GFX Morning FX Commentary, April 16th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9950-1.0050

Today's expected range for the Canadian Dollar against the Euro is 1.3000-1.3100

Today's expected range for the Canadian Dollar against Sterling is 1.5810-1.5910

The US Dollar is stronger to start the new trading week as European markets continue to worry about Spain and Italy needing a bailout, comments from the EU about the Spanish situation and the fact that Spain has to go the market this week all weighed on the Euro.  EURO.USD broke below the 1.3000 level for the first time in months as the Euro continues to trade with a weak bias.

In an interesting development last night the Chinese Government increased the range which they allow the Yuan to trade in against the world's currencies. As I have mentioned before China artificially controls the value of their currency in an effort to make the cost of their exports cheaper, the US has long had a problem with this policy as they argue that it gives China an uneven trade advantage, they have been lobbying for China to allow the Yuan to free-float on world markets with little success, this increase in the market band is a big development but a long way from what the USA wants. I think it also sends a positive signal to world markets, China must think their economy will have strong growth as if they were worried about the economy they would not have taken this action.

The Canadian Dollar is back near parity and considering the moves overnight by the US Dollar, the Loonie is actually fairing quite well, with the weaker Euro and Sterling the Loonie may be poised to make up some ground against those currencies as well.

Up tomorrow we get the Bank of Canada interest rate announcement and while there is little chance of a rate hike if they hint at a hike earlier than the late 2013 the Loonie will take off and be back at .9900 very quickly.

For  today we have the release of the Canadian Wholesale Trade report for February and with equity markets pointing higher in North America look for USD.CAD to trade above par at some point today, overall I am not expecting much of a range ahead of the Bank of Canada announcement tomorrow.

Have a great week

Mike

GFX Morning Currency Rates
Monday, April 16 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9986			0.994
CAD/USD		1.0014			1.006
EUR/USD		1.3027			1.6164
EUR/CAD		1.3011			1.3084
STG/CAD		1.582			1.5833
AUD/CAD		1.0339			1.0341
CAD/JPY		80.79			81.48
CAD/CHF		0.9236			0.9182
CAD/HKD		7.7592			7.8079
CAD/CNY		6.3206			6.337
CAD/MXN		13.2568			13.1742
Commodities
Gold		$1,649			$1,674
OIL		$102.56			$103.26
Option Volatility
Canada
O/N		11.30%			6.88%
1 Week		8.67%			8.38%
1 Month		8.42%			8.36%

Today's Calendar

USA
None

CANADA
Wholesale Trade for February    08:30