GFX Morning Commentary April 4th, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0125-1.0180

Today’s expected range for the Canadian Dollar against the Euro is 1.2980-1.3060

Today’s expected range for the Canadian Dollar against Sterling is 1.5320-15400

The US Dollar is marginally stronger this morning as the overnight markets awaited the announcement from the Bank of England and the European Central Bank on interest rates. Overnight the big mover was the Japanese yen where the Bank of Japan (that countries Central Bank) announced that it was doubling its stimulus program and adopted a 2 year program to increase inflation to 2%. This announcement had the effect of devaluing the Yen by almost 2% against almost every currency it trades against. USD.JPY is now at a 17 month high so the program to devalue the Yen is in full force, we will see what other countries in the region do to answer this latest salvo in the currency war.

The Bank of England announced today that it was keep interest rates at current levels and not making any increases in the value of their stimulus program, currency speculators overnight looked at what the Bank of Japan did and betted heavily by driving Sterling lower that the Bank of England would also increase their stimulus program, when their policy did not change speculators were forced to cover their open positions and buy back the Pound driving GBP.USD and GPB.CAD higher. Overall nothing has changed policy wise and we still feel Sterling will trade weaker.

This morning the ECB announced that they are keeping interest rates at 0.75%, I thought they might entertain a rate cut to 0.50% given the Cyprus and the unemployment situations but they did nothing. Governor Draghi gives his press conference at 08:30 and currency traders will be watching for any hints on what he is planning, I think we will get some enhanced volatility for EURO.USD and EURO.CAD during that press conference.

Once again USD.CAD did nothing overnight, it is basically exactly where we left it yesterday and had a very narrow trading range, Canadian dollar trading has been very uninspiring at the moment. We have seen a bit of a sell-off in other commodity currencies so in fact the Loonie has been quite resilient over the past few days, this also makes me worry that at some point USD.CAD will move higher, I still feel that US Dollar buyers need to take advantage of these levels. We will probably get some enhanced volatility tomorrow when we see the employment reports for both US and Canada.

Have a great day

Mike

GFX Morning Currency Rates
Thursday April 04, 2013
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0147			1.0136
CAD/USD		0.9855			0.9866
EUR/USD		1.2807			1.2818
EUR/CAD		1.2996			1.2996
STG/CAD		1.5284			1.5318
AUD/CAD		1.056			1.0616
CAD/JPY		94.09			92.22
CAD/CHF		0.9353			0.9355
CAD/HKD		7.63			7.6361
CAD/CNY		6.1131			6.1158
CAD/MXN		12.1376			12.111
Commodities
Gold		$1,543.00			$1,569.00
OIL		$94.55			$96.73
US DOLLAR INDEX
P.CLOSE		82.87			83.1
OPEN		83.41			83.08

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