GFX Morning FX Commentary Sept 18th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is  .9725-.9800

Today’s expected range for the Canadian Dollar against the Euro is 1.2720-1.2820

Today’s expected range for the Canadian Dollar against Sterling is 1.5835-1.5935

The US Dollar is stronger this morning as the Euro has traded weaker throughout the night, in Germany a survey showed that investors are still very negative on the Euro crisis and there are reports that Spain will delay in asking for a full bail-out which will once again drive their borrowing costs higher.

The Canadian Dollar gave back some strength against the stronger US Dollar last night as USD.CAD moved back up to test .9750. The Loonie is once again getting dragged along by the larger currency pairs so it certainly looks like the run the Loonie had for the past week or so has died out and it will now go back to its back and forth trading pattern. I still think there is room for the Loonie to go on another run but for now we should see USD.CAD trade between .9700 and .9800. IF we do get above .9800 I think US Dollar sellers need to look at that level and try and take advantage of it, if the Euro crisis get “solved” and The US dollar continues to trade weaker because of the Quantative Easing then it is not unrealistic to see USD.CAD trading at .9600/.9500 in the coming weeks.

With the lack of economic activity today (only secondary data out of the US) and equity markets pointing lower I would expect that USD .CAD will continue to move a bit higher in an orderly manner towards .9800.

I will be out of the office for the next couple of days, if you need anything just ring the general number and ask for Mike Hawie or Richard Earl.

Have a great day

Mike

GFX Morning Currency Rates
Tuesday September 18, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9754			0.9715
CAD/USD		1.0252			1.0293
EUR/USD		1.306			1.3116
EUR/CAD		1.274			1.2745
STG/CAD		1.5853			1.5777
AUD/CAD		1.0138			1.0203
CAD/JPY		80.54			80.64
CAD/CHF		0.9502			0.9541
CAD/HKD		7.923			7.9564
CAD/CNY		6.4735			6.5046
CAD/MXN		13.1592			13.1299
Commodities
Gold		$1,760			$1,773
OIL		$96.25			$98.86
Option Volatility
Canada
O/N		10.25%			10.99%
1 Week		7.87%			7.40%
1 Month		6.95%			6.54%

GFX Morning FX Commentary Sept 17th, 2010

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9675-.9775

Today’s expected range for the Canadian Dollar against the Euro is 1.2730-1.2830

Today’s expected range for the Canadian Dollar against Sterling is 1.5750-1.5850

The US Dollar is marginally stronger this morning as equity markets have given back some of Friday’s gains in light trading conditions as Japan was closed for a holiday, the Euro is slightly weaker as in Spain the country wrestles with large protests against austerity at the same time the Government is considering  asking the EU for a full bailout. Even though the current ECB policy is  having a positive effect on the EURO, the crisis will still cause investors to be nervous about any pro-longed strength in the Euro.

The Canadian Dollar is weaker this morning as it gave back Friday’s strength and bounced after USD.CAD tried to get below the .9650 level.  With very little on the economic front today and with North American equity markets pointing a little lower to start the day I would expect USD.CAD to trade back up towards .9750 at some point. If you need to sell some US dollars in the near future you should really look at .9775 to .9800 as a good level to achieve, given the current situation I just don’t see USD.CAD getting back to parity in the near future.

Have a great week

Mike

GFX Morning Currency Rates
Monday September 17, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9715			0.965
CAD/USD		1.0293			1.0362
EUR/USD		1.3116			1.3091
EUR/CAD		1.2745			1.2654
STG/CAD		1.5777			1.5676
AUD/CAD		1.0203			1.0198
CAD/JPY		80.64			80.8
CAD/CHF		0.9541			0.9628
CAD/HKD		7.9564			8.0113
CAD/CNY		6.5046			6.542
CAD/MXN		13.1299			13.2536
Commodities
Gold		$1,773			$1,776
OIL		$98.86			$100.00
Option Volatility
Canada
O/N		10.99%			8.39%
1 Week		7.40%			6.61%
1 Month		6.54%			6.13%

