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Daily Market Commentary

The Loonie remains in its painfully range-bound pattern, which hasn't broken since November.  After years of volatility, this flatlining stability is something we aren't used to on the trading desk.  It is beneficial, however, to companies who have US operations, making their revenue streams much more predictable.  As the Bank of Canada and the Federal Reserve have both clearly indicated that they are on hold with overnight target rates, the USD/CAD seems to have found its level.

Is that the true picture though?  We look overseas to see the CAD$ measured in other terms.  Over the same period of stability (since early November), look at these returns against the CAD$:

Euro + 20%

Yen  + 15%

Aussie + 12%

Swiss Franc + 17%

Brazil Real + 19%

Mexican peso + 14% 

Only the Pound Stirling lags as much as Loonies and greenbacks have - essentially showing the same flat pattern. 

These currency relationships may serve as further evidence of a "decoupling" phenomenon, where worldwide economies are much stronger than our domestic North American field.  Simply owning foreign investments has already netted a nice return on currency alone, regardless of the performance of the investment.

Watch the BlackBlog for investment ideas to gain exposure to overseas currencies.

Canadian Leading Indicators are out this morning still hovering around the flatline mark at 0.2%, however last month was revised downward to 0.0%.  This is not bad news per say, but doesn't herald an immediate recovery for our economy.  That's it for data until CPI tomorrow.

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