GFX Morning FX Commentary January 10th, 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 1.2900-1.2975

Today's expected range for the Canadian Dollar against Sterling is 1.5800-1.5875

The US Dollar is marginally weaker this morning as EURO.USD has jumped higher for the first time in a couple of days. The Euro is higher as a result of a better than expected Spanish bond auction where Spain was able to borrow more money from the market at a lower rate of interest than was expected. This move underscores the desire by institutional investors to continue to hold European assets in their portfolios.

This morning as expected both the European Central Bank and the Bank of England kept their interest rates at current levels (0.75% and 0.5% respectively) with the Bank of England also announcing that they were not making any changes to their quantative easing program. With the Bank of England meeting minutes not due out for two weeks investor focus will turn to ECB Governor Draghi's press conference later this morning to get an idea what he is planning for future policy.

The US Dollar was also pushed weaker by a much better than expected trade data out of China. In December Chinese exports grew over 14% when they were only expected to grow by 5%, the Chinese economic engine continues to keep moving along.

The Canadian dollar is marginally stronger this morning but still enveloped by lackluster trading ranges. I do think that currency traders will be watching this morning’s press conference to get a sense of what the ECB will do on interest rates in the coming months but any volatility resulting from a change in policy will have more effect on EURO.CAD and GBP.CAD than it will on the USD.CAD currency pair.

Also today we do get some trade data out of the US and some housing data out for Canada, if we see further Euro strength we may see USD.CAD drop a little lower but overall I am not expecting much of a range.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9851			0.9876
CAD/USD		1.0149			1.0124
EUR/USD		1.31			1.3054
EUR/CAD		1.2904			1.2895
STG/CAD		1.5821			1.5841
AUD/CAD		1.0421			1.0366
CAD/JPY		89.19			88.26
CAD/CHF		0.9362			0.9371
CAD/HKD		7.8486			7.8273
CAD/CNY		6.3144			6.3
CAD/MXN		12.878			12.9708
Commodities
Gold		$1,664			$1,663
OIL		$94.35			$93.04
Option Volatility
Canada
O/N		5.60%			7.00%
1 Week		5.50%			5.85%
1 Month		5.45%			5.40%