GFX Morning FX Commentary October 9th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is .9730-.9830

Today’s expected range for the Canadian Dollar against the Euro is 1.2600-1.2675

Today’s expected range for the Canadian Dollar against Sterling is 1.5620-1.5720

As we come back to the office after the holiday weekend we find the US Dollar stronger against the Euro and Sterling and marginally weaker against the Canadian Dollar and other commodity currencies. Yesterday the Euro was weaker as EU finance ministers met to discuss the Spanish situation and German Industrial Production came in weaker than expectation, in the UK Sterling was also weaker as a Lloyds Bank Employment survey painted a bleak picture.

 

This morning it is the IMF (international Monetary Fund) report on global growth that has driven the markets. Basically the IMF has downgraded overall global growth for 2012 and 2013 (this does not come as a complete surprise) and painted a bleak picture for EU growth in particular citing that a big reason for the decline in global growth is the lack of a solution to the current EU crisis. The IMF lowered EU growth to -0.2% for 2012 and 0.5% for 2013, basically there will not be any growth in the EU economy until at least 2014, how do you create jobs when you have no growth? Today German Chancellor Angela Merkel travels to Athens to show her support for Greek austerity measures, in a welcoming gesture the Greeks have put 7,000 police officers on the streets and the Greek people are planning a nice welcoming party, talk about fanning the flames,  I imagine that it will be the same kind of reception that Gary Bettmann would get here in Canada.

The Canadian Dollar has fared very well the last couple of days as it is marginally stronger against the US Dollar and much stronger against the Euro and Sterling. The IMF did reduce the Canadian growth rate for 2012 to 1.9% and for 2013 to 2.0% which has us faring better than most economies. EURO.CAD closed around 1.2760 on Friday and today trades near 1.2630 so a good move for the Loonie. I am thinking that currency traders are starting to like the fact that the Canadian economy is hanging in and will keep the Loonie at current levels against the US Dollar over the short-term.

For today with North American equity markets pointing lower I would expect USD.CAD to pull back a bit, I would think for most of this week we will see USD.CAD trade around the .9800 level.

 

Have a great week

Mike

GFX Morning Currency Rates
Tuesday October 09, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9768			0.9807
CAD/USD		1.0238			1.0192
EUR/USD		1.2929			1.3007
EUR/CAD		1.2626			1.2784
STG/CAD		1.5639			1.5871
AUD/CAD		0.9972			1.005
CAD/JPY		80.08			79.87
CAD/CHF		0.9584			0.9496
CAD/HKD		7.9316			7.8988
CAD/CNY		6.4338			6.4538
CAD/MXN		13.1039			13.0164
Commodities
Gold		$1,773			$1,792
OIL		$89.54			$90.76
Option Volatility
Canada
O/N		9.54%			7.80%
1 Week		6.96%			7.66%
1 Month		6.83%			7.15%