GFX Morning Commentary February 7th, 2012

Good Morning,

Todays suggested range for the Canadian dollar against the US Dollar is .9950 – 1.0050.

Todays suggested range for the Canadian dollar against the Euro is 1.3060-1.3200

Todays suggested range for the Canadian dollar against Sterling is 1.5760-1.5900

Apologies for sending this twice we continue to have issues cutting and pasting to the blog. here it is again.

The US Dollar is marginally weaker this morning as the world's financial markets await any news out of Greece. Equity markets have stabilized in the hope that some resolution will be achieved this week and the money will be allowed to flow through for the 2nd bailout but before that happens all Greek political parties must agree another 600 million in cuts for this year or the IMF will stop the flow of funds and Greece will default.

Of interest last night was the Reserve Bank of Australia keeping its key interest rate unchanged at 4.25% where it was widely expected that they would cut rates 0.25%, the Aussie dollar soared on this development as it signaled to the markets that maybe things are not as bad as they seem. Also last night it was announced that the Central Bank of Japan was quietly intervening in the currency markets selling massive amount of yen to try and help stem the yen from appreciating, two very different central bank approaches to manipulating the value of their currency.

The Canadian dollar is marginally stronger this morning but had a very quiet night with little trading volume. We still favour a stronger Canadian dollar over the next few days but everything will depend on what happens with Greece, a resolution to the problem and USD.CAD will move towards .9900, more uncertainty and we will move towards the 1.0100 level.

or today with no major economic data due out look for a narrow trading range with USD.CAD testing paity at some point which I think represents good short-term value for US Dollar sellers.

Have a great day
Mike

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

Tuesday, February-07-12

Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1			0.9985
CAD/USD		1			1.0015
EUR/USD		1.3162			1.3138
EUR/CAD		1.3162			1.3121
STG/CAD		1.583			1.5806
AUD/CAD		1.0692			1.0696
CAD/JPY		76.24			76.18
CAD/CHF		0.915			0.9181
CAD/HKD		7.5555			7.7651
CAD/CNY		6.3027			6.3075
Commodities
Gold		$1,758			$1,749
OIL		$96.70			$97.06
Option Volatility
O/N		8.50%			13.75%
1 Week		10.00%			10.50%
1 Month		10.00%			9.90%

EURO STEADY DESPITE GREEK UNCERTAINTIES

Europe’s single currency is holding steady despite worse than expected German industrial production and the uncertainty surrounding Greece. A lot of the downward pressure for the Euro appears limited given the market remains heavily short. Stocks and commodities are slightly lower with risk appetite waning. In a surprise move overnight the Reserve Bank of Australia left interest rates alone at 4.25% with the market widely expecting a quarter point drop. The Australian dollar following the announcement quickly gained a full cent against the USD. Meanwhile our Loonie was held to extremely tight ranges overnight with no significant economic data due out this week. Today in Canada building permits for December is the lone data, with nothing out in the U.S. Dow futures are pointing down by 20 in pre-market trading and will be watching for any headlines on the Greek debt restructuring.

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