Canadian GDP and US Consumer Confidence On Tap.

Quote Line: 1 800 832 5104

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Market Snapshot (near-term 48 hour outlook)
USD/CAD: Bullish. Spot at 1.1186
EUR/CAD: Bearish. Spot at 1.4067
GBP/CAD: Bearish. Spot at 1.8097
EUR/USD: Bearish. Spot at 1.2577
GBP/USD: Bearish. Spot at 1.6178
Today’s Commentary
USD/CAD Commentary

The dollar traded mixed against most major currencies on Monday as investors digested a mixed bag of U.S. data. Expectations for U.S. monetary policy to grow less accommodative at a time when others may move to loosen have firmed the dollar in recent sessions, though by Monday, mixed U.S. data gave markets room to sell the greenback against its peers. The dollar remained near six year highs against the yen yesterday and four year peaks against a basket of major currencies.

The U.S. dollar held steady against its Canadian counterpart on Monday, hovering close to a six month peak as upbeat U.S. personal spending data added to the feeling that the economic recovery is likely to continue in the current quarter.

Demand for the dollar continued to be underpinned after data on Friday showed that the U.S. economy grew at an annual rate of 4.6% in the second quarter, the fastest pace in two-and-a-half years.

Today, the U.S. is to publish data on business activity in the Chicago region and a report on consumer confidence. In Canada there are GDP numbers that are expected to remain positive but expected to drop from 0.3% to 0.2% from before.

Short term technicals are mixed with the support located at 1.1083 and the resistance at 1.1228.

Today’s expected trading range is 1.1150 – 1.1250

EUR/USD Commentary

The euro bounced up from near 22-month lows against the dollar on Monday after mixed U.S. data sent investors selling the greenback for profits. Last week, European Central Bank President Mario Draghi reiterated the bank’s commitment to act with more policy measures to boost inflation in the euro zone. Mario Draghi’s strategy for reviving the euro area looks like devaluation.

While the European Central Bank president says the exchange rate isn’t a policy target, officials aren’t secretive about their approval of the currency’s almost 10 percent slide. The depreciation increases the cost of imports and boosts exporters’ competitiveness, aiding the effort to revive inflation that data tomorrow will probably show is the weakest since 2009.

The euro dropped from a 2 1/2-year high in May as officials unveiled a medley of stimulus measures. Elsewhere in Europe on Monday, Germany’s consumer price index remained unchanged this month, according to official preliminary data.

Today is a heavy day for the euro region as there is German Unemployment change and Unemployment rate along with consumer price index and Unemployment rate from the Euro region.

Short term technicals constinue to remain bearish with support located at the 1.2550 while resistance is located at 1.2830.

Today’s expected trading range is 1.2550 – 1.2625

GBP/USD Commentary

The pound stalled against the broadly stronger dollar yesterday, trading close to two week lows as investors looked ahead to a series of economic reports later in the week. Sterling rallied against the dollar in the first half of the year, rising to six year peaks of 1.7190 in mid-July, boosted by expectations that the robust recovery in the U.K. would see the Bank of England raise interest rates before then end of the year.

Today, there is GDP number from Britain which might give some strength to the pound sterling against its major peers as they are expected to rise to 3.2% from a previous number of 3.0%. No other report in the UK tomorrow though it is to publish reports on manufacturing and service sector growth later in the week.

Short term technicals are bearish with support located in the 1.6120 while resistance is located at 1.6359.

Today’s expected trading range is 1.6150 – 1.6250

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Opening FX Rates (USD)
USD/CAD 1.1186
EUR/USD 1.2577
GBP/USD 1.6178
USD/JPY 109.76
AUD/USD 0.8711
USD/HKD 7.7675
USD/PLN 3.3187
USD/THB 32.43
Opening FX Rates (CAD)
USD/CAD 1.1186
EUR/CAD 1.4067
GBP/CAD 1.8097
CAD/JPY 98.09
AUD/CAD 0.9743
CAD/HKD 6.942
CAD/PLN 2.9652
CAD/THB 28.99
Opening Commodities (USD)
Oil 94.41
Gold 1205.10
Silver 17.15
Economic and Event Calendar
EUR – Germany Unemployment Change Sep 30
GBP – Gross Domestic Product Sep 30
EUR – Consumer Price Indec Sep 30
CAD – Gross Domestic Product Sep 30
USD – Consumer Confidence Sep 30
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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US Dollar Rose Broadly Last Week. Focus Turns to Economic Data This Week

Quote Line: 1 800 832 5104

www.mtfx.ca

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Bullish. Spot at 1.1158
EUR/CAD: Neutral. Spot at 1.4168
GBP/CAD: Neutral. Spot at 1.8105
EUR/USD: Bearish. Spot at 1.2700
GBP/USD: Bearish. Spot at 1.6227
Today’s Commentary
USD/CAD Commentary

The dollar rose to fresh six year highs against the yen on Friday and hit 14-month peaks against the euro after data showed that the U.S. economy grew at its fastest pace in two-and-a-half years in in the second quarter.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies ended Friday’s session up 0.51% to a four year high of 85.77, capping its eleventh consecutive weekly gain.

