GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0560-1.0620

Today’s expected range for the Canadian Dollar against the Euro is 1.4530-1.4580

Today’s expected range for the Canadian Dollar against Sterling is 1.7200-1.7260

The US Dollar is unchanged in very tight overnight trading conditions, it appears that all currency markets are solely focused on what the US Federal reserve announces tomorrow. Sterling did drop a little lower against the US Dollar as UK inflation data came in lower than expected, a result which will give the Bank of England more time to keep interest rates low and stimulate the economy. Economists were expecting a higher inflation rate in the UK which in turn would have forced the BOE to raise interest rates before they were ready. The only other currency of note last night was the Swedish Krona that is a bit weaker as the Swedish Central Bank (the Riksbank)unexpectedly cut interest rates by 0.25%.

Nothing new to report on the Canadian Dollar, it is just trading in tight ranges ahead of tomorrow’s Federal Reserve announcement. One thing I should point out is that the short Canadian Dollar open positions has reached a new high (since April of this year) on the Chicago Mercantile Exchange. This means that most currency speculators are all the same way and betting that the Canadian Dollar will weaken against the US in the coming days. If the Federal Reserve does not cut the stimulus program tomorrow then there is a good chance that the herd mentality will help push the Canadian Dollar much stronger, all of these speculators will try and buy Canadian Dollars at the same time to cut their losses driving USD.CAD lower. If this in fact happens it will only be a temporary action and our US Dollar buyers need to make sure they are ready to take advantage of it by placing some orders ahead of the Fed announcement. Give us a call and we can suggest some strategies.

We may get a little volatility today surrounding the US Inflation report but as long as it still shows that inflation is under control then the number will not have much impact.

Have a great day
Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0579			1.0585
CAD/USD		0.9452			0.9447
EUR/USD		1.3746			1.3782
EUR/CAD		1.4545			1.4595
STG/CAD		1.7207			1.7287
AUD/CAD		0.9437			0.9455
CAD/JPY		97.31			97.25
CAD/CHF		0.8389			0.8359
CAD/HKD		7.323			7.3162
CAD/CNY		5.7361			5.7325
CAD/MXN		12.2425			12.1973
Commodities
Gold		$1,238.00			$1,229.00
OIL		$97.27			$97.14
US DOLLAR INDEX
P.CLOSE		80.24			80.38
OPEN		80.29			80.12
US 10YR YIELD		2.86%			2.85%