GFX Morning FX Commentary July 15th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0375-1.0450

Today’s expected range for the Canadian Dollar against the Euro is 1.3550-1.3625

Today’s expected range for the Canadian Dollar against Sterling is 1.5660-1.5740

The US Dollar is marginally stronger this morning in relatively quiet overnight markets, EURO.USD and GBP.USD are both lower as Chinese Growth rates came in as expected (grew 7.5% in the 2^nd quarter) but both still trade in familiar ranges. It looks now that the dive the US Dollar took on the Bernanke comments last week seems to be losing momentum as trading ranges have begun to narrow again. The Australian Dollar is stronger this morning (recovering a little from some very large weakness in recent weeks) on the back of the Chinese growth report, it highlights just how closely ties the Australian and Chinese economies are.

The Canadian Dollar is weaker this morning as it moves back and forth around the 1.0400 level, it looks like the Loonie will stay in these ranges as the market awaits the Bank of Canada policy announcement on Wednesday, this will be Stephen Poloz’s first announcement so the markets will be paying extra attention looking for any style changes or change in policy from the Carney era.

Up today we get the release of the US Retail Sales report so we could see some enhanced volatility around the report, a strong report will again increase speculation about tapering by the US Federal Reserve but for the most part we should see USD.CAD continue to trade around the 1.0400 level.

The big business news this morning is the announcement by Loblaw’s of their acquisition of Shoppers Drug Mart for 12.4B Canadian Dollars, most pundits seem to say that this was done to help combat the Wal-Mart effect. As this is a CAD for CAD deal I would not expected much if any ramifications for the Canadian Dollar market but if Loblaw’s has to unwind any US Holdings to generate cash for the transaction then we may see the Loonie rally a bit from time to time during the next few weeks, the impact will be minimal.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0528			1.0374
CAD/USD		0.9498			0.964
EUR/USD		1.3024			1.305
EUR/CAD		1.3579			1.3541
STG/CAD		1.5694			1.5684
AUD/CAD		1.059			0.9405
CAD/JPY		95.96			95.71
CAD/CHF		0.9128			0.9142
CAD/HKD		7.4104			7.4538
CAD/CNY		5.8863			5.9078
CAD/MXN					12.41
Commodities
Gold		$1,282.38			$1,274.00
OIL		$105.28			$104.72
US DOLLAR INDEX
P.CLOSE					82.91
OPEN		83.44			83.3
US 10YR YIELD		2.60%			2.57%

 

 

 

 

 

 

GFX Morning Commentary July 12, 2013

Good Morning,

Today’s expected range for the Canadian is 1.0340-1.0440

Today’s expected range for the Canadian Dollar against the Euro is 1.3520-1.3600

Today’s expected range for the Canadian Dollar against Sterling is 1.5660-1.5740

The US Dollar is for the most part unchanged this morning, after a very tough week for the Greenback it looks like FX markets are taking their time to assess the damage and see where the US Dollar will go from here. The biggest currency mover overnight was once again the Aussie Dollar as it dropped over 100 points, most of the recent Aussie Dollar weakness is on the back of expected interest rates cuts in that country. From the looks of the overnight trading ranges both the Euro and Sterling have had quiet nights and should remain quiet today.

The Canadian Dollar had a dull night as it settles into its new trading range, we will have to wait and see what develops over the next few sessions to see if this Canadian Dollar strength will extend over the short-term or will USD.CAD push back higher, either way I do think US Dollar buyers should be looking at these levels as good opportunity to pick up some cheap US Dollar. US Dollar sellers may see a bit of a pullback above 1.0400 but again I would not hold off too long expecting a quick run back to 1.0500 or 1.0600, I think that will be very hard to achieve.

Have a great weekend, I will be out of the office today, if you need anything just ask for Randy.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0374			1.038
CAD/USD		0.964			0.9634
EUR/USD		1.305			1.3069
EUR/CAD		1.3541			1.357
STG/CAD		1.5684			1.5713
AUD/CAD		0.9405			0.9574
CAD/JPY		95.71			0.9552
CAD/CHF		0.9142			0.9132
CAD/HKD		7.4538			7.4472
CAD/CNY		5.9078			5.9043
CAD/MXN		12.41			12.3544
Commodities
Gold		$1,274.00			$1,283.00
OIL		$104.72			$106.09
US DOLLAR INDEX
P.CLOSE		82.91			84.2
OPEN		83.3			83.16
US 10YR YIELD		2.57%			2.68%

