GFX Morning FX Commentary December 10th 2012

Good Morning

Today’s expected range for the Canadian Dollar is against the US Dollar is .9830-.9900

Today’s expected range for the Canadian Dollar against the Euro is 1.2740-1.2820

Today’s expected range for the Canadian Dollar against Sterling is 1.5840-1.5930

The US Dollar is marginally stronger this morning as news out of Italy that Prime Minister Monti will resign after his coalition lost the support from the People of Freedom party led by former Prime Minister Berlusconi, who also announced that he will run for Prime Minister in the February elections. After this announcement Italian equity markets dropped 3%, borrowing cost soared and the Euro dropped by 50 points, I think that pretty much sums up the thoughts of investors on the Italian situation,  Monti is a very well thought off technocrat who was brought in to stabilize the Italian economy and with him leaving investors are not very happy with the thought of Berlusconi running the country again, at least there would be great parties back in parliament if he wins the election. And I wonder why I have no confidence that current EU leadership has any idea of what they are doing.

The Canadian Dollar had its biggest move of the last week at 5:00 pm on Friday after the markets were closed, the announcement that the Federal Government would allow the takeover of Nexen and Progress by foreign state owned companies gave the Loonie a big boost, I will be interested to see if we can stay  at these levels or will it jump back above the .9900 level. The markets going forward will also look at the new rules that Industry Canada will come up with when other state owned companies want to buy Canadian companies in the future, kind of like closing the barn door after the horse left but what can you do.

With the Monti announcement and the concerns about Europe I would be surprised if North American equities start out higher, I think the early pressure will push USD.CAD higher. Later this week we get the US Federal Reserve announcement on interest rates and we will watch with interest what they the Fed says about the US economy. For today I think that US Dollar buyers should take advantage of these rates and buy some forwards, short-term US Dollar sellers need to think about leaving their orders at the .9900 level as this should be the extent of any pullback today.

 

Have a great week

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9876			0.9927
CAD/USD		1.0124			1.0063
EUR/USD		1.2909			1.2928
EUR/CAD		1.2751			1.2835
STG/CAD		1.5852			1.5908
AUD/CAD		1.0357			1.039
CAD/JPY		83.19			82.93
CAD/CHF		0.9458			0.9414
CAD/HKD		7.8242			7.7862
CAD/CNY		6.3171			6.2675
CAD/MXN		12.991			12.9776
Commodities
Gold		$1,714			$1,697
OIL		$86.47			$86.10
Option Volatility
Canada
O/N		6.58%			5.94%
1 Week		5.21%			5.59%
1 Month		5.12%			5.22%