GFX Morning FX Commentary, June 28th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0200-1.0300

Today's expected range for the Canadian Dollar against the Euro is 1.2750-1.2875

Today's expected range for the Canadian Dollar against Sterling is 1.5950-1.6075

The US Dollar is marginally stronger as yet again Italy is forced to pay higher borrowing costs to borrow funds on the international bond market. The Euro was also hit by reports from the IFO report that said the current crisis will hurt the German economy this year and a higher than expected unemployment rate, the current crisis continues.

As reported yesterday the EU summit starts today and as of my writing there have been a few comments from the German finance minister that are causing confusion in the Euro market, it just reinforces my view that current leadership is incapable of solving this crisis, why can’t the just keep their mouths shut until the figure this out. Financial markets will be looking for any signs of the easing of austerity measures and polices based on growth, one thing that we will not see is the announcement of the issuing of EU bonds, something I believe would be well received by financial markets. If I see any serious developments I will send out a currency alert,

The Canadian Dollar continues to trade within narrow overnight ranges and for all purposes is being ignored by global financial markets. This will change and soon but until we hear from the EU summit, Canadian Dollar trading will remain subdued.

This morning,  a major M&A deal was announced that may affect the Canadian Dollar, Malaysian based Petronas is buying Progress Energy for a reported $4.8B Canadian dollars in an all cash deal. If Petronas has to come to market and buy the Dollars then you will see USD.CAD fall back below 1.0200, with the deal closing today my guess would be that they have already bought the CAD so it may have limited affect. It is just me or will we as Canadians no longer own any of our own resources anymore?

Two other items of note to keep in mind for longer term trades are a possible purchase of RIM and an oil strike in Norway. RIM will report an operating loss today and the stock will fall further as it starts to eat into its pile of cash making it a cheaper takeover target which when it occurs ( and I believe it is inevitable) would have a short-term effect on the Canadian Dollar. In Norway an national strike by oil workers is underway and to date has reduced supply by 15% (240,000 barrels per day) of the total Norwegian production. if this strike affects the Global supply of oil (Norway is the 8^th largest supplier of oil in the world) then you will see a jump in the price of oil and the Loonie would benefit. To date the Norwegian Government is not planning any action to end the strike.

For today with North American equity markets pointing lower and in my opinion little substance coming from the EU summit look for USD.CAD to test higher in narrow trading ranges.

A quick reminder that we will be closed on Monday for Canada Day but the international currency markets will be open so make sure you get your orders in early, on Cad holidays we often see enhanced volatility so you want to make sure you take advantage of it.

Have a great day

Mike

GFX Morning Currency Rates
Thursday June 28, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0267			1.0247
CAD/USD		0.974			0.9758
EUR/USD		1.2429			1.2495
EUR/CAD		1.2764			1.2806
STG/CAD		1.5964			1.6014
AUD/CAD		1.0331			1.0324
CAD/JPY		77.24			77.56
CAD/CHF		0.9403			0.9373
CAD/HKD		7.5488			7.5648
CAD/CNY		6.1889			6.1998
CAD/MXN		13.2733			13.4381
Commodities
Gold		$1,569			$1,568
OIL		$80.03			$79.13
Option Volatility
Canada
O/N		13.40%			13.50%
1 Week		9.13%			9.85%
1 Month		9.07%			9.50%

Today's Economic Calendar

USA
GDP for Q1-(08:30)

CANADA
None