GFX Morning FX Commentary July 13th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0125-1.0225

Today's expected range for the Canadian Dollar against the Euro is 1.2370-1.2475

Today's expected range for the Canadian Dollar against Sterling is 1.5660-1.5775

The US Dollar is marginally weaker this morning as we start the day but it was stronger for most of the overnight trading session, it was only in the last hour that the US Dollar pulled back some strength. Overnight as expected China reported lower GDP numbers indicating a slowing economy, later in the morning Moody's surprised the markets by downgrading the sovereign debt of Italy citing “higher unemployment and a slowing economy”, as a result equity markets fell and the Greenback jumped higher. Later in the European morning the markets recovered and the US Dollar fell back as the Italian bond auction went much better than expected with Italy able to get lower interest rates than previously expected.

The Canadian dollar once again spent yesterday trading with a weak bias but was able to recover this morning, so USD.CAD continues to trade around the 1.0200 level. The Loonie continues to make gains both against the Pound and Euro as it has been able to benefit from weakness in those economies.

Up today we get the release of the US PPI and Consumer sentiment, I am interested in the Consumer number as if consumers are worried about the economy they will stop spending which will ripple through the broader economy, I think a bad number here will hit the equity markets and drive USD.CAD higher. If the number does not disappoint then we should see equities stay strong and USD.CAD test the 1.0150 level.

Have a great weekend

Mike

GFX Morning Currency Rates
Friday July 13th, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0157			1.0237
CAD/USD		0.9845			0.9768
EUR/USD		1.2204			1.2187
EUR/CAD		1.2395			1.2477
STG/CAD		1.5684			1.5811
AUD/CAD		1.0343			1.0356
CAD/JPY		77.9700			77.4400
CAD/CHF		0.9683			0.9621
CAD/HKD		6.2871			6.3745
CAD/CNY		7.6351			7.7565
CAD/MXN		13.1847			13.1205
Commodities
Gold		1,583.2500			$1,564.20
OIL		$86.88			$84.65
Option Volatility
Canada
O/N		7.89%			11.68%
1 Week		8.46%			8.75%
1 Month		8.08%			8.52%

Today's Economic Calendar

USA
Producer Price Index for June (08:30)
Consumber Sentiment for July (09:55)