GFX Morning Commentary February 24th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9930-1.0030

Today’s expected range for the Canadian Dollar against the Euro is 1.3370-1.3500

Today’s expected range for the Canadian Dollar against Sterling is 1.5750-1.5875

The US Dollar is marginally weaker this morning as the Euro continues to show signs of strength on the resolution of the Greek situation, that being said the FX markets are still unusually quiet as the overall volatility in the FX markets has reached a three year low, Bloomberg is reporting that currency volatility has not been this low since August of 2008, just before the collapse of Lehman Brothers. The Euro at the moment seems to be on a bit of a run and while I still think we will see a weaker Euro in the medium-term it is pretty hard to sell Euro at these levels if the short-term trend is going to push it higher, EURO.CAD has also pushed higher  so anyone needing Euro against Canadian Dollar should look at a pullback of EURO.CAD to 1.3325 as a good short-term buying opportunity

Canadian Dollar trading was virtually non-existent in the overnight market as the trading range for USD.CAD was incredibly narrow, we basically are opening this morning where we closed it at 4:30 Toronto time Yesterday, until overall volatility retruns to the currency market (and it will return, I have seen markets like this before) Canada will stay on the sidelines.

For today we have the release of the US new home sales report in the and it is expected to once again show a jump in home  sales, continued further evidence of a recovery unfolding in the USA. North American Equity market will like this report and should push higher again today, USD.CAD should drop a little affording US Dollar buyers a chance to pick up a little extra value, if the report is weaker than expectation USD.CAD should push a bit higher  back above parity, if US Dollar sellers  do see USD.CAD above parity I think they should jump all over it as we will see further movement back and forth around par for some time yet

Have a great weekend and try and stay out of the weather, I feel really bad for the people at the weather network, they have had nothing to  talk about all winter and finally a storm is on the way and it turns out to be a big dud so far, it must be tough if you are a “weather person” (incorrect  to say “weatherman” anymore).

 Mike

GFX FOREIGN EXCHANGE MORNING UPDATE

Friday, February-24-12

Market Indicators                              * For current market prices please contact our currency advisors or visit our
                                                                  on line site at www.gfxpartners.ca *

Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.997			0.9978
CAD/USD		1.003			1.0022
EUR/USD		1.3413			1.3298
EUR/CAD		1.3374			1.3272
STG/CAD		1.576			1.5683
AUD/CAD		1.0708			1.067
CAD/JPY		80.72			80.28
CAD/CHF		0.9004			0.9078
CAD/HKD		7.7763			7.7698
CAD/CNY		6.3134			6.3089
Commodities
Gold		$1,782			$1,778
OIL		$108.30			$106.41
Option Volatility
Canada
O/N		7.06%			11.00%
1 Week		8.50%			8.51%
1 Month		8.61%			8.95%