GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0140-1.0240

Today's expected range for the Canadian Dollar against the Euro is 1.2350-1.2450

Today's expected range for the Canadian Dollar against Sterling is 1.5760-1.5860

The US Dollar is weaker this morning as the Euro has received a push higher from comments made by one of the ECB members that the EU rescue fund could be given a brand new banking license which would create the advantage of allowing the European Central Bank to lend directly to the fund, presently their charter cannot do that. This to me is yet another example of the EU leadership reaching at straws to try and solve this problem, the only solution in my mind  is for the EU to issue joint bonds with each nation guaranteeing each other debt but with the political division in Europe this will never happen so the crisis will continue. The rise in the Euro was pared backed by the German Business Confidence report that showed confidence in the economy continues to slip which of course will only lead to less investment.

Readers may recall that a few months back I reported that the Swiss National Bank (Swiss Central Bank) announced that they were setting a floor for the Swiss Franc (CHF) against the Euro to prevent their currency from getting stronger and hurting their export market. The floor for EURO.CHF was set at 1.2000 and with the weakness in the Euro over the last month the SNB has been in the currency market buying Euro's to defend this level, it is estimated that to date they have bought some 20 Billion Euro helping to prop up the Euro. I could only imagine where the Euro would have gone if they had backed off this commitment which they may be forced to do at some point, no single institution is bigger than the market.

With the weakness in the US Dollar overnight the Loonie has pulled back some strength and USD.CAD is back below the 1.0200 level but still trading in narrow ranges. The only economic date of any significance is the US New Home Sales report for June so we may get some volatility if the number still points to a recovery in the US housing markets but barring any surprises USD.CAD should stay range bound today.

Have a great day

Mike

GFX Morning Currency Rates
Wednesday July 25th, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0178			1.0192
CAD/USD		0.9825			0.9811
EUR/USD		1.2144			1.2083
EUR/CAD		1.2360			1.2321
STG/CAD		1.5785			1.5800
AUD/CAD		1.0469			1.0468
CAD/JPY		76.82			76.69
CAD/CHF		0.9712			0.9743
CAD/HKD		7.6194			7.6080
CAD/CNY		6.2757			6.7641
CAD/MXN		13.3734			13.4125
Commodities
Gold		$88.57			$88.54
OIL		$1,591.00			$1,572.90
Option Volatility
Canada
O/N		12.55%			11.64%
1 Week		9.43%			8.47%
1 Month		8.90%			8.26%

Today's Economic Calendar

USA
New Home Sales for JUne (10:00)

CANADA
None