Currency Snapshot for Tuesday September 14, 2010

Here are this morning's opening  interbank mid-market rates:

USD/CAD  1.0255                 EUR/CAD    1.3209                     USD/JPY       83.15

GBP/USD  1.5408                 EUR/USD    1.2861                     USD/CHF    1.0041

Commentary:
 

The Yen surged to a 15-year high against the USD as Prime Minister Naoto Kan beat his rival Ichiro Ozawa in a party leadership vote today, reducing the likelihood the government will intervene to weaken the currency. It seems that the market has made up its mind on the chance of intervention and has completely ignored Japan’s Finance Minister Yoshihiko Noda, who's ministry is responsible for currency intervention. Noda said policy makers are prepared to take bold action on currencies if necessary, including intervention. He also said the government is watching markets with great interest. Meanwhile, the other lead story in the forex markets today is that the CHF hit parity with the USD for the first time since December on concern that the global economic recovery is faltering as the market went from yesterday's risk on to today's safety trade. Driving those fears was the German ZEW economic sentiment index, which fell more than expected in September taking the Euro with it. The index aims to predict developments six months ahead, dropped to minus 4.3 from 14 in August. That’s the fifth monthly decline and the lowest since February 2009. We will have to keep an eye out to see if the appreciation of the CHF might become a problem for the Swiss National Bank, which began selling CHFs in March 2009 to curb its gains against the Euro to ward off deflation and bolster exports. The SNB signaled on June 17 that it would end their currency intervention policy, saying risks of deflation or a general drop in consumer prices, had “largely disappeared.” Just to show you how schizophrenic the market is lately, the market has moved back to the risk trade in the North American session as U.S. retail sales rose more than expected in August, easing some concern about the state of the U.S. economy. The U.S. Commerce Department said retail sales increased 0.4% in August, compared with a 0.3% gain predicted by analysts. In Canada, the CAD rallied after the U.S. retail sales report and Canada's capacity utilization report. Canada's industrial capacity use rose in Q2 of 2010, the fourth consecutive increase, thanks to strength in both the manufacturing and non-manufacturing sectors. Also, the market will be watching a speech by Bank of Canada Governor Mark Carney today for fresh insight into future direction of  monetary policy in Canada.

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.