680-1.5750

The US Dollar is marginally weaker this morning as the Euro continued to inch higher on the investor expectation that the ECB will be granted extraordinary measures to enter the market and purchase sovereign bonds. Also this morning Spanish Prime Minister Rajoy and French President Hollande are having their own crisis meeting as the expectation grows that Spain will be forced to ask the EU for a bail out. Another two regional Governments in Spain have applied to Madrid for a bail out so the crisis continues to ramble along with no end in sight which is too bad as these governments are totally consumed by the debt crisis and have no plans to grow their economies, there won't be any change anytime soon to the 25% unemployment rate in Spain.

With yesterday's US GDP report coming in exactly as expected (US economy grew at 1.7% for the quarter) the focus of the markets will now turn to Bernanke's speech at Jackson Hole scheduled for tomorrow, I am not sure 1.7% is good enough and it looks like he will be hinting at further stimulus in September.

Nothing new to report on the Loonie, USD.CAD jumped a little higher last night but still remains in very tight ranges, right now it looks like it wants to continue to trade around the .9900 level for a while.

Up today we have some minor economic data out of the US and Canada but not enough to influence the currency markets, equity futures are pointing lower to start the day so look for USD.CAD to test a bit higher at some point but once again I am not expecting any kind of dramatic movement until we see what Bernanke says tomorrow.

 

Long-time readers will know that I am not a big fan of the Bank Act here in Canada which allows Canadian Banks to operate unfettered from foreign competition in the Canadian market, I believe that this approach costs Canadian business like yours and mine millions of dollars in higher fees and borrowing costs. The last two days have seen record profits once again from the big five (RBC made 2.2 billion just for the last QUARTER) with the Canadian retail operations of the banks leading the way. This morning there was a CBC report that said the international Banking regulator based in Switzerland which was formed after the banking crisis of 2008 has now called for Ottawa to limit the size of the Canadian banks as they are now considered "too big to fail" and called for more foreign competition in the Canadian Banking system. The report shows the combined balance sheets of the big 5 are at least 2.5 times the size of the total Canadian GDP, can you imagine what a bank failure in Canada would do to the overall economy, It would be a disaster. I find it quite humorous that a banking system that was held up as an example to the rest of the world in 2008 is now deemed too big to fail. I will leave it to your imagine to figure out what Ottawa's reaction will be, I think it may have involved the middle finger on Finance Minister Flaherty’s right hand but that is yet to be confirmed.

Have a great day

Mike

GFX Morning Currency Rates
Thursday August 30, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9913			0.9887
CAD/USD		1.0087			1.0114
EUR/USD		1.254			1.2555
EUR/CAD		1.2432			1.2415
STG/CAD		1.5697			1.5643
AUD/CAD		1.0242			1.0246
CAD/JPY		79.27			78.54
CAD/CHF		0.9653			0.9667
CAD/HKD		7.8016			7.8218
CAD/CNY		6.4017			6.4222
CAD/MXN		13.4767			13.3904
Commodities
Gold		$1,658			$1,668
OIL		$95.33			$95.61
Option Volatility
Canada
O/N		7.53%			6.90%
1 Week		6.18%			5.60%
1 Month		6.43%			6.50%

GFX Morning FX Commentary August 29th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9850-.9940

Today’s expected range for the Canadian Dollar against the Euro is 1.2400-1.2475

Today’s expected range for the Canadian Dollar against Sterling is 1.5630-1.5700

The Us Dollar is marginally stronger this morning as narrow ranges continue to be the norm in quiet overnight trading conditions. EURO.USD continues to hold onto recent strength again as Italian Prime Minister Monti and German Chancellor Merkel meet to discuss the current crisis today. The Euro did gain some strength yesterday as a statement from ECB Governor Draghi said the ECB may take extraordinary measures to support the Euro but in Spain the regional Government of Catalonia applied to the central government of Spain for a bail-out, the third such region in Spain to apply for a bail-out, each passing day looks to keep bringing this debt crisis to a head, one way or the other.

Currency traders will be looking to the US GDP report for the 2^nd quarter to get a gauge on the economy this morning, investors will be looking to see if growth is slowing enough for the Federal Reserve to react next month. If it is a weak number look for stock markets to jump and the US dollar to retreat on the expectation that the Fed will act to boost the economy. A poor number also places more emphasis on Bernanke speech later this week at Jackson hole where he will talk about US economic policy. We are expecting a growth rate on an annualized basis of 1.7%, last quarter it was 1.5% so anything less than this will I think force the Fed’s hand.

This week is also  the Republican National Convention and tonight Romney accepts the nomination and gives his speech. Normally you will see a boost in the polls shortly after a convention but as of now the financial markets seem to be ignoring the polling data, I am sure that will change as we get closer to the election.

The Canadian Dollar is marginally weaker this morning but nothing of a material nature, USD.CAD continues to trade in and around the .9900 level, I have noticed that the Loonie is not really getting any bump from the spike in oil and gas prices as a result of Hurricane Isaac, I am guessing that the financial markets are not that worried about the damage Isaac will do to the refining industry, if it should come out that refineries will be out of commission for a while then the Loonie should benefit .

Again today we are looking for subdued trading in the Canadian market but if the GDP number comes in lower than expected we should see some enhanced volatility and USD.CAD may move lower. Make sure you have your orders in ahead of the 08:30 report, any big moves will happen very quickly after that report.

