Friday November 30th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9880-.9960

Today’s expected range for the Canadian Dollar against the Euro is 1.2860-1.2940

Today’s expected range for the Canadian Dollar against  Sterling  is 1.5880-1.5950

The US Dollar is marginally weaker this morning against the Euro as the currency markets traded in very narrow ranges and were for the most part dominated by Yen trading, EURO.JPY rose to a 6th month high.  Japan the 3^rd largest economy in the world is facing some tough challenges, it has basically lost a decade due to low growth and now in the midst of an upcoming election the debate rages on whether the Bank of Japan and the new government should provide much more stimulus. The US Dollar was also influenced by comments yesterday afternoon from Speak Boehner that they were not getting any closer to a deal with the President, look for the rhetoric to continue.

In Europe The EU unemployment report showed that unemployment rose to 11.7% up from 11.6% as 18.7 million workers are unemployed, Spanish unemployment is expected to go to 27% shortly. How can an EU with employment tax revenue falling, social costs rising expect to fund a debt crisis in the coming months, this situation will hit the tipping point at some point.

The Canadian Dollar is right where we left it last night, I don’t know if it really traded at all last night. Each of the Canadian banks would have a treasury staff at one of their foreign branches managing the banks FX positions, I  am not sure how any of these traders would be able to justify their salaries in these current environments, if this was to continue I would expect large layoffs at some of the Canadian banks. After all RBC only made a $1.9B for the 4^th quarter so they would not want any pesky trader cost’s eating into that profit.

Up today I am hopeful that we will see some volatility around the release of the Canadian GDP for the month of September and the end of the third quarter, year over year we are expecting a growth rate of 1.2% which is certainly lagging behind the numbers reported yesterday by the US at 2.7%. Both numbers are not very exciting but at 1.2% there is really no growth in the Canadian economy and certainly no meaningful job creation will occur. If the number disappoints then look for USD.CAD to move up towards .9950 very quickly.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9925			0.9914
CAD/USD		1.0075			1.0086
EUR/USD		1.3011			1.2986
EUR/CAD		1.2915			1.2878
STG/CAD		1.2929			1.5882
AUD/CAD		1.0349			1.0371
CAD/JPY		83.26			82.76
CAD/CHF		0.9324			0.9344
CAD/HKD		7.7874			7.7937
CAD/CNY		6.2705			6.28
CAD/MXN		13.0132			13.059
Commodities
Gold		$1,732			$1,726
OIL		$88.21			$88.00
Option Volatility
Canada
O/N		5.00%			7.14%
1 Week		5.20%			5.27%
1 Month		5.10%			5.14%