 

GFX Morning FX Commentary September 14th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9600-.9700

Today’s expected range for the Canadian Dollar against the Euro is 1.2600-1.2700

Today’s expected range for the Canadian Dollar against Sterling is 1.5620-1.5750

The US Dollar is much weaker this morning as equity markets are all higher on the news that the US Federal Reserve announced another new round of QE (QE3)to set the table for low interest rates in the hopes it spurs job creation. The EURO is at a four month high against the Greenback and this move looks to have taken the focus away from the crisis in Europe and focused it directly on the US economy. I am sure European leaders are breathing a sigh of relief at the moment even as a strong Euro will  make their exports more expensive and will hurt their economies even more.

This policy by the Fed should help the US economy, it will create wealth in the stock markets, encourage a weak US Dollar creating demand for US exports, inflation will start to tick higher (look at the jump in the price of commodities last night), it will give the banks longer access to cheap money creating massive profits for them but it will only create more jobs if these banks take the risk and lend to corporate America which in turn will make investments in job creation. With the first two rounds of QE not producing the amount of job creation that they are looking for I really don’t know what they expect to happen this time, I guess we have to see after the election what the fiscal policies on the Government will be and how jobs will be created.

The Canadian Dollar is much stronger against the USD as you would expect, with a weak US Dollar policy clearly now in place the question is just how far will the CAD go. On a technical basis the next level of support for the USD.CAD should be around .9500 so I would think we will now see USD.CAD and other commodity currencies start to appreciate against the US Dollar. US Dollar sellers now have to set their sights on any pullbacks towards .9700/.9800, I don’t think we will be back near parity in the short-term. For today we do have some US data due out (CPI, Consumer Sentiment) but barring any surprises I think these numbers will be ignored by the markets as equity markets continue to rise on the new Fed policy.

 

Have a great weekend

Mike

GFX Morning Currency Rates
Friday September 14, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.965			0.9758
CAD/USD		1.0362			1.0248
EUR/USD		1.3091			1.2904
EUR/CAD		1.2654			1.2594
STG/CAD		1.5676			1.5724
AUD/CAD		1.0198			1.0183
CAD/JPY		80.8			79.58
CAD/CHF		0.9628			0.9613
CAD/HKD		8.0113			7.9243
CAD/CNY		6.542			6.4839
CAD/MXN		13.2536			13.3635
Commodities
Gold		$1,776			$1,733
OIL		$100.00			$97.15
Option Volatility
Canada
O/N		8.39%			13.40%
1 Week		6.61%			8.40%
1 Month		6.13%			6.71%

GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9675-.9850

Today’s expected range for the Canadian Dollar against the Euro is 1.2550-1.2660

Today’s expected range for the Canadian Dollar against Sterling is 1.5660-1.5800

The US Dollar is marginally weaker this morning in quiet overnight FX trading markets as the Euro continues to show signs of strength ahead of today’s US Federal Reserve announcement and the possibility of QE3. One of the market indicators that I keep an eye on is the overnight volatility index, it is  a measure of volatility that the currency option market assign to the likelihood that a currency will move in either direction, it does not indicate which direction it will  move it just gives an idea if a particular currency will have an active day. This morning we were able to observe that overnight volatility index doubled from what it usually is trading at which simply put means that the US Dollar should have a very busy day after the Fed announcement, it does not indicate which way the dollar will move just that the options market thinks it will be a very volatile day.  As we said yesterday if the Fed announces QE3 then equities will jump higher and the US Dollar will get weaker, if they do very little to add stimulus then equities will drop off and the US Dollar will get stronger. Most economist still favour the QE3 model but I am betting that they hold off and just say they will extend low interest rates until 2015.

Nothing to report in the CAD range last night, the Loonie continues to hold onto recent strength as it awaits the 2:15 announcement this afternoon, if it is positive for QE3 USD.CAD should drop below .9700 and if the policy does not have any new stimulus USD.CAD should be up near .9850 very quickly, kind of like going to a casino and putting your money on Black or Red. If you need to do something and you don’t want to take this kind of risk give us a call before 2:00 and we can lock you in at current rates.

