GFX Morning Commentary September 28th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar .9775-.9875

Today’s expected range for the Canadian Dollar against the Euro is 1.2660-1.2750

Today’s expected range for the Canadian Dollar against Sterling is 1.5850-1.5950

The US Dollar is mixed this morning as it is weaker against the Euro and a bit stronger against Sterling and the commodity currencies. The markets in Europe were buoyed by the Spanish budget that pledged to meet all their austerity targets, it will be interesting to see if they can in fact do this over the next year or just using rhetoric to buy them some time, the Spanish Finance department will also today release the results of the Spanish bank stress tests, earlier this year the Spanish Government asked for a bail-out for the Spanish banks so the markets want to know just how bad the situation still is.

Yesterday saw the announcement that one of the biggest Chinese steel producers was moth-balling a plant because of the global slowdown, this is something that China  is not used to doing and now the expectation is growing that China will announce a new stimulus program to get that economy moving again. This is an economy that has been used to growth rates of 6-10% every year for the past decade, If growth rates start to fall and unemployment starts to rise then we could see big problems with the highly regulated economy.

The Canadian Dollar is marginally weaker against the Greenback but continues to trade in tight ranges. Today the Canadian market will focus on the Canadian GDP report for July, we are expecting  a monthly rise in the growth rate of 0.1% and an annualized growth rate of 2.0% (down from the June growth rate of 2.4%). The US rate yesterday disappointed the market(revised down to 1.3%) and the fear is that if the Canadian growth rate starts to decline you may see the Loonie get hit hard. It will be something if the Canadian economy can maintain a higher growth rate than the US over an extended period of time, growth rates of 1-2% are hardly anything to get excited about but if Canada can hold on for the next year it should help the Loonie stay strong.

Have a great day

Mike

GFX Morning Currency Rates
Friday September 28, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9803			0.9831
CAD/USD		1.02			1.0172
EUR/USD		1.2933			1.2862
EUR/CAD		1.268			1.2647
STG/CAD		1.5883			1.5927
AUD/CAD		1.0204			1.0214
CAD/JPY		79.16			78.96
CAD/CHF		0.9533			0.9551
CAD/HKD		7.8859			7.8628
CAD/CNY		6.4075			6.4025
CAD/MXN		13.1034			13.0679
Commodities
Gold		$1,782			$1,757
OIL		$91.99			$90.89
Option Volatility
Canada
O/N		7.58%			8.50%
1 Week		7.70%			6.80%
1 Month		6.90%			6.60%