Have a great day

Mike

GFX Morning Currency Rates
Wednesday August 29, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9887			0.9886
CAD/USD		1.0114			1.0114
EUR/USD		1.2555			1.2545
EUR/CAD		1.2415			1.2409
STG/CAD		1.5643			1.5611
AUD/CAD		1.0246			1.0258
CAD/JPY		78.54			79.53
CAD/CHF		0.9667			0.9676
CAD/HKD		7.8218			7.838
CAD/CNY		6.4222			6.4235
CAD/MXN		13.3904			13.3282
Commodities
Gold		$1,668			$1,664
OIL		$95.61			$96.90
Option Volatility
Canada
O/N		6.90%			7.40%
1 Week		5.60%			5.50%
1 Month		6.50%			6.40%

 

GFX Morning FX Commentary August 28th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9850-.9925

Today's expected range for the Canadian Dollar against the Euro is 1.2370-1.2450

Today's expected range for the Canadian Dollar against Sterling is 1.5580-1.5650

The US Dollar is weaker this morning as the Euro jumped back above 1.2500 against the Greenback, reports showed this morning’s Spanish debt auction performed much better than expected. Investors seem to be betting that the ECB and the EU are coming up with a new plan to counter the growing financial crisis and as such are rewarding troubled countries with lower interest rates, time will tell if this will last for the long run. In an interesting side note ECB Governor Draghi announced that he will not be attending the Jackson Hole Central Bank meetings later this week citing a heavy workload over the next few days, I wonder if he has something up his sleeve.

Sterling is also lower this morning as GBP.USD is weaker on a very poor housing report which showed house price continues to slip, investors are banking that continued weakness in the UK housing market will lead to another recession in the UK.

After a very quiet day yesterday as the Canadian Dollar continues to hold onto recent strength but does seem that it is just waiting for any development to get it moving again. Bernanke's speech at Jackson Hole later this week will most likely give some momentum to the FX market, if Bernanke’s speech is pro further stimulus the equities will jump and USD.CAD will fall back, if it suggests the status quo then just the opposite will happen. Ahead of this USD.CAD should remain relatively stable.

For today with only Consumer Confidence and the Richmond Fed index out of the US being released we should once again have a quiet market, US Dollar buyers should look to leave their orders at .9850 and short-term US Dollar sellers should leave their orders at the .9925 level, I think it would take a lot to push us outside these levels today.

 

Have a great day

Mike

GFX Morning Currency Rates
Tuesday August 28, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9886			0.9898
CAD/USD		1.0114			1.0102
EUR/USD		1.2545			1.2524
EUR/CAD		1.2409			1.2398
STG/CAD		1.5611			1.5651
AUD/CAD		1.0258			1.0292
CAD/JPY		79.53			79.49
CAD/CHF		0.9676			0.9681
CAD/HKD		7.838			7.8297
CAD/CNY		6.4235			6.4213
CAD/MXN		13.3282			13.3218
Commodities
Gold		$1,664			$1,673
OIL		$96.90			$97.05
Option Volatility
Canada
O/N		7.40%			7.50%
1 Week		5.50%			5.50%
1 Month		6.40%			6.50%

GFX Morning FX Commentary August 27th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9860-.9960

Today’s expected range for the Canadian Dollar against the Euro is 1.2375-1.2450

Today’s expected range for the Canadian Dollar against Sterling is 1.56250-1.5700

The US Dollar is marginally weaker this morning as the German Business Confidence report while negative was not as bad as expected, trading ranges were muted overnight as the UK is shut down for the summer banking holiday. European equity markets were all slightly higher and the Euro was able to jump to a 7 week high but trading volumes were greatly reduced. The Euro has been on a run lately as investors are beginning to believe that the ECB is coming to grips with the financial crisis, personally I think it is just delaying the inevitable, in other Euro news over the weekend Greece was not offered any new favourable terms by German Chancellor Merkel to pay back its loans so the Greek economy continues to inch along towards default.

The Canadian Dollar had a very narrow overnight range and USD.CAD is slightly lower than where we closed on Friday. For the most part over the next few days I think it will stay within muted ranges as there is not much economic news on the horizon to create volatile trading conditions. Later this week market watchers will be waiting for US Fed Chairman Ben Bernanke speech at Jackson Hole to see if he will hint at further stimulus at the Fed’s September meeting. Any signs of a new round of stimulus should be equity market positive and US dollar negative (Canadian Dollar will rally) and we could see USD.CAD fall back to the .9800 level. Short-term US Dollar sellers now have to hope for a pullback towards .9950/1.0000 to try and get some extra value out of their transactions, I would not wait too long as the pressure right now is for USD.CAD to move lower.

 

Have a great week

Mike

GFX Morning Currency Rates
Monday August 27, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9898			0.9936
CAD/USD		1.0102			1.0064
EUR/USD		1.2524			1.2521
EUR/CAD		1.2398			1.2439
STG/CAD		1.5651			1.5734
AUD/CAD		1.0292			1.0325
CAD/JPY		79.49			79.01
CAD/CHF		0.9681			0.9648
CAD/HKD		7.8297			7.8015
CAD/CNY		6.4213			6.3934
CAD/MXN		13.3218			13.3229
Commodities
Gold		$1,673			$1,668
OIL		$97.05			$95.85
Option Volatility
Canada
O/N		7.50%			4.00%
1 Week		5.50%			6.40%
1 Month		6.50%			7.00%