GFX Morning FX Commentary Nov 8th, 2012

Good Morning

Today’s expected range for the Canadian Dollar against the US Dollar is .9925-1.0025

Today’s expected range for the Canadian Dollar against the Euro is 1.2670-1.2750

Today’s expected range for the Canadian Dollar against Sterling is 1.5910-1.6000

The equity markets did not give Obama much time to enjoy his re-election, yesterday saw the Dow Jones drop over 2.5% as investors are getting very nervous about what the first quarter of next year will bring, if a compromise is not reached on the “Fiscal Cliff” in the next few weeks look for the US economy to be close to a recession by the end of the first quarter next year, (it sounds more like a Fiscal Steep Slope than an actual cliff). We now have to get ready for just  massive amounts of rhetoric from US law makers on how everybody has to work together to get this situation solved, I think the next few weeks in the US will be very tough to take.

Overnight saw the US Dollar continue to get stronger against the Euro, the recent spate of poor data out of Germany will continue to weigh on the Euro and give some strength to the Greenback. The Euro was not able to get any bounce from the Greek Parliament passing the lasted austerity budget, I guess it was the 48 hour strike and the riots in the streets that made Euro investors nervous. The next tranche of funds from the ECB is now free to be released to Greece so the EU stays whole for another day. This morning the EU announced that they were keeping interest rates at current levels and the markets will now look to Governor’s Draghi’s press conference in a short while for further direction.

The Canadian dollar was hammered yesterday on the weak US stock markets and the surging US dollar. After the election the Loonie reacted as it through it would looking to break below the .9900 level but after the equities markets threw Obama under the bus the Loonie had no chance of getting stronger and USD.CAD moved back towards parity. It look like this morning that equities are going to recover a bit so USD.CAD may move back towards .9950 but I am now looking for more volatility in the coming weeks both with equities and currencies, I think we are heading into interesting times.

In reaction to stocks being hit hard yesterday, Finance Minister Flaherty said in the house of commons that if the US moves into recession it is almost sure to follow that Canada will as well and that they stand ready to take action(there goes the deficit again). Prime Minister Harper is over in India and said that while the US is our most important trading partner today Canadian business should be looking to diversify to places like India, what a helpful comment. If anybody needs a Rupee price today I can get you one!!

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9967			0.99
CAD/USD		1.0033			1.01
EUR/USD		1.2739			1.2816
EUR/CAD		1.2699			1.2687
STG/CAD		1.5986			1.5827
AUD/CAD		1.035			1.0324
CAD/JPY		79.83			81.06
CAD/CHF		0.9495			0.9513
CAD/HKD		7.7533			7.8088
CAD/CNY		6.2731			6.3133
CAD/MXN		13.1299			13.0681
Commodities
Gold		$1,719			$1,724
OIL		$85.34			$87.88
Option Volatility
Canada
O/N		9.52%			9.50%
1 Week		6.77%			6.90%
1 Month		6.29%			6.50%