GFX Morning FX Commentary February 28th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0210-1.0280

Today’s expected range for the Canadian Dollar against the Euro is 1.3420-1.3490

Today’s expected range for the Canadian Dollar against Sterling is 1.5550-1.5620

The US Dollar is marginally stronger against the Euro this morning as the Dutch Government said that it would not meet the deficit reduction target mandated by the EU for its budget, I guess we have a new player to the table now in Europe. Please move over Spain, Ireland, Portugal and Greece, I wonder what the new acronym will be, PINGS maybe? Euro traded down to a low of 1.3100 overnight before recovering a bit this morning.

Sterling seems to be making a bit of a base at the moment as it is trying to fight back higher after this week’s rapid fall, GBP.USD is back trading above 1.5200 for the moment, I still favour a weaker Sterling over the short-term but the Pound may stabilize for the next few days. I did read a report that Lloyds Bank in the UK is predicting that GBP.USD will be at 1.4800 by the end of the year, I don’t place much faith in currency strategist predictions but Sterling should be lower in the coming months.

My comments yesterday that the longer we hung around 1.0300 without breaking above that level the more likelihood that USD.CAD would move back lower came to pass yesterday afternoon as the US Dollar traded lower all afternoon. We are back near the 1.0250 level so we will see if USD.CAD can continue this move lower or will it resume its attempt on 1.0300.

Up today we get the release of the US 4^th Quarter GDP report and markets will be watching to see if the US economy is meeting growth expectations. If the number falls below expectation then I think you will see equities take a big hit as the combination of a slowing economy and the budget cuts that are starting to take affect will get investors running for the hills. Today could be a very volatile day in the currency markets.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0234			1.0264
CAD/USD		0.9771			0.9745
EUR/USD		1.3114			1.31
EUR/CAD		1.3423			1.3448
STG/CAD		1.5553			1.5539
AUD/CAD		1.0505			1.0455
CAD/JPY		90			89.26
CAD/CHF		0.9087			0.906
CAD/HKD		7.5556			7.5365
CAD/CNY		6.0765			6.0639
CAD/MXN		12.4934			12.5214
Commodities
Gold		$1,590			$1,605
OIL		$92.66			$92.90
Option Volatility
Canada
O/N		8.50%			8.50%
1 Week		7.60%			7.94%
1 Month		6.98%			7.39%