GFX Morning FX Commentary March 15th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0175-1.0250

Today’s expected range for the Canadian Dollar against the Euro is 1.3310-1.3400

Today’s expected range for the Canadian Dollar against Sterling is 1.5450-1.5525

The US Dollar is considerably weaker since this time yesterday, it appears and I am not quite sure why but there was a definite change of sentiment yesterday as both the Euro and Sterling surged. I think it was just a case that the US dollar had been so strong over the past few weeks currency traders just decided that it had come a bit too far too fast and they started to square up their positions, economically there was no fundamental change in the world economy to warrant such a move so it may be only temporary.

The Euro has reached a high of 1.3070 this morning, yesterday it opened at 1.2932 so the Euro is quite strong and this in spite of nervous Euro investors. This morning The EU announced that it would allow countries more time to balance their deficits in the face of a worsening recession, they also announced the ground rules for a rescue of Cyprus which has fallen the way of the other PIGS. Given the mess that Europe is in,  I still favour a weaker Euro but given the quick change in sentiment it may enjoy a short-term run.

The pound is higher as well trading at 1.5154 against the Greenback, yesterday GBP.USD opened at 1.4943 so a dramatic rise for a currency that was incredibly weak the past few months. This morning soon to be replaced BOE Governor King stated that the bank was not trying to weaken the Pound which gave Sterling an additional boost. Sterling sellers should take advantage of this move as I still think the Pound will be weaker down the road.

The Canadian dollar was trading as we expected in a narrow range yesterday but as the Euro and Sterling started to rise USD.CAD gradually fell to trade at 1.0250 and then eventually the dam broke and we quickly dropped to 1.0225, I think it was a case that the market was so long USD against the Loonie that traders had to bailout quickly and that caused the run on the Loonie. I still don’t think that the overall sentiment has changed so US Dollar buyers need to be ready with their orders today to take advantage of this move, If we break below 1.0200 today you should be picking up some USD.

Up today the market will be watching the release of a number of US data releases including the US inflation report. If inflation is as expected (0.5% month-over-month and 1.8% year-over-year) then I think it means the US Fed can leave their stimulus in place, equity markets will like this and we could see the US Dollar jump. IF inflation looks like it is rising then I think that will be negative for the US Dollar and we could see USD.CAD break towards 1.0180. Either way it could be a busy morning.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0205			1.0272
CAD/USD		0.9799			0.9735
EUR/USD		1.3058			1.2932
EUR/CAD		1.3331			1.3285
STG/CAD		1.5466			1.5354
AUD/CAD		1.0579			1.0631
CAD/JPY		94.17			93.76
CAD/CHF		0.9233			0.9287
CAD/HKD		7.5999			7.5503
CAD/CNY		6.0922			6.0515
CAD/MXN		12.1428			12.0637
Commodities
Gold		$1,592.92			$1,585.15
OIL		$93.38			$92.58
Option Volatility
Canada
O/N		5.77%
1 Week		6.21%
1 Month		5.88%