GFX Morning FX Commentary January 4th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9880-.9960

Today’s expected range for the Canadian Dollar against the Euro is 1.2880-1.2980

Today’s expected range for the Canadian Dollar against Sterling is 1.5875-1.5950

The US Dollar is stronger this morning across a broad range of currencies as the release yesterday of the minutes from the last Federal Reserve policy meeting have shown that the Fed is strongly considering removing the bond purchase program before the end of 2013. Markets are clearly showing their worry that the Fed might be acting too soon in removing the stimulus. Equity markets are down across the globe, gold is off $40 an ounce, oil is lower and the US Dollar has jumped the most it has in almost 2 months.

The market will now pay close attention to the US jobs report today as any signs of increased job creation could lead the Fed to end the program much sooner than expected, we are looking for the creation of 150k new jobs in December (after 143,00 in November) but if the number comes in higher than 200k then look for stocks to get hit hard and the US Dollar to surge. On this kind of number investors will expect the Fed to end the program sooner than later which will have them worrying about the US economy and equities will fall as a result.

As with other commodity currencies the Canadian Dollar is lower as USD.CAD tries to break back above the .9900 level. The Loonie has fared better than a lot of other currencies overnight but is still weaker against the US Dollar this morning. Given the weakness in the Euro and Sterling overnight the Loonie has been able to extend some small gains against those currencies but is still off it recent highs against the Euro and Sterling, these current levels for EURO.CAD and GBP.CAD may be good levels to buy some currencies if you need them.

USD.CAD direction will be dominated by the US jobs report this morning but we also get the Canadian Employment report where we are not expecting any new jobs to have been created in December, (after creating over 50k jobs in November) the jobless rate is expected to rise to 7.3%. Not sure how we go to flat from up 50K in a single month, but if the number comes in different than expectation we may have a very volatile morning. If we do see USD.CAD jump towards .9950 and above, US Dollar sellers need to be ready with their orders, I don’t believe any move towards parity can be sustained over the long run.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9919			0.9863
CAD/USD		1.0081			1.0137
EUR/USD		1.2998			1.3108
EUR/CAD		1.2896			1.2931
STG/CAD		1.589			1.5954
AUD/CAD		1.0322			1.036
CAD/JPY		88.92			88.06
CAD/CHF		0.9373			0.9347
CAD/HKD		7.8088			7.854
CAD/CNY		6.2764			6.3159
CAD/MXN		12.9499			12.9616
Commodities
Gold		$1,630			$1,681
OIL		$91.69			$92.59
Option Volatility
Canada
O/N		7.59%			7.41%
1 Week		5.97%			5.92%
1 Month		5.48%			5.41%