GFX Morning Commentary December 4th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9900-.9960

Today’s expected range for the Canadian Dollar against the Euro is 1.2980-1.3050

Today’s expected range for the Canadian Dollar against Sterling is 1.5970-1.6050

The US Dollar is marginally weaker this morning as the Euro has jumped on positive news out of Europe. In Greece the government as part of their agreement with the EU rescue fund and started a bond buying program which they agreed to back in March, private investors have until Friday to sign up to sell their Greek Government bonds back to the Greek Government at 32% to 40% of their face value. Most investors feel that this is the best they could hope for so they will jump at this opportunity, this will reduce the overall Greek debt and private investors will be losing over 100 million Euro on their investments. In Spain the government also announced that the Spanish bank bailout has gone through, this is not a full bailout of Spain, that is yet to come, this round is just to prevent a collapse of their banking system. I am not sure this Euro centric optimism can be maintained but for the moment the Euro seems to be on a bit of a roll.

Last night saw the Reserve Bank of Australia lower its lending rates by 0.25% to a record low 3.0%, the Aussie Dollar actually jumped on the news which is a bit surprising as local currencies usually drop when a central bank lowers it interest rate.

The Canadian Dollar had another quiet night on the Asian and European trading markets, nothing new to report as it is still firmly stuck between .9900 and .9950, we may see some breakout today as the Bank of Canada is about to release its last interest rate policy announcement for the year. We are not expecting any change to the interest rate but given the apparent slowdown in the Canadian economy we may see a change in tone from the Bank. Previously they would have been looking for an opportunity to raise interest rates to stem the increase in household debt but with the slowdown in growth in Canada they may want to start hinting at cutting rates next year, my guess is that they will indicate that the  outlook for the economy is turning negative but they will not hint at change to policy.  If I am right the USD.CAD should break a little higher throughout the day. I will send out an alert shortly after the announcement at 9:00 am.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.994			0.9925
CAD/USD		1.006			1.0075
EUR/USD		1.308			1.3028
EUR/CAD		1.3003			1.2933
STG/CAD		1.6029			1.5933
AUD/CAD		1.041			1.0348
CAD/JPY		82.45			82.76
CAD/CHF		0.9325			0.9321
CAD/HKD		7.7756			7.7834
CAD/CNY		6.26			6.2726
CAD/MXN					13.0227
Commodities
Gold		$1,709			$1,717
OIL		$86.86			$88.98
Option Volatility
Canada
O/N		6.50%			6.90%
1 Week		5.00%			5.20%
1 Month		4.80%			5.10%