GFX Morning Commentary February 17th, 2012

Good Morning,

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The US Dollar is weaker this morning as optimism seems to have grown since yesterday that EU leaders will reach an agreement on the 2nd bailout package for Greece. It was reported yesterday that European Central Banks were swapping old Greek Bonds for the new ones, something they would not do if they thought the Greek Government was going to default, EURO.USD which had at one point yesterday dropped below 1.3000 has traded back up above 1.3100, even GBP.USD has traded higher this morning as UK Retail Sales for January came in higher than expected so overall a good night for stocks and a bad night for the US Dollar.

The Canadian Dollar is marginally stronger this morning as USD.CAD has moved lower on the weaker US Dollar and on the jump overnight in equity markets. This morning the Canadian CPI report for January  showed an annualized inflation rate of 2.5% and a core inflation rate of 2.1%, both numbers were a little higher than expected and slightly higher than the Bank of Canada’s inflation target but I don’t think these numbers will  give the Bank of Canada any concern on a rapid rise in inflation and should allow them to keep interest rates where they are in line with their recent comments.

This morning there is a big M&A deal to talk about, Encana is selling 40% of a stage in one of its gas fields to Mitsubishi Corp. in a deal valued at $2.9 Billion, $1.45 Billion will need to be paid on closing so if Mitsubishi needs to come to the FX markets to sell Yen and buy Canada you may see the Loonie get a short-term boost against the US Dollar as well.

For today we have the US CPI report out as well but we are not expecting any great market reaction to the report, if all is as expected look for USD.CAD to test the .9950 level at some point today as equity markets are pointing higher to start the day.

GFX will be closed on Monday but the FX markets will be open, as we have seen on previous occasions it is quite possible that you can get exaggerated moves on Canadian holidays so make sure you have your orders in with us over the weekend and even if they are a bit out of the market at present levels go ahead and leave them as you never know what can happen.

Have a great Family Day weekend

Mike

GFX FOREIGN EXCHANGE MORNING UPDATE

Tuesday February 21st, 2012

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		0.996			1.0034
CAD/USD		1.004			0.9966
EUR/USD		1.3132			1.3
EUR/CAD		1.308			1.304
STG/CAD		1.5766			1.5724
AUD/CAD		1.0709			1.0705
CAD/JPY		79.39			78.49
CAD/CHF		0.9228			0.9248
CAD/HKD		7.7836			7.7278
CAD/CNY		6.3182			6.277
Commodities
Gold		$1,731			$1,718
OIL		$102.60			$101.23
Option Volatility
Canada
O/N		7.58%			12.61%
1 Week		9.04%			9.75%
1 Month		9.46%			9.76%