Morning Foreign Exchange Report

By Warren Hayhoe,

Columnist, Canadian Money Magazine

Central Trader, Jameson Bank

USD/CAD 1.0689               
GBP/CAD 1.6683
EUR/USD 1.3731
GBP/USD 1.5614
CAD/EUR 1.4673
JPY/CAD 0.011937
Oil opened at $71.68, currently $72.53
Gold opened at $1062.40, currently $1074.50
CRB closed at 261.52, +2.97

Today:

• While focus is on the Eurozone, some concerns over Fannie/Freddie loom, as the state’s ailing housing giants already consumed $51bln of gov’t money, and it’s likely to need even more; partnered with no blueprints for its future or clear exit strategy for the gov’t added to issues.
• In early morning trade Oil, the Euro, and metals gain on Greece Aid speculation.
• Reports that lawsuits against Toyota will push the cost of recalls linked to faulty manufacturing in its accelerator and brakes passed the estimate of $2bln for warranty costs and lost sales.

Yesterday:

• Canada’s housing starts rose 5.8 percent in January to a seasonally adjusted rate of 186,000 units from 176k in December. Few analysts raise worries over facing a potential short term bubble.
• Eyes remain fixed on the likelihood that China may raises its rates soon as it aims to limits inflation to about 3%.
• The Dow closed below 10,000 yesterday as lingering debt woes out of Europe spurs risk aversion late in the trading day.

Overnight:

• Euro, and Asian stocks improve on speculation that Europe will provide support to Greece with the battle of its hindering deficit.
• UK’s trade deficit expands to the broadest point in almost a year, exceeding forecaster’s expectations of a slower deficit growth as imports rose faster than exports.
• European Central Bank President Trichet prompted speculation that initiatives are in the works when he cut short a trip to Australia to attend a special European Union Summit.

Observations:
U.S. stock index futures are pointing to a higher open this morning on some positive news from two key Dow components, Caterpillar and Coca-Cola. The indication higher comes a day after a last-hour selloff pushed the Dow to its first close below 10,000 since November, and the S&P 500 to a fresh three-month closing low as well. In other news, speculations that the ECB will resolve Greece’s debt problems are also helping the equity futures. In reaction, the yen and US dollar fell versus their most-traded counterparts, reviving risk demand.
Oil is up at $72.88 while USD/CAD 1.0665 and EUR/USD 1.3763 at 8.19AM.
 
Thought of the Day
“Peace is its own reward.”  --  Mohandas Gandhi