GFX Morning FX Commentary

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0880-1.0940

Today’s expected range for the Canadian Dollar against the Euro is 1.4840-1.4900

Today’s expected range for the Canadian Dollar against Sterling is 1.8340-1.8400

The US Dollar is stronger against the Euro and Sterling as a poor German IFO (business confidence report) showed that German businesses are worried about the pace of the EU recovery, yet again another sure sign that the European Central Bank will increase stimulus measures at their next meeting. Today will mark the third straight week that the Euro has recorded a decline against the US Dollar.

Sterling is also lower on the German IFO report but also in local town council elections where the Conservative party lost 60 seats as voters moved away from the Conservatives and backed the UK Independence party. I think this has to be a worry for Prime Minister Cameron as the UK gets set for a national election in 2015.

I read on Bloomberg this morning that in the upcoming national elections in Greece the Syriza party is leading in the polls, they were the party that did not want to meet the conditions of the bailout, if they form the next Greek government it should make Euro investors very nervous. When you look at this possibility, tie in the prospect of deflation and you can see why the Euro is trading so weak at the moment. European central bankers may be quickly coming upon the can that they kicked down the road a couple of years ago.

Nothing to report on the Canadian Dollar, it continues to trade back and forth in narrow ranges as it looks for a new direction against the US Dollar, it continues to hold in against the Greenback and continues to make small gains against the Euro and Sterling.

Up today we get the release of the Canadian Inflation (CPI) report for April, we are expecting an inflation rate of 2.0% (yoy) after a 1.5% rate in March, anything near the 2.0% level should give the Bank of Canada comfort that deflation is not an issue in Canada as it is in Europe. Anything much less that 1.5% should be negative for the Loonie and you will see USD.CAD jump higher

Have a great weekend and just a reminder that our American friends will be closed on Monday for the Memorial day holiday, we will be open but the US wire system will be closed,  if you need to send some US Dollar wires make sure you get them in for today.

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0903			1.0911
CAD/USD		0.9149			0.9165
EUR/USD		1.3618			1.3677
EUR/CAD		1.4851			1.4927
STG/CAD		1.8362			1.8411
AUD/CAD		1.0056			1.0086
CAD/JPY		93.46			93.02
CAD/CHF		0.8218			0.8179
CAD/HKD		7.1066			7.0995
CAD/CNY		5.7159			5.712
CAD/MXN		11.8467			11.8693
Commodities
Gold		$1,293.00			$1,297.00
OIL		$103.80			$104.01
US DOLLAR INDEX
P.CLOSE		80.23			80.07
OPEN		80.42			80.11
US 10YR YIELD		2.55%			2.54%