Daily FX Commentary, March 1, 2011
Tuesday, March 1, 2011 at 3:40PM
By Warren Hayhoe,
Columnist, Canadian Money Magazine
USD/CAD 0.9710
GBP/CAD 1.5800
EUR/USD 1.3820
GBP/USD 1.6270
EUR/CAD 1.3420
USD/JPY 82.05
Oil opened at $96.97, currently $97.70Gold opened at $1409.90, currently $1420.00
Morning Observations:
The Loonie continues to relentlessly move higher through most majors after our GDP report yesterday surpassed expectations and saw positive revisions for Q3. Yesterday’s USDCAD 0.9710 support (Feb 28th 2008 low) was taken out at the Asian session open and driven to a 0.9700 low by the London open. All things considered it was an exceptionally tight range overnight ahead of the BoC rate decision this morning at 9:00am. The market is telling us that there is a 0% chance of a rate hike today, however the all important communiqué that will accompany the decision will direct exchange markets. Given our recent economic reports (Q/Q Annualized Q4 GDP - 3.3%, Trade Balance – +3.0B, Employment - +69.2K) a slightly more hawking tone is the obvious thought. That being said, last month’s inflation report was a little soft so there may not be a sense of urgency. Currently the market is pricing a 65% chance of a hike at the May meeting and 120% chance of a 25pt hike in the July. Also today, US ISM manufacturing is out at 10:00am and Mr. Bernanke is testifying in front of the Senate. For today, the trend is your friend and with the tops moving lower consider the risk of jumping on the CAD bandwagon to be increasingly smaller, expected range in USDCAD today: 0.9660-0.9760
Thought of the Day
“An explanation of cause is not a justification by reason.” -- C. S. Lewis
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