GFX Morning Commentary March 22nd, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0200-1.0280

Today’s expected range for the Canadian Dollar against the Euro is 1.3255-1.3330

Today’s expected range for the Canadian Dollar against Sterling is 1.5550-1.5625

The Us Dollar is weaker this morning as both Euro and Sterling are surprisingly higher. In Europe the Euro is surprisingly higher as European equities are lower on the ongoing problems in Cyprus, it looks almost certain now that if Cyprus does not find alternative funding over the weekend the European Central Bank will removed funding for the Cypriot banks and they will be forced into bankruptcy. The deal with the Russian’s has fallen apart and with the Parliament voting down the tax on deposit accounts it looks almost certain that Cyprus will default and be forced out of the EU. This will provide uncharted waters for Europe and even though Cyprus is very small it will create a road map for any other possible withdrawals from the EU. Germany was also hit by a poor Business Confidence report so I am very surprised that the Euro is a bit stronger this morning, it may be a good time to sell Euro.

The Canadian dollar is unchanged this morning from yesterday’s Toronto close against the USD but with the overnight strength in the Euro and Sterling the Loonie did lose some ground to those currency pairs. The Federal budget had no impact on the Loonie as it was really a neutral budget with no surprises, Flaherty reported that they still anticipate that they will be in surplus by 2015/2016 which as most skeptics would say there is little or no chance of him hitting those targets, he is building in a much higher growth rate next year and higher prices for Alberta oil, after a higher deficit this year I don’t think that he has any chance of achieving his goal. He should do what the Liberals did when Martin was finance minister, he used to low ball his budget predictions so badly that when the actual numbers came in he looked like a hero.

With the lack of economic data today I think the Canadian market and overall currency markets will be slow as traders await further developments out of Cyprus. If Cyprus declares their banks bankrupt then I don’t think there will be much of a contagion effect to the rest of the world’s banks, Russian banks will take a hit but I don’t expect Canadian banks to have much exposure, it will be interesting to see just how the EU orchestrates Cyprus leaving the EU.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0249			1.0228
CAD/USD		0.9757			0.9777
EUR/USD		1.2939			1.2918
EUR/CAD		1.3264			1.3213
STG/CAD		1.5582			1.553
AUD/CAD		1.0694			1.063
CAD/JPY		92.17			93.38
CAD/CHF		0.9271			0.924
CAD/HKD		7.5518			7.5683
CAD/CNY		6.0558			6.0725
CAD/MXN		12.1089			12.0716
Commodities
Gold		$1,610			$1,607
OIL		$92.67			$93.11
US DOLLAR INDEX
P.CLOSE		83
OPEN		82.79