GFX Morning FX Commentary August 1st. 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0260-1.0340

Today’s expected range for the Canadian Dollar against the Euro is 1.3610-1.3770

Today’s expected range for the Canadian Dollar against Sterling is 1.5665-1.5740

The US Dollar is mixed this morning as it is stronger against the Euro but weaker against Sterling. In the UK a manufacturing report came in better than expected and the Bank of England announced that they were keeping interest rates at current levels and not making any changes to their stimulus package, this gave investors some confidence that the BOE will keep the stimulus in place for some time so they pushed the Pound higher.

As I write the European Central Bank announced that they will keep interest rates at current levels, the market will await ECB Governor Draghi’s press conference at 08:30 where they will be looking for some guidance that interest rates will be staying low for the foreseeable future. Barring any surprises from Draghi the Euro should range trade over the next few weeks as we see more data on how the EU economy is performing.

The Canadian Dollar is still in the 1.0250 to 1.350 trading range but has been trading weaker within that range over the past 24 hours. As I said yesterday I think that the Potash announcement weighed a little on the Loonie and now USD.CAD is just trading back and forth around 1.0300 after the US Federal Reserve announcement. In that announcement everything was the status quo, as I predicted there was no talk about tapering the stimulus program but what did catch some people off guard was the mention of deflation. To me deflation is considerably worse for an economy that inflation, deflation has been plaguing Japan for 10 years and if they US economy starts to experience a prolonged bout of deflation then the Canadian economy won’t be far behind.

Trading today will be dictated by the Draghi press conference but for the most part I think USD.CAD has room to go a bit higher today, possibly up towards 1.0350 but if we don’t get a move in the morning the afternoon session will be quiet ahead of tomorrow’s US employment report.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0286			1.0293
CAD/USD		0.9722			0.9715
EUR/USD		1.3234			1.3254
EUR/CAD		1.3616			1.3642
STG/CAD		1.5623			1.5644
AUD/CAD		0.9235			0.9298
CAD/JPY		96			94.89
CAD/CHF		0.9043			0.902
CAD/HKD		7.5118			7.5133
CAD/CNY		5.9576			5.9515
CAD/MXN		5.9576			12.4536
Commodities
Gold		$1,323.00			$1,330.00
OIL		$106.81			$103.25
US DOLLAR INDEX
P.CLOSE		81.75			81.93
OPEN		82.1			81.93
US 10YR YIELD		2.59%			2.60%