GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.2380-1.2470

Today’s expected range for the Canadian Dollar against the Euro is 1.4240-1.4320

Today’s expected range for the Canadian Dollar against Sterling is 1.8920-1.9000

The US Dollar is mixed this morning as it is marginally stronger (after the sharp sell-off yesterday) against the Euro and weaker against the Pound. The Dollar is picking up some strength this morning as the Euro give back a little strength  to the market on Greek default concerns. There are reports out this morning that the ECB is not prepared to renegotiate the Greek debt and I heard on the news that some Greek officials were saying that the country is basically bankrupt, I think that might be a bit of overstating the obvious. Currency markets will not like the uncertainty the this situation is creating so look for the Euro to continue to show weakness in the coming weeks. Sterling is a bit stronger against the Greenback this morning on slightly better than expected economic data, it will be interesting to see if the UK economy can flourish despite the downturn in Europe.

The price of oil jumped to $54.17 yesterday before pulling back to $51 this morning, oil is now up 20% in the past week and I am not sure the reason, it looks like there are concerns that supply is starting to slowdown in the US. If that is in fact true the oil price should be supported above $50 for the next while. I think oil also rallied on the news that BP was pulling the plug on many capital projects, if more large companies do this then future new supplies will not come online for the next years which will help to support the price.

The Canadian Dollar had its best single day gain in probably over a year with over a 200 point rally from the overnight highs Monday night to yesterday’s low for the USD.CAD rate. The Loonie has given back some gains this morning with oil dropping from yesterday’s high. Right now the Canadian Dollar is trading in tandem with the oil price, this will change once things calm down again but for now the Loonie is very vulnerable to any changes in the oil price. Given that we have seen such a drop in the USD.CAD rate it would be wise for US Dollar buyers to take advantage of it, if the belief still exists that we will see USD.CAD up at 1.3000 in the coming weeks then buyers need to be ready to take advantage of any pullbacks that we see.

Up today we get the minutes from the last Federal Reserve meeting, the market will be looking to see if any committee members are looking at postponing the rate interest rate hike until 2016. In Canada we do get some trade data but for the most part the currency markets will still focus on the oil price.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm Tuesday close
USD/CAD	1.2435				1.2557				1.2401
CAD/USD	0.8041				0.7963				0.8063
EUR/USD	1.1452				1.1351				1.1483
EUR/CAD	1.4243				1.4257				1.4244
STG/CAD	1.892				1.8933				1.8807
AUD/CAD	0.9707				0.9628				0.9675
CAD/JPY	94.44				93.41				94.7100
CAD/CHF	0.7441				0.7373				0.7446
CAD/HKD	6.2134				6.1506				6.2310
CAD/CNY	5.0225				4.9795				5.0444
CAD/MXN	11.8282				11.798				11.8534
Commodities
Gold	$1,265.00				$1,285.00				$1,261.00
OIL	$515.50				$51.20				$52.50
US DOLLAR INDEX
OPEN	93.73				94.47				93.62
US 10YR YIELD	1.77%				1.72%				1.79%