GFX Mornihng FX Commentary, May 29th, 2012

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 1.2810-1.2900

Today's expected range for the Canadian Dollar against Sterling is 1.6020-1.6120

The US Dollar is marginally weaker in narrow trading ranges, Asian equity markets got a bit of a boost last night on speculation that China was going to add some more stimulus to their economy (a rumour later denied by Chinese officials) and the US dollar traded a little weaker as a result of this, once the rumour was denied the dollar moved higher

In Europe the Greek election and banking crisis in Spain continues to hang over the common currency like the sword of Damocles , the Euro will continue to trade with a weak bias until the Greek election is over, hopefully common sense prevails and we don't see a breakdown of the EU. In Spain the government has taken control of the 4^th largest bank in that country has bad property loans have made it vulnerable to collapse. The Government plans to go to the bond markets in the next few days to try and raise funds to re-capitalize the bank, It will be interesting to see what support the bond markets give this ambition.

The Canadian Dollar had a quiet night as it continues to move away from its weakest levels against the Greenback last week. Keep in mind that the Loonie only weakened off because of the turmoil in Europe, if that situation continues then US Dollar sellers will benefit, but if the situation gets under control then I believe  we will see USD.CAD back under parity, locking in a percentage of your forward exposure now might not be a bad idea.

Up today we get the release of some secondary US data which should not have a dramatic effect on the markets,  with North American equity markets pointing higher we should see USD.CAD test lower in a narrow trading range today.

Later this week we get the US employment and I thought I would share an observation from my week-long trip to Orlando. In driving around the city I only noticed a total of 3 relatively small construction projects underway, if this is typical of most large US cities my question is how can you have a rise in employment and an economic recovery when there are no construction jobs being created?

Have a great day

Mike

GFX Morning Currency Rates
Tuesday May 29, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0234			1.0226
CAD/USD		0.9771			0.9779
EUR/USD		1.2525			1.2588
EUR/CAD		1.2818			1.2874
STG/CAD		1.6041			1.6057
AUD/CAD		1.0062			1.0163
CAD/JPY		77.65			77.57
CAD/CHF		0.9354			0.9337
CAD/HKD		7.5794			7.5881
CAD/CNY		6.1996			6.2013
CAD/MXN		13.6447
Commodities
Gold		$1,572			$1,577
OIL		$91.22			$91.76
Option Volatility
Canada
O/N		12.84%			12.30%
1 Week		10.27%			10.17%
1 Month		10.99%			11.00%

Today's Economic Calendar

USA
Consumer Confidence for May (10:00 am)
Case-Shiller Home Price Index for Q1-(9:00 am)

CANADA
none