GFX Morning FX Commentary August 2nd, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0000-1.0100

Today's expected range for the Canadian Dollar against the Euro is 1.2300-1.2400

Today's expected range for the Canadian Dollar against Sterling is 1.5600-1.5700

The US Dollar is weaker this morning as the excitement builds while the financial markets await word from ECB governor Mario Draghi on what surprises he has in store for the common currency this morning,  As I write the commentary the ECB has announced that they are keeping interest rates at 0.75%. I think Draghi probably realizes now that he put his foot in his mouth last week when he said the ECB will do whatever it takes to defend the Euro, markets are now waiting for some great announcement that will solve the current crisis at his 08:30 press conference. Quite frankly I don't think he will have any great announcement and financial markets will be disappointed, myself and every other market pundit in the world make the case that the Euro will fall on a disappointing policy so we will shortly see if that comes to pass.

Sterling is weaker this morning as the latest manufacturing data out of the UK showed a further decline in the country’s economy. The Bank of England also announced this morning that they are leaving interest rates at the current level of 0.50% and did not announce any increase in the stimulus program, UK watchers now await the minutes of today’s meeting which are due out in two weeks. I spoke to a very good friend of mine yesterday who works at an American Bank in the UK and he went to the Maple Leaf bar near Covent Garden yesterday and the place was nearly empty. It appears that Olympic officials have overstated the economic benefit to the country, the stories of massive traffic jams and high hotel prices have kept people away and seats empty at Olympic venues. So much for spending 17 Billion on the games, good luck Rio!!

The Canadian Dollar pretty much reacted as we thought it would after the Federal Reserve announcement yesterday. The Fed did nothing new and equities were hit and USD.CAD moved higher. The Loonie did not have much of an overnight range and now awaits the ECB decision before moving again. Positive news from the ECB and USD.CAD will again test par, if the ECB stays the course USD.CAD should be testing 1.0100 and possibly higher pretty quick, if you want to lock in before the announcement you have until 08:30 before the ECB press conference to get a hold of us.

Have a great day

Mike

GFX Morning Currency Rates
Thursday August 02, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0028			1.001
CAD/USD		0.9972			0.999
EUR/USD		1.2267			1.231
EUR/CAD		1.2307			1.2323
STG/CAD		1.5594			1.5645
AUD/CAD		1.054			1.0536
CAD/JPY		77.93			78.03
CAD/CHF		0.9757			0.974
CAD/HKD		7.7252			7.74
CAD/CNY		6.3477			6.3603
CAD/MXN		13.3446			13.2833
Commodities
Gold		$1,604			$1,614
OIL		$89.24			$88.25
Option Volatility
Canada
O/N		13.00%			14.23%
1 Week		9.25%			9.38%
1 Month		8.00%			8.30%