The dollar was boosted after the Commerce Department reported that U.S. gross domestic product was revised up to 4.6% in the three months to June from a previous estimate of 4.2%. It was the fastest rate of expansion since the fourth quarter of 2011.

In a revised report, the University of Michigan said its consumer sentiment index remained unchanged at 84.6 this month, compared to expectations for an uptick to 84.7. The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

In Canada the governor of the Bank of Canada is sending a strong message to the markets: You do your job and we will do ours. Stephen Poloz has been dogged by the perception that he has been attempting to “talk down the dollar” — essentially to help encourage business investment and expand export markets — as the economy struggles to regain its initial post-recession traction. Last Tuesday, Mr. Poloz attempted to set the markets straight, saying it is not up to his policymakers to determine currency levels. To do so, he said, would be to court economic “havoc.”

After a relatively quiet week, the upcoming economic calendar is rather busy. In particular, U.S dollar will face the tests of consumer confidence, ISM indices and NFP. Sentiment towards the greenback is leaning towards the upside, meaning that strong data would push dollar higher but weak data could have mild impact. In Canada Tuesday’s GDP print will provide direction for the Canadian dollar in the short term.

Technically bias remains on the upside this week for a test on 1.1278 resistance. Break there will resume the larger up trend. On the downside, below 1.1092 support will turn bias neutral and bring consolidations.

Today’s expected trading range is 1.1100 – 1.1200

EUR/USD Commentary

The euro dropped to fresh multi-month lows against the U.S. dollar on Friday, hovering close to a two-year trough as positive U.S. economic growth data lent further support to the greenback. Since August 5th the euro has depreciated an alarming 6 percent against the U.S dollar with most market participants expecting another leg lower over the coming week.

The euro remained under pressure last week after data showed German consumer climate index ticked down to 8.3 this month, from a reading of 8.6 in August. Analysts had expected the index to slip to 8.5.

The report added to concerns over the outlook for growth in the euro zone’s biggest economy as data on Wednesday also showed that Germany’s business confidence index deteriorated for the fifth successive month in September.

The single currency dropped to nearly two-year lows against the dollar on Thursday after European Central Bank President Mario Draghi reiterated the bank’s commitment to act with more policy measures to boost inflation in the euro zone.

"We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation," Draghi said.

The week ahead represents a big week fundamentally for the euro as we approach the year end. Investors will be looking ahead to euro zone inflation data and the outcome of Thursday’s ECB meeting both expected to have a significant impact on the common currency.

Short term technicals continue to remain bearish with initial support located at 1.2660 while resistance is located at 1.2903. A decisive break of 1.2660 could open up the 1.24 level in the short term.

Today’s expected trading range is 1.2625 – 1.2775

GBP/USD Commentary

After sterling outperformed early in 2014, investors have scaled back their long positions. Rate expectations have been whipsawed by conflicting central bank communications. Implied rates moved towards pricing in earlier tightening, only to be followed by promises from Governor Carney to only move rates gradually from Q1 2015, causing investors to backtrack.

The pound traded lower against the dollar on Friday but held ahead of recent lows as hawkish comments out of the Bank of England earlier in the week gave some support to the currency.

Bank of England Governor Mark Carney said earlier in the week that the time at which rate hikes will be kicking in is "getting closer" but stressed a decision to tighten policy will depend on data and added the BOE does not have a pre-set course, words that cushioned the pound’s losses against a firming dollar.

Data out of the U.K has been subdued over the last few sessions. CBI reported sales where on a downward trend while inflation has come off its recent highs and recently disappointed. With a Scottish independence “Yes” vote going from long shot to even odds before the plebiscite, event risks weighing on the pound have subsided.

Most participants continue to suggest a recovery for the pound in the coming weeks given the recent trajectory of rate spreads. In the week ahead markets will be looking to the U.K’s GDP, manufacturing PMI and services PMI releases for direction on the currency.

Short term technicals continue to remain mildly to the downside with support located at 1.6244 while resistance is located at 1.6416.