 

 

GFX Morning FX Commentary July 11th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0350-1.0450

Today’s expected range for the Canadian Dollar against the Euro is 1.3570-1.3670

Today’s expected range for the Canadian Dollar against Sterling is 1.5720-1.5820

The US Dollar is significantly weaker this morning as the world’s financial markets react to the minutes from the US Federal Reserve meeting and comments from US Federal Reserve Chairman Bernanke yesterday afternoon. The release of the minutes showed that committee members are divided on the tapering of stimulus, half want to start soon and the other half want to wait until the employment picture gets better. Taking questions after his speech yesterday Bernanke made it quite clear that interest rates and stimulus are not going anywhere until unemployment in the US recovers to 6.5% and even then that number is not a trigger to end stimulus but a new level where they will assesses what the economy needs, “Highly accommodative monetary policy for the foreseeable future is what's needed in the US economy" is the quote that got everybody’s attention.

Given that the markets were expecting the Fed to start tapering the stimulus sooner than later this announcement got everybody by surprise and the markets went crazy, the US Dollar was smashed, equity markets around the world rose, gold jumped 3% and funny enough 10-year US interest rates remained steady, I thought they would have dropped off. In Europe EURO.USD rose to trade at 1.3208 and GBP.USD rose to trade at 1.5175, currency markets can be describes as having extreme volatility at the moment, both of these currency pairs have dropped 100 points from their overnight high, we should be in for more of this today.

The Canadian Dollar was able to benefit from the Bernanke comments, when we went home yesterday afternoon the inter-bank rate was above 1.05000 and at one point last night got near 1.0350, one of the most volatile nights the Loonie has had in months. All of this is in reaction to the comments from Bernanke and the expectation from investors who were expecting a tapering of stimulus by the Fed. Given that over a week ago it looked like USD.CAD was going to trade above 1.0600 and now we are back near 1.0400 in quick order, I think US Dollar buyers need to get on the bandwagon and get some US at these cheaper levels.

Up today we only get some secondary US trade data so the markets will settle in and find new levels to trade at, given that equities and gold will all be much higher today, I would not be surprised if USD.CAD starts to fall below 1.0400 at some point. If you need to sell some USD in the near future look for pullbacks towards 1.0425/1.0450 to leave your orders.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.038			1.0515
CAD/USD		0.9634			0.951
EUR/USD		1.3069			1.2817
EUR/CAD		1.357			1.348
STG/CAD		1.5713			1.566
AUD/CAD		0.9574			0.9682
CAD/JPY		0.9552			95.17
CAD/CHF		0.9132			0.9214
CAD/HKD		7.4472			7.3545
CAD/CNY		5.9043			5.8312
CAD/MXN		12.3544			12.2935
Commodities
Gold		$1,283.00			$1,252.00
OIL		$106.09			$104.68
US DOLLAR INDEX
P.CLOSE		84.2			84.85
OPEN		83.16			84.53
US 10YR YIELD		2.68%			2.63%

 

 

 

GFX Morning FX commentary July 10th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0475-1.0530

Today’s expected range for the Canadian Dollar against the Euro is 1.3450-1.3530

Today’s expected range for the Canadian Dollar against Sterling is 1.5625-1.5700

The US Dollar is weaker this morning as the currency markets get ready for the release of the US Federal Reserve policy minutes from their last meeting and Fed Governor Ben Bernanke’s speech this afternoon. The big movers overnight were the Japanese Yen and Sterling, in Japan USD.JPY fell over 100 points as the Bank of Japan began their two day interest rate policy meeting, it is not expected that the BOJ will add any more stimulus to their economy as there is signs that they will use the word “recovery” for the first time in two years in their statement.

In the UK the Pound is trading stronger and GBP.USD is back above the 1.4900 level, once again we see the Pound finding support below the 1.4900 level, it may take another round of bad data to give it the momentum to continue its march lower but we do expect Sterling to drop further in the coming weeks. GBP.CAD continues to fall as well but obviously not as fast as against the USD.

The Canadian Dollar is marginally stronger overnight as the weaker dollar and a jump in the price of commodities are helping the Loonie. Oil has jumped to $105 a barrel but again I caution readers that the correlation between the price of oil and the Canadian Dollar seems very low at the moment, there are too many other factors influencing the Loonie, especially when Canadian oil trades at a $20 discount on world markets.

