GFX Morning FX Commentary January 31st, 2013

Good Morning

Today's expected range for the Canadian Dollar against the US Dollar is .9980-1.0060

Today's expected range for the Canadian Dollar against the Euro is 1.3550-1.3625

Today's expected range for the Canadian Dollar against Sterling is 1.5810-1.5900

The US Dollar is marginally stronger this morning as a poor German Retail Sales report has investors questioning the extent of the Euro-Zone recovery. The EURO.USD bounced lower after it traded at a 13-month high at 1.3584, I would now think with the recent strength in the Euro that we should start to see some resistance build up as EURO.USD reaches 1.3600, I would not be surprised to if we were to see the Euro start to pullback a bit from these levels.

Yesterday the US Federal Reserve indicated that the US economic expansion was slowed by “transitory issues” in the fourth quarter of last year, in their statement they showed no signs of ending their stimulus program anytime soon. There was virtually no reaction to this announcement by the currency markets as it really is just a stay the course plan, going forward over the next month it should be equity market positive and US Dollar negative.

The Canadian Dollar continues to trade in narrow overnight ranges as it awaits its next move, it seems to be favouring a break back below par which would not be surprising as anytime we see significant movement higher for USD.CAD over a short-period like we have in the past week we usually get some kind of a pull back before the next move. US Dollar buyers may want to think about leaving some orders close to the market to take advantage of this move.

Up today we get the release of the Canadian GDP report for November where we are expecting a growth rate of 0.2% which, given the US slowing economy would not be a bad number. If the number is less than expectation and shows a slowing Canadian economy then we should see some fireworks and USD.CAD should move back higher. We do also get some secondary US data this morning as market set up for tomorrow morning’s US Employment report, there is a very good chance that we could see some enhanced volatility this morning.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0024			1.002
CAD/USD		0.9976			0.998
EUR/USD		1.3548			1.3543
EUR/CAD		1.3584			1.3574
STG/CAD		1.5829			1.5806
AUD/CAD		1.041			1.0451
CAD/JPY		90.76			91.06
CAD/CHF		90.9			0.9147
CAD/HKD		7.7164			7.7373
CAD/CNY		6.2			6.2058
CAD/MXN					12.6836
Commodities
Gold		$1,675			$1,664
OIL		$97.75			$97.88
Option Volatility
Canada
O/N		10.36%			10.79%
1 Week		6.84%			7.13%
1 Month		6.28%			6.51%