GFX Morning FX Commentary, July 20th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0100-1.0175

Today's expected range for the Canadian Dollar against the Euro is 1.2360-1.2450

Today's expected range for the Canadian Dollar against Sterling is 1.5780-1.5850

The US Dollar traded stronger for most of the night as comments from Chinese officials about a tough employment market in the months ahead pushed Asian equities lower and gave the USD some strength, in fact I read this morning that the US Dollar index (an index used to track the Greenback against a wide variety of currencies) is just 1% from an all-time high, clearly the weak equity markets have had a major influence on investors moving money into US treasuries and pushing the Greenback higher. The Euro was also hit on comments from German Chancellor Merkel that stated the “European project” is at risk unless policy makers work harder, once again we see misguided comments from officials that are supposed to be leading a solution to this crisis affect the financial markets.

In the UK the Bank of England minutes from their last interest rate policy meeting showed that the UK is considering an interest rate cut to stimulate the economy, they also reported that the unemployment rate dropped to 8.1% with 181K new jobs having being created, Sterling like Euro traded weaker throughout the morning session and looks to continue that trend for the rest of the day.

Yesterday saw Fed Chairman Bernanke state that the Fed remains ready to provide further stimulus if they feel it is warranted, the markets thought that was a very tepid statement and equities traded weaker right after his comments. Today Bernanke is in front of the House Finance committee but I imagine that he will just be repeating everything he said yesterday

The Canadian Dollar did stage a very brief rally after the Bank of Canada report yesterday, but it was not able to extend any further gains and we continue to trade in this 1.0100 to 1.0200 trading range. Up today we do get the Bank of Canada Monetary Policy Report which will expand on what they said yesterday, I don’t think we will get any surprises from this report so the intra-day effect on the Loonie from this report will be minimal.

With only secondary data out of the US and Canada today, I am not expecting any big moves for USD.CAD, with equity markets pointing lower today I would not be surprised if the Loonie weakens off a little against the USD but overall we should continue in current ranges. With the weakness in Euro and Sterling the Loonie should be able to trade stronger against those currencies.

Have a great day

Mike



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GFX Morning Currency Rates
Wednesday June 20th, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0129			1.0226
CAD/USD		0.9873			0.9777
EUR/USD		1.2238			1.2612
EUR/CAD		1.2398			1.2899
STG/CAD		1.5805			1.6025
AUD/CAD		1.0443			1.0379
CAD/JPY		77.93			77.14
CAD/CHF		0.9684			0.9306
CAD/HKD		7.6496			7.5829
CAD/CNY		6.2826			6.2146
CAD/MXN		12.9918
Commodities
Gold		$1,578.60			$1,630.08
OIL		$88.89			$83.14
Option Volatility
Canada
O/N		10.20%			15.35%
1 Week		7.98%			10.68%
1 Month		7.88%			9.94%

Today's Economic Calendar

USA
Housing Starts & Building Permits for June (08:30)
Beige Book (14:00)

CANADA
BoC Monetary Policy Report (10:30)