GFX Currency Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.1425-1.1500

Today’s expected range for the Canadian Dollar against the Euro is 1.4170-1.4240

Today’s expected range for the Canadian Dollar against Sterling is 1.7930-1.8040

The US Dollar is marginally weaker this morning in an active trading overnight session. The Yen was the big gainer as it benefitted from flows back into Japan as the world’s equity market continue to decline on the back of the drop in the price of oil. In other developments overnight the Chinese Yuan fell to its lowest level (inside its controlled trading band) since July after that country reported its slowest export growth in seven months, Sterling is higher this morning on the weaker Greenback despite an unexpected drop in manufacturing output and in Norway as in Canada they are looking at downgrading their growth forecasts as the price of oil is going to hammer their economy. Somewhere in Saudi Arabia I get the sense that they are quite enjoying this meltdown which was brought on by their decision not to cut the output of oil.

Yesterday saw a further dip in oil prices to trade as low as $62.78 a barrel, this morning the price has rebounded to $63.80 but I would think that it will remain under pressure for some time to come and that we will start to see news reports of North American producers shutting down in the new year.

The Canadian Dollar had a tough day yesterday and it traded weaker in the overnight session, the combination of oil dropping quickly and the TSX getting hammered put further pressure on the Loonie. It is amazing to think how fast a turnaround can come in the financial markets, just a couple of weeks ago I was beginning to think that the Canadian economy and the Loonie may start to turn around but one decision by OPEC has again put the economy and the Loonie under pressure. With the overnight pullback in oil the Loonie was able to stem its losses and it recovered a little.

Leading the way yesterday on the stock markets was the decline of the Canadian Bank stocks, I get a laugh anytime the bank stocks get hit, each of them makes at least a billion per quarter and if they are going to go through a rough patch because of loan losses they will just increase retail and corporate fees to recover their revenue. Long time readers will know that I think the only way to protect your business from grossly high Canadian bank fees is to own the stock and take the dividends that they pay out. This may be a great opportunity to pick some Canadian banks up at cheaper prices.

With only US Wholesale trade on the slate today the Loonie will remain focused on oil and equity trading and volatility should remain the key word.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.1466			1.1438
CAD/USD		0.8721			0.8742
EUR/USD		1.2352			1.2261
EUR/CAD		1.416			1.4025
STG/CAD		1.7923			1.7863
AUD/CAD		0.9494			0.9498
CAD/JPY		104.63			105.82
CAD/CHF		0.8787			0.857
CAD/HKD		6.74			6.7554
CAD/CNY		5.3969			5.3946
CAD/MXN		12.5427			12.6132
Commodities
Gold		$1,205.00			$1,195.00
OIL		$63.85			$64.20
US DOLLAR INDEX
P.CLOSE		89.16			89.31
OPEN		88.91			89.39
US 10YR YIELD		2.26%			2.32%