GFX Morning Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1075-1.1140

Today’s expected range for the Canadian Dollar against the Euro is 1.5000-1.5070

Today’s expected range for the Canadian Dollar against Sterling is 1.8110-1.8180

The US Dollar is unchanged from yesterday’s Toronto close against the major currencies but it did have an active night, Sterling was once against the most active currency overnight as UK Construction data came in higher than expected. Global stock markets are starting to reflect the recent meltdown in the emerging market economies, yesterday saw the Dow Jones drop over 300 points, its third triple loss in over a week. The Japanese Nikkei Index was down almost 4% overnight and all European equity markets are showing losses so not a very pretty picture at the moment. I wonder if these equity movements will cause the new Chairperson of the Federal Reserve Janet Yellen to rethink their strategy of tapering the stimulus in the US economy.

Of interesting note last night was the trading of the Australian Dollar, readers will remember a few months ago the Australian Central Bank used verbal intervention to try and weaken their currency, they had set a target level for the Aussie Dollar of 0.8500 to the US Dollar. Last night the Bank came out and said they were no longer looking for that level, I think in my thirty years of FX experience I have never seen a Central Bank reverse course like that so quickly, AUD.USD rallied about 2% on this announcement. Markets will not like this move as it creates great uncertainty around the Australian economy and I think that it will be reflected in investor confidence going forward.

The Canadian Dollar had an active night as it trades around the 1.1100 level, as we anticipated it was not able to hold onto its strength from Friday, once again we see bouts of Loonie strength are quick to happen but and short-lived in nature. I am a bit concerned that the Loonie did not get a bit of a boost from the stronger Australian Dollar as the commodity currencies seem to stick together but that was not the case last night.

We only have US Factory Orders to be released today so it is a light day from a reporting stance, the Dow Jones is pointing higher by 30 points on the opening so we may see the Loonie rally a little bit if we do have a bounce back day on the markets. The vulnerable side is still for USD.CAD to go higher.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.109			1.1068
CAD/USD		0.9017			0.9035
EUR/USD		1.3513			1.3502
EUR/CAD		1.4993			1.4951
STG/CAD		1.8103			1.8086
AUD/CAD		0.986			0.974
CAD/JPY		91.29			91.97
CAD/CHF		0.8147			0.8166
CAD/HKD		6.978			6.9901
CAD/CNY		5.4631			5.4723
CAD/MXN		12.1178			12.039
Commodities
Gold		$1,259.00			$1,244.00
OIL		$96.48			$97.49
US DOLLAR INDEX
P.CLOSE		81.07			81.26
OPEN		81.06			81.19
US 10YR YIELD		2.60%			2.66%