GFX Morning Commentary July 19th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0340-1.0430

Today’s expected range for the Canadian Dollar against the Euro is 1.3590-1.3670

Today’s expected range for the Canadian Dollar against Sterling is 1.5810-1.5900

The US Dollar is marginally weaker this morning in quiet overnight markets. This morning China announced that they are scrapping the floor on their commercial bank rate, this is a clear sign that they are worried about future growth and want to lower interest rates to spur borrowing by companies. The Australian Dollar which is closely tied to the Chinese economy has received a boost as anything seen as helping the Chinese economy is seen as great for the Australian economy. Both the Euro and Sterling jumped on the news but still trade in recent ranges.

The Canadian Dollar is marginally stronger in overnight trading and it has been able to make small gains on the Chinese news. I am a bit surprised that the Loonie had not broken below the 1.0350 level during the night, oil had jumped above $108 a barrel last night but the Loonie does not seem to be getting any bump from this move, USD.CAD is still supported by the 1.0350 level at the moment and trading in the 1.0350-1.0450 range.

The big news in the last 24 hours is the bankruptcy declaration by the City of Detroit, this will be the largest municipal bankruptcy in the history of the United Sates and the fallout over the next few  years will be dramatic, my fear is that this will not be the last municipal default that the US economy will have to deal with and I worry that further municipal and county bankruptcies will derail the overall US recovery. At least the lawyers will be making lots of money.

Up today we get the Canadian CPI inflation report, we are expecting inflation to remain subdued over the near-term, any indication that inflation is on the rise should give the Canadian Dollar a boost as higher inflation is one of the conditions set by the Bank of Canada for higher interest rates.

We are expecting a high today in Toronto of 35C without the humidity index so try and stay cool and dry, the Weather Network is getting all excited about the incoming storms.

Have a  great weekend.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.038			1.0416
CAD/USD		0.9634
EUR/USD		1.3111			1.31
EUR/CAD		1.3611			1.3645
STG/CAD		1.5838			1.5845
AUD/CAD		0.9524			0.9551
CAD/JPY		96.58			96.06
CAD/CHF		0.9078			0.9058
CAD/HKD		7.4711			7.445
CAD/CNY		5.9119			5.8943
Commodities
Gold		$1,288.01			$1,281.55
OIL		$108.36			$106.29
US DOLLAR INDEX
P.CLOSE		82.94			82.78
OPEN		82.86			82.95
US 10YR YIELD		2.51%			2.47%