GFX Morning Commentary August 23rd, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0520-1.0600

Today’s expected range for the Canadian Dollar against the Euro is 1.4070-1.4170

Today’s expected range for the Canadian Dollar against Sterling is 1.6400-1.6475

The US Dollar is all over the map this morning after a wild ride during the Asian and London trading sessions. In Europe the US Dollar was weaker against Sterling for most of the morning as the UK GDP report was revised higher for the 2^nd quarter, further indication that the UK may be emerging out of its five year slump. That strength for the Sterling was very short-lived as GBP.USD dropped over 70 points in a matter minutes on some large sell orders. I think the currency markets are going to be very volatile over the next little while, with interest rates starting to edge higher investors are becoming increasing concerned that the global recovery will not be sustainable if interest rates go higher.

The sell-off in emerging market currencies continues with the flow of money for the most part going into the Euro, in India the Government has introduced capital controls and in Brazil the government has committed $60 Billion Dollars to defend the Brazilian Real from dropping in value, we are seeing a dramatic shift away from investment in these economies and back into Europe and the USA.

The Canadian Dollar continues to weaken off dramatically and for the most part it is weakening against the USD as a result of being very weak against the Euro and Sterling. EURO.CAD has jumped to a high of 1.4100 this morning, it has not been this high in two years and GBP.CAD is trading up near 1.6425, it has not been this high since 2010. Until we see the Loonie rebound against the Euro and Sterling it will remain weak against the US Dollar and 1.0600 is a very strong possibility today.

Up today we get the Canadian CPI report which will be watched closely by the market, if there are signs that inflation is growing in Canada then the Loonie will recover on the expectation of higher interest rates from the Bank of Canada, if inflation is benign then look for USD.CAD to jump a bit higher. Either way I think we are in for a period of enhanced volatility, make sure you take advantage of it.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0556			1.0493
CAD/USD		0.9473			0.953
EUR/USD		1.3356			1.3309
EUR/CAD		1.41			1.3964
STG/CAD		1.6487			1.6341
AUD/CAD		0.9502			0.9435
CAD/JPY		93.71			94
CAD/CHF		0.8756			0.8837
CAD/HKD		7.3261			7.3685
CAD/CNY		5.7973			5.8298
CAD/MXN					12.6241
Commodities
Gold		$1,374.00			$1,368.00
OIL		$105.15			$104.41
US DOLLAR INDEX
P.CLOSE		81.5			81.35
OPEN		81.57			81.68
US 10YR YIELD		2.90%			2.85%