GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9675-.9850

Today’s expected range for the Canadian Dollar against the Euro is 1.2550-1.2660

Today’s expected range for the Canadian Dollar against Sterling is 1.5660-1.5800

The US Dollar is marginally weaker this morning in quiet overnight FX trading markets as the Euro continues to show signs of strength ahead of today’s US Federal Reserve announcement and the possibility of QE3. One of the market indicators that I keep an eye on is the overnight volatility index, it is  a measure of volatility that the currency option market assign to the likelihood that a currency will move in either direction, it does not indicate which direction it will  move it just gives an idea if a particular currency will have an active day. This morning we were able to observe that overnight volatility index doubled from what it usually is trading at which simply put means that the US Dollar should have a very busy day after the Fed announcement, it does not indicate which way the dollar will move just that the options market thinks it will be a very volatile day.  As we said yesterday if the Fed announces QE3 then equities will jump higher and the US Dollar will get weaker, if they do very little to add stimulus then equities will drop off and the US Dollar will get stronger. Most economist still favour the QE3 model but I am betting that they hold off and just say they will extend low interest rates until 2015.

Nothing to report in the CAD range last night, the Loonie continues to hold onto recent strength as it awaits the 2:15 announcement this afternoon, if it is positive for QE3 USD.CAD should drop below .9700 and if the policy does not have any new stimulus USD.CAD should be up near .9850 very quickly, kind of like going to a casino and putting your money on Black or Red. If you need to do something and you don’t want to take this kind of risk give us a call before 2:00 and we can lock you in at current rates.

I will send out an update shortly after the Fed announcement.

Have a great day

Mike

GFX Morning Currency Rates
Thursday September 13, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9758			0.9735
CAD/USD		1.0248			1.0272
EUR/USD		1.2904			1.292
EUR/CAD		1.2594			1.2578
STG/CAD		1.5724			1.5683
AUD/CAD		1.0183			1.0214
CAD/JPY		79.58			79.89
CAD/CHF		0.9613			0.9605
CAD/HKD		7.9243			7.9444
CAD/CNY		6.4839			6.4969
CAD/MXN		13.3635			13.3129
Commodities
Gold		$1,733			$1,747
OIL		$97.15			$97.75
Option Volatility
Canada
O/N		13.40%			7.43%
1 Week		8.40%			7.56%
1 Month		6.71%			6.67%