GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1250-1.1320

Today’s expected range for the Canadian Dollar against the Euro is 1.4020-1.4100

Today’s expected range for the Canadian Dollar against Sterling is 1.7680-1.7760

The US Dollar is unchanged for the most part this morning as currency markets get ready for the US GDP report this morning. Once again the commodity currencies led the market as Aussie, Kiwi and Canada all traded weaker at one point last night, they are all reacting to falling oil and commodity prices ahead of the OPEC meeting on Thursday. The Japanese Yen did recover a little last night as currency traders took some profit on their short Yen positions ahead of the GDP report.

Over the last few months I have l talked about the strong US Dollar trend that continues to remain in place, this morning I read a Bloomberg article that highlights that trend. In a recently published report by the Chicago Mercantile Exchange, hedge funds and other large currency speculators have pushed the long US Dollar speculative positions to a record $48 Billion in size, all these funds are betting that the US Dollar will continue to get stronger over the medium term. Until you see a large turnaround in this position the Greenback will still continue to rally throughout the new year.

The Canadian Dollar traded weaker throughout the night alongside other commodity currencies before recovering early this morning, again we see another Canadian Dollar rally sniffed out and the Loonie give back strength that it had gained after Friday’s inflation numbers. If USD.CAD does not break higher this morning after the US GDP report then we could see another rally for the Loonie be created.

There is an article in the Globe and Mail this morning that quotes the OECD (Organization for Economic Co-operation and Development) as saying Canada will increase interest rates next spring, and then increase them steadily thereafter. This view is well ahead of want bank economists are predicting and even what the Bank of Canada is currently saying, if this view is correct it should be very positive for the Canadian Dollar over the medium term, again another positive factor that seems to be accumulating in favour of the Loonie. I will keep an eye on inflation over the next few months to get a sense of what the Bank will do.

For the US GDP report for the 3^rd quarter we are expecting an annualized growth rate of 3.4% rate which is down slightly from the 3.5% last quarter, so a slight downward revision on the economy. In addition to the GDP report we are getting the Canadian Retails Sales report for September and a slew of US secondary data including Consumer Confidence for November, we should be in for a busy morning session.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1285			1.124
CAD/USD		0.8861			0.8897
EUR/USD		1.2431			1.2408
EUR/CAD		1.4029			1.3949
STG/CAD		1.7671			1.7617
AUD/CAD		0.9633			0.9708
CAD/JPY		104.59			105.17
CAD/CHF		0.8568			0.8619
CAD/HKD		6.852			6.8784
CAD/CNY		5.436			5.4624
CAD/MXN		12.1345			12.1592
Commodities
Gold		$1,200.00			$1,195.00
OIL		$76.09			$76.24
US DOLLAR INDEX
P.CLOSE		88.1			88.3
OPEN		88.18			88.23
US 10YR YIELD		2.29%			2.33%