GFX Morning Commentary march 6th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0225-1.0325

Today’s expected range for the Canadian Dollar against the Euro is 1.3400-1.3475

Today’s expected range for the Canadian Dollar against Sterling is 1.5500-1.5575

The US Dollar is marginally stronger this morning is a very quiet overnight session. I think the market is getting set up for the US employment report due out tomorrow so trading has been light the last couple of days. Up today we do get the ADP employment report and later this afternoon we get the Beige Book report on the overall economy but barring any surprises the US Dollar should remain relatively stable ahead of tomorrow morning.

Sterling is a bit weaker this morning as the Bank of England begins their committee meeting and they will be looking at the UK economy to see if more stimulus needs to be added. The numbers out of the UK have been weak lately so there is an argument for increased stimulus, we will have to see what they say tomorrow when their statement is released.

The Canadian dollar continues to trade within recent ranges so nothing new to report this morning, all Canadian Dollar trades will be watching the Bank of Canada announcement due out today at 9:00am. Previously to this announcement the Bank of Canada had what is called a tightening bias in place which means they favoured hiking interest rates but now with the economy clearly slowing down some BOC watchers feel they might take this bias out of their statement and even a few more think they have room to start hinting at an interest rate cut. I think they will take a more pragmatic approach and they will say concern about the economy is growing but they do not see the need to reduce interest rates at this time, It makes sense that they delay any possible rates hikes to further into 2014. If the report is highly negative and indicates the Bank has growing concern about the economy then look for USD.CAD to move quickly above 1.0300, if they stay the course and indicate better growth for the economy in the 2^nd half of 2013 then I think you will see USD.CAD break below 1.0250 and set up for a test of 1.0200 at some point.

Either way I think it will be a volatile morning.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0283			1.0265
CAD/USD		0.9725			0.9742
EUR/USD		1.3042			1.3032
EUR/CAD		1.3413			1.3379
STG/CAD		1.552			1.5554
AUD/CAD		1.0566			1.0495
CAD/JPY		90.84			90.71
CAD/CHF		0.9175			0.9177
CAD/HKD		7.5206			7.536
CAD/CNY		6.218			6.0575
CAD/MXN		12.3507			12.4053
Commodities
Gold		$1,575			$1,582
OIL		$90.73			$90.28
Option Volatility
Canada
O/N		11.16%			10.42%
1 Week		7.83%			8.13%
1 Month		6.93%			7.22%