GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0880-1.0940

Today’s expected range for the Canadian Dollar against the Euro is 1.4840-1.4900

Today’s expected range for the Canadian Dollar against Sterling is 1.8340-1.8400

The US Dollar is stronger against the Euro and Sterling as a poor German IFO (business confidence report) showed that German businesses are worried about the pace of the EU recovery, yet again another sure sign that the European Central Bank will increase stimulus measures at their next meeting. Today will mark the third straight week that the Euro has recorded a decline against the US Dollar.

Sterling is also lower on the German IFO report but also in local town council elections where the Conservative party lost 60 seats as voters moved away from the Conservatives and backed the UK Independence party. I think this has to be a worry for Prime Minister Cameron as the UK gets set for a national election in 2015.

I read on Bloomberg this morning that in the upcoming national elections in Greece the Syriza party is leading in the polls, they were the party that did not want to meet the conditions of the bailout, if they form the next Greek government it should make Euro investors very nervous. When you look at this possibility, tie in the prospect of deflation and you can see why the Euro is trading so weak at the moment. European central bankers may be quickly coming upon the can that they kicked down the road a couple of years ago.

Nothing to report on the Canadian Dollar, it continues to trade back and forth in narrow ranges as it looks for a new direction against the US Dollar, it continues to hold in against the Greenback and continues to make small gains against the Euro and Sterling.

Up today we get the release of the Canadian Inflation (CPI) report for April, we are expecting an inflation rate of 2.0% (yoy) after a 1.5% rate in March, anything near the 2.0% level should give the Bank of Canada comfort that deflation is not an issue in Canada as it is in Europe. Anything much less that 1.5% should be negative for the Loonie and you will see USD.CAD jump higher

Have a great weekend and just a reminder that our American friends will be closed on Monday for the Memorial day holiday, we will be open but the US wire system will be closed,  if you need to send some US Dollar wires make sure you get them in for today.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0903			1.0911
CAD/USD		0.9149			0.9165
EUR/USD		1.3618			1.3677
EUR/CAD		1.4851			1.4927
STG/CAD		1.8362			1.8411
AUD/CAD		1.0056			1.0086
CAD/JPY		93.46			93.02
CAD/CHF		0.8218			0.8179
CAD/HKD		7.1066			7.0995
CAD/CNY		5.7159			5.712
CAD/MXN		11.8467			11.8693
Commodities
Gold		$1,293.00			$1,297.00
OIL		$103.80			$104.01
US DOLLAR INDEX
P.CLOSE		80.23			80.07
OPEN		80.42			80.11
US 10YR YIELD		2.55%			2.54%

 

 

 

GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0880-1.0950

Today's expected range for the Canadian Dollar against the Euro is 1.4900-1.4960

Today's expected range for the Canadian Dollar against Sterling is 1.8390-1.8450

The US Dollar is marginally stronger this morning as the release of the UK first quarter GDP report has pushed Sterling lower. UK first quarter GDP came in at 0.8% which was in line with expectation but I think most investors are disappointed that the number did not continue the recent string of exceptional data that the UK economy had been producing. The UK budget deficit for April also grew quite a bit so that may have weighed on Sterling as well.

In other overnight news the Chinese Yuan jumped higher as that nation reported some strong manufacturing data, investors had been worried about a slowdown in China dragging down other regional economies, this report has allayed those fears for the moment.

After spending most of yesterday trading weaker the Canadian Dollar recovered slightly last night ‎as it traded stronger against the US in a very narrow range, the Loonie continues to trade within narrow ranges outside of our trading hours

Up today we get a slew of important economic reports including the US Leading Indicator report for April and the Canadian Retails Sales report for March. For the Retails Sales report we are looking at an increase of 0.3% after last month’s 0.5% increase, a weak number should push USD.CAD well above 1.0900 and while a strong number will push the currency pair lower.