Today’s expected trading range is 1.6150 – 1.6300

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Opening FX Rates (USD)
USD/CAD 1.1158
EUR/USD 1.2700
GBP/USD 1.6227
USD/JPY 109.40
AUD/USD 0.8725
USD/HKD 7.7649
USD/PLN 3.2911
USD/THB 32.381
Opening FX Rates (CAD)
USD/CAD 1.1158
EUR/CAD 1.4168
GBP/CAD 1.8105
CAD/JPY 98.01
AUD/CAD 0.9732
CAD/HKD 6.9589
CAD/PLN 2.9491
CAD/THB 29.030
Opening Commodities (USD)
Oil 93.20
Gold 1220.89
Silver 17.56
Economic and Event Calendar
USD – Pending Home Sales Sep 29
CNY – HSBC Manufacturing PMI Sep 29
EUR – German Employment Change Sep 30
GDP – Gross Domestic Product Sep 30
EUR – Consumer Price Inflation Sep 30
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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USD continues to gain on hawkish Fed comments

Quote Line: 1 800 832 5104

www.mtfx.ca

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Bullish. Spot at 1.1102
EUR/CAD: Neutral. Spot at 1.4136
GBP/CAD: Neutral. Spot at 1.8107
EUR/USD: Bearish. Spot at 1.2738
GBP/USD: Bearish. Spot at 1.6311
Today’s Commentary
USD/CAD Commentary

The U.S. dollar was trading near six-month highs against its Canadian counterpart on Thursday, after the release of mixed U.S. economic reports as expectations for the Federal Reserve to raise interest rates sooner than expected continued to support the greenback.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending September 20 increased by 12,000 to 293,000, from the previous week’s revised total of 281,000. Analysts had expected jobless claims to rise by 19,000 to 300,000 last week.

Separately, official data showed that U.S. durable goods orders dropped by 18.2% in August, after an increase of 22.5% in July, whose figure was revised down from a previously estimated gain of 22.6%. Analysts had expected durable goods orders to decline by 18.0% last month.

Core durable goods orders, which exclude transportation items, rose 0.7% last month, in line with expectations, after a 0.5% fall in July, whose figure was revised from a previously estimated 0.7% drop.

The greenback strengthened earlier after Dallas Federal Reserve President Richard Fisher said the U.S. central bank may start raising interest rates around the spring of 2015.

The CAD over the short term remains in a precarious position with a surging US dollar, soft commodity prices and an uneven global economic outlook. The near term risk continues to call for short term weakness before stabilizing into the year end.

Today markets will be looking to the U.S Gross Domestic Product for direction. A higher than expected reading may cause a significant surge in the USD/CAD rate and poses a significant risk for USD buyers in the short term.

Short term technicals continue to remain bullish with the pair looking to break toward the 1.1200 level.

Today’s expected trading range is 1.1040 – 1.1140

EUR/USD Commentary

The euro flirted with 22-month lows against a firming dollar yesterday after data revealed fewer in the U.S. sought first-time joblessness assistance last week, while hawkish comments out of the Federal Reserve boosted demand for the U.S. dollar. The pair closed the trading day at 1.2748.

The euro came under pressure after European Central Bank President Mario Draghi reiterated on Thursday the bank’s commitment to act with more policy measures to boost inflation in the euro zone.

"We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation," Draghi said.

A day earlier, Mario Draghi had already vowed to keep monetary policy "accommodative" for as long as needed, and to use every tool at the ECB’s disposal to fight deflation.

The current trend on the euro continues to remain to the downside and it is too early to pick a bottom. As most traders say “the trend is your friend” which holds true for the euro in the short term.

Technically the euro has broken support of 1.2750 with the next major support level located at 1.2662. A decisive break of the 1.2700 level may trigger further selling pressure on the euro toward the 1.2500 level.

Today’s expected trading range is 1.2680 – 1.2760

GBP/USD Commentary

The pound traded lower against the dollar on Thursday but held steady as hawkish comments out of the Bank of England gave the pair some support to the currency.

Bank of England Governor Mark Carney said earlier yesterday that the time at which rate hikes will be kicking in is "getting closer" but stressed a decision to tighten policy will depend on data and added the BOE does not have a pre-set course, words that cushioned the pound’s losses against a firming dollar.

Data out of the U.K has been subdued over the last few sessions. CBI reported sales where on a downward trend while inflation has come off its recent highs and recently disappointed. However, most participants continue to suggest a recovery for the pound in the coming weeks once the current bout of U.S. strength as subsided.

Short term technicals continue to remain neutral for the moment. Support is located in the 1.627’s. A decisive break of the said support will open up the 1.6200 level.

