GFX Morning Commentary May 2nd, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0040-1.0120

Today’s expected range for the Canadian Dollar against the Euro is 1.3260-1.3340

Today’s expected range for the Canadian Dollar against Sterling is 1.5650-1.5730

The US Dollar is weaker this morning as an interest rate cut of 0.25% by the European Central Bank has pushed EURO.USD higher, which surprisingly is a bit contrary to what would normally happen to a currency if a central bank cuts a key interest rate. Quite often after a country cuts its interest rate policy that countries currency will weaken but I get a sense now that investors are buying the Euro as they view this rate cut helping to stimulate the EU economy and drag it out of recession. The numbers coming out of Europe are quite poor, this morning it was the 21^st straight month of a decline in manufacturing output that led to the rate cut, it will be interesting to see from ECB Governor Draghi’s press conference later this morning if this rate cut is a one-off or will be followed up by further cuts, the new ECB rate now stands at 0.5%.

The Pound did better than the Euro over night as it was pushed to an 11 week high on better than expected construction data, after trading as low as 1.4800 a while back GBP.USD not sits at 1.5600 which is a great jump for Sterling. I am still not convinced that the UK can weather a slowing EU economy but for the moment Sterling seems to be on a run.

The Canadian Dollar continues to hold onto its strength but still trades in limited overnight ranges. With the bump up overnight in Euro, EURO.CAD once again is trying to break above 1.3300, if we get another push lower today for USD.CAD then we may see the Loonie do much better against the Euro.

Up today we should get some increased volatility on Draghi’s press conference, I am guessing he will not have very good news to deliver, we also get some trade data for the US and Canada. I would not expect much movement for USD.CAD today as most of the focus will be on the Euro, the longer that we sit here at current levels and do not break below 1.0050 the more the likelihood that USD.CAD will trade up towards 1.0150.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0071			1.0054
CAD/USD		0.9929			0.9946
EUR/USD		1.3179			1.3189
EUR/CAD		1.3273			1.3261
STG/CAD		1.5697			1.5649
AUD/CAD		1.0316			1.041
CAD/JPY		96.61			96.99
CAD/CHF		0.9213			0.9234
CAD/HKD		7.683			7.6986
CAD/CNY		6.108			6.1289
CAD/MXN		12.1044			12.0785
Commodities
Gold		$1,454.00			$1,467.00
OIL		$91.50			$92.17
US DOLLAR INDEX
P.CLOSE		81.64			81.75
OPEN		81.69			81.61