GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0125-1.0225

Today's expected range for the Canadian Dollar against the Euro is 1.2300-1.2400

Today's expected range for the Canadian Dollar against Sterling is 1.5760-1.5875

The US Dollar is much stronger this morning as the last trading week for July gets underway in North America. Reports coming out of Spain that 6 Regional Governments are going to tap the EU rescue fund because they can no longer raise funds in the open market have smashed equity markets and  driven the Euro lower falling below 1.2100 against the US Dollar for the first time in over two years. There is a clear sentiment among global investors  that the EU leadership is not doing enough to solve this problem and this jumping from crisis to crisis will continue for some time yet making financial markets very nervous. There are also reports that the IMF is heading to Greece this week and given the sentiment that they cannot achieve their austerity targets they may consider turning off the tap which would leave Greece in default situation by mid-September, on all of these developments EURO.USD fell to trade as low as 1.2080 before recovering a little this morning. One leading currency strategist in London who I know quite well stated on Bloomberg this morning that he sees EURO.USD trading at parity at some point. For that to happen I think you would need to see a complete meltdown of the EU, for now let's just say the Euro will continue to trade with a weak bias.

The Canadian dollar is weaker against the US Dollar and other currencies as it suffers from the strong dollar and weaker commodity prices. As I walked in this morning BNN was reporting that once again our natural resources were being sold to China. This morning CNOOC (China’s top offshore oil producer) announced they had reached a deal to purchase Nexen for $15.1 Billion in cash, this deal will need Government approval and is scheduled to close at the end of January, but such a deal if it closes will have a positive short-term effect on the Loonie.

With the Dow Jones and TSX going to open much lower I would expect USD.CAD to continue to test higher and we may see the 1.0200 level hit again today . Once again this highlights by point last week that US Dollar buyers needed to lock some USD in below the 1.0100 level, anytime the Loonie gets stronger that strength will come in a gradual motion but when it goes the other way it will be quicker and more volatile.

Have a great week

Mike

GFX Morning Currency Rates
Monday July 23rd, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0160			1.0085
CAD/USD		0.9842			0.9915
EUR/USD		1.2123			1.2231
EUR/CAD		1.2319			1.2336
STG/CAD		1.5786			1.5831
AUD/CAD		1.0454			1.0495
CAD/JPY		76.9100			77.8300
CAD/CHF		0.9745			0.9730
CAD/HKD		7.6324			7.6496
CAD/CNY		6.2845			6.2874
CAD/MXN					13.1216
Commodities
Gold		$89.06			$90.49
OIL		$1,570.85			$1,581.80
Option Volatility
Canada
O/N		11.46%			7.40%
1 Week		8.36%			7.76%
1 Month		8.23%			7.47%

No Economic Releases Today.