FX Morning Commentary Feb 1st, 2012

Good Morning,

Todays suggested range for the Canadian dollar against the US dollar is .9950– 1.0040.

Todays suggested range for the Canadian dollar against the Euro is 1.3130-1.3230

Todays suggested range for the Canadian dollar against Sterling is 1.5800-1.5900

The US Dollar is weaker to start the new month as better than expected manufacturing data in Europe and particularly Germany have helped to push the Euro higher against the Greenback. EURO.USD which yesterday looked like it would break below 1.3000 is back above 1.3100 so a good overnight session for the currency pair. I still think the Euro has further weakness in its future as the crisis is far from over but for now we should see the Euro trade in a back and forth motion.

Of note is the movement of the EUR.CHF currency pair which is approaching the Swiss National Bank's floor at 1.2000, last night it traded down to 1.2030. As previously mentioned a few months back the Swiss Central Bank created the policy that it will intervene in the currency markets to sell massive amounts of Swiss Francs to prevent the Franc from getting stronger and hurting the economy. A novel approach that I am sure will be tested in the coming weeks and the markets will see just what the resolve of the SNB is.

The Canadian Dollar is again stronger against the US Dollar as USD.CAD continues to oscillate around the 1.0000 level, the Loonie continues to react to whatever the Euro or US dollar is doing and is not really being affected by domestic issues. Yesterday the Loonie did give up some strength when the poor Canadian  GDP report for November was released but as we have seen overnight that move was very short lived and the Canadian Dollar is back tracking the equity markets and changes in the US Dollar, hopefully this will change with Friday's Canadian Employment report but I doubt it.

I do not expect much movement today, US dollar buyers should be able to get some USD at the .9975 level and sellers of USD should be able to get 1.0025 today.

Today is the first day of using the Blog let me know what you think, there are some other news resources that you can access if you want more information.

Have a great month

Mike

Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9995			0.997
CAD/USD		1.0005			1.003
EUR/USD		1.3128			1.3197
EUR/CAD		1.3124			1.315
STG/CAD		1.5776			1.5731
AUD/CAD		1.0665			1.0633
CAD/JPY		76.07			76.57
CAD/CHF		0.9177			0.9157
CAD/HKD		7.7587			7.7796
CAD/CNY		6.3065			6.3233
Commodities
Gold		$1,746			$1,741
OIL		$99.34			$100.30
Option Volatility
O/N		12.00%			13.33%
1 Week		10.15%			10.32%
1 Month		9.90%			9.82%

RISK ON WITH IMPROVED MANUFACTURING AND GREEK OPTIMISM

Better than expected manufacturing data in China, Germany and the U.K. helped overseas

stocks make strong gains. In addition to the improved economic data the market is optimistic
that an agreement will be reached with Greece on the debt swap with private creditors.
The USD is lower against the broader market on increased risk appetite with the U.S. ISM manufacturing
data today now in focus. Speculation swirls that the Bank of Japan and the Swiss National Bank are
set to intervene to limit the gains in their respective currencies.
Gold and oil have resumed their rally with Dow futures pointing higher by 90 points in pre-market trading.
The Canadian dollar continues to oscillate around parity with no major economic data until Fridays
employment data.

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