GFX Morning Commentary, March 30th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9920-1.0020

Today's expected range for the Canadian Dollar against the Euro is 1.3270-1.3400

Today's expected range for the Canadian Dollar against Sterling is 1.5940-1.6075

The US Dollar is marginally weaker this morning as the EU Finance Ministers begin their 2-day meeting with the expectation of greatly increasing the provisions on the EU Bailout fund, anything less than 800 Billion Euro will be considered a disappointment and will be met with Euro selling.  EURO.USD which had traded as low as 1.3225 overnight rebounded this morning and traded as high as 1.3345.

The Canadian Dollar has once again rejected the parity level for the time being and USD.CAD has moved a bit lower, with North American equity markets looking for strong gains this morning I would expect the first move for USD.CAD will be to test the .9950 level. The Loonie continues to trade in tight ranges against its US counterpart and should do so for some time.

For today we do have some secondary US data and the Canadian GDP data for January were we are expecting a monthly growth rate of 1.7% (on an annualized basis) but overall I think the expected jump in the equity markets will push USD.CAD a bit lower and this data will be ignored by the currency markets.

The markets have pretty much ignored the Canadian budget as it contained very few surprises, I thought I would provide a couple personal observations on the budget, with cuts and attrition coming for some 19k public sector employees and with the pay freezes in the public sector in Ontario I look for massive labour conflicts in the coming year which I think can be disruptive to the overall economy. I will watch with interest what the inflationary pressures of the removal of the penny will be to the economy and what it will mean for Government tax revenue. Everything you buy will be forced up by a minimum of $0.05c, imagine the increased Government revenue just on gasoline sales alone!! While I agree the penny has to go, make no mistake it will cost us that little bit more and increase Government revenue significantly.

Have a great weekend

Mike

GFX Morning Currency Rates
Friday, March 30th, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9964			1.0002
CAD/USD		1.0036			0.9998
EUR/USD		1.334			1.328
EUR/CAD		1.3294			1.3286
STG/CAD		1.5953			1.588
AUD/CAD		1.0363			1.0347
CAD/JPY		82.34			82.23
CAD/CHF		0.9057			0.9069
CAD/HKD		7.7906			7.7644
CAD/CNY		6.317			6.306
CAD/MXN		12.8179			12.8117
Commodities
Gold		$1,665			$1,656
OIL		$103.30			$104.87
Option Volatility
Canada
O/N		7.00%			11.15%
1 Week		8.80%			8.55%
1 Month		8.50%			8.62%