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%

 

 

 

 

GFX Morning Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.2565-1.2640

Today’s expected range for the Canadian Dollar against the Euro is 1.4280-1.4360

Today’s expected range for the Canadian Dollar against Sterling is 1.8970-1.9050

The US Dollar is mixed this morning, it is unchanged against the Euro and Canadian Dollar and a little weaker against Sterling and Yen. The big surprise overnight is the Reserve Bank of Australia unexpectedly cutting their interest rates by a quarter point to 2.25%. Much like the Canadian Dollar when the Bank of Canada did its surprise cut the Aussie Dollar lost 2% on the announcement, the RBA made the statement that they felt the Aussie Dollar was overvalued on local markets. It appears the global currency war is now in full swing as each country races to weaken their currency the fastest, first country to the bottom wins.

Oil continues to push higher as there are reports that US Shale producers are going offline and decreasing the supply. I am not convinced that this is a reversal in the oil price, I rather think it is oil traders covering their short position and waiting for the oil market to heat up again,  I think there is too much uncertainly in the global economy to all of a sudden have the price of oil start a sustained opportunity.

Even though the Canadian Dollar is basically unchanged this morning it did have a wild ride overnight, USD.CAD first jumped higher on the interest rate cut in Australia and then the Loonie recovered when the oil price jumped above $50 dollars a barrel. If oil can sustain the $50 threshold for a while then I think we will see USD.CAD drop a little lower, if the oil price quickly drops again, USD.CAD will move higher and look to set new highs in the coming weeks.

Up today we have some secondary data out of the US, markets will pay particular attention to the Richmond Fed Index to see what is happening with the US economy, any  further signs (confirming the poor GDP report) that the US economy is slowing should lead to the expectation that the US Federal Reserve may delay their interest rate rise.

Have a great day

Mike

 

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm Monday close
USD/CAD	1.2557				1.267				1.2575
CAD/USD	0.7963				0.7892				0.7952
EUR/USD	1.1351				1.1324				1.1335
EUR/CAD	1.4257				1.435				1.4258
STG/CAD	1.8933				1.9035				1.8896
AUD/CAD	0.9628				0.9887				0.9813
CAD/JPY	93.41				92.78				92.7800
CAD/CHF	0.7373				0.7346				0.7367
CAD/HKD	6.1506				6.0956				6.0956
CAD/CNY	4.9795				4.9388				4.9741
CAD/MXN	11.798				11.7961				11.8442
Commodities
Gold	$1,285.00				$1,276.00				$1,274.00
OIL	$51.20				$49.25				$49.75
US DOLLAR INDEX
OPEN	94.47				94.70				94.6
US 10YR YIELD	1.72%				1.67%				1.67%

 

 

 

 

 

 

 

GFX Morning Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.2650-1.2730

Today’s expected range for the Canadian Dollar against the Euro is1.4360-1.4430

Today’s expected range for the Canadian Dollar against Sterling is 1.9040-1.9110

The US Dollar is marginally weaker this morning as the currency markets continue to react to the weaker than expected US GDP report and a late surge in the oil price on Friday afternoon. With US GDP coming in slightly weaker than expected at 2.6% currency traders are questioning the ability of the US Federal Reserve’s ability to raise interest rates in the summer and may want to sell off the dollar ahead of Friday’s Employment report.

The oil price jumped Friday afternoon which I thought was just month-end squaring up of positions but that price move continued overnight and we open up above $49.00, needless to say the Canadian Dollar was able to rally on this news and was able to hold onto the gains overnight. I don’t see any fundamental changes to the oil market over the last 24 hours so I am not convinced that this move is the beginning of a sustained recovery in the oil price, I suspect it is nothing more than back and forth trading and we could easily see it trade back below $45 today or later this week.

The USD.CAD rate is back near the lows that we saw on Friday afternoon when oil first started to rally, this move just how volatile the currency will be when oil starts to move around. As mentioned above I see no fundamental economic shift that would indicate to me that both oil and the Loonie were set to go on a big run. As ugly as the rate is for US Dollar buyers anytime you see a dip like this you need to be ready to pick some up. For US Dollar sellers if you have not yet put on any forwards I would suggest doing so at current rates and if you have some forwards on the books then we should see higher rates to benefit your average position.

To start February we have a busy week on the economic front with lots of US and Canadian secondary economic data, followed on Friday by both US and Canadian employment data. I think we are in for another month of volatility, make sure you have it working for your business.

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening			4pm close Friday
USD/CAD	1.267				1.2655				1.2700
CAD/USD	0.7892				0.7902				0.7874
EUR/USD	1.1324				1.1354				1.1296
EUR/CAD	1.435				1.4377				1.4355
STG/CAD	1.9035				1.9101				1.9133
AUD/CAD	0.9887				0.9829				0.9886
CAD/JPY	92.78				92.94				92.4500
CAD/CHF	0.7346				0.7287				0.7239
CAD/HKD	6.0956				6.1051				6.0820
CAD/CNY	4.9388				4.9392				4.9212
CAD/MXN	11.7961				11.7643				11.8264
Commodities
Gold	$1,276.00				$1,263.00				$1,284.00
OIL	$49.25				$45.10				$47.50
US DOLLAR INDEX
OPEN	94.70				94.79				94.77
US 10YR YIELD	1.67%				1.71%				1.66%