GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0980-1.1050

Today's expected range for the Canadian Dollar against the Euro is 1.5120-1.5200

Today's expected range for the Canadian Dollar against Sterling is 1.8300-1.8470

The US Dollar is marginally stronger this morning as the Euro continues to weaken on the expectation that the ECB will cut interest rates at their next meeting. Overnight inflation data out of Germany and Spain showed that prices in Europe are still declining giving the ECB room to add stimulus.

Once again the commodity currencies were quite strong overnight with the New Zealand Dollar leading the way, there is a growing expectation that both Australia and New Zealand will increase interest rates next month.

The Canadian Dollar is unchanged after spending the afternoon yesterday once again getting stronger, the Loonie continues to shake off the verbal intervention from the Bank of Canada and has done quite well in the past week. I had an interesting conversation yesterday where one of my contacts told me a large US hedge fund was active in the market selling US dollars and removing the Canadian Dollar hedges that they had put on a couple of years ago. This company would have bought large amounts of US Dollars as they were concerned that the value of their Canadian assets would weaken if the Loonie traded weaker. They have certainly done very well with that hedge over the last two years but the fact that they are now taking the hedge off (selling the US Dollars) indicates that they are thinking the Loonie will recover over the medium-term, time will prove if they are right.

Up today we get some more secondary US data including Consumer Sentiment but for the most part I think the reports will be ignored and the Loonie should continue to trade stronger. Eventually I think USD.CAD will trade back higher and it will be a quick snap back but for the immediate short-term the Loonie looks like it wants to continue to improve. Buyers of Euro should really look at the rate today, it has dropped over 300 points in the last week and you need to take advantage of the cheaper rates.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1016			1.1087
CAD/USD		0.9097			0.9019
EUR/USD		1.3729			1.3755
EUR/CAD		1.5129			1.5253
STG/CAD		1.8309			1.8423
AUD/CAD		1.014			1.0234
CAD/JPY		92.86			92.14
CAD/CHF		0.8057			0.7991
CAD/HKD		7.0211			6.9747
CAD/CNY		5.6375			5.6014
CAD/MXN		11.8751			11.8511
Commodities
Gold		$1,296.00			$1,295.00
OIL		$101.80			$100.35
US DOLLAR INDEX
P.CLOSE		80.14			80.03
OPEN		80.21			80.12
US 10YR YIELD		2.69%			2.70%