Daily Foreign Exchange Report

By Warren Hayhoe,

Columnist, Canadian Money Magazine

Central Trader, Jameson Bank

USD/CAD 1.0500       
GBP/CAD 1.6177
EUR/USD 1.3516
GBP/USD 1.5399
CAD/EUR 1.4193
JPY/CAD 0.011453
Oil opened at $78.37, currently $78.75
Gold opened at $1108.40, currently $1110.60
CRB closed at 276.15, +2.31

Today:

• Commodities, Oil, and Gold fall as the US Dollar climbs after the Fed rate hike cause market to refrain demand and seek refuge  Rate hike signaling end of stimulus measures to supply liquidity to financial markets.
• Canadian retail sales strongly up 0.4% in December. Canada monthly Job Insurance Claims decline 2% in December.
• US January CPI up 2.0%, Core CPI (minus food, energy) down 0.1%, seen as somewhat a muted inflation report.

Observations:

Stock index futures are pointing to a lower open on Wall Street but were well off their lows as investors reacted to a surprise move by the Federal Reserve to hike its discount lending rate to banks. Canadian core retail sales came in line with the forecast, rising by 0.4%. In the US, core CPI declined by 0.1% suggesting that inflation is not an issue for the FED. The greenback strengthened yesterday afternoon after the discount rate hike against the major currencies including the euro and the loonie.

Yesterday:

• Canadian CPI met its target area of 2.0% YoY for the core, although this will not signal a rate hike possibly until 3^rd quarter.
• US initial jobless claims for the week ending February 13^th came in 473k, which was higher than the anticipated 438k. US producer prices for January came out 1.4% almost double the expectations of 0.8%.
• US Federal reserve hikes the discount by quarter point after the day of trading.    US Dollar spikes, stocks sink.

Overnight:

• Stocks in Asia decline for a 2^nd day as concerns of needed stimulus programs may be over with af the Fed rate hike.
• CLSA Asia-Pacific Group stated that China is still on track for an asset bubble even after policy-makers ordered banks to raise reserves deposits..
• Dubai shares declined for a 3^rd time this week on concerns about the details of Dubai World’s debt restructuring plan which is set to be released next month.

Thought of the Day

“My main focus is on my game.”  -- Tiger Woods