GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1230-1.1320

Today’s expected range for the Canadian Dollar against the Euro is 1.5500-1.5570

Today’s expected range for the Canadian Dollar against Sterling is 1.8600-1.8670

The US Dollar is stronger this morning as the world’s financial markets react to US Federal Reserve Chairperson Yellen’s press conference yesterday. As expected the US Federal Reserve did not change interest rates and they continued their pace of reducing the stimulus by $10 Billion a month. In her press conference after the announcement the markets got very nervous as she indicated there is a likelihood that the US will increase interest rates about 6 months after the end of the stimulus program, early estimates put this into the third quarter of 2015. This caught investors a little off guard and equity markets around the world have retreated and the US Dollar has spiked, of interest in the announcement was the fact that the Fed will no longer just rely on the unemployment rate when deciding on interest rate hikes but will start to look at a wider data set on what action to take.

The Canadian Dollar continues to get hammered against the US Dollar, in the past 48 hours the Loonie has lost over 2% which is a fairly dramatic move. It certainly looks like our two economies are diverging , in Canada you have the Governor of the Bank of Canada saying that the economy is slowing and he may have to cut interest rates and in the US the Chair of the Federal Reserve is laying out a plan to raise interest rates, clearly not a good path for the strength of the Canadian Dollar. I think we will see the pace of weakness for the Loonie slow down over the next couple of sessions but clearly the trend is still for a stronger US Dollar and we can now easily see USD.CAD trading above 1.1300.

We get some secondary data out of the US today so we could see some volatility this morning, I look for USD.CAD to take a run at the 1.1300 level at some point but I think there will be some resistance so I am not looking for a break through on the first couple of try’s. US Dollar buyers need to look at 1.1250 as buying opportunities for their short-term requirements.

Have a great day.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1269			1.1175
CAD/USD		0.8874			0.8948
EUR/USD		1.3763			1.3924
EUR/CAD		1.5511			1.5562
STG/CAD		1.8622			1.8585
AUD/CAD		101.54			1.0183
CAD/JPY		90.9			90.82
CAD/CHF		0.7856			0.7821
CAD/HKD		7.7441			6.9256
CAD/CNY		6.2281			5.543
CAD/MXN		11.8051			11.7869
Commodities
Gold		$1,328.33			$1,347.00
OIL		$100.07			$99.62
US DOLLAR INDEX
P.CLOSE		80.00			79.34
OPEN		80.41			79.44
US 10YR YIELD		2.78%			2.37%