GFX Morning FX Commentary, Sept 6th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9850-.9950

Today's expected range for the Canadian Dollar against the Euro is 1.2450-1.2550

 

Today's expected range for the Canadian Dollar against Sterling is 1.5700-1.5800

The US Dollar is weaker this morning as equity markets are higher on the expectation that ECB Governor Draghi will cut EU interest rates this morning and them more importantly announce an "unlimited sterilized" bond buying program to help indebted nations get access to cheaper money becoming in reality the lender of last resort to these countries. I am not sure I fully understand what Sterilized means but I think they will be buying bonds with a maturity of a maximum term of three years and then redeeming longer term bonds so they don't actually add any new money to the system. The last piece I read was the German Bundesbank (German central bank) was opposed to this program so it will be interesting to see how this discord is contained moving forward. EURO.USD opens the day above 1.26 and if this program is implemented it should jump higher.

As I write the commentary the ECB has announced that they are keeping interest rates at 0.75% so they in fact did not cut rates as planned. This announcement will put even more pressure on Draghi to announce program to support the Euro, if he does not announce anything know then the Euro will get smashed.

Also on interest rates overnight the Swedish Central Bank unexpectedly cut their interest rate citing the high values of the Kronar was hurting exporters. The bank of England also kept their interest rate at 0.5% and did not announce any new quantative easing measures, the UK economy continues to stumble along towards recession.

The Canadian Dollar recovered what it gave up yesterday as it still trades in narrow ranges. Any movement today will come out of the ECB announcement, if equity markets like the plan then USD.CAD will move back towards .9850 and if it is not well received we will move towards .9950.

Have a great day

Mike

GFX Morning Currency Rates
Thursday September 06, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.988			0.988
CAD/USD		1.012			1.012
EUR/USD		1.2619			1.2542
EUR/CAD		1.2468			1.2395
STG/CAD		1.5714			1.5702
AUD/CAD		1.0118			1.0062
CAD/JPY		79.38			79.3
CAD/CHF		0.9654			0.9685
CAD/HKD		7.8293			7.827
CAD/CNY		6.4179			6.4229
CAD/MXN		13.2522			13.3602
Commodities
Gold		$1,709			$1,963
OIL		$96.48			$95.04
Option Volatility
Canada
O/N		9.00%			7.87%
1 Week		6.93%			6.94%
1 Month		6.79%			6.78%