In case you missed it in the new Royal Bank of Canada is reporting record 2.2B Dollars in profits for the 2^nd quarter, if they hit that number over the course of a year they would make $8.8B dollars in the year. If you are a customer of RBC take heart that all those excessive fees you are paying to run your business are going to a good home, I am sure CEO Gord Nixon will get nice big retirement package. Long time readers will know that I believe that the fees we pay for banking services in this country are incredibly high and help to lead many industry sectors being uncompetitive, until the Federal Government removes the unfairness to foreign competition in the Canadian banking industry Canadian business will continue to suffer.

Have a great day.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0911			1.0905
CAD/USD		0.9165			0.917
EUR/USD		1.3677			1.3691
EUR/CAD		1.4927			1.4931
STG/CAD		1.8411			1.8427
AUD/CAD		1.0086			1.0065
CAD/JPY		93.02			92.57
CAD/CHF		0.8179			0.8181
CAD/HKD		7.0995			7.1051
CAD/CNY		5.712			5.7138
CAD/MXN		11.8693			11.8578
Commodities
Gold		$1,297.00			$1,291.00
OIL		$104.01			$103.15
US DOLLAR INDEX
P.CLOSE		80.07			80.04
OPEN		80.11			79.96
US 10YR YIELD		2.54%			2.52%

 

 

 

 

 

GFX Morning Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0875-1.0925

Today's expected range for the Canadian Dollar against the Euro is 1.4900-1.4960

Today's expected range for the Canadian Dollar against Sterling is  1.8400-1.8460

The US Dollar is mixed this morning as it is weaker against the Japanese Yen and British Pound but stronger against the Euro. In Japan the Yen reached a three month high against the Greenback as the Bank of Japan did not announce any new stimulus measures at their latest meeting, in the UK the pound is stronger as the April Retail Sales report came in much better than expected prompting more expectation of interest rate hikes in the UK and finally the Euro continues to trade weaker on the expectation of added stimulus by the ECB at their next meeting.

The Canadian Dollar continues to lose a little ground to the U‎S dollar every night but it continues to trade within narrow ranges and so far there in no indication that volatility will increase any time soon, of course that can change in an instant but for now the USD.CAD pair looks relatively stable. The price of oil reached a one month high but had no effect on the Loonie, the currency seems to be ignoring the commodity markets at the moment. The Loonie does look set to make some gains against the Euro as the weakness in the Euro should push EURO.CAD lower any time you can get Euro below 1.5000 over the short-term is a good thing.

Nothing on the economic calendar so look for USD.CAD to test a little higher but I don’t think we will see a material jump. The rest of the week will have a busy economic calendar with Canadian Retail Sales and CPI due out along with a slew of US data.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0905			1.0884
CAD/USD		0.917			0.9187
EUR/USD		1.3691			1.3687
EUR/CAD		1.4931			1.4909
STG/CAD		1.8427			1.8314
AUD/CAD		1.0065			1.0088
CAD/JPY		92.57			93.05
CAD/CHF		0.8181			0.8191
CAD/HKD		7.1051			7.1165
CAD/CNY		5.7138			5.7277
CAD/MXN		11.8578			11.894
Commodities
Gold		$1,291.00			$1,293.00
OIL		$103.15			$102.72
US DOLLAR INDEX
P.CLOSE		80.04			80.12
OPEN		79.96			80.04
US 10YR YIELD		2.52%			2.53%

 

 

 

 

GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0860-1.0720

Today's expected range‎ for the Canadian Dollar against the Euro is 1.4900-1.4960

Today's expected range for the Canadian Dollar against Sterling is 1.8310-1.8370

‎The US Dollar is marginally weaker this morning but for the most part unchanged from our Friday close. Overnight Sterling was stronger at one point as the April inflation data showed that inflation jumped for the first time in almost a year. Inflation grew in April at an annualized rate of 1.8% up from the March rate of 1.6%, the UK continues to outperform the rest of Europe but this inflation report may force Carney’s hand and increase interest rates to cool the housing market long before he really wants to. In other news overnight, the Aussie Dollar was lower as the Government there indicated that interest rates will remain low for a prolonged period of time, an economy and current situation that is very similar in nature to Canada’s.