Today’s expected trading range is 1.6275 – 1.6375

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Opening FX Rates (USD)
USD/CAD 1.1102
EUR/USD 1.2738
GBP/USD 1.6311
USD/JPY 109.08
AUD/USD 0.8792
USD/HKD 7.7537
USD/PLN 3.2811
USD/THB 32.29
Opening FX Rates (CAD)
USD/CAD 1.1102
EUR/CAD 1.4136
GBP/CAD 1.8107
CAD/JPY 98.27
AUD/CAD 0.9759
CAD/HKD 6.8989
CAD/PLN 2.9551
CAD/THB 29.091
Opening Commodities (USD)
Oil 92.95
Gold 1211.09
Silver 17.52
Economic and Event Calendar
EUR – German Consumer Climate Sep 26
EUR – French Consumer Confidence Sep 26
USD – Gross Domestic Product Sep 26
USD – Real Consumer Spending Sep 26
USD – Michigan Consumer Sentiment Sep 26
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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USD/CAD Reclaims 1.1100 Handle

Quote Line: 1 800 832 5104

www.mtfx.ca

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Bullish. Spot at 1.1108
EUR/CAD: Bearish. Spot at 1.4132
GBP/CAD: Neutral. Spot at 1.8109
EUR/USD: Bearish. Spot at 1.2722
GBP/USD: Bearish. Spot at 1.6302
Today’s Commentary
USD/CAD Commentary

The U.S. dollar climbed yesterday to fresh four-year highs against a basket of major currencies as strong U.S. new home sales data added to expectations for an early rate hike by the Federal Reserve. Official data showed that U.S. new home sales data rose 18.0% last month to 504,000 units, beating expectations for a 4.4% gain to 430,000 units.

The U.S. stocks rebounded as new-home sales surged and health-care shares erased Tuesday’s losses. In October, the Federal Reserve is expected to close its monthly bond-buying program and then begin raising benchmark interest rates some time in 2015, though the timing of the latter remains up in the air.

Canadian stocks fell, with the benchmark index headed for a three-month low, as financial shares retreated and energy producers declined with the price of oil. In a report, Bank of Canada Deputy Governor Timothy Lane said that Canadian dollar may weaken and the market interest rates may climb while the Federal Reserve normalizes monetary policy. The Lonnie strengthened yesterday afternoon from the lows of 1.11 to 1.1063 areas after the speech from BoC Deputy Governor Lane.

Today’s market movement focuses on U.S. durable goods orders and weekly jobless claims numbers. No major economic reports in Canada today or tomorrow.

Short term technicals are slightly bearish with the support located at 1.0951 and the resistance at 1.1145.

Today’s expected trading range is 1.1070 – 1.1170

EUR/USD Commentary

The euro flirted with 14-month lows against the dollar yesterday after data revealed new U.S. homes sales soared last month, while dovish comments from European Central Bank President Mario Draghi kept the pair lower as well. Draghi said the bank will keep its monetary policy "accommodative" for as long as needed and use every tool at its disposal to fight deflation, comments that softened the euro and bolstered the greenback’s appeal. He also said that the monetary policy will remain accommodating for a long time and the Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under 2%.

In another report, Germany’s Ifo business confidence index deteriorated for the fifth successive month in September. Business climate index fell to 104.7 from 106.3 in August. It was the lowest level since April 2013 and much weaker than economists’ forecasts for 105.7. This data added to fears that the euro zone’s largest economy is losing momentum. The euro dropped below 1.28 after the report.

Today, main focus from the European markets focus on the numbers from the US market while in Europe there will me M3 money supply report and Italy’s retail sales and wage inflation numbers.

Short term technicals signal bearish trend with support located at the 1.2610 while resistance is located at 1.2940.

Today’s expected trading range is 1.2670 – 1.2770

GBP/USD Commentary

The pound was almost unchanged against the U.S. dollar in quiet trade on Wednesday, as demand for sterling remained supported by the outcome of last week’s vote on Scottish independence, while Tuesday’s U.S. manufacturing data continued to boost the greenback. The pound remained supported as markets focus returned to the outlook for U.K. monetary policy in the wake of last Thursday’s Scottish independence referendum.

The pound may struggle to strengthen further against the dollar as uncertainty lingers around political proposals on devolution in the U.K., Nomura International Plc and Citigroup Inc. analysts said. Sterling has appreciated 0.5 percent since Scotland rejected independence from the U.K. last week. In the days following the referendum, proposals for constitutional change in England have been raised.

Sterling has strengthened 8 percent in the past year, the best performer among 10 major currencies. Today’s major focus will be on the comments from BoE Governer Mark Carney, any dovish comments will drive the movement of the GBP against its major counterparts.

Short term technicals are slightly bearish with support located in the 1.6255 while resistance is located at 1.6434.

