GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1045-1.1125

Today’s expected range for the Canadian Dollar against the Euro is 1.5200-1.5270

Today’s expected range for the Canadian Dollar against Sterling is 1.8460-1.8530

The US Dollar for the most part is unchanged this morning from yesterday’s North American close. There is a Bloomberg report this morning that volatility in the EURO.USD currency pair had dropped to its lowest level since 2007 as currency traders are sitting on the sidelines awaiting signals from Central Banks as to what their polices will be going forward. New Federal Reserve Chairperson Janet Yellen will speak tomorrow and investors will be looking to see if the dramatic winter in the US will slow the tapering process by the Fed.

The British Pound held onto its recent gains as the UK GDP report showed the UK economy expanded for the fourth quarter in a row. The GDP increased in the fourth quarter by 0.7% and on a yearly basis it expanded by 2.7%(the most it has expanded in over five years). It certainly looks like the British Pound will stay strong over the short and medium-terms.

A very serious Geo-Political situation is rapidly starting to unfold in Ukraine. The country looks to be on the verge of an all-out civil war and a there is a growing possibility that the new Government will default on its debt obligations coming due at the end of this month. Such a move would be very negative for the Euro and would push both the US Dollar and Japanese Yen higher. We could easily see USD.CAD break above 1.1200 and higher if this occurs.

The Canadian Dollar is right where we left it last night and does not look like it wants to move much at all at the moment, I would expect USD.CAD to move higher at some point but I think we will see it settle in to a narrow range for a little while yet.

With no major economic news out until Friday when we get the GDP reports for the US and Canada I look for normalized trading conditions, with the exception of course that if the situation in Ukraine escalates then we will have increased volatility almost immediately. I still favour US Dollar buyers purchasing forward contracts at current levels as the risk of a dramatic rise for USD.CAD still outweighs a slow recovery for the Loonie.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1077			1.1066
CAD/USD		0.9028			0.9037
EUR/USD		1.3739			1.3744
EUR/CAD		1.522			1.5212
STG/CAD		1.8484			1.8461
AUD/CAD		0.9663			1
CAD/JPY		92.38			92.95
CAD/CHF		0.8013			0.8014
CAD/HKD		6.9856			6.9918
CAD/CNY		5.5295			5.5315
CAD/MXN		11.9362			11.9697
Commodities
Gold		$1,339.80			$1,334.00
OIL		$102.14			$101.95
US DOLLAR INDEX
P.CLOSE		80.18			80.22
OPEN					80.09
US 10YR YIELD		2.71%			2.74%