GFX Morning FX Commentary July 12th, 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 1.2440-1.2550

Today's expected range for the Canadian Dollar against Sterling is 1.5780-1.5900

The US Dollar is stronger this morning as equity markets in Asia and Europe were all lower on investor fears of a slowdown in the global economy. Last night saw investors react to the neutral Federal Reserve (no new stimulus) minutes, a Korean cut of interest rates the first time in three years), the Bank of Japan not adding any stimulus to their economy and Australia reporting higher unemployment, when you add in the recently weak data out of China then you can see why investors are pulling money out of equities. Tomorrow's GDP report due out of China (10:00 pm tonight Toronto time)  will take on added significance to the market, if it comes in poorer than expected we may see further declines in equities and a surge in the US Dollar.

Sterling hit a one month low against the US Dollar as Price Waterhouse issued a report that stated the UK economy should get ready for a prolonged recession if the Euro debt crisis is not resolved, we have said for a while that Sterling will trade weaker and we are still seeing this scenario play out.

As you would expect with the stronger US Dollar overnight the Loonie gave up some gains and moved back above 1.0200, familiar territory for the Loonie over the past few weeks, with nervous equity markets and poor economic data coming out of Europe and Asia I think US Dollar buyers need to guard  against a move much higher which could turn out to be expensive, US dollar buyers should be looking at some forward contracts at current levels to protect themselves.

With very little economic data due out for the rest of this week I will keep an eye on equities to get a direction for USD.CAD and right now equates are going to open lower so look for USD.CAD to try and test the 1.0250 level.

Have a great day

Mike

GFX Morning Currency Rates
Thursday July 12th, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0237			1.0184
CAD/USD					0.9819
EUR/USD		1.2187			1.2280
EUR/CAD		1.2477			1.2507
STG/CAD		1.5811			1.5807
AUD/CAD		1.0356			1.0454
CAD/JPY		77.4400			77.8300
CAD/CHF		0.9621			0.9598
CAD/HKD		6.3745			7.7544
CAD/CNY		7.7565			6.3643
CAD/MXN		13.1205			13.0518
Commodities
Gold		$1,564.20			$1,577.40
OIL		$84.65			$84.85
Option Volatility
Canada
O/N		11.68%			11.65%
1 Week		8.75%			8.44%
1 Month		8.52%			8.39%

Today's Economic Calendar

USA
Trade Price Indices for June (08:30)

Canada
New Housing Price Index for May (08:30)