GFX Morning FX Commentary, May 17th, 2012

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0075-1.0175

Today’s expected range for the Canadian Dollar against the Euro is 1.2840-1.2950

Today’s expected range for the Canadian Dollar against Sterling is 1.6040-1.6150

The US Dollar is marginally stronger this morning as the Euro has dropped near its 2012  low on fears that the Greek contagion will spread across Europe and hit other vulnerable states. This was evident this morning as Spain’s  borrowing costs rose as investors are demanding higher interest rates to lend to European sovereign states that appear to be in trouble, comments from ECB President Draghi that it won’t accept any compromises to keep Greece in the union did not help the overnight direction of the Euro.  EURO.USD fell to trade at 1.2690 and it looks like it wants to test the lows that we saw earlier in the week, with North American equity markets pointing lower we may in fact see this happen today.

The Canadian Dollar had a quiet night and USD.CAD now looks set to settle into its new trading range between 1.0050 and 1.1050. Given the current uncertainty in Europe I still favour a move higher but given the overall strength in the Loonie I think the climb will be slow and difficult. Short-term US dollar buyers need to be ready on any small pull-back for the USD, I don’t think you are going to see any quick moves back towards par but if you do see some intra-day or overnight rally back towards 1.0075 and 1.0050 then I really think you need to grab some USD, with the situation in Greece set to explode next month USD.CAD has the potential to go much higher.

For today we do get have some secondary data including Leading indicators out of the USA for the month of April and the Philadelphia Fed survey for May, two numbers that may bring some volatility to the currency market, make sure you have your orders in  with us to take advantage of the recent volatility.

I will be out of the office starting this afternoon, long-term readers will know that each May for  the past 11 years for some  strange reason that has yet to be discovered I choose along with my closest friends to travel to some far flung corner of the world to chase a little white ball around a wide open field of green. Given that I have never been able to master this vocation I return each year to see if anything has changed. The location of this year’s torture is Orlando,  in my absence please contact Randy or Mike and they will be able to help you and I will be back on the 28^th hopefully with the trophy in hand.

Have a great week

Mike

GFX Morning Currency Rates
Thursday, May 17 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0135			1.01
CAD/USD		0.9867			0.99
EUR/USD		1.2695			1.2712
EUR/CAD		1.2872			1.2841
STG/CAD		1.6077			1.6074
AUD/CAD		1.0053			1.0009
CAD/JPY		79.11			79.55
CAD/CHF		0.9327			0.9347
CAD/HKD		7.6615			7.6917
CAD/CNY		6.2369			6.2564
CAD/MXN					13.7643
Commodities
Gold		$1,547			$1,535
OIL		$92.86			$92.36
Option Volatility
Canada
O/N		15.08%			15.94%
1 Week		10.91%			10.47%
1 Month		10.69%			10.47%

Today's Economic Calendar

USA
Jobless Claims (08:30)
Leading Indicators for April (10:00)
Philadelphia Fed Survey for May (10:00)

CANADA
Foreign Investor Flow for March (08:30)
Wholesale Trade Data for March (08:30)