GFX Morning Commentary January 16th, 2013

Good Morning,

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

Today’s expected range for the Canadian Dollar against the Euro is 1.3100-1.3175

Today’s expected range for the Canadian Dollar against Sterling is 1.5770-1.5850

The US Dollar is marginally stronger overnight after being much stronger against the Euro yesterday afternoon. Yesterday saw Luxembourg Prime Minister Junker who is also a senior EU official come out and say that the Euro was overvalued on the world’s currency markets, EURO.USD immediately fell almost 100 points after this statement was published. I think this is just another example of what I call “verbal intervention” where a political figure makes a comment that affects the currency market. This statement is more likely a reaction to what is happening in Japan (that country trying to devalue their currency to improve exports) at the moment as certain countries seem to want try and influence the value of their currency by any means possible, this type of actions are rarely long-lasting.

While the Euro dropped significantly yesterday the poor old Canadian Dollar was stuck in the mud and had another quiet afternoon and overnight session,  with the movement in Euro yesterday EURO.CAD fell in value but USD.CAD still holds fast in current ranges, the Euro did recover a bit overnight and EURO.CAD is back to the levels we saw before the Junker announcement yesterday. Given this current scenario I think we will start to see USD.CAD move slowly towards the .9900 level over the next few days.

Up today we get a slew of US economic data being released including the inflation report for December, with markets watching inflation data more closely than in the past few months we may see some enhanced volatility this morning.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9855			0.9852
CAD/USD		1.0145			1.0148
EUR/USD		1.3309			1.3342
EUR/CAD		1.3118			1.3147
STG/CAD		1.5805			1.5813
AUD/CAD		1.0398			1.0375
CAD/JPY		89.74			89.4
CAD/CHF		0.9427			0.9395
CAD/HKD		7.845			7.8473
CAD/CNY		6.3067			6.3099
CAD/MXN		12.8256			12.86
Commodities
Gold		$1,679			$1,678
OIL		$93.47			$94.01
Option Volatility
Canada
O/N		5.40%			5.39%
1 Week		5.51%			5.40%
1 Month		5.31%			5.25%