I will send out an update shortly after the Fed announcement.

Have a great day

Mike

GFX Morning Currency Rates
Thursday September 13, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9758			0.9735
CAD/USD		1.0248			1.0272
EUR/USD		1.2904			1.292
EUR/CAD		1.2594			1.2578
STG/CAD		1.5724			1.5683
AUD/CAD		1.0183			1.0214
CAD/JPY		79.58			79.89
CAD/CHF		0.9613			0.9605
CAD/HKD		7.9243			7.9444
CAD/CNY		6.4839			6.4969
CAD/MXN		13.3635			13.3129
Commodities
Gold		$1,733			$1,747
OIL		$97.15			$97.75
Option Volatility
Canada
O/N		13.40%			7.43%
1 Week		8.40%			7.56%
1 Month		6.71%			6.67%

 

 

GFX Morning FX Commentary, September 12th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9700-.9800

Today’s expected range for the Canadian Dollar against the Euro is 1.2550-1.2650

Today’s expected range for the Canadian Dollar against Sterling is 1.5650-1.5750

The US Dollar is much weaker to start the day as the Euro continues it amazing run. This morning the German high court ruled that the German Government could in fact contribute funds to the EU rescue fund with the only caveat being that they must first get parliamentary approval. With Merkel presently have a majority in parliament this is not much of an issue but may become one next year when she has to have an election.  Euro is now trading close to 1.2900 against the Greenback and does look set to move towards 1.3000 in the short-term.

The markets will now focus on the US Federal Reserve’s interest rate announcement and to see if they will add stimulus to the economy, Bloomberg is reporting that fully 2/3’s of economists they polled expect the FED to announce some form of Quantative Easing, “QE3” as it is referred to. I myself do not think they will do anything and the markets will be a bit disappointed, the US economy is still growing, inflation is in check and jobs are being created. It is not the responsibility of the Federal Reserve to create jobs but to create price stability and to create the environment for the Government to have fiscal policy in place that will create jobs. I think the Fed will announce that they will continue their TWIST program (they sell short-term bonds to buy long-term bonds to keep interest rates low)and will announce that they will extend their low interest environment until 2015. If I am correct the equity markets will drop off and the US dollar should jump.

While most currencies reacted to the stronger Euro and weaker US Dollar last night, USD.CAD was on the sidelines and did not have a big move, I think it is down to the fact that the Loonie has become so strong so quickly that traders are beginning to get nervous that it may be too strong, it is beginning to look like the Loonie will pause for a while before it moves again. If my scenario is correct for tomorrow’s Fed announcement US Dollar buyers should be looking at locking in part of their exposures so that they don’t miss out, if I am wrong and the Fed announces QE3 then US Dollar buyers will benefit. Given the uncertainty surrounding the decision US Dollar sellers may also want to consider leaving some orders at these levels, I know .9700 is a crappy area to be selling US dollars but it is still better than .9500 which is where we will head if equities jump a lot higher on the Fed announcement.

For today with the lack of economic releases and the German court ruling out of the way, USD.CAD will continue to trade in narrow ranges, I would not except the Loonie to strengthen all that much as it sets up for tomorrow announcement.

 

Have a great day
Mike

GFX Morning Currency Rates
Wednesday September 12, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9735			0.9738
CAD/USD		1.0272			1.027
EUR/USD		1.292			1.279
EUR/CAD		1.2578			1.2455
STG/CAD		1.5683			1.56
AUD/CAD		1.0214			1.0104
CAD/JPY		79.89			80.08
CAD/CHF		0.9605			0.9681
CAD/HKD		7.9444			7.9409
CAD/CNY		6.4969			6.5041
CAD/MXN		13.3129			13.3944
Commodities
Gold		$1,747			$1,735
OIL		$97.75			$96.56
Option Volatility
Canada
O/N		7.43%			7.00%
1 Week		7.56%			6.90%
1 Month		6.67%			6.50%