GFX Morning FX Commentary March 7th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0275-1.0350

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 1.5520-1.5600

The Us Dollar is marginally weaker this morning as the Euro rebounded to trade at 1.3040 as investors awaited word from the European Central Bank and the Bank of England. This morning the ECB announced they were keeping interest rates at 0.75% and the market now awaits Draghi’s press conference at 08:30 to see what he has to say about the economy.

In the UK the Bank of England announced that they were holding interest rates at 0.5% and were not adding to their quantative easing program. Some investors were expecting a boost in spending by the Bank of England so when it did not happen Sterling was able to rally a bit. Markets had been punishing Sterling over the past few weeks in anticipation of an increase in quantative easing, so given that it did not happen today GBP.USD was able to pull back and trade higher.

The Canadian Dollar continues to trade near the 1.0300 level as it initially traded much weaker on the switch in bias by the Bank of Canada but then the Loonie staged a rally the rest of the day and slowly recovered. I got ahead of myself a bit yesterday saying the unemployment reports were due out today, they are of course due out tomorrow so Canadian traders will be waiting for the results. The risk to the Loonie is a very poor number, if we get a second month in a row of poor job growth then I think USD.CAD will be set for a move towards 1.0400, if the number is stable or positive then I think we will see USD.CAD continue to pullback but ever so slowly towards 1.0250.

Up today we could see some enhanced volatility as the market reacts to whatever ECB Governor Draghi has to say but as the afternoon wears on the markets will stabilize and await both the US and Canadian Jobs reports tomorrow. Given that a negative jobs report may be bad for the Loonie if you do need to purchase some USD in the near future you may want to take some of the risk off the table today.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0305			1.0283
CAD/USD		0.9704			0.9725
EUR/USD		1.3013			1.3042
EUR/CAD		1.3414			1.3413
STG/CAD		1.5457			1.552
AUD/CAD		1.058			1.0566
CAD/JPY		91.35			90.84
CAD/CHF		0.9186			0.9175
CAD/HKD		7.5045			7.5206
CAD/CNY		6.033			6.0464
CAD/MXN		12.409			12.3507
Commodities
Gold		$1,581			$1,575
OIL		$90.70			$90.73
Option Volatility
Canada
O/N		11.53%			11.16%
1 Week		7.81%			7.83%
1 Month		6.96%			6.93%