GFX Morning FX Commentary June 21st, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0325-1.0425

Today’s expected range for the Canadian Dollar against the Euro is 1.3680-1.3750

Today’s expected range for the Canadian Dollar against Sterling is 1.6030-1.6100

The US Dollar is for the most part unchanged this morning against most currencies as the financial markets caught their breath after the carnage from the last two days. Yesterday saw equity markets in North America wipe out their gains from April and May and the US dollar rallied dramatically right across the board as investors fled the equity markets and bought US Treasuries. Of interest, the 10 Year US Treasury Bond has gained over 50 basis points in yield in the past month,  if you were to buy a 10 year bond today you would get 2.4% in interest over the 10 years, last month you would have received only 1.9%, that is a huge increase in US interest rates so borrowing costs in the US are clearly starting to rise, a sign that the market thinks the US recovery is in hand.

The Canadian Dollar had a quiet night as it stabilized after the big move for USD.CAD yesterday, normally after such a dramatic move I would expect some kind of a pullback so I would not be surprised if we see USD.CAD fall back today towards 1.0350 as it calms down and regroups for its next move.

Up today we do get Canadian Inflation and Retail Sales data so we may have a little volatility early on but I do get the sense that the currency market is focused on the events of the last few days and as long as there are no big surprises in the data we should have a relatively calm day. Keep an eye on North American Equity markets, right now it looks like the Dow Jones and the TSX will open higher, as long as they stay the course then USD.CAD has the best chance to recover a bit and we will see the Loonie rally, if they fall off then USD.CAD could test 1.0400 level again.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0378			1.0337
CAD/USD		0.9635			0.9674
EUR/USD		1.3217			1.3201
EUR/CAD		1.3718			1.3649
STG/CAD		1.607			1.5985
AUD/CAD		0.9576			0.9527
CAD/JPY		0.9402			0.9453
CAD/CHF		0.894			0.9015
CAD/HKD		7.4513			7.4777
CAD/CNY		5.908			5.9293
CAD/MXN		12.7999			12.8907
Commodities
Gold		$1,293.00			$1,303.00
OIL		$95.42			$96.69
US DOLLAR INDEX
P.CLOSE		81.98			81.45
OPEN		82.03			82.09
US 10YR YIELD		2.40%