Morning Currency Wrap for Thursday February 24, 2011

Safe-Haven Flows & Interest Rate Expectations - All you need to know about the forex market right now is that the two main drivers are safe-haven flows and interest rate expectations. Safe-haven flows are going into the Yen, CHF, and gold as the ongoing political turmoil in the Arab world continues. What is utterly shocking here is that the USD is not picking up any safe-haven flows to speak of, times are a changing. Meanwhile, the GBP and Euro are being well bid as the market continues to price interest rate increases sooner rather than later while US interest rates continue to stay near zero. In Canada, the CAD started its long anticipated move up against the USD as prices extended gains on turmoil in Libya. Brent crude reached $120 per barrel today and since Canada is a net oil exporter the CAD pushed higher. Let's not forget the CAD has two nick names the "loonie" and the "petro dollar" and the latter is asserting itself in this market.