Today’s expected trading range is 1.6270 – 1.6370

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Opening FX Rates (USD)
USD/CAD 1.1108
EUR/USD 1.2722
GBP/USD 1.6308
USD/JPY 109.24
AUD/USD 0.8811
USD/HKD 7.7537
USD/PLN 3.2822
USD/THB 32.30
Opening FX Rates (CAD)
USD/CAD 1.1108
EUR/CAD 1.4132
GBP/CAD 1.8109
CAD/JPY 98.27
AUD/CAD 0.9786
CAD/HKD 6.9778
CAD/PLN 2.9540
CAD/THB 29.070
Opening Commodities (USD)
Oil 93.02
Gold 1210.30
Silver 17.49
Economic and Event Calendar
EUR – M3 Money Supply Sep 25
USD – Durable Goods Sep 25
USD – Jobless Claims Sep 25
GBP – BoE’s Governer Carney Speech Sep 25
USD – Gross Domestic Product Sep 26
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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Canadian Dollar Gets Hammered On Disappointing Retail Sales

Quote Line: 1 800 832 5104www.mtfx.ca

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Bullish. Spot at 1.1078
EUR/CAD: Slightly Bullish. Spot at 1.4211
GBP/CAD: Slightly Bullish. Spot at 1.8164
EUR/USD: Slightly Bearish. Spot at 1.2827
GBP/USD: Neutral. Spot at 1.6400
Today’s Commentary
USD/CAD Commentary

The U.S. dollar pulled back from lows against the Canadian dollar on yesterday after data showed that Canadian retail sales unexpectedly fell in July, following six consecutive months of gains. The USD/CAD whipsawed from the session low of 1.0988 to close at 1.1070 on the disappointing data point.

The Canadian dollar weakened after Statistics Canada reported that retail sales fell 0.1% in July to C$42.5 billion, compared to expectations for a 0.4% increase. However, June’s retail sales were revised up to a 1.2% increase from a previously reported 1.1% gain. Core retail sales, which exclude auto sales, were down 0.6% from a month earlier, worse than forecasts for a 0.1% decline.

The commodity linked Canadian dollar had gained ground earlier yesterday after data showed that factory activity in China unexpectedly picked up this month, easing concerns over a slowdown in the world’s second-largest economy. The preliminary reading of China’s HSBC manufacturing index for September came in at 50.5, ahead of expectations for 50.0 and up from the final reading of 50.2 in August.

The greenback struggled to build gains against the loonie as investors took a breather from buying the greenback following its recent run higher.

The US Dollar Index which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.22% to 84.62, after rising to highs of 84.86 in the previous session, the most since July 2010.

The U.S. dollar’s rally has been fuelled by expectations the ongoing economic recovery in the U.S. would prompt the Federal Reserve to hike rates sooner than markets expect.

Short term technicals on the USD/CAD have turned bullish over the last few trading sessions with the pair looking to decisively break the psychological 1.11 level.

Today’s expected trading range is 1.1025 – 1.1125

EUR/USD Commentary

The euro rose against the dollar on Tuesday despite soft European data as investors locked in gains from the greenback’s recent rally and sold the U.S. currency for profits.

The dollar firmed against the euro and most other major currencies in recent weeks as investors prep for monetary policy to become less accommodative in the U.S. at a time when Europe and Japan are taking steps to loosen policy.

Yesterday investors viewed the dollar’s rally as due for a breather and sold the greenback for profits, giving the single currency room to rise despite negative European data.

The malaise continues:

The euro zone composite output index, which measures the combined output of both the manufacturing and service sectors, slumped to a nine-month low of 52.3 from 52.5 in August.

The bloc’s services PMI slid to a three-month low of 52.8 from 53.1 last month, missing expectations for a 53.0 reading. While the manufacturing index ticked down to a 14-month low of 50.5 from 50.7 in August, though in line with market forecasts.

Germany’s private sector output continued to expand this month but growth in the manufacturing sector slowed to a 15 month low.

Private sector activity in France fell for the fifth consecutive month, as service-sector activity declined for the first time in three months, offsetting a slower decline in manufacturing output.

On Monday, European Central Bank President Mario Draghi said economic activity in the euro area has slowed and added he saw risks for further downturn, though markets have already priced in monetary stimulus measures to shore up the economy.

Year-end forecast:

EUR has made repeated attempts at stabilization through the month of September, only to weaken further on the back of policy developments. Monday’s reaction to ECB President Draghi’s testimony highlighted the marketed slowdown which is expected to continue in the medium term. With an ECB tone focused on balance sheet expansion and the relative policy outlook most market participants expect further downside pressure as we approach the year end.

