GFX Morning FX commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0950-1.1020

Today's expected range for the Canadian Dollar against the Euro is 1.5210-1.5270

Today's expected range for the Canadian Dollar against Sterling is 1.8520-1.8580

The US Dollar is marginally weaker this morning in quiet May Day trading (most of Europe was closed)  as once again strong economic reports out of the UK have pushed the Greenback lower. This morning it was a manufacturing report that came in better than expected and also a housing report that showed home prices jumping the most since the financial crisis of 2008, clearly the UK has the strongest economy right now of the major Western economies. The Euro reached a three week high against the US Dollar as the expectation of further ECB stimulus among Euro traders begins to wane, it looks like the ECB may wait for more data before changing their interest rate policy.

The Canadian Dollar is slowly starting to give back its strength against the US, it is still very narrow trading ranges but at the moment USD.CAD seems to want to inch higher. Yesterday’s US Federal Reserve announcement which maintained the status quo had no effect on the currency market and North American currency traders will now focus on the US Employment report tomorrow.

Up today we get slew of secondary US data which I don’t think will have much effect on the currency market, I still look for USD.CAD to slowly start to move back higher but the day should be uneventful. In addition today we get the Ontario budget where we are expecting massive spending increases alongside tax increases and an abandonment of any pretense to balance the budget deficit. I don't think there will be any short-term effect on the Loonie as most of this budget has been leaked to the public but at some point down the road there will be. If the province continues down this path, one that is very similar to Portugal, Greece, Ireland and others then Government of Ontario Bonds that are being used to finance the debt will hit junk status and a bail-out by the Federal Government will be needed. I shudder to think what an Ontario austerity budget would look like but it would not be pretty. In such a scenario the Canadian Dollar would suffer.

Hard to imagine that we are already into May, have a great month

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0976			1.0963
CAD/USD		0.911			0.9121
EUR/USD		1.3876			1.3829
EUR/CAD		1.5234			1.5264
STG/CAD		1.8559			1.8439
AUD/CAD		1.0181			1.0156
CAD/JPY		93.09			93.53
CAD/CHF		0.8002			0.8043
CAD/HKD		7.0574			7.0655
CAD/CNY		5.7			5.707
CAD/MXN		11.9345			11.9666
Commodities
Gold		$1,286.00			$1,292.00
OIL		$99.25			$100.49
US DOLLAR INDEX
P.CLOSE		79.52			79.81
OPEN		79.45			79.74
US 10YR YIELD		2.66%			2.71%