GFX Morning FX Commentary October 25th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9875-.9950

Today’s expected range for the Canadian Dollar against the Euro is 1.2850-1.2950

Today’s expected range for the Canadian Dollar against Sterling is 1.5970-1.6050

The US Dollar is weaker this morning as developments in Europe continue to effect the currency markets. The Euro is stronger this morning on mixed reports that the EU troika (EU, ECB and IMF)  will give Greece an extension of two years to pay back their loans in exchange for a new austerity program, this report was announced by the Greek Prime Minister but denied by EU officials so I am not sure if it has yet been approved. The big mover overnight was Sterling which got a big boost from their GDP report which showed that they officially came out of their double dip recession on a 2^nd quarter growth rate of 1.0%, much better than expected and the fastest expansion in 5 years. I think this was the quarter that has the “Olympic effect” in it so we will see if the UK can sustain this growth rate for the rest of the year, GBP.USD got a good jump on this report reaching a high of 1.6130.

The Canadian Dollar is marginally weaker as it still moves between .9900 and .9950, it looks like USD.CAD is trailing other commodity currencies which seem to be strengthening ahead of the Loonie, I would have thought that USD.CAD would be below .9900 by now but the Loonie is struggling to get stronger at the moment, perhaps today will be the day. There were no surprises yesterday from the Federal Reserve announcement or the Bank of Canada Monetary Policy report, in the US the Fed stated the US economy still needs the stimulus program and that low interest rates will be around until 2015, in Canada Carney made a statement that higher interest rates in Canada are not imminent but further down the road.

Up today we have a full calendar of US economic data along with major corporate earnings releases, recently we have seen quite a few US based companies disappoint on their results which have spooked the equity markets, if this happens today and equities drop off then we may see USD.CAD rise in reaction to this drop and break above .9950, if the economic and the earnings reports are strong then that may give the push needed for USD.CAD to fall below .9900.

 

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9904			0.9906
CAD/USD		1.0096			1.0095
EUR/USD		1.2995			1.2943
EUR/CAD		1.2873			1.2825
STG/CAD		1.5976			1.5864
AUD/CAD		1.0288			1.0229
CAD/JPY		80.84			80.5
CAD/CHF		0.9391			0.9431
CAD/HKD		7.8016			7.8012
CAD/CNY		6.2926			6.3006
CAD/MXN		13.0728			13.1412
Commodities
Gold		$1,715			$1,710
OIL		$86.25			$86.81
Option Volatility
Canada
O/N		9.28%			10.00%
1 Week		7.04%			7.55%
1 Month		7.00%			7.10%