Short term technicals continue to remain dovish with support located at 1.2814 while resistance is located at 1.2994.

Today’s expected trading range is 1.2750 – 1.2950

GBP/USD Commentary

The pound erased losses against the dollar yesterday as the greenback took a breather following its recent run higher. The pair closed at 1.6392 just shy of the psychological 1.6400 level.

Sterling remained supported as investor focus returned to the outlook for U.K. monetary policy in the wake of last Thursday’s Scottish independence referendum. But the pound struggled to build on gains after data on Tuesday showed that U.K. public sector borrowing increased from a year earlier in August.

The Office for National Statistics reported that public sector net borrowing, excluding public sector banks, was £11.6 billion in August 2014, an increase of £700 million compared with August 2013.

A separate report showed that U.K. mortgage approvals fell unexpectedly in August, but the underlying trend remained stable. The number of mortgage approvals fell to 41,588 in August from 42,715 in July the British Bankers’ Association said. Economists had expected the number of approvals to rise to 42,900.

After last week’s events in the U.K. the pound seems to have stabilized and seems to be in a consolidative mode. Overall markets continue to expect the BoE to be the first of the G4 to raise interest rates which should continue to support the currency in the short term.

Short term technicals are neutral for the moment with the currency pair looking for a catalyst to move in either direction. Support is located at 1.6286 while resistance is located in the mid 1.64’s.

Today’s expected trading range is 1.6300 – 1.6500

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Opening FX Rates (USD)
USD/CAD 1.1078
EUR/USD 1.2827
GBP/USD 1.6400
USD/JPY 108.74
AUD/USD 0.8871
USD/HKD 7.7516
USD/PLN 3.2496
USD/THB 32.219
Opening FX Rates (CAD)
USD/CAD 1.1078
EUR/CAD 1.4211
GBP/CAD 1.8164
CAD/JPY 98.18
AUD/CAD 0.9822
CAD/HKD 7.0009
CAD/PLN 2.9346
CAD/THB 29.108
Opening Commodities (USD)
Oil 91.10
Gold 1218.66
Silver 17.64
Economic and Event Calendar
EUR – German Business Climate Sep 24
USD – New Home Sales Sep 24
USD – Durable Goods Orders Sep 25
USD – Gross Domestic Product Sep 26
USD – Michigan Consumer Sentiment Sep 26
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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Canadian Dollar Steady at 1.10 Ahead of Retail Sales

Quote Line: 1 800 832 51041 800 832 5104

www.mtfx.ca

Market Snapshot (near-term 48 hour outlook)
USD/CAD: Neutral. Spot at 1.0996
EUR/CAD: Neutral. Spot at 1.4170
GBP/CAD: Neutral. Spot at 1.8025
EUR/USD: Neutral. Spot at 1.2886
GBP/USD: Neutral. Spot at 1.6389
Today’s Commentary
USD/CAD Commentary

The U.S. dollar rose to session highs against the Canadian dollar in early trade yesterday as expectations for an early hike in U.S. interest rates continued to underpin dollar demand. Last week, the Fed offered fresh guidance on its plans to raise interest rates, outlining in more detail how it will start to raise short term interest rates when the time comes. Demand for the greenback continued to be underpinned as indications that the economic recovery is making solid progress fuelled expectations that the Federal Reserve will hike interest rates sooner than markets are expecting.

The Canadian dollar remained broadly weaker despite data on Friday showing that the annual rate of core inflation in Canada rose at the fastest rate in over two years last month. The strong increase in core inflation boosted expectations that the Bank of Canada may shift away from its neutral stance on interest rates sooner than expected. The US Dollar dropped against the most major currencies but the Canadian currency after the soft U.S. home sales numbers.

Today, the markets watch out for the Canadian Retail Sales which are expected to be dropping from previous. The expected impact is going to be bearish on the loonie. In the US, there is housing price index and Markit Manufacturing PMI.

Short term technicals are bullish with the support located at 1.0978 and the resistance at 1.1084.

Today’s expected trading range is 1.0950 – 1.1050

EUR/USD Commentary

The euro gave up gains against the dollar on Monday after European Central Bank President Mario Draghi warned earlier the European recovery is losing steam. In remarks to the economic and monetary affairs committee of the European parliament, Draghi said economic activity in the euro area has slowed and added he saw a risk of a further downturn.

The European Central Bank President Mario Draghi expressed concern about recovery in the euro area though the single currency rose on demand from bargain hunters, as loose monetary policies have already been priced into trading.

He reiterated that the ECB expects inflation to remain at low levels over the coming months before increasing gradually in 2015 and 2016. Draghi said the ECB remains ready to use additional unconventional instruments within the bank’s mandate should it become necessary to further address risks of a prolonged period of low inflation.

