GFX Morning FX Commentary November 9th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9975-1.0040

Today’s expected range for the Canadian Dollar against the Euro is 1.2710-1.2800

Today’s expected range for the Canadian Dollar against Sterling is 1.5930-1.6000

The US Dollar is stronger this morning as the “Fiscal Cliff” concerns keeps driving equities lower, the Dow Jones is set to have its worst week in 5 months as the markets are telling law makers to get a deal done or Wall Street will push the government over the cliff. I am hearing on BNN this morning that there is a clause in the legislation that allows for a 6 month extension to be applied, if this is the case then US lawmakers will absolutely take advantage of this and “kick the can down the road” as I heard this morning. Given that US numbers have been fairly positive recently I think equities are vastly over reacting to this problem and should start to pull back once the Cliff has been addressed.

The Euro is also lower on once again poor manufacturing data, this time out of France and Sweden, there were also reports yesterday that the EU troika will delay the payments to Greece to make sure they are meeting their targets. I just can’t see the Euro holding any strength with the crap that is coming out of the union. As I write the Greek Finance minister has made a statement that Greece’s cash reserves are almost depleted, what a mess!!

The Canadian Dollar continues to trade weaker on the back of weak equity markets and a stronger US Dollar, but for the most part it is actually showing a strong resilience. When I heard what had happened with overseas equities overnight I thought that USD.CAD would have blown through parity but it was basically right where we left it, on the doorstep of parity as it tries to come up with its next move. I think USD.CAD will go higher but there are so many USD sell orders above par that it will take some time to get a considerable move.

Up today we get some US data including Consumer Sentiment so we could see some enhanced volatility, if the numbers are overly negative then you will see equities get hit hard again and USD.CAD will jump, if the numbers are positive then equities will still fall but not as much, US Dollar buyers need to be ready to purchase on any pullback towards .9975

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0003			0.9967
CAD/USD					1.0033
EUR/USD		1.2718			1.2739
EUR/CAD		1.2726			1.2699
STG/CAD		1.5944			1.5986
AUD/CAD		1.0393			1.035
CAD/JPY		79.12			79.83
CAD/CHF		0.9469			0.9495
CAD/HKD		7.7471			7.7533
CAD/CNY		6.2443			6.2731
CAD/MXN					13.1299
Commodities
Gold		$1,731			$1,719
OIL		$84.85			$85.34
Option Volatility
Canada
O/N		6.35%			9.52%
1 Week		6.65%			6.77%
1 Month		6.46%			6.29%