Ahead of the US Fed report and Bernanke speech I anticipate that the currency markets will be quiet, we do get the release of the US Wholesale Trade report but barring any big surprises I do not expect much movement, I look for USD.CAD to break below the 1.0500 level at some point this morning.

There was a report on Bloomberg this morning stating that US companies such as Proctor and Gamble, Tiffany & Co., Delta Airlines and Apple are blaming the high US Dollar for reduced profits, it will be interesting to see if this trend starts to influence the momentum that the US Dollar has built up over the past little while.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0515			1.0558
CAD/USD		0.951			0.9471
EUR/USD		1.2817			1.2862
EUR/CAD		1.348			1.358
STG/CAD		1.566			1.5667
AUD/CAD		0.9682			0.9655
CAD/JPY		95.17			95.88
CAD/CHF		0.9214			0.9168
CAD/HKD		7.3545			7.3249
CAD/CNY		5.8312			5.8047
CAD/MXN		12.2935			12.1953
Commodities
Gold		$1,252.00			$1,248.00
OIL		$104.68			$103.00
US DOLLAR INDEX
P.CLOSE		84.85			84.43
OPEN		84.53			84.59

 

Michael Smith | GFX Partners Inc |President

229 Yonge Street, Suite 502

Toronto, ON M5B 1N9

Trading Room | 416-217-3088 |

Direct Line 416-217-3095 | Fax 416-217-3089 |

E-Address | msmith@gfxpartners.ca |

 Website | www.gfxpartners.ca

________________________________________

 

GFX Morning FX Commentary July 9th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0525-1.0600

Today’s expected range for the Canadian Dollar against the Euro is 1.3565-1.3640

Today’s expected range for the Canadian Dollar against Sterling 1.5660-1.5730

The US Dollar is mostly unchanged to start the day, the lone exception being against Sterling. In the UK this morning the Industrial Production report came in much worse than expected driving GBP.USD down over 150 points to trade at 1.4840, clearly Carney has his work cut out for him as the UK economy is sputtering along. The last time Sterling was this week was March of this year, it quickly recovered from those levels and traded above 1.5600 for some time, if Sterling does not recover in the short-term then more bad data could push GBP.USD to trade below the 1.4500 level in the coming weeks. GBP.CAD is also a bit lower but because the Canadian Dollar is still relatively weak against the USD we are not getting as much movement in GBP.CAD as we are in GBP.USD.

The Euro jumped for a little while overnight as the EU Finance Ministers announced they would release another $2.5B of the aid package to Greece, that in itself was not enough to push the Euro all that much higher. Now if they had refused Greece more money that would have made currency trading very interesting today.

The Canadian Dollar is still stuck in tight overnight ranges (and tight intra-day North American ranges for that matter) as it awaits its next push, there is very little on the horizon to give it much impetus so it may stay in these ranges for some while yet. 

We have not had a Mike Smith morning Rant for some time so here goes:  Yesterday saw CIBC come out and say that by the end of 2014 the Canadian Dollar will be back at parity to the US Dollar, a statement that was picked up by the media and spread across the news wires. In my mind there is absolutely no point in projecting where the Canadian Dollar will be in 18 months, it is much too difficult and prone to so many factors changing that one cannot accurately predict any currency that far out. If you want to impress me tell me where the currency will be next week not in 18 months or how about getting your expectations for an economic release correct for once,  that would be very helpful. I guess CIBC was just looking for some easy press coverage, in 18 months no one will remember what was said yesterday, they will just ignore it if they were wrong. I am not sure if Jeff Rubin (he was the chief economist) was still at CIBC when he made the prediction that the price of oil was going to hit $200 a barrel, how did that one work out? I wish economists in general would just stop making outlandish predictions which in no way can be supported.

With just Canadian Housing starts due out today I am not expecting much of a range but I can see USD.CAD breaking to the lower end of our expected range to start the day.

Have a great day.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0558			1.056
CAD/USD		0.9471			0.947
EUR/USD		1.2862			1.2852
EUR/CAD		1.358			1.3576
STG/CAD		1.5667			1.5745
AUD/CAD		0.9655			0.9601
CAD/JPY		95.88			95.73
CAD/CHF		0.9168			0.9126
CAD/HKD		7.3249			7.5269
CAD/CNY		5.8047			5.8057
CAD/MXN		12.1953			12.3545
Commodities
Gold		$1,248.00			$1,230.00
OIL		$103.00			$102.98
US DOLLAR INDEX
P.CLOSE		84.43			84.2
OPEN		84.59			84.65
US 10YR YIELD		2.65%			2.72%