Today, markets track German and euro zone manufacturing purchasing managers’ indices.

Short term technicals signal bullish with support located at the 1.2763 while resistance is located at 1.2995.

Today’s expected trading range is 1.2825 -1.2925

GBP/USD Commentary

The pound edged higher against the U.S. dollar yesterday, but gains were expected to remain limited as demand for the greenback remained supported by expectations for an early rate hike by the Federal Reserve. The pound rose to two-week highs against the greenback on Friday after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call.

The pound was initially boosted after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call. A total of 55% of voters voted to reject independence, while 45% voted in favor of it.

Sterling’s rally was short lived however as investors began to turn their attention back towards the Bank of England’s monetary policy stance, with the referendum issue out of the way. U.K. stocks fell the most in more than 10 weeks, after the largest two-day rally in a month sent the FTSE 100 Index close to its highest level since 1999. The battle over the future of Scotland risks tainting U.K. government bonds for years to come.

No Major economic reports in the UK today apart from the BBA Mortgage approvals and Public sector net borrowings.

Short term technicals are mixed with support located in the 1.6204 while resistance is located at 1.6485.

Today’s expected trading range is 1.6335 – 1.6435

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Opening FX Rates (USD)
USD/CAD 1.0996
EUR/USD 1.2886
GBP/USD 1.6389
USD/JPY 108.45
AUD/USD 0.8913
USD/HKD 7.7512
USD/PLN 3.2388
USD/THB 32.216
Opening FX Rates (CAD)
USD/CAD 1.0996
EUR/CAD 1.4170
GBP/CAD 1.8025
CAD/JPY 98.56
AUD/CAD 0.9805
CAD/HKD 7.0494
CAD/PLN 2.9430
CAD/THB 29.283
Opening Commodities (USD)
Oil 91.57
Gold 1232.06
Silver 17.92
Economic and Event Calendar
EUR – German Manufacturing PMI Sep 23
CAD – Retail Sales Sep 23
USD – Housing Price Index Sep 23
USD – Markit Manufacturing PMI Sep 23
USD – New Home Sales Sep 24
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USD Bullish Trend Intact

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Market Snapshot (near-term 48 hour outlook)
USD/CAD: Neutral. Spot at 1.0984
EUR/CAD: Bearish. Spot at 1.4104
GBP/CAD: Neutral. Spot at 1.7933
EUR/USD: Bearish. Spot at 1.2841
GBP/USD: Neutral. Spot at 1.6328
Today’s Commentary
USD/CAD Commentary

The Canadian dollar and markets faced a number of major events last week that could have potentially undercut them. These included the U.S. Federal Reserve rate announcement and Scottish referendum. In the end, the concerns weren’t warranted, as Scots voted against secession and the Fed statement didn’t throw any curve balls. As a result, after falling to nearly 1.11 against the U.S. dollar on Monday the Loonie managed to end the week around 1.0950 against the U.S. dollar, still a level well below its recent 94 US cent peak set this summer. The Loonie’s relatively hesitant gains against the US dollar at week’s end concealed a better performance against other major currencies, such as the euro, pound and yen. Canada’s S&P TSX has lost some modest ground since last Friday’s close, although that appeared to reflect a further softness in commodity markets rather than directly tied to last week’s big stories.

A big part of the U.S. dollar strength in recent weeks has been chalked up to the attraction of higher U.S. government bond yields, which moved even higher last week following the much-awaited FOMC meeting. While the Fed’s statement continued to highlight the fact that monetary policy will remain ultra-accommodative for a "considerable period", fixed income investors put more emphasis on the upward adjustment to interest-rate expectations of FOMC members (the so-called "Dots" expectations). As such, the 2-year Treasury reached three-year highs of 59 basis points, while the 10-year maturity moved to 2.60%.

Canadian government bonds yields followed their U.S. counterparts higher, driven higher in part by a string of strong Canadian economic data. From manufacturing to home sales to trade, indications are that real GDP in Q3 will increase by at least 3% annualized, with notable upside risk. Friday’s news that core CPI inflation surged unexpectedly to 2.1% y/y in August from 1.7% a month earlier added some fuel to the bond sell-off. U.S.-Canadian bond yield spreads narrowed slightly on the week, but U.S. 10-year Treasuries still offer a yield premium over Canada’s of roughly 35 basis.

The attractive returns offered in the U.S. will likely remain one of a number of headwinds that will hold back the Loonie from taking flight in the coming weeks. For instance, international securities data for July released last week point to a growing number of Canadians investing their assets abroad this year, with the U.S. a major target of this capital. And with respect to Friday’s surge in CPI inflation – which will likely reignite debate about when the Bank will ultimately move off the sidelines, reading too much into one month of data may not be a prudent approach to a historically very volatile data print.

