GFX Mornign FX Commentary March 1st, 2013

Good Morning

Today's expected range for the Canadian Dollar against the US Dollar is 1.0280-1.0360

Today's expected range for the Canadian Dollar against the Euro is 1.3400-1.3475

Today's expected range for the Canadian Dollar against Sterling is 1.550-1.5575

The US Dollar is much stronger this morning as poor manufacturing data in Europe and the UK have pushed the Pound and Euro lower, Unemployment in the Euro Zone also rose to a record level of 11.9%, clear evidence that the EU is still in a recession and the European Central Bank must cut interest rates to try and encourage some growth. The Pound really took it on the chin as it fell from 1.5180 to 1.5020, our scenario of a weaker Sterling still continues to hold and I look for it to fall further.

The Canadian Dollar traded weaker late in the afternoon yesterday as the strength in the USD continues to weigh on the Loonie, since the 8^th of February when the poor Canadian jobs report came out USD.CAD has risen by almost 350 points without any serious signs of a pullback. Since that time we have had a series of poor Canadian data and a strong US Dollar, at some point the Loonie will recover a bit but right now you can fight the trend, US Dollar sellers need to take advantage of these levels and US Dollar buyers need to raise their expectations that we won’t be seeing USD.CAD below parity in the weeks to come.

Up today we get the release of the Canadian GDP report for December and the 4^th quarter, we are expecting a growth rate of 0.7% for the quarter and for December we are expecting a drop in growth of 0.1%, any numbers much worse than this could push USD.CAD beyond 1.0350. Should be another volatile session this morning.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0319			1.0234
CAD/USD		0.969			0.9771
EUR/USD		1.3019			1.3114
EUR/CAD		1.3437			1.3423
STG/CAD		1.5502			1.5553
AUD/CAD		1.0513			1.0505
CAD/JPY		90.06			90
CAD/CHF		0.9112			0.9087
CAD/HKD		7.4938			7.5556
CAD/CNY		6.0242			6.0765
CAD/MXN					12.4934
Commodities
Gold		$1,567			$1,590
OIL		$91.41			$92.66
Option Volatility
Canada
O/N		7.24%			8.50%
1 Week		8.59%			7.60%
1 Month		7.15%			6.98%