GFX Morning FX Commentary, April 12th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9950-1.0050

Today’s expected range for the Canadian Dollar against the Euro is 1.3120-1.3250

Today’s expected range for the Canadian Dollar against Sterling is 1.5900-1.6025

The US Dollar is sharply weaker this morning as comments out of the EU have once again restored confidence in Euro-Zone investors (at least for this day!!). Early this morning the Euro was weaker on reports that European Industrial Production was less than expected and also on the results of the Italian bond auction that showed Italy had to pay higher interest rates to borrow money than previously expected. Once the Euro started to drop EU officials immediately came out and stated that if needed they will enter the bond market and buy more sovereign bonds easing the borrowing pressure on nations in need, as we saw yesterday on such a comment the Euro immediately jumped and this morning EURO.USD jumped off of its lows and traded to a high of 1.3170. Given the current situation Europe and the nervousness of the market I just can’t see a situation where the Euro will be able to hold onto any strength but we shall see what the resolve of the ECB actually is.

As you would expected with the weaker USD overnight the Loonie has staged a bit of a rally with USD.CAD moving lower throughout the night, overall the currency pair continues to trade with a narrow range around parity with very little on the horizon that would change my expectation for more volatility, with the jump in Euro and Sterling overnight the Loonie has also given up a bit of strength to these currencies but still is hanging in there.

Up today we get some producer inflation data out of the US and some Canadian trade data but with equity markets pointing higher for the 2^nd day in a row I would expect the Loonie to hold onto its strength and possibly test the .9975 level at some point today. If equity market start to turn negative then the extent of a USD pullback should be limited by the 1.0050 over the short-term

Have a great day

Mike

GFX Morning Currency Rates
Thursday, April 12 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9992			1.0016
CAD/USD		1.0008			0.9984
EUR/USD		1.3146			1.3148
EUR/CAD		1.314			1.317
STG/CAD		1.5947			1.5955
AUD/CAD		1.0394			1.0325
CAD/JPY		80.96			80.68
CAD/CHF		91.47			0.9117
CAD/HKD		7.7651			7.7515
CAD/CNY		6.3089			6.2938
CAD/MXN		13.0956			13.0968
Commodities
Gold		$1,657			$1,661
OIL		$103.26			$101.59
Option Volatility
Canada
O/N		11.91%			11.77%
1 Week		9.15%			8.03%
1 Month		8.87%			8.83%

Today' Economic Calendar
US
Producer Price Index for March  08:30
Trade Balance for February         08:30        

Canada
Merchandise Trade for February   08:30
New Housing Price Index              08:30