GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0850-1.0920

Today's expected range for the Canadian Dollar against the Euro is 1.4175-1.4275

Today's expected range for the Canadian Dollar against Sterling is 1.7870-1.7950

The US Dollar was marginally stronger overnight as the Euro continues to decline in the wake of a growing economic crisis and the Ukrainian situation. This morning the Chief currency strategist at Goldman Sachs made the prediction that EURO.USD will fall to 1.2500 in the next 6 months. Sterling also remains under pressure as the UK awaits the Scottish independence vote.

As I write the European Central bank has unexpectedly cut interest rates from 0.15% to 0.05%, as a result of this move the inter-bank EURO.USD rate has dropped from 1.3140 to trade at 1.3040, a 100 point move in a matter of seconds. Draghi’s press conference will take on added significance this morning but clearly the EU is under tremendous pressure and we will see Euro to continue to trade with a negative bias. In other interest rate news the Bank of England held the line on interest rates, there had been some thought that the Bank of England might be ready to announce an interest rate hike but given the situation in Scotland I am not surprised that they held the line.

The Canadian Dollar has held onto the strength it picked up after yesterday's Bank of Canada announcement, while it continues to grow stronger against both the Euro and Sterling. After the Interest rate cut just now, EURO.CAD dropped to trade at trade at 1.4200, that is over a 100 point drop so far this morning. It was a quiet night for USD.CAD as most of the focus was on the Euro, the Canadian market will now set up for tomorrow's release of the US and Canadian Employment reports for August.

Up today in addition to the ECB press conference we get some secondary data out of Canada and the US but the main focus will be on the Draghi press conference. USD.CAD should have a relatively stable day while EURO.CAD might jump around a bit, I still think US Dollar buyers should be ready to react to any slight drops in the rate.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0888			1.09
CAD/USD		0.9184			0.9174
EUR/USD		1.3122			1.3149
EUR/CAD		1.4293			1.4336
STG/CAD		1.791			1.7969
AUD/CAD		1.0173			1.0169
CAD/JPY		96.36			96.34
CAD/CHF		0.8444			0.842
CAD/HKD		7.0959			7.0871
CAD/CNY		5.6348			5.6343
CAD/MXN		12.0195			12.0043
Commodities
Gold		$1,273.00			$1,269.00
OIL		$95.08			$93.69
US DOLLAR INDEX
P.CLOSE		82.85			82.97
OPEN		82.97			82.87
US 10YR YIELD		2.40%			2.46%