GFX Morning FX Commentary October 17th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9800-.9900

Today’s expected range for the Canadian Dollar against the Euro is 1.2880-1.2980

Today’s expected range for the Canadian Dollar against Sterling is 1.5890-1.6000

The US Dollar is weaker this morning as optimism keeps growing that Spain will request a bail-out in a few weeks. This morning Moody’s affirmed Spain’s debt rating as investment grade (one step above junk) on the expectation that they will request a bail-out. this sparked a rally in Spanish and Italian bonds and drove those yields lower. On this  news EURO.USD rallied to a high above 1.3100, EURO.CAD also jumped higher to trade above 1.2900 so a great night to be long Euros. This move should create further investors expectation of positive news coming out of the EU summit scheduled for Thursday and Friday where the big news may be a time extension for Greece to pay back their debt to the EU.

In the UK the Bank of England minutes were released from the October 3^rd meeting and there is division amongst the committee members on the need for more stimulus. Sterling did jump on this report but is still lagging the Euro, I think the jump in Sterling is more related to the good news coming out of Europe than any new programs to help the economy in the UK.

The Canadian Dollar is marginally stronger this morning but was once again pretty much ignored in the overnight markets trading in a very tight range. With this move in the Euro and equity markets trading higher again I am now convinced that it is only a matter of time before the Loonie rallies and we will see USD.CAD back trading below the .9800 level, It may not happen today but I think that trend will emerge.

This morning we get the release of New Housing report in the US and again it is expected to show a continuing recovery in  the US housing market which should give equities a boost and push USD.CAD a little lower. If you are holding US Dollars and need to sell them sooner than later look towards .9850 as a good level, I think any jumps in USD.CAD will be short-lived.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9839			0.9824
CAD/USD		1.0163			1.0179
EUR/USD		1.3121			1.3012
EUR/CAD		1.2913			1.2785
STG/CAD		1.5905			1.5808
AUD/CAD		1.0172			1.0043
CAD/JPY		79.97			80.22
CAD/CHF		0.9366			0.945
CAD/HKD		7.8561			7.8671
CAD/CNY		6.353			6.3722
CAD/MXN		13.0443			13.0538
Commodities
Gold		$1,751			$1,741
OIL		$92.27			$91.98
Option Volatility
Canada
O/N		8.89%			8.80%
1 Week		6.86%			6.49%
1 Month		6.68%			6.75%