USD/CAD 1.0222 EUR/CAD 1.4036 USD/JPY 83.31
GBP/USD 1.5854 EUR/USD 1.3712 USD/CHF 0.9744
Commentary:
The Euro retreated from a six-month high against the USD as concern that nations on Europe’s periphery will struggle to bolster their finances reduced demand for the region’s assets. The Financial Times reported Ireland’s budget deficit this year will be higher than earlier forecast, and Nobel Prize-winning economist Joseph Stiglitz said the Euro’s future is “looking bleak.” It's starting the look like austerity is no panacea as tax receipts are falling faster then deficits. This caused safe haven flows into the CHF. Lets keep in mind that Stiglitz has a new book coming out. The Euro has rallied by about 9% since early September and is due for a correction. Meanwhile, in the UK the GBP railed as the construction sector picked up in September. The Markit/Chartered Institute of Purchasing and Supply construction PMI rose to 53.8 in September from 52.1 in August, confounding expectations for an easing to 51.4. In Asia, the Yen halted a four-day gain versus the USD on speculation the Bank of Japan will take additional credit-easing measures at its two-day meeting starting today. The Bank of Japan began on Monday a two-day policy meeting and was expected to extend a cheap fund-supply tool to help shore up the struggling economy. Some market participants said there was speculation any BOJ stimulus steps may be followed by more Yen-selling intervention. Some analysts expect Japanese authorities to step in to sell Yen if the USD falls under 83 yen, as they did last month. If the BOJ doesn't defend the 82-83 level then the fall in the USD could become disorderly. This week sees the release of crucial U.S. jobs data while the central banks of Australia, the euro zone, Japan and the UK hold policy meetings. The IMF and G7 finance ministers also meet this week. Given these risks, look for market players to trim their short USD positions even though many in the market expect the prospect of more U.S. quantitative easing will continue to hurt the currency. In Canada, the CAD pulled back from its overnight highs on lower commodity prices. The Thomson Reuters-Jefferies CRB index, a global commodities benchmark, has been on a tear over the last month so a pause here due to a possible correction in the USD is to be expected. The CAD has been supported by a string of recent domestic economic data but Bank of Canada Governor Mark Carney has poured cold water on an October rate hike by saying last week that record high household-debt levels and a soft U.S. export market mean modest economic growth for Canada in the months ahead.
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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