GFX Morning FX Commentary March 27th, 2013

Good Morning

Today's expected range for the Canadian Dollar against the US Dollar is 1.0150-1.0230

Today's expected range for the Canadian Dollar against the Euro is 1.2980-1.3050

Today's expected range for the Canadian Dollar against Sterling is 1.5370-1.5450

The US Dollar is stronger this morning as Cyprus worries and the political stalemate in Italy continue to weigh on the Euro. Cyprus has announced that they will place restrictions on what people can take out of their bank accounts when banking resumes tomorrow. Trading volume was light but EURO.USD did reached a four-month low trading at 1.2817 overnight, and this morning it continued lower trading down to 1.2770, clearly investors are worried about this Cyprus mess expanding further into Europe.

The Canadian Dollar had a strong afternoon yesterday as it broke below the 1.0200 level, in overnight trading it has given back a lot of that gain as US Dollar strength overnight and this morning has pushed USD.CAD back up towards 1.0200.  This goes back to my point yesterday where I said US Dollar buyers need to be ready to jump anytime we see weakness in the US Dollar, the trend I think is still for US Dollar strength so we could easily see USD.CAD back towards 1.0200 today. The Loonie has maintained its strength against the Euro with EURO.USD set to break below 1.3000 today, Euro buyers should look to take advantage of this move.

Up today we get the release of the Canadian CPI report for February, we are expecting a year-over-year inflation rate of 1.0% so given that this will be well below the Bank of Canada’s target for inflation this number will not have any real effect on the Loonie. Currency traders will continue to focus on the Euro market today, if EURO.USD continues to slide look for USD.CAD to move higher.

Yesterday saw the Office of the Superintendent of Financial Institutions Canada (OFSI- the Federal body that regulates the banks) release the results of their study that determined which of the Canadian banks are “too big to fail”. After much study (and loads of taxpayer dollars) it was determined that all of the big 6 Canadian banks were deemed too big to fail, boy I never would have thought that it a million years. Because they were able to come up with such a stunning decision they have come up with a plan to charge the banks a 1% capital surcharge to make them more secure, there goes our banking fees again so the banks can raise more money, so much for competition.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0182			1.0201
CAD/USD		0.9821			0.9803
EUR/USD		1.2786			1.287
EUR/CAD		1.302			1.3133
STG/CAD		1.5395			1.5488
AUD/CAD		1.0624			1.0686
CAD/JPY		92.67			92.39
CAD/CHF		0.9352			0.9293
CAD/HKD		7.6053			7.585
CAD/CNY		6.1021			6.087
CAD/MXN		12.1642			12.0937
Commodities
Gold		$1,591			$1,598
OIL		$95.78			$95.30
US DOLLAR INDEX
P.CLOSE		83.04			83.06
OPEN		83.33			82.98