Short term technicals continue to remain mixed for the moment with upward momentum on the U.S. dollar diminishing. Most analysts expect the coming weeks to be relatively range bound with the pair trading comfortably on either side of the 1.10 level.

Today’s expected trading range is 1.0920 – 1.1020

EUR/USD Commentary

The euro fell to a fresh 14-month trough against the broadly stronger dollar on Friday as expectations that the Federal Reserve is moving closer to raising U.S. interest rates continued to bolster demand for the greenback.

The dollar has rallied in the past two months, boosted by expectations for an early hike in U.S. interest rates, while the European Central Bank looks likely to stick to a looser monetary policy stance. On Wednesday the Fed offered fresh guidance on its plans tighten monetary policy, outlining in more detail how it will start to raise short term interest rates when the time comes. The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.

The euro has remained under pressure against the dollar since the ECB unexpectedly cut rates to record lows across the euro zone earlier this month, and implemented fresh measures in an attempt to shore up inflation in the currency bloc.

On Thursday, euro area lenders borrowed less than expected from the ECB under its new low cost loan program. The ECB said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. That was well below the €100 to €150 billion predicted by analysts. The low loan uptake indicated that the operation will have only a limited impact on boosting liquidity in the euro area.

The euro ended lower against the U.S. dollar on Friday closing in the low 1.28’s. Most market analysts continue to suggest that the euro will drift lower as we approach the year end with the current economic fundamentals and a diverging monetary policy stance vis-à-vis the U.S. continuing to weigh on the currency.

In the week ahead, investors will be awaiting Tuesday’s data on euro zone private sector activity, amid concerns that the recovery in the region is losing momentum.

Short term technicals are mixed with support located at the psychological 1.2800 level while resistance is located at 1.2923.

Today’s expected trading range is 1.2800 – 1.2875

GBP/USD Commentary

The pound turned lower against the broadly stronger dollar on Friday, coming off the two-week highs hit earlier after voters in Scotland’s independence referendum elected to remain inside the United Kingdom. After a very volatile week the pound closed just below the 1.6300 level.

The pound was initially boosted after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call. A total of 55% of voters voted to reject independence, while 45% voted in favor of it.

Sterling slumped to 10-month lows against the dollar earlier this month as uncertainty over the Scottish referendum rattled financial markets. With the referendum issue out of the way, investors began to turn their attention back towards the Bank of England’s monetary policy stance.

Sterling rallied in the early part of the year on the back of expectations that the deepening recovery in the U.K. would prompt the BoE to raise interest rates ahead of other central banks.

However, the dollar has rallied in the past two months as economic data indicated that the U.S. recovery is progressing strongly, while the pace of the recovery in the U.K. appeared to be moderating. On Wednesday the Federal Reserve offered fresh guidance on its plans to raise interest rates, outlining in more detail how it will start to raise short term interest rates when the time comes.

Most analysts continue to suggest the BoE will be the first of the G4 to raise interest rates and with the Scottish elections behind us; Sterling should start picking up some of its recent losses as we move toward the year end.

The week ahead the calendar in the U.K. is light, with reports on mortgage approvals and public borrowing due on Tuesday.

Short term technicals are bearish with support located in the 1.625’s while resistance is located just north of the 1.6450 level.

Today’s expected trading range is 1.6300 -1.6390

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Opening FX Rates (USD)
USD/CAD 1.0984
EUR/USD 1.2841
GBP/USD 1.6328
USD/JPY 109.06
AUD/USD 0.8874
USD/HKD 7.7510
USD/PLN 3.2555
USD/THB 32.234
Opening FX Rates (CAD)
USD/CAD 1.0984
EUR/CAD 1.4104
GBP/CAD 1.7933
CAD/JPY 99.24
AUD/CAD 0.9747
CAD/HKD 7.0545
CAD/PLN 2.9626
CAD/THB 29.341
Opening Commodities (USD)
Oil 91.73
Gold 1212.64
Silver 17.62
Economic and Event Calendar
EUR – ECB Draghi Speech Sep 22
USD – Existing Home Sales Sep 22
CNY – HSBC Manufacturing PMI Sep 22
EUR – German Manufacturing PMI Sep 23
CAD – Retail Sales Sep 23
Disclaimer:

MTFX accepts no responsibility for the accuracy or completeness of any information here in contained nor for any forecasts or recommendations. MTFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by MTFX that you will profit from the strategies herein or that your losses in connection therewith can or will be limited.

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