GFX Morning FX Commentary September 14th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9600-.9700

Today’s expected range for the Canadian Dollar against the Euro is 1.2600-1.2700

Today’s expected range for the Canadian Dollar against Sterling is 1.5620-1.5750

The US Dollar is much weaker this morning as equity markets are all higher on the news that the US Federal Reserve announced another new round of QE (QE3)to set the table for low interest rates in the hopes it spurs job creation. The EURO is at a four month high against the Greenback and this move looks to have taken the focus away from the crisis in Europe and focused it directly on the US economy. I am sure European leaders are breathing a sigh of relief at the moment even as a strong Euro will  make their exports more expensive and will hurt their economies even more.

This policy by the Fed should help the US economy, it will create wealth in the stock markets, encourage a weak US Dollar creating demand for US exports, inflation will start to tick higher (look at the jump in the price of commodities last night), it will give the banks longer access to cheap money creating massive profits for them but it will only create more jobs if these banks take the risk and lend to corporate America which in turn will make investments in job creation. With the first two rounds of QE not producing the amount of job creation that they are looking for I really don’t know what they expect to happen this time, I guess we have to see after the election what the fiscal policies on the Government will be and how jobs will be created.

The Canadian Dollar is much stronger against the USD as you would expect, with a weak US Dollar policy clearly now in place the question is just how far will the CAD go. On a technical basis the next level of support for the USD.CAD should be around .9500 so I would think we will now see USD.CAD and other commodity currencies start to appreciate against the US Dollar. US Dollar sellers now have to set their sights on any pullbacks towards .9700/.9800, I don’t think we will be back near parity in the short-term. For today we do have some US data due out (CPI, Consumer Sentiment) but barring any surprises I think these numbers will be ignored by the markets as equity markets continue to rise on the new Fed policy.

 

Have a great weekend

Mike

GFX Morning Currency Rates
Friday September 14, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.965			0.9758
CAD/USD		1.0362			1.0248
EUR/USD		1.3091			1.2904
EUR/CAD		1.2654			1.2594
STG/CAD		1.5676			1.5724
AUD/CAD		1.0198			1.0183
CAD/JPY		80.8			79.58
CAD/CHF		0.9628			0.9613
CAD/HKD		8.0113			7.9243
CAD/CNY		6.542			6.4839
CAD/MXN		13.2536			13.3635
Commodities
Gold		$1,776			$1,733
OIL		$100.00			$97.15
Option Volatility
Canada
O/N		8.39%			13.40%
1 Week		6.61%			8.40%
1 Month		6.13%			6.71%