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MARKET INSIGHT:

by xauca
February 4, 2016

compliments of AFEX:

Today’s expected range for the Canadian Dollar against the US Dollar is 1.3675 – 1.3800
Today’s expected range for the Canadian Dollar against the Euro is 1.5350 -1.5450
Today’s expected range for the Canadian Dollar against Sterling is 1.9950 – 2.0100

USD
The US dollar is still sliding lower against the majors this morning as investors have doubts that the FED will raise interest rates this year. If you have payables in USD this could be a great time to start to look at locking in your rates as we have dropped from 1.47 to 1.37 in the last 12 days. This morning we have US unemployment claims which is set to add just 1000 more workers than the previous month. Factory orders m/m are due out this morning as well which is expected to be – 2.3% If this news comes out better than expected we could see the green back strengthen.

CAD
The loonie strengthened against the green back as investors took note of another big merger in Canada with the 3.2 Billion Lowe’s and Rona deal. It’s always been my opinion that global investors forget about Canada and they need to see big deals such as this to remember Canada still has a lot to offer. Oil is down this morning but still trading above the $31 – $32 mark. Could this be a sign that oil will be back on the up? This could signal Loonie strengthening a bit further this week especially as tomorrow we have CAD and US unemployment numbers coming out.

Euro
The German bond market gave the clue to the EURUSD move and with yields on German Bonds making new all-time lows (meaning that investors get less money back when they invest in a bund as they want security rather than return) the EUR pushed higher in the afternoon. The move into the EUR was driven by a move out of the USD as US data was again not very positive and Fed Governor Dudley was also blamed for USD weakness. Analysts are now looking for more EUR strength as it is breaking out of its recent range against the USD and the weaker EUR and oil price are both positive factors for the Eurozone which has a trade surplus and is an importer of oil. Draghi spoke early this morning and despite saying that the ECB will not surrender to low inflation implying more easing in March the EUR held its ground.

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