GFX Morning Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0830-1.0890

Today's expected range for the Canadian Dollar against the Euro is 1.4680-1.4740

Today's expected range for the Canadian Dollar against Sterling is 1.8400-1.8460

The US Dollar is weaker against the Pound and Euro and stronger against the Yen this morning, all-in-all a mixed bag in quiet overnight trading conditions.

Sterling had a big jump yesterday afternoon as Bank of England Governor Mark Carney signaled that given the strength in the UK economy interest rates will rise sooner than previously thought. He also indicated that he was worried that the UK recovery could be hurt by the negative effect rising interest rates will have on the countries growing ‎mortgage debt. I think this will mirror the situation in Canada has yesterday BOC governor Stephen Poloz hinted that he was worried about an overheated Toronto Condo market and a soft landing in the overall housing market.

The Bank of Japan has kept interest rates and asset purchases unchanged as expected, causing the  Japanese Yen to ease off slightly from our close. The AUD and NZD also pulled back from the  recent overbought levels as both currencies are attracting flows on higher interest rates.

Of an interesting note is that the price of a barrel of oil has risen to $107 USD, while this is having no effect on the Canadian Dollar at the moment continued price hikes in oil has a similar effect on the economy as interest rate hikes, both  are a drag on the economy and if we continue to see oil at current levels or higher on world markets look for a global slowdown which will be negative for the Canadian Dollar.

The Canadian Dollar is unchanged from its close yesterday as the currency was not moved by the comments from Poloz or the Ontario election. As I mentioned yesterday the results of the Ontario election will have a long-term negative effect on the Loonie, as the province goes deeper into debt and interest rates rise you will see the credit worthiness of the province be reduced (I would expect to see a bond downgrade within the next 6 months) and it became much more difficult to grow Canada's largest province.

With no economic release of note today look for more consolidation of USD.CAD and keep an eye on the price of oil, if you see it continue to rise then you will see equities get hit hard and the US Dollar jump on the safe haven effect.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0856			1.0856
CAD/USD		0.9211			0.9211
EUR/USD		1.3564			1.3524
EUR/CAD		1.4729			1.4684
STG/CAD		1.8415			1.8276
AUD/CAD		1.0186			1.0215
CAD/JPY		93.89			93.99
CAD/CHF		0.8259			0.8287
CAD/HKD		7.1121			7.117
CAD/CNY		5.7179			5.7255
CAD/MXN		12.0188			11.9964
Commodities
Gold		$1,274.00			$1,266.00
OIL		$107.08			$105.95
US DOLLAR INDEX
P.CLOSE		80.56			80.8
OPEN		80.52			80.79
US 10YR YIELD		2.59%			2.66%