Daily FX Commentary, December 6, 2011
Tuesday, December 6, 2011 at 6:12PM
By Warren Hayhoe,
Columnist, Canadian Money Magazine
Expected USD/CAD range: 1.0125-1.0240
Expected GBP/CAD range: 1.5855-1.5980
Expected EUR/CAD range: 1.3600-1.3725
Expected GBP/USD range: 1.5570-1.5725
Expected EUR/USD range: 1.3315-1.3475
Expected USD/JPY range: 77.50-78.20
Oil opened at $100.99 currently $100.80Gold opened at $ 1730.70, currently $1717.50
Morning Observations:
Over night we got a nice surprise to the upside by the way of German factory orders +5.2% vs exp. +1% and the RBA cut rates 0.25% to 4.25%.
Late yesterday the S&P put the entire Eurozone on negative credit watch, well almost everyone sorry Greece your rating can’t go any lower than it already is. This puts even more pressure on Europe to come up with a viable plan to be implemented at Friday’s European Summitt. If they can not then France and Germany are at a 50% risk of having their AAA rating cut. This would cause the ECB and ESFS even more difficulties in how they could implement any bailouts for countries in the Eurozone. The reason being is that they take the soverign debts of the larger more stabile economies in Europe, leverage them upward to pay off the debts of the weaker economies. If your stong economies are all of a sudden weakened by a ratings downgrade and your already short of funding to bailout the weaker ones, well what do you do? You do what they are desperatley hoping they will not have to do and that is go to the IMF with their hat in hand. And that is why Mr. Geitner is on a plane to Germany right now. Guess who would have to put more money into the IMF? And guess who’s congress already sees this coming and is preparing legislature to block such a move by the FED. Your move Ms. Merkel and Mr. Sarkozy.
On this side of the pond we have the BoC Interest rate announcement, which is expected to remain at 1% with all eyes on any comments that are said afterwards, we will also get building permits and Ivey PMI later this morning. There is no data out of the US today.
Expect this week to continue to be whipsawed around by headlines from mainly Europe but also the US. We also seem to be in a pattern of alternating ‘risk on’, ‘risk off’ days and by that standard today is risk off.
Thought of the Day
Everything in excess is opposed to nature.
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