GFX Morning FX Commentary August 29th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9850-.9940

Today’s expected range for the Canadian Dollar against the Euro is 1.2400-1.2475

Today’s expected range for the Canadian Dollar against Sterling is 1.5630-1.5700

The Us Dollar is marginally stronger this morning as narrow ranges continue to be the norm in quiet overnight trading conditions. EURO.USD continues to hold onto recent strength again as Italian Prime Minister Monti and German Chancellor Merkel meet to discuss the current crisis today. The Euro did gain some strength yesterday as a statement from ECB Governor Draghi said the ECB may take extraordinary measures to support the Euro but in Spain the regional Government of Catalonia applied to the central government of Spain for a bail-out, the third such region in Spain to apply for a bail-out, each passing day looks to keep bringing this debt crisis to a head, one way or the other.

Currency traders will be looking to the US GDP report for the 2^nd quarter to get a gauge on the economy this morning, investors will be looking to see if growth is slowing enough for the Federal Reserve to react next month. If it is a weak number look for stock markets to jump and the US dollar to retreat on the expectation that the Fed will act to boost the economy. A poor number also places more emphasis on Bernanke speech later this week at Jackson hole where he will talk about US economic policy. We are expecting a growth rate on an annualized basis of 1.7%, last quarter it was 1.5% so anything less than this will I think force the Fed’s hand.

This week is also  the Republican National Convention and tonight Romney accepts the nomination and gives his speech. Normally you will see a boost in the polls shortly after a convention but as of now the financial markets seem to be ignoring the polling data, I am sure that will change as we get closer to the election.

The Canadian Dollar is marginally weaker this morning but nothing of a material nature, USD.CAD continues to trade in and around the .9900 level, I have noticed that the Loonie is not really getting any bump from the spike in oil and gas prices as a result of Hurricane Isaac, I am guessing that the financial markets are not that worried about the damage Isaac will do to the refining industry, if it should come out that refineries will be out of commission for a while then the Loonie should benefit .

Again today we are looking for subdued trading in the Canadian market but if the GDP number comes in lower than expected we should see some enhanced volatility and USD.CAD may move lower. Make sure you have your orders in ahead of the 08:30 report, any big moves will happen very quickly after that report.

Have a great day

Mike

GFX Morning Currency Rates
Wednesday August 29, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9887			0.9886
CAD/USD		1.0114			1.0114
EUR/USD		1.2555			1.2545
EUR/CAD		1.2415			1.2409
STG/CAD		1.5643			1.5611
AUD/CAD		1.0246			1.0258
CAD/JPY		78.54			79.53
CAD/CHF		0.9667			0.9676
CAD/HKD		7.8218			7.838
CAD/CNY		6.4222			6.4235
CAD/MXN		13.3904			13.3282
Commodities
Gold		$1,668			$1,664
OIL		$95.61			$96.90
Option Volatility
Canada
O/N		6.90%			7.40%
1 Week		5.60%			5.50%
1 Month		6.50%			6.40%