GFX Morning Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0850-1.0930

Today's expected range for the Canadian Dollar against the Euro is 1.4080-1.4150

Today's expected range for the Canadian Dollar against Sterling is 1.7710-1.7780

The US Dollar is unchanged this morning after a wild ride yesterday. The Dollar was much stronger as the Euro led the way dropping over a hundred points on the news that the European Central Bank was lowering interest rates and starting a stimulus program that some reports say will hit 700 billion Euro in the next few years. I get a sense that this action fits the old slogan about a barn door and the horse leaving!

Overnight the action was muted as both the Euro and Sterling range traded as the Markets get set up for today's US Employment report.‎ In August we are expecting that the US economy created 200k new  jobs and the unemployment rate to come in at 6.1%. A very strong number should push the Euro lower once again, we did hit my short-term target of 1.30000 yesterday but if Goldman Sachs is to be believed then we should see 1.25000 soon, Euro will continue to trade weaker.

The Canadian Dollar was not immune to market actions yesterday as it had a wild ride of its own. Initially USD.CAD did not react to the ECB announcement but as EURO.CAD dropped heavily the strength of the Loonie against the Euro was enough to pull USD.CAD much lower. Once EURO.CAD stabilized the Loonie could not hold its strength and we rode right back up to where the day started. I think it is safe to say that the summer doldrums are over for the currency markets and volatility has returned.

In addition to the US Employment report we also get the Canadian Employment report for August and we are expecting 10K new jobs to have been created and an Unemployment Rate of 7.0%, here's hoping that Stats Canada can get it right this time. Since Bank economist predictions have not been able to get close to this number in their predictions I am not sure what to expect, a very strong number will push USD.CAD lower and vice versa if it stronger. If we see a big movement I will send out a currency alert.

I did see a summary yesterday of all Canadian bank predictions for the Canadian Dollar, and while I have very little confidence in the accuracy of such predictions I did see one interesting trend. Each of the Bank economists is predicting a higher USD.CAD rate by the end of the first quarter, the range went from 1.1100 to a high of 1.1500. In reading this if I was a US Dollar buyer and I know I need some US going into next year I think I would want to start looking doing some forwards just in case the trend was correct.

Have a great weekend and thanks for all the kind words on the sale of GFX, I am looking forward to great things with AFEX.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0878			1.0888
CAD/USD		0.9193			0.9184
EUR/USD		1.2959			1.3122
EUR/CAD		1.41			1.4293
STG/CAD		1.775			1.791
AUD/CAD		1.0191			1.0173
CAD/JPY		96.04			96.36
CAD/CHF		0.8552			0.8444
CAD/HKD		7.1029			7.0959
CAD/CNY					5.6348
CAD/MXN		12.0889			12.0195
Commodities
Gold		$1,266.00			$1,273.00
OIL		$94.73			$95.08
US DOLLAR INDEX
P.CLOSE		83.76			82.85
OPEN		83.74			82.97
US 10YR YIELD		2.45%			2.40%