GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9925-1.0025

Today's expected range for the Canadian Dollar against the Euro is 1.2960-1.3075

Today's expected range for the Canadian Dollar against Sterling is 1.6080-1.6200

The US Dollar is stronger to start the new trading week as anti-austerity sentiment has swept across Europe today and incumbents are falling like dominoes. In Greece both austerity parties suffered large losses and any new coalition Government will need to include some of the anti-austerity fringe parties, in France Sarkozy was shown the door as Socialist and anti-austerity campaigner  Francois Hollande  was elected and finally in Germany, Chancellor Merkel's Christian Democratic party was humiliated in provincial elections. As I feared Friday these kind of results have made financial markets very nervous, Asian equity markets were down on average of 2% and in Europe most bourses were down over 1% at their worst levels, EURO.USD traded down to 1.2955 the lowest level of the year, Sterling was also weaker with GBP.USD trading down to 1.6115, both currencies have recovered a bit this morning as currency traders take a wait and see attitude, Sterling trading should be quiet as it is a Bank holiday in the UK and Ireland. The great fear of financial markets is these new governments will start to renege on the existing bail-out packages and cause global financial chaos, we shall see what the next few weeks will bring but for the immediate short-term the US Dollar should benefit.

Mixed up in all of this was the news that Putin was crowned King of Russia once again, he was reported to have been very miffed that the European elections upstaged his coronation so he immediately dispatched some independent journalists to Siberia for the fun of it, it was reported he was feeling much better after that.

The Canadian dollar has lost a lot of ground to the US Dollar and now trade on again back above the .9900 level as I thought it might on Friday. The European elections and the poor US Jobs report continue to weigh on North American equities creating the safe-haven effect and pushing the US Dollar higher. Europe will be on edge for some time now so I won't be surprised if USD.CAD pushed above par this week, it should continue to trade in narrow ranges but for the next few days US Dollar buyers need to be ready to get anything below .9950 and then we can see what hakes out in the coming weeks.

Have a great week

Mike

GFX Morning Currency Rates
Monday, May 07 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9952			0.9878
CAD/USD		1.0048			1.0124
EUR/USD		1.3036			1.3129
EUR/CAD		1.2976			1.297
STG/CAD		1.6092			1.5987
AUD/CAD		1.0143			1.0127
CAD/JPY		80.17			81.17
CAD/CHF		0.9253			0.926
CAD/HKD		7.7975			7.8557
CAD/CNY		6.3347			6.3804
CAD/MXN		13.2649			13.1416
Commodities
Gold		$98			$101
OIL		$1,641.30			$1,633.00
Option Volatility
Canada
O/N		10.22%			8.43%
1 Week		9.17%			8.89%
1 Month		8.91%			8.43%

No Major Economic Releases this Morning