The Euro continues to trade under pressure as global currency speculators increase their short Euro bets. I would guess that global investors feel there is now a 100% certainty that the European Central Bank will introduce some stimulus measures at their meeting next month. Some of the options available to the central bank include lowering the key interest rate to 0.10% from 0.25%, dropping the deposit rate to -0.10% ( it would cost you to hold deposits rather than receive interest) or start buying back EU bonds. Either way the Euro should continue to trade under pressure for the next few weeks.

The Canadian Dollar traded weaker throughout the holiday weekend but continues to trade within recent ranges and does not yet look set for a breakout in either direction. With only Canadian Wholesale trade data due out today,  I am not expecting much to happen. USD.CAD may test back above 1.0900 at some point but again I would not expect much of break higher this morning.

Have a great week.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0884			1.0876
CAD/USD		0.9187			0.9195
EUR/USD		1.3687			1.3688
EUR/CAD		1.4909			1.4889
STG/CAD		1.8314			1.8262
AUD/CAD		1.0088			1.0181
CAD/JPY		93.05			93.22
CAD/CHF		0.8191			0.8197
CAD/HKD		7.1165			7.1222
CAD/CNY		5.7277			5.7292
CAD/MXN		11.894			11.9449
Commodities
Gold		$1,293.00			$1,295.00
OIL		$102.72			$101.71
US DOLLAR INDEX
P.CLOSE		80.12			80.03
OPEN		80.04			80.09
US 10YR YIELD		2.53%			2.50%

 

 

 

GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0855-1.0910

Today's expected range for the Canadian Dollar against the Euro is 1.4890-1.4950

Today's expected range for the Canadian Dollar against Sterling is 1.8250-1.8310

The US Dollar is marginally stronger this morning as all major currency pairs traded in quiet market conditions. In overnight news of note the Chinese Yuan traded lower as the Government is hinting that it wants a lower exchange rate to help boost exports, in Japan the Yen continues to get stronger on safe haven flows and in India the Rupee is 0.5% stronger as the opposition Congress party is poised for the biggest election win in over 30 years.

Perhaps the biggest financial market story of the past week was the drop in interest rates in the US. The US 10-year treasury yield dropped from a high over the last few weeks of 2.7% to now trade at 2.47%. Most bond traders were expecting the rate to rise to 3.0% over the next few months as the Federal Reserve removes stimulus so I think this move has caught the bond market by surprise. It says to me that we will not see any interest rate hikes by the Federal Reserve for some time yet, the move should be very positive for Equities and slightly negative for the US Dollar.

The Canadian Dollar continues to trade in tight ranges against the US Dollar and is making further gains against the Euro and Pound, I still favour a move higher for USD.CAD but right now there could be a little further short-term pressure to strengthen the Loonie.

Up today only some secondary US data including Consumer Sentiment at 10:00 am, ahead of the long weekend I am not looking for much of a trading range but US Dollar buyers could see slightly better levels to start the day.

Just a reminder that we will be closed on Monday but the currency markets will still be trading around the globe, get your overnight orders in early today.

Have a great long weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0876			1.0874
CAD/USD		0.9195			0.9196
EUR/USD		1.3688			1.366
EUR/CAD		1.4889			1.4856
STG/CAD		1.8262			1.8219
AUD/CAD		1.0181			1.0187
CAD/JPY		93.22			93.72
CAD/CHF		0.8197			0.8227
CAD/HKD		7.1222			7.1232
CAD/CNY		5.7292			5.7274
CAD/MXN		11.9449			11.8957
Commodities
Gold		$1,295.00			$1,305.00
OIL		$101.71			$101.94
US DOLLAR INDEX
P.CLOSE		80.03			80.06
OPEN		80.09			80.26
US 10YR YIELD		2.50%			2.54%