Morning FX Commentary, May 20, 2011
USD/CAD 0.9680
GBP/CAD 1.5720
EUR/USD 1.4225
GBP/USD 1.6230
EUR/CAD 1.3800
USD/JPY 81.70
Oil opened at $98.44, currently $98.74
Gold opened at $1492.40, currently $1494.60
Morning Observations:
Canadian Inflation data was released early this morning and held no surprises. The headline year over year number (3.3%) was a little softer than most expectations but the monthly and core readings were essentially bang on. Transportation, energy and gas were the primary contributors to the price increases and by region, as you might expect; Alberta skewed prices higher. All said and done the numbers look like they will be accommodative to either path the BoC decides to take. The expectations of rate hikes here in Canada have been pushed back as of late to mirror what the Fed’s expected to do (late 2011 rate hikes). Moving forward, we still have Canadian retail sales at 8:30am; the street is expecting a similar number to last week’s reading (0.7%).
Elsewhere overnight the US dollar managed to limit its losses as the euro took a turn for the worse shortly after the London session got under way. Peripheral CDS spreads widen versus German bunds on persistent restructuring rumors and the EURUSD pair has plunged through short-term trend support from the 1.4050 low. As for USDCAD we’ve seen a 40pip jump since the number after getting as low as 0.9640/50 overnight. The mid 0.96’s is riddled with short-term technical support levels which should keep us supported throughout the day. It’s a much needed long weekend here in Canada so we should see things quiet down once London goes home and bond markets close. Expected range in USDCAD: 0.9660-0.9750
Thought of the Day
“Every closed eye is not sleeping, and every open eye is not seeing.” -- Bill Cosby
