USD/CAD 1.0512 EUR/CAD 1.3488 USD/JPY 84.18
GBP/USD 1.5378 EUR/USD 1.2830 USD/CHF 1.0111
Commentary:
The Euro was marginally up on Thursday after encouraging results at Spanish and French bond auctions as investors cautiously awaited comments from European Central Bank President Jean-Claude Trichet. The ECB earlier left interest rates unchanged, as expected, at 1.0%. The market is focused on whether Trichet will maintain emergency measures to prevent the economy from contracting. The central bank has so far committed to lend banks unlimited cash at the benchmark rate until at least Oct. 12. Obviously, if Trichet does sound concerned about the outlook then that would be negative for the Euro. Earlier data confirmed the euro zone economy grew by 1% quarter-on-quarter between April and June. Meanwhile, the CHF is starting to make a move to parity against the USD after Switzerland's economy grew at a faster pace in Q2 than was expected. Elsewhere in Europe, the SEK rose to its highest level in more than two years against the Euro after Sweden's central bank, The Riksbank, raised its key interest rate to 0.75%, as expected. The central bank was also upbeat on the economy and it left its forecasts for future interest rates unchanged. In Asia, the Yen remained within a tight trading range as the Yen displayed limited reaction to Japan's political heavyweight Ichiro Ozawa saying action was needed to stem Yen gains. Yesterday's upbeat Australian GDP, Chinese manufacturing, and U.S. manufacturing data helped the market shift into risk mode from safe haven currencies thereby lifting equity markets, commodities, and higher yielding currencies. In Canada, the CAD was slightly firmer against the USD as the risk on trade from yesterday was still in play. With no domestic economic news on tap for the rest of the week, the CAD will take its cue from U.S. data, especially tomorrow's U.S. non- farm payrolls report. Market players still expect the Bank of Canada will raise its key rate by a quarter point to 1%, and then stand pat for the rest of the year because of the slowing economy. Yields on overnight index swaps stand at about 53%, which means the Bank of Canada's Sept. 8 rate decision will be a close call.
Disclaimer: Please note that any currency rates/prices contained in this document are indicative, and subject to change without notice. Prices quoted may vary substantially based upon the size of